Talk that competition between China and ASEAN (Association of Southeast Asian Nations) countries will hinder enhancement of economic collaboration in East Asia is based on misunderstanding, experts said.

The competition is for a different market and should not interfere with cooperation among East Asian countries, said Zhou Xiaobing, deputy director of the Institute of Asia-Pacific Studies of the Chinese Academy of Social Sciences.

"It's very important for East Asian countries to cooperate in order to maintain a stable and continuous development in the region," Zhou said.

Free trade agreements and ultimately an East Asian free trade zone would help create solid markets, which are essential for stable and continuous development of East Asian countries, he said.

East Asian economies, with huge production capacity, depend heavily on expanding global demand.

Surging overseas and local demand helped pull East Asia out of the 1997 financial tumult.

While external demand is volatile, Zhou said the rapidly growing trade among East Asian countries has stabilized local demand. Neighbourly trade accounted for half of East Asian countries' total foreign trade last year, a bit higher than the proportion for North American Free Trade Agreement (NAFTA) members but lower than that of the European Union, official statistics show.

The deputy director added that the need for stable markets underlay Premier Zhu Rongji's call for free trade relationships with ASEAN members at the recent 10-plus-three (the 10 ASEAN members and China, South Korea and Japan) summit.

Past cooperation has laid down a firm foundation for free trade relationships in the region, Zhou said.

East Asian countries have all committed to some degree of opening to ASEAN, the Asia-Pacific Economic Cooperation or the World Trade Organization.

An East Asian free trade area would accelerate the mutual opening of domestic markets, Zhou said.

But Xu Changwen, director of the department of Asia and Africa of the Chinese Academy of International Trade and Economic Cooperation, said that at present Japan and South Korea are better partners for China than ASEAN countries.

Opening to Japan and South Korea would deal a blow to domestic industries, especially the service industries such as telecommunications and finance.

"But closer trade relationship with the two countries will also bring along capital and technology that China needs to accomplish its present goal of economic development," Xu told Business Weekly.

Cooperation with ASEAN countries means more pressure but less opportunities for domestic industries, he said.

Xu said China and ASEAN are competitors for capital and markets rather than complementary economies.

China and many ASEAN members are export-oriented and have similar economic development levels.

(China Daily 12/04/2000)