Oleh/By : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat/Venue : TOKYO, JAPAN
Tarikh/Date : 21-05-2002
Tajuk/Title : THE 8TH NIKKEI CONFERENCE ON THE
FUTURE OF ASIA
Versi : ENGLISH
Penyampai : PM
"CHINA - A CHALLENGE OR AN OPPORTUNITY FOR ASEAN?"
I would like to thank the Nippon Keizai Shimbun
and the Nikkei Conference Organisers for the
invitation to speak once again at this annual
conference on Asia.
2. In 1803, almost exactly 200 years ago, Napoleon
Bonaparte gave us a most prophetic quotable quote.
"China is like a sleeping giant," he said. "And when
she awakes, she will astonish the world." Astonish
the world China truly has. Of this there can be no
doubt.
3. But many questions remain. The organisers of this
8th Nikkei Conference on the Future of Asia have asked
me to speak on this astonishing China, this phenomena
of the awakening giant and what it portents for us in
the ASEAN countries. Is it going to be what someone
describes as a black hole which sucks up everything
and gives back nothing or will China be the locomotive
for the economic prosperity of ASEAN in the future?
4. What one has to accept is that China is there. It
has been there for the past 4000 years and it cannot be
wished away. The idea of containing it, a policy tried
by the West in the Cold War years did not work. If
China was a non-performer during those years it was not
because of containment by the West but because the
Chinese leaders chose to isolate China and to
reject modernisation.
5. Now China has decided to join the rest of the
world in espousing trade and development and like it
or not we have to admit that China is doing well and
blossoming into a great economic power. A country of
1.3 billion diligent and skillful people, organised
and disciplined cannot but be a powerful country once
it sets its mind on developing its huge potential.
As an economic power it will exert much influence in
the affairs of the world. China must therefore be
accorded its rightful place in the constellation of
powerful nations.
6. The fear is that with its enormous power it may
try to expand into Southeast Asia, perhaps
territorially. China's occupation of Tibet may be
cited. But China has no history of expanding
territorially. It may have had pretensions about
being the centre of the world, the middle Kingdom,
but historically China had not colonised other
countries. In contrast the European countries
conquered and colonised Asian countries thousands of
miles away from Europe. I don't think China is about
to change its ways and become a colonial power.
7. The clash involving China in the future is going
to be economic and it will be between China and the
other developed countries. Now we all know that when
two elephants fight the grass and the animals
underneath will get trampled. So the fear is not
from China's black hole character but the fierceness
of China's struggle for market share for its products
and services worldwide.
8. For ASEAN what will be the effect of China's
economic struggle? Well, we have already seen how
China's attractiveness as an investment location has
reduced the flow of FDI to the ASEAN nations.
China's advantage at the moment is its low cost
labour and the enormous size of its domestic market.
9. But we have to remember that Japan too started
as a low labour-cost country. It did not remain so
for long. As Japan prospered the cost of labour rose
quite rapidly. Such was the increase that Japan had
to invest and produce in low-labour cost countries of
Southeast Asia very early on in order to remain
competitive. Additionally the voluntary and
involuntary transfers of technology resulted in South
East Asian Countries developing their own industrial
capacities. Thus Japan's industrialisation benefited
the poorer ASEAN countries in a number of ways.
10. It is possible that China too will progress in
the same way. Already the labour cost along the
coastal areas which have developed first is higher
than that inland. As industralisation proceeds the
cost in China is bound to go up. The size of China's
population will make this process longer than in
Japan. Still there will be some benefits to be
derived as China's work-force begin to earn higher
incomes. We are already seeing this in South East
Asia as attested by an increasing influx of Chinese
tourists. We are also beginning to see Chinese
investments and increases in their imports of certain
products including electronic goods and components.
11. When 1.3 billion people get even a slight
increase in income the purchasing power will be
enhanced much more than happens in an ordinary-sized
country. China's growing prosperity cannot but make
it a great market for Southeast Asia. Trade with
China has already increased manifold since the
opening up of the country. The momentum is gaining
and we can expect faster growth, especially after
China's accession to the World Trade Organisation
(WTO).
