By 2020, China’s FTA with ASEAN nations will get another big boost; a 3,900km high-speed railway system linking China’s Kunming through Laos, Thailand, and Malaysia down to Singapore becomes operational and construction has already started. See my hand-drawing in the regional map below to get a sense of scope of this project. China’s trade with the ASEAN countries has sky-rocked to $292.78 billion in 2010, the year the FTA went into effect. ASEAN countries exports to China at $154.56 billion already dwarfed the U.S.’.
Before I talk more about trade, let’s refresh our memory of the East Asia (+U.S.) geopolitics in the months leading up to the Obama administration’s ‘getting back into Asia’ pronouncement.
First, there was the supposed sinking of the South Korean navy ship, Cheonan, during a joint U.S.-South Korea military exercise, which a U.S.-South Korean lead ‘international’ investigation concluded the North responsible. Russia rebuked the conclusion after looking into the evidence with China also not agreeing to blame the North.
Then there was the shelling of disputed Yeonpyeong island by North Korea killing South Korean marines and civilians. A Chinese fishing trawler and a Japanese coast guard ship colliding near disputed island (Diaoyutai/Senkaku) just north of Taiwan.
Russian President Medvedev landed in one of the disputed Kuril Islands promising further development (and I suggested Foreign Minister’s resignation was due to it). ASEAN countries supposedly invited the U.S. to join a regional forum, but nobody signed up to say anything bad about China.
(For completeness, I mind as well add in the Takeshima/Dokdo dispute with South Korea, because Japan is so embroidered up northeast.)
The March 2011 earthquake and the ensuing tsunami came, then everything went quiet.
Well, arguably, Wikileaks was another earthquake with the epicenter in Washington, D.C..
So, what now?
With that said, the opinion I would like to share is rather simple. When the aggressive geopolitiking and military schoolyard nonsense are kept at bay, doesn’t everything seem much more peaceful? (I am talking about East Asia in case it is not clear.)
Back to this Kunming-Singapore high speed railway; I think it will play a major role in accelerating the trade between China and ASEAN countries. According to this report,
Furthermore, energy and goods that Japan and South Korea need can also be transported to both countries through this railway network of global significance.
The railway network will facilitate the movement of goods and people, improve the efficiency of economic activities, and help create a more peaceful and stable geopolitical environment.
By the way, the red outline is just me connecting the dots, and I wanted to use the map to visualize this massive under-taking. After completion, Vietnam and Cambodia will become linked with Thailand and Myanmar further by train.
I applaud the recent KORUS free trade agreement between South Korea and the U.S.. ASEAN+1 is already in effect, and the next step will be ASEAN+3, adding South Korea and Japan. China is already Japan’s largest trade partner, so this expansion is rightfully to be expected.
In the future, as more developed countries advance, trade will become a more important factor in standards of living anywhere on the planet. And I applaud China’s leaders in making free trade a priority.
Want more examples? President of the European Council Herman van Rompuy is currently in China in talks with President Hu Jintao to expand trade. EU needs all of China’s help it can get in financing as well as market access. China could use more high-technology exports from the region.
Chinese Commerce Minister Chen Deming is in Brazil talking to Trader Minister Fernando Pimentel on “China, Brazil open wider for each other.” (For some reason, this headline sounds funny.) Though trade volume is still modest, China-Brazil trade is expected to grow 20% in 2011 to $37 billion.
Imagine that kind of growth percentage wise between China and the U.S.?
Don’t forget the just completed Strategic & Economic Dialog between those two countries. Lets hope they yield concrete results. Otherwise, it seems certain U.S.’s trade volume with China will decline as a percentage of China’s overall. And I predict ASEAN to over-take America soon.
In terms of high speed rail, I will be impressed when the U.S. leads in building one connecting Canada down to Mexico. And it cannot for the lack of examples.