S-E Asian firms 'can rise together with growing China businesses'

Forum participants stress importance of cooperation between Asean and China

A giant screen showing Chinese President Xi Jinping at the National People's Congress in Beijing on March 11. Panellists at a forum in Singapore on Monday agreed that China would overtake the US as the world's largest economy, but not because of Chin
A giant screen showing Chinese President Xi Jinping at the National People's Congress in Beijing on March 11. Panellists at a forum in Singapore on Monday agreed that China would overtake the US as the world's largest economy, but not because of China actively pushing for such an outcome. PHOTO: REUTERS

Asean has become more important to China economically and there are opportunities to be had for the regional grouping as China grows.

But Singapore and other South-east Asian countries need to be more humble when doing business with China, economist Tan Kong Yam said on Monday at a forum on China's parliamentary sessions in March and its 14th five-year plan.

This is because while China's coastal regions have developed high technology such as artificial intelligence, South-east Asian countries, including Singapore, still lack top-rate technology in these areas.

As China climbs the technology ladder, companies in South-east Asia should strive for complementary development with mid-level Chinese tech firms, said Professor Tan, adding that China and South-east Asia have many areas of complementarity.

Singapore, with its hub status in South-east Asia, has an advantage in that it can play a role in helping Chinese firms - with little understanding and knowledge of the local situation - branch out across the region, he added.

Prof Tan, who teaches at Nanyang Technological University and has extensive experience in China including as senior economist at the World Bank in Beijing, was speaking at the forum in Mandarin that was organised by Business China and Lianhe Zaobao.

Asean became China's largest trading partner last year, overtaking the European Union which dropped to No. 2 while the United States is at No. 3.

Some of that trade has to do with Chinese exports to the US being channelled through South-east Asian countries such as Vietnam to avoid high tariffs imposed by the then Donald Trump administration in Washington, noted Mr Tommy Xie, the other panellist at the forum.

However, Chinese companies are also coming to Asean to invest because the regional bloc is a bridgehead for Chinese firms going overseas, said Mr Xie, who is head of greater China research at OCBC Bank.

In particular, many digital companies that are coming out of China now are private ones set up only in the past 10 or 20 years, such as Alibaba, with little experience overseas. "They need very much this Asean platform whether as cooperation partners or advisers," Mr Xie said.

"Therefore, I believe that in future, cooperation between China and Asean will become very important," he added.

Prof Tan noted that as China and Asean countries grow economically, their domestic consumption will also increase, making them larger and larger end-markets in themselves and not just channels for exports to other markets.

The panellists also agreed that China would overtake the US as the world's largest economy, but not because of China actively pushing for such an outcome.

They see it as a natural outcome of China's economic growth and a historical trend.

Noting that China's population at 1.4 billion is four times that of the US, which is about 330 million, Prof Tan said that if China's per capita gross domestic product is just one-quarter that of the US, its economy will be larger than the US'.

He added that the risk is not whether China will overtake the US but that China will become overly proud of its success so that it will miss noticing the dangers ahead. Noting that China has its weaknesses, he said other countries that are afraid of it would want to get together to exploit these weaknesses.

A version of this article appeared in the print edition of The Straits Times on April 07, 2021, with the headline 'S-E Asian firms 'can rise together with growing China businesses''. Subscribe