12. But perhaps I am being too optimistic. China is
an economic threat for Southeast Asia. It is already
a threat in terms of attracting Foreign Direct
Investments and it is going to be a threat to
Southeast Asia's world trade. We know that China
with its cheap and highly skilled labour and the
potential of its huge domestic market is capable of
large-scale low cost production of anything and
everything. It has been gradually putting in place
the legal and policy frameworks and infrastructures
for FDI and domestic investments and its products are
going to be highly competitive. Just as the Japanese
and the Korean products displaced European and
American products, we can expect Chinese products to
shoulder aside not only the Japanese and the Korean
but also the products of Southeast Asia. Chinese
goods will achieve world standards and already we are
seeing signs of Chinese innovation resulting from
their own Research and Development.
13. In the household appliances business this is
already happening. Japan, Korea and Southeast Asia
will lose their market share for these low-tech yet
essential goods. Of course the Europeans and the
Americans are not ever going to be able to stage a
come back. And it is likely that China will
dominate the market for other manufactured goods as
well. However there will be niches where branded
goods of high quality produced by some countries will
continue to be in demand.
14. Besides, China cannot so impoverish other
countries especially Southeast Asian countries so
that they cannot buy Chinese products. It is
imperative that China ensures the survival and
prosperity of the countries which will be its market.
And this may mean increasing Chinese investments in
these countries and increasing purchases of raw
materials and components produced by these countries.
15. We can infer that this will happen from the
Western response to the influx of cheap high quality
Japanese goods. They focussed on developing brands
of quality and prestige. Thus the numerous brands of
European goods, motor vehicles, watches and audio
equipment. As niche products the market is not big
but the profit margins are enormous. The European
strategy is still working and I believe Japan, Korea
and Southeast Asia will be opting for niche products
of high quality and prestige.
16. Japanese mass produced products are not inferior
but because of snob value, European products do find
a market. Similarly when the markets of the world are
flooded with Chinese products, a good number of
buyers will be opting for branded goods from
traditional suppliers. South East Asian products can
provide the demand for variety and name. Obviously
so can Japan and Korea.
17. The race is already on and Southeast Asian
countries are already looking for niche products and
businesses involving hi-tech and I.T. Some Southeast
Asian countries do have certain advantages, including
geographical location, good legal and educational
system, values and practices with which the
international business community is comfortable.
18. The Governments of these Southeast Asian
countries are more business friendly and workers do
not often resort to industrial action. The political
stability and generally calm atmosphere are good
selling points. Besides the local entrepreneurs and
local capital have become sophisticated and
knowledgeable about investments and manufacturing as
well as being familiar with the world market.
19. It is well to remember that together the Asean
ten have nearly half the population of China. Their
average per capita is as high as China, and the
domestic markets obviously have the same potential as
China. Given a period of peace and stability the
Asean countries can grow and develop and become an
attractive market and continue to be a good location
for foreign direct investments.
20. Asean is one of the most cohesive of regional
groupings involving developing countries. With the
Asean Free Trade Area, (AFTA) the Asean countries
have become more attractive to foreign investors
wishing to operate in the bigger ASEAN market.
Already motorcar manufacturers are investing in Asean
countries in order to take advantage of the larger
market as well as taking advantage of the relatively
lower cost and highly skilled labour. It is very
likely that manufacturers of other products would
follow. A well developed infrastructure and good
supporting industries make investing in Asean
countries a sound proposition.
21. Trade between the Asean countries is increasing
rapidly. The AFTA will act as a stimulus to more
intra-Asean trade. Obviously Asean will not be a
walk over for China. Life would be tougher. FDI will
diminish. The export led growth will not be easy
any longer. But the Southeast Asians will be able to
find a niche for themselves. Working together they
will be able to use their combined market to match
that of China.
