1. ASEANAFFAIRS
T he Voi c e of S outhe a s t A s ia
2010 | Vol. 4 No. 6 | ASEANAFFAIRS.COM

2. CONTENTS
November-December 2010 I Vol. 4 No.6
ASEAN IN REVIEW
November-December 2010 Vol. 4 No. 6
U T
8 Your Views SI DE O
IN
Editorial
Subscription form / Index of advertisers
Liu Haiyan Jeffrey Chen
Asean economies roar
Xu Kuangdi Alyce Su, Ph. D. Binsheng teng
Asean Talk
I SEE NO HOPE FOR BURMA
Asean Year in Review
Asean Talk
Indonesia
THE BLACK SHEEP REMAINS BLACK PUSHING FOR QUICKER
Li Ruogu Jean-Claude Juncker J.C. ISEUX, CHEN HONG CARLA CICO ASEAN ECONOMIC COMMU-
NITY START-UP
Asean Money Thailand
HOT MONEY FINDS ASEAN LOOKS TOWARD THE 2011
ELECTION
Asean Money
Zhang Yue TARIQ AHMED NIZAMI DAN BRUTTO ANDRÉ LOESEKRUG-PIETRI Michael Barbalas
DARK POOLS, HOT MONEY Malaysia
WILL NEW ECONOMIC MODEL
WORK?
Asean Environment
China in Spotlight : Pages 35-72 Singapore
CSR leads to sustainability
The emerging role of China in the 21st century is a focal NEW CASINOS ATTRACT
point for conjecture and a certain degree of apprehension TOURISTS
Wolfgang Lehmacher Thomas Homberg
in the world outside of China. Is China an ally, a
competitor, an adversary or perhaps all three?
74 Asean Aviation
In this issue, AseanAffairs presents a current picture of
CARGO FOCUS AT THAI Philippines
SECOND-FASTEST GROWING
China, primarily from the words of its business leaders as ECONOMY IN ASEAN
well as foreign business persons who have had extensive
experience inside China. We hope this information
Beyond Asean
provides readers with a candid and accurate view of Vietnam
China today and where the country is heading. AUSTRALIA-ASEAN TRADE WILL THE PRESIDENT STEP
Jennifer Angenend NEARS A$100 BILLION
Zhang Jianwei DOWN IN 2011?
Myanmar (Burma)
78 Asean Trade
WHAT HAPPENS AFTER THE ELECTION?
GLOBALIZATION 4.0:TRADE’S NEW CENTER
OF GRAVITY
22 Brunei
NEEDS A BETTER-TRAINED WORKFORCE
Nan Cunhui Jianwen (Jon) Liao Stan Fung Lili Zhao Karen Tang
78 Asean Traveller
ASEAN’S BOLD NEW WINE INDUSTRY
22 Cambodia
WILL OIL AND GAS MONEY CHANGE
THE COUNTRY?
84 Asean in Figures
Asean Events 22 Laos
BUCKING ENVIRONMENTAL GROUPS TO
David Huang Charles Tang Han Wei Aloysius Wee Jim Zhang
87 Asean Bazaar HARNESS THE MEKONG
The Voice of Southeast Asia

