Rebalancing growth

Many economists agree with the analysis that ultimately a rebalancing of growth is needed away from exports to the West and more towards fostering local demand instead.

Asia must look at boosting domestic demand to cut its reliance on foreign consumers, especially in the hard-hit United States, IMF chief Strauss-Kahn said.

"Asian countries themselves have a big enough market to generate the demand now developed countries fail to," said Zhao Xiaoyu, Vice President of ADB, "but this requires countries to make concerted efforts under regional cooperative platform."

"My analysis is that once the pan-Asian cooperation is put on track and demand is boosted, there will be very positive factors to tackle the crisis," he said.

On Jan. 1, China's Free Trade Agreement with ASEAN came into effect, an important step for Asian's cooperation that could spur much-needed regional investment.

The China-ASEAN Free Trade Area (CAFTA), the world's largest free trade area of developing countries, covers a population of 1.9 billion and accounts for about US$4.5 trillion in trade volume.

China's Deputy Commerce Minister Yi Xiaozhun said China's investment in southeast Asia would rise rapidly as firms become more eager to go abroad to invest.

Under the FTA, the average tariff on goods from ASEAN countries to China is reduced from 9.8 percent to 0.1 percent. The six original ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- slashed the average tariff on Chinese goods from 12.8 percent to 0.6 percent.

Both China and ASEAN should make full use of investment funds and other resources and step up infrastructure construction to meet the need of further trade cooperation, Yi said.

"The FTA is mutually beneficial," Yi said. "With full consideration of economic development levels and market capacities of both sides, the FTA will advance the regional economic integrity by eliminating barriers of trade and investment."

In addition, ASEAN countries vowed to create the ASEAN Economic Community by 2015 to ensure free flow of skilled workers and capital. ASEAN+3 (China, Japan, and South Korea) are cooperating on a US$120-billion foreign currency reserve pool to tackle financial difficulties. In some sense, the economic crisis has provided a spur to the Asian efforts of forming a more integrated economy.

(Xinhua News Agency February 13, 2010)