22. A symbiotic relation can be developed between
China and Southeast Asia. A rich China will need
quite a lot of things that China cannot produce by
itself. And China's needs for everything would be
enormous. Malaysian and Indonesian palm-oil should
find a ready market in China. So would pulp and
paper, oil and gas and chemicals which the
availability of feedstock gives a competitive
advantage to quite a few of the countries of
Southeast Asia.
23. So far I have talked largely about the economic
challenge posed by China. Although China has never
attempted to conquer and colonise as Europeans were
wont to do, the fact remains that there are huge
Chinese minorities in all the Southeast Asian
countries. In fact in Singapore, the Chinese
majority is such that Singapore today is basically a
Chinese state with Malay and Indian minorities.
This Chinese minority invariably dominate the economy
of the Southeast Asian countries.
24. The situation is such that the Chinese can
become a fifth column in Southeast Asia. In fact in
the immediate post Pacific War period the Chinese
resistance movements against Japanese occupation
converted itself into revolutionary forces bent on
establishing Chinese Communist states in the
countries of Southeast Asia. When China came under
Communist rule a lot of sympathy and support was
extended to the Chinese guerrilla forces which at
first fought against the colonialist British and
later the independent Governments of Southeast Asian
countries.
25. The insurrections were by and large
unsuccessful.
26. Today the people of Chinese origin in Southeast
Asian countries are loyal citizens. Admittedly, a
few still would like to make these countries into
extensions of China by demanding that the Chinese as
Chinese be separated from the indigenous people, by
having a Chinese education system, separate and
segregated Chinese schools and the preservation of
all that is Chinese. But these people, few in
number, do not get the support of the majority of the
Chinese who wish to live in peace with the indigenous
people and to do business and acquire wealth.
27. We do not believe that the Chinese in Southeast
Asia have any wish to contribute towards China's
overseas territorial ambitions or adventures. In
fact we think that they are not only loyal citizens
but they are good bridges for the economic
cooperation between China and Southeast Asia.
28. Today the relationship between China and
Southeast Asian countries is good. There is of
course the dispute over the islands in the South
China Sea fuelled by the possibility of finding gas
and oil there. But serious confrontation has been
avoided.
29. The policy with regard to defence differs
between the Southeast Asian countries. Some would
like to have the American military shield but some
would like to see a less confrontational stance.
Malaysia believes that if we treat China like a
future enemy it will regard us as the enemy now and
respond by arming itself to the teeth. We should
remember that one of the reasons for Japanese
military expansion was because European fear of the
Japanese lead to attempts to cut off Japan from the
sources of raw materials and fuel that it needed for
its economic growth. To break this virtual siege the
Japanese launched the Greater Southeast Asia War.
30. A policy of trying to contain China might very
well lead to the Chinese boosting their military
capacity in order to match those of their potential
enemy. History has taught us that when the military
muscles are strong there is always a desire to flex
them and to test their capacity. It requires but a
minor incident for a full-scale conflagration to
follow.
31. It is far better for China to be accepted as a
major economic power. It will be powerful but it
will not totally dominate the world. The U.S.,
Europe, Japan and even Korea would provide a counter
balance. It is important to remember that China
too is afraid. It is afraid of its traditional
enemies in Asia and of the U.S. History has taught
China that when it is weak it is likely to be ridden
over roughshod by foreign powers. The unequal
treaties of the past are still fresh in the minds of
the Chinese.
32. Southeast Asia has the most to fear from China's
expansionism. Unless China is provoked that fear is
misplaced. In today's world military conquest is
unnecessary, costly and counter-productive. We do
not think that China would indulge in military
adventures. There is therefore no reason for
Southeast Asia to fear China's military might. But
establishing a mechanism for defusing potentially
dangerous disputes is necessary. The East Asia
Economic Grouping can provide this mechanism.
33. China has assured Southeast Asia that the
dispute over the Spratlys can be resolved through
negotiations. Southeast Asia should take China's
words for this and begin serious discussion on a
common stand over China's and each other's claims.
34. While military conquest or even threat is
unlikely, economic domination is possible. It will
not be total, but it can be sufficiently damaging for
the economies of the Southeast Asian nations. But
I have already pointed out that there are ways for
Southeast Asia and others to counter this
possibility.
