Trade within East Asia offers the best hope for growth in the region amid global uncertainties and this should be promoted through the implementation of free-trade agreements, World Bank officials said yesterday.
"Regional trade is the most dynamic element of the region's growth right now," said Jemal-ud-din Kassum, World Bank vice president for East Asia and the Pacific, while presenting a report on the region's economies in Tokyo.
"Trade is very high on the agenda for Asian countries," he said -- the day after an ASEAN summit ended in Phnom Penh with a major push for free trade between China and the 10 ASEAN countries.
China is well positioned to play a central role in the growth of intra-regional trade in stark contrast to Japan, which has been stuck in an economic slump for more than a decade, the officials said.
Japan, Papua New Guinea and East Timor are expected to be the only three countries in the region whose economies contract this year, according to the World Bank.
"Probably, in another couple of years... exports (of Asian nations) to China will exceed their exports to Japan," predicted Homi Kharas, chief economist and director for the World Bank in East Asia and the Pacific
A study by the World Bank into external trade by the eight nations -- Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam -- shows their exports to China surged 50 percent in the first half of 2002, advancing at a rate two to three times faster than their global exports.
In contrast, Japan's current account surplus with the rest of Asia is rising at around 300 percent a year, due largely to a drop in imports from its neighbors.
"It is an indication of the kind of growth that trade with China can provide," said Kharas, a view which has clearly seduced potential trade partners in the region.
On Monday, Chinese Prime Minister Zhu Rhongji (朱鎔基) and ASEAN leaders signed a historic agreement to create the world's biggest free trade area between 2010 and 2015, embracing 1.7 billion people and two-way trade worth US$1.2 trillion.
An agreement inked the following day by Japanese premier Junichiro Koizumi with the same ASEAN partners aims simply to put in place a framework for free trade negotiations and received a tepid reception from the Japanese press.
"When we looked at Japan and China's handling of ASEAN talks on regional economic cooperation, it is fair to say China is the front runner while Japan is the second runner," the widely-read Yomiuri newspaper said in an editorial yesterday.
Kharas said it was essential for free trade agreements in East Asia to continue to be founded on "open regionalism." This amounted to regional preferences being accompanied by an overall reduction of trade barriers.
These agreements could do much to boost productivity growth by promoting specialization across the region.
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