The rise of China and Japan as Asian economic centers may be recognized as the opening up of national and regional economies to the global dimension. Even though in the past, Japan and China were understood as the major challenge to ASEAN regional security and economic stability, in the context of economic globalization, these countries could enhance the economic status of ASEAN and its member states in the global arena. This is simply because ASEAN is not in a position to pursue hegemony in the region. Rather it can serve as a buffer zone for the competition between China and Japan. What is noteworthy is that all of the East Asian countries are positive toward regional cooperation. Thus, ASEAN plus three can be developed into an institutional device for bona fide regional cooperation while serving as a forum for policy dialogue among member states. In addition, ASEAN plus three is expected to produce specific outcomes by institutionalizing government-level cooperation, whereas regional cooperation based on economics alone has failed to yield any results. Nevertheless, even if the intra-ASEAN trade volume is much greater than that with Japan and China, but when comparing country to country, each of ASEAN member states is more obviously linked with external economic powers than that of its ASEAN partners. For example in the case of Thailand, even though Singapore and Malaysia are the largest ASEAN trading partners of Thailand, the trade volume is less than half that of China and Japan, for instance. This situation might thus affect the possibility in creating ASEAN’s solidarity as a singular entity.

Thanawat Pimoljinda

Congratulations on a very insightful piece!

I am quite concerned by the latest call by some for Asian economies to rebalance their economies, ie, reducing dependence on export markets and developing domestic demand. Imbalance might be a serious issue in China, but I can’t think of an effective way of most East Asian economies becoming more inward-looking, while maintaining very strong growth. Asia as a whole benefited greatly from its openness. The negative impacts we are seeing now come naturally with the openness. But it would wrong to conclude that Asia should change its course of development.

Having said that, most ASEAN economies do have room to lift domestic investment. On average, investment shares of GDP in key ASEAN economies are still 6-8 percentage points below their pre-crisis levels. While they probably should not return to the pre-crisis levels, there is increasing evidence that investment lagged in Southeast Asia during the past 10 years.

I am particularly interested in your comments on ASEAN as an institution and its future. Some speculated that ASEAN’s lack of active participation in international economic decision-making is attributable to its generally consensus-building style. But the Euro Area has been extremely active in the G20 process. Or perhaps it’s because ASEAN no longer has a statesman , after Singapore’s elder Li and Thailand’s Thaksin?

As you pointed out at the end, China is to be more important in the world economy. But China is not yet ready to play an active role unilaterally. So perhaps ASEAN can work with China, Japan and Korea to jointly formulate ideas for interantional economic policy reform. This would fit ASEAN’s medium power. But if ASEAN can rope in China and Japan, then it will make a significant contribution to the world economic affair, directly or indirectly.

Thanks again.

Yiping