China says growth poses no danger to neighbors

By Ben Blanchard

KUALA LUMPUR (Reuters) – China’s rapid economic rise spells
an opportunity, not a threat, to the rest of East Asia, Chinese
Premier Wen Jiabao reassured leaders from neighboring countries
on Monday ahead of a regional summit.

“China’s development not only benefits its 1.3 billion
people but also provides more opportunities for other East
Asian countries,” Wen told a conference being held in the
run-up to the inaugural East Asian summit in Malaysia’s capital
on Wednesday.

The world’s most populous country and seventh largest
economy has racked up near double-digit annual growth for more
than the last decade and overtaken the United States as the
largest trading partner for several Asian nations, including
Japan.

But China’s rapid economic ascent, as well as its military
build-up and increasing diplomatic clout, have raised fears
that it could dominate the region.

Wen reassured other Asian leaders that Beijing had no such
plans. “China is committed to East Asia cooperation in the
interest of fostering a harmonious, secure and prosperous
neighborly environment,” he said.

“China hopes that such cooperation will promote regional
peace and prosperity and create a friendly international
environment that will facilitate its development endeavor.
China is proud to be a good neighbor, good friend and good
partner of other Asian countries.”

Yet China is in the midst of a long-running feud with
Japan, triggered by its wartime past and Prime Minister
Junichiro Koizumi’s visits to a Tokyo war shrine.

SNUB

The East Asia summit is being convened by the Association
of South East Asian Nations (ASEAN) and will provide
opportunities for bilateral discussion. But Beijing said ahead
of the summit that Wen and other leaders would not hold
separate meetings with Koizumi — widely seen as a deliberate
snub.

China is also involved in a territorial dispute over the
Spratly Islands, a string of oil-rich rocky outcrops in the
South China Sea which it claims along with Taiwan, Brunei,
Malaysia, the Philippines and Vietnam.

Wen did not mention that dispute in his speech, instead
focusing on Chinese businesses’ roles as drivers of the
regional economy and Beijing’s commitment to financial
stability in Asia, referring to his country’s choice not to
devalue its renminbi currency during the Asian financial crisis
in the late 1990s.

Under heavy international pressure, China did revalue its
currency by 2.1 percent against the dollar this July and
scrapped its decade-long peg to the dollar, moves Wen said were
taken with the region’s interests in mind.

“In introducing this reform and adjustment, we have taken
full account of both China’s economic and financial stability
and the impact of such reform and adjustment on the economic
and financial stability of China’s neighbors, the whole region,
and the world at large,” Wen said.

“We will continue to do so in the future.”

Wen also dangled the prospect of Chinese investment, and
access to potentially the world’s largest consumer market, in
front of countries which have been struggling to attract
foreign capital in the face of competition from ultra-low cost
China.

“As Chinese companies continue to expand in business, China
will contribute more significantly to Asia’s economic growth,”
he said. “With domestic demand growing, China will import more
than $2 trillion of goods in the next five years.”

Trade between China and ASEAN grew by 25 percent in the
first half of 2005, and China is the block’s fourth largest
trading partner. Trade volume for the first six months of 2005
totaled $59.76 billion.

China and ASEAN in 2002 agreed to establish a free trade
area, and Beijing has also signed bilateral trade agreements
with Cambodia, Laos and Myanmar.

But Chinese direct investment in ASEAN was a paltry $226
million in 2004.

By contrast Singapore, with just 4 million people, invested
$2.01 billion last year in China alone.