Why China needs Asean and you – Business Mirror

During the past decade, China has made studied and steady steps to enlarge its economic influence around the globe. We think of that in terms of issues, such as its military expansion in the South China Sea, but that is a minor factor.

A case in point is the massive investment that China has made in Africa. Its investment there has skyrocketed in recent years, from $7 billion in 2008 to $26 billion in 2013. Recently, in December 2015, President Xi Jinping ushered in a new era, backing a long-term proposal with a commitment of $60 billion of new investment in major capital projects. This investment has been made with the stated idea of “developing local economic capacity”.

Since much of the past investment in Africa has been in the mineral industry, the headlines read, “Is China exploiting Africa for its natural resources, or is it aiding the continent’s development?” Every time China steps into another nation’s economy, flashing cash and big smiles, the same suspicions arise. In the Philippines, that has manifested in concerns that China will use potential investments to influence foreign policy on one hand and, on the other, to put the Philippines in so much debt that our nation becomes a financial vassal sate to China as it once did to Western banks. And the headline reads, “China’s Southeast Asia investments: A blessing or a curse?”

The pinnacle of China’s investment stretch is its “One Belt, One Road” global vision of New Silk Road, linking East and West and all the nations in between. This initiative is all a part of a broader scheme, which includes Africa and Southeast Asia to develop and secure new consumer markets to which China could offload its overproduction.

China’s political stability and the future of its government depend on keeping 1.4 billion Chinese fat and happy. Fat in the sense of experiencing increasing wealth, and happy knowing the future is secure and bright. However, for all the talk, this cannot be done selling washing machines and sport shoes to its domestic market. It desperately needs all those consumers from Yiwu in central Zhejiang province to London (the route of the new freight-train service) that runs 12,070 kilometers through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan, to name a few nations on the route.

While Europe is the final destination with its large market, that is not the long-term objective.

If you are exporting goods to another nation or region, you need that area to hold lots of warm bodies that have lots of cash. You need a growing market, and Europe is not the place for the long term.

Europe’s population is in decline. When you remove island-nations like Micronesia and Niue, all 20 of the nations experiencing the highest population decline are in Europe, from Italy and Spain to Germany and Russia. Further, a “poorer” migrant population is replacing the “rich” indigenous population of Europe, and China knows this.

Then, compare with nations that have healthy population growth combined with healthy economic growth. The names that fit this combined parameter include Lao PDR, Indonesia, the Philippines and Vietnam, along with Turkey, Turkmenistan and India.

China is playing both the short and long game, and the immediate aggressive tactics are part of that short game. However, countries like the Philippines must also realize that, in the long term, the Red Dragon may need us more than we need them.

Source: Google News :

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