35. The European Union is the product of the
European Economic Community. The most significant
achievement of the EEC is not so much economic as the
half a century of peace that it brought to Europe.
It is possible that the proposed EAEG will result in
a similar peace for East Asia. And peace in East
Asia can only be good for the region and for the rest
of the world. Opposition to the EAEG is very
difficult to understand. It cannot be that there is
a wish to see East Asia remaining poor. It is very
perplexing.
36. The EAEG will not become an East Asian Union as
easily as the European countries, which in any case
took a considerable length of time. For a long time
the East Asian Group will remain a very loose
grouping, confining itself to the discussion of
regional affairs and common problems. Potential
conflicts can be brought to meetings of the grouping
at official, ministerial and Heads of Government
level.
37. The proposal for an East Asia Monetary Fund as
an extension of the swap arrangement can do harm to
no one, within the grouping or outside it. Today's
problem is likely to be financial and the fund should
contribute towards earlier solutions when member
countries get into financial difficulties.
38. As China will be a member of the EAEG,
challenges posed by China that may be damaging to
Southeast Asian countries can be discussed in the
forum and mitigated. China surely realises that a
prosperous and stable Southeast Asia is good for it.
Poor countries are always a source of problems for
rich neighbours. If the EAEG can contribute towards
preventing China's challenge from damaging the
economies of fellow members of the Grouping then
China would surely want to listen and consider the
effect of its challenge on the countries of Southeast
Asia.
39. China will pose a challenge to Southeast Asian
countries. But the EAEG would help resolve much of
these problems. What remains would be opportunities
for Southeast Asia to benefit from China's economic
prosperity and stability. And these are enormous.
Not only will China be a great market for the
products and services of Southeast Asia but there
will be a lot of Chinese investment in Southeast
Asia. In addition with the passage of time the half
a billion Southeast Asians will become a good market
for China's products and services.
40. The only thing that the Southeast Asians need to
worry is the attitude they take vis-.-vis China. If
the Southeast Asians participate in trying to contain
China then an atmosphere of confrontation will
develop and much will be wasted on preparations for
conflicts. Southeast Asia will certainly stand to
lose in the ensuing tension.
41. But if Southeast Asia accepts the fact that
China is there, that it cannot be wished away, that
it is going to play its role in the economic
development of East Asia and the world and
accordingly look at China as we do Japan and Korea,
then, as much as Japan and Korea have contributed
towards the prosperity of Southeast Asia, China too
will do the same.
42. China is both a challenge and an opportunity.
This much is obvious. Whether we gain or lose
because of the challenge and the opportunity offered
by this new China very much depends on us the
Southeast Asians. We have a need to understand the
problems posed by China and we can then design an
approach that will minimise the challenge and
maximise the opportunity.
43. This is my view. I may be wrong. But as the
great Chinese leader, Chow En Lai said, it is too
early to tell.
44. Historically, China had not been a threat to
Southeast Asia. The Chinese migrants who settled
down in Southeast Asia tended to adopt the local
language and much of the local culture. They
remained Chinese however, but gradually lost touch
with their relatives and clans in China. Although
maintaining that Chinese anywhere were their people
China had never sent gunboats to protect Chinese
settlers in Southeast Asia. China never behaved like
a metropolitan power nor tried to colonise Southeast
Asian countries.
45. In the past, the small Southeast Asian states
used to acknowledge the superior size of China by
sending gold and silver flowers as gifts or tributes
to the Emperor of China. But the submission was
never more than that.
46. The emergence of China as an economic powerhouse
should not worry Southeast Asian countries any more
than in the past. There will be challenges and there
will be opportunities. Faced with these the
Southeast Asian countries will have to learn to
manage the challenges and seize the opportunities.
The chances are that at worse a balance will be
attained but with astuteness Southeast Asia will
benefit more from the opening up of the ever richer
Chinese markets.
Sumber : Pejabat Perdana Menteri
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