China may be putting up a new investment fund and loan package to help get over the problems of the global financial crisis for ASEAN. This is the latest overture by China towards the region.
A proposed China-ASEAN free-trade zone is also suggested which would pave the way for faster trade flows. The last step in those negotiations, the signing of an investment agreement, was expected to be completed on the sidelines of the botched ASEAN summit at Pattaya, Thailand, earlier this month.
Once the agreement is signed and implemented as early as 2010, annual bilateral trade volumes are expected to reach $1.2 trillion, according to figures projected in China’s state-controlled media.
The aid package includes a US$10 billion investment fund, geared for cooperation in infrastructure construction, energy and natural resources development, and improvements in information and communications. China also announced it would extend a $15 billion line of credit over the next three to five years to needy ASEAN countries. Although the terms were not made public, the loans include preferential terms for $1.7 billion in cooperation projects.
An additional $39.7 million was earmarked for ‘special aid’ to Cambodia, Laos and Myanmar, the 10-member groupings poorest members and closest China allies, to meet ‘urgent needs’. China also announced it would donate $5 million to the China-ASEAN Cooperation Fund and an additional $900,000 to the ASEAN plus China, Japan and South Korea cooperation fund.
The aid package underscores accelerating economic integration. China’s trade with 10-member ASEAN has nearly doubled since 2004. Trade rose 14% last year to US$231.12 billion, making ASEAN China’s fourth-largest trading partner.
China’s aid to the region, by some reports including a November 2008 estimate from Taiwan’s Center for Asia-Pacific Studies, has now surpassed that of the US. For China the benefits of greater integration are as much political as economic.
For instance, a rising tide of pro-Chinese sentiment in the region has made it easier for Chinese companies to secure deals for natural gas exploration in Myanmar, land large scale agriculture projects in the Philippines, and build transportation infrastructure in Thailand and Laos.
Asia Times Online in a long, well-written and careful study by Brian McCartan showed that China has made firmer inroads with the mainland countries of Cambodia, Laos and Myanmar, although even these countries try to balance Chinese influence with other big countries, including the US and India.