China Daily Hong Kong Edition: China-ASEAN ties on road to win-win future

China and the ASEAN countries will benefit from increased economic cooperation and integration with the creation of the 21st Century Maritime Silk Road, one of China’s most significant and latest national strategies, a China Daily Roundtable conference on the regional economic development outlook heard on Tuesday.
“Asia today is on the threshold of a momentous era in economic development and advancement, with China having taken the lead in pushing a string of initiatives that are aimed not only at linking up the whole of Asia, but also at giving the continent the impetus it desperately needs to spur growth after a period of global economic stagnation and uncertainties,” Zhou Li, publisher and editor-in-chief of China Daily Asia Pacific, said in his welcome address at the panel session entitled “China, ASEAN and the New Silk Road — Global Financial Perspectives” as part of the Asian Financial Forum (AFF) in Hong Kong.
“The New Silk Road illustrates the development of Asia. It connects the world’s second-largest economy with 600 million people of the ASEAN Economic Community. This new dynamic project has the ability to create a tremendous amount of change in finance and business, where Hong Kong is well positioned to tap the opportunities,” stressed Raymond Yip, deputy executive director of the Hong Kong Trade Development Council, the organizer of AFF — one of the most important annual events on the global financial calendar.
Xu Ningning, executive president of the China-ASEAN Business Council, affirmed that Hong Kong will have an edge in the development of the New Silk Road, including its strategic geographical location and natural connection with both ASEAN countries and the Chinese mainland, not to mention its strength in financial services and its vibrant business society.
Economic Community
China and ASEAN states reached a consensus to support the “New Silk Road” at the 17th ASEAN-China Summit in November. Trade value between China and ASEAN increased 8.3 percent on year in 2014, more than two times faster than that for Chinese outbound trade on average.
With bilateral trade value pointing at $500 billion in 2015, growth rate is due to exceed 10 percent this year, Xu said.
“With the ASEAN Economic Community to be established at the year-end, the New Silk Road will help enhance regional economic cooperation and make ASEAN the first stop for Chinese outbound investment,” Xu said.
“With GDP surpassing $2.4 trillion and its rising middle class, the 21st century belongs to ASEAN. However, to benefit from regional integration, we need to have strong economic fundamental and structural reforms, and closer ties with neighboring countries,” Perry Warjiyo, deputy governor of Bank Indonesia, told the audience.
Warjiyo emphasized that the gap between ASEAN member states is wide and demand for infrastructure investment is huge. “During the next five years, Indonesia plans to build 15 new airports, 24 ports and over 3,000 kilometers of highways. An estimated $450 billion will be required for these projects and other expansion plans. We are looking for cooperation with other countries, including China and the US,” he said.
While ASEAN already represents the world’s seventh-largest economy in terms of GDP, it is on track to become the fourth-largest by 2050. Value of ASEAN-China trade will reach $1 trillion by 2020, said Tan Sri Dr Michael Yeoh, chief executive officer of Asian Strategy and Leadership Institute, Kuala Lumpur. Malaysia has the chairmanship of ASEAN this year.
“Given its resource richness and the size of the market, businesses in the region are expected to thrive, which will engage big corporates as well as SMEs in both ASEAN and China,” Yeoh said. “Newly established offshore renminbi clearing banks in Malaysia, Thailand and Singapore will prompt trade and economic contingence with China, which will make China stronger and a true partner of ASEAN.”
Identical views were expressed by China-ASEAN Investment Cooperation Fund CEO Li Yao, who said that in linking the Chinese and ASEAN markets, the New Silk Road will promote the circulation of capital flow, technology and goods in the region, facilitating sustainable growth in the long term and, above all, improve mutual trust.
“The New Silk Road deserves global attention,” Li emphasized.
Huang Yiping, deputy dean of the National School of Development at Peking University, said: “China can contribute to the international economic order by doing what it does best — no matter whether it is construction or providing funding.”
Huang said since China is upgrading its industries and rebalancing economic structure amid a slower growth rate, it will become a major direct investor overseas.
“China, now the third-largest capital exporter in the world after only the US and Japan, is soon to become the second, given the liberalization of its capital account and overseas relocation of lower-end manufacturers. The New Silk Road will also bring more investment aboard,” he added.
Logical market
Vivek Pathak, regional director of Asia and the Pacific at the International Finance Corporation, told the session that due to the demands of asset diversification and expansion of Chinese brands, capital outflow from China will be the key phenomenon for the next decade. “ASEAN is the most logical market for China. It is not only important as a market for selling, but also as a manufacturing base for Chinese brands,” he said.
Meanwhile, unlike the traditional model where the financial sector follows manufacturers, more Chinese tech giants such as Tencent and Alibaba are set to become involved in financial services and integrated with financial firms in the region and may even get ahead of the traditional banking sector.
“While the New Silk Road prompts physical connectivity, in 10 years or less, we are also going to have a virtual cycle connecting ASEAN, China, India and other parts of Asia that provides financial support,” Pathak said.
Separately, China’s outbound investment activities along the New Silk Road would provide huge opportunities for service industries based in the Qianhai-Hong Kong zone, said Edward Chen Kwan-yiu, president of the Qianhai Institute for Innovative Research.
“Outreach investment is becoming increasingly popular among Chinese enterprises. Other than overseas IPOs, there are going to be more overseas joint ventures and cross-border M&A deals, which will need intermediaries,” Chen forecast.
“Given Qianhai’s liberal policies and Hong Kong’s expertise, the Qianhai-Hong Kong zone will demonstrate the new model of China’s growth.
Emmadai@chinadailyhk.com
http://www.chinadailyasia.com/2015-01/23/content_15218069.html