Chronic insomniac Napoleon Bonaparte got it right when he said of China: "That is a sleeping dragon. Let him sleep. If he wakes, he will shake the world." GDP projections weren’t available in 1803, so not even Boney could have predicted the Middle Kingdom would be poised to leapfrog France and Britain to become the fourth-biggest economy on the planet.
The superlatives have all but been used up on the economic front. Much interest is now being focused on how China is using its stellar trading success to garner still more diplomatic influence, starting in its own backyard. According to China’s Ministry of Commerce, foreign trade in 2005 climbed 23% to reach US$1.2 trillion, including over US$400 billion worth of goods bought from Asian trade partners. Almost 80 cents of every dollar that Chinese companies invest overseas goes into the Asian region. This is not an unalloyed plus, because competition is hurting many local manufacturers, and Chinese foreign direct investment is still in its infancy.
China’s forbearance by not indulging in a competitive devaluation of the yuan during the Asian currency crisis helped avert an even worse train wreck. Since then, the region has been looking more and more to Beijing, much to the consternation of the United States. Many countries welcome the new "win-win cooperation" tone of China’s diplomatic utterances, compared with the maladroit and often bellicose language of the past. This kind of development comes with growing confidence.
Chinese leaders have been fairly sprinting around neighboring capitals over the last year, with President Hu Jintao visiting Russia, Vietnam, and both Koreas. Another round of six party talks over the dismantling of Pyongyang’s nuclear weapon program, large-scale joint military exercises with Russia and a warming of relations with emerging superstar India have been the tangible results.
The only tall fence patently not mended is that with Japan, where relations have continued to deteriorate. This cast something of a shadow over the inaugural East Asian Summit in Kuala Lumpur in December. The summit was attended by the ten ASEAN countries plus China, Japan, South Korea, India, Australia and New Zealand, with Russia as an observer, and it’s a pity the event did not get the media attention it deserved. But of course there were better photo opportunities at the WTO scuffles in Hong Kong.
China’s preference was for an EAS comprising two blocs – the core states with China as the dominant player, leaving India, Australia and New Zealand as lesser members. The idea didn’t gather sufficient support, not least because US friends like Japan and Singapore wanted India on board simply as a counterbalance to China. But the event still proceeded smoothly, bringing together countries representing over half the world’s population, a combined GDP of US$8.3 trillion, more than a quarter of world trade, and over two-thirds of global foreign exchange reserves.
The talk was of promoting financial stability and cooperation including narrowing the development gap in East Asia through technology transfer and infrastructure building. It is fanciful that the fledgling body could develop into a framework for a jumbo East Asian Free Trade Area. Meanwhile, the damage the Euro has inflicted on some European economies is unlikely to add much momentum to the Asian Currency Unit idea.
Nevertheless, the summit was seen as sufficiently successful to warrant a vote on making it an annual event. Even more significant, perhaps, was the fact that a conference of this stature took place at all without a chair for America – it was like Banquo’s absence from the feast. The US declined to join because of a reluctance to sign a treaty of amity and friendship, renouncing the use of force in the region. Russia and Australia both agreed to sign up and got a ticket.
It is too much to put the non-invitation down to the Bush administration’s continued loss of authority. However, delivering lectures about human rights and people oppression does not play well against a background of Guantanamo and Abu Ghraib. East Asian Summit proponents see it as laying foundations for an economic and political alliance that in the long term might rival those of North America and Europe – not completely wacky ambitions considering the four largest economies by 2050 are likely to be Asian.