Wednesday, November 30, 2005

U.S. must take notice of China's emergence

U.S. must take notice of China's emergence
VALLEY VIEWS
By Seemi Ahmad
The news of China's economic growth is pervasive.
Every media outlet extols the pace of its gross domestic product growth (9.5 percent in 2004), of its construction activity (half the world's heavy machinery is in China) and its expanding exports (seven out of 10 goods sold at Wal-Mart are made in China).
According to some estimates, China's economy may replace Japan's as the second largest in the world by 2020. China is spreading its wings deliberately and methodically by combining its new-found economic clout with overtures to developing countries through joint ventures and trade pacts.
How do China's immediate neighbors perceive this growing power? On my recent trip to South Asia, I was intrigued by the sudden shift of focus in that region of the world. China and India are now new destinations for foreign students, as well as for rich patients with complicated medical needs. The well-heeled had always looked to Europe or the United States for new products, new trends, advanced medicine and travel; times are changing. Shanghai, Hong Kong, Kuala Lumpur, Bangkok and Dubai have become popular tourist havens. There is new buoyancy and optimism about the emergence of China as an economic power. Importantly, China's growth is not perceived as a zero-sum game by its neighbors, since they see the benefits spilling over into their own economies.
Pakistan gives access
Take the example of Pakistan. To augment energy supplies in Pakistan, China is helping it build hydro-power and thermal solar energy plants. They jointly completed the 480-miles-long Kharkhuram highway, the fabled old Silk Route, linking northern Pakistan to China's Xinjiang province.
In cooperation with China, Pakistan is constructing a $250 million port city in Gwader. Not only does this port give China access to the warm waters of the Arabian Sea, this alternative and shorter route links China directly to energy supplies from the Middle East, easing its worries that a potential naval blockade of the Malacca Straits by hostile nations could disrupt its existing vital route for oil.
At the same time these projects benefit Pakistan's economy enormously. The Gwader port will serve other landlocked Central Asian countries creating windfall revenues for Pakistan. Such projects are being replicated by China in other developing nations where this increased foreign investment and trade offer a promise of prosperity.
China is actively signing strategic agreements for raw materials and energy supplies with countries in Asia, Africa and Latin America. Its trade pact with the Association of Southeast Asian Nations would create by 2010 the world's largest common market. It just signed free trade agreements with the South Asian Association for Regional Cooperation which includes, among others, India, Pakistan, Bangladesh, Nepal and Sri Lanka.
Populous and poor
The sense of excitement among association countries about this development is palpable. These countries are home to 25 percent of the world population, but they also have half the world's poor. They are aware free trade agreements offer them one sure prescription to alleviate poverty. Such bilateral and regional agreements have created amity and goodwill between China and its neighbors.
It is important to note that China faces fewer hurdles when it undertakes projects or signs trade pacts since it is unencumbered by environmental regulations, labor unions or even property rights. Building a stadium in New York City is much harder than building the Three Gorges Dam in China, which, when completed by 2009, will displace about two million people.
There is, however, mounting concern that the United States is losing influence in South Asia and Southeast Asia. The exclusive focus of the U.S. on the Iraq war and on combating terrorism prevents it from countering the "economic diplomacy" adopted by China. The U.S. needs to do more and needs to do it soon so it can retain its influence in a region that promises to expand its economic dominance in the 21st century.
Wednesday, November 30, 2005
Seemi Ahmad is an associate professor of economics at Dutchess Community College in Poughkeepsie.

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