3. CHINA IN SPOTLIGHT
In this issue, Asean Affairs examines the relationship between China and the world through the eyes of a galaxy of observers and
business leaders both inside and outside of China.Their insights gained from intimate knowledge and firsthand experience provide a
deep understanding of doing business in the middle kingdom. Also the advent of the China-Asean Free Trade Agreement on January 1
projects an important new trading bloc on the world stage. But will the trading be one-way out of China or will there be balanced two-
way trade? Asean Affairs, as media partner of the 6th Global China Business Meet in Luxembourg (Nov 21-22, 2010), interviewed 23
business leaders and observers of China to produce this unique annual special country feature, China in Spotlight.
On the following pages
36 Overview: Horasis Global China 49 CHINA’S NEW WORLD ROLE 60 BUILDING TALENT IN CHINA
Business Meeting, 21-22 Nov., 2010 Aloysius Wee Wolfgang Lehmacher
38 Honouring the Chinese Business
Leaders of the Year 2010 62 SUCCESSFUL STRATEGIES IN CHINA
50 CHINA’S ROAD TO DEMOCRACY Carla Cico
40 CHINA-ASEAN: BEYOND TRADE? Lili Zhao
David Swartzentruber Charles Tang
42 INSIDE CHINA: INSIGHTS FROM THE 52 MANAGING INVESTMENTS INSIDE Tariq Ahmed Nizami
RED BARON AND OUTSIDE OF CHINA
J.C.Iseux Alyce Su, Ph. D.
Dan Brutto
David Huang
Chen Hong
44 THE NEW SILK ROAD TO CHINA Stan Fung
Rajiv Biswas Michael Barbalas
Andre Loeskrug-Pietri
Thomas Homberg
47 A STRATEGY FIX FOR MNCS
Jianwen (Jon) Liao Jennifer Angenend
56 SUSTAINING GROWTH IN CHINA
Karen Tang
48 CHINA STILL AWAITING 70 THE AGE OF THE CHINESE
TRANSFORMATIVE LEADERS Jim Zhang CONSUMER
Binsheng Teng Han Wei
Jeffrey Chen
34 The Voice of Southeast Asia

4. GLOBAL CHINA BU
USINESS MEETING
The Global Visions Community
Synopsis of the 2010 Horasis Global China Business Meeting
The sixth Horasis Global China Business jun, Vice Chairman and Chief Executive
Co-hosts:
Meeting, Luxembourg, 21-23 November Officer, Fosun Group, China; Nan Cun- Co-organizers:
2010, brought together a large number of hui, Chairman, Chint Group, China; Juan
CEOs from China with leaders from around María Nin, President and Chief Executive Strategic Partners:
Media Partners: Media Partner:
the globe to discuss China’s and the world’s Officer, La Caixa, Spain; Patrick O’Basuyi, Knowledge Partners:
current economic state. Chairman, Obax Group, USA; Dinesh C.
More than 400 business leaders from 45 Paliwal, Chairman and Chief Executive he said. ‘The broader message from the G20 meeting was a power- embourg, explained that “while actively coping with the global
countries, including CEOs from the Mid- Officer, Harman International, USA; Sal- ful recognition of the shift in economic power to emerging nations economic crisis, China attaches great importance to strengthening
dle East, Asia, Latin America, as well as man Al Jishi, Chairman, Salman Group, like China _ away from the western industrial powers,” added coordination and cooperation with the European Union.”
Europe and North America, came together Saudi Arabia; Yat Siu, Chief Executive Of- Hu Shuli, Editor-in-Chief, Caixin Media, China. Liang Xinjun, Vice
The plenary sessions in the main hall were followed by a round
to debate the critical requirements for ficer, Outblaze, Hong Kong SAR; John Tan, Chairman and Chief Executive Officer, Fosun Group, China sug-
of unique and intensive boardroom dialogue sessions, where del-
Chinese firms to successfully expand their Chief Executive Officer, Asia Capital Rein- gested that the G20 process needed to be made more inclusive.
egates interacted with the panellists on a variety of fundamental
operations toward a global level playing surance Group, Singapore; Xiang Wenbo,
Jeannot Krecké, Minister for the Economy and Foreign Trade, issues. More than 20 themed panels across the one and a half days
field. The Horasis Global China Business President, Sany Heavy Industry Co., China;
Luxembourg, opened the meeting in a dinner session that was in- embraced a wide variety of topics, some focussing on specific
Meeting was co-hosted by Luxembourg Zhang Yue, Chairman, Broad Air Condi-
formative and candid. sectors such as energy, infrastructure, or financial services, with
for Business and the China Federation tioning, China; Zhang Jianwei, President,
others featuring discussions reflecting on the diversification of the
of Industrial Economics. Sinotrans, China; Zhou Xin, Chairman, Speaking for the Chinese government, Xu Kuangdi, Vice Chair-
Chinese economy and the country’s emerging leadership role in
E-HOUSE China Holdings, China; and Zhu man, 10th National Committee of the Chinese People’s Political
The following co-chairs represented the the world.
Jimin, Chairman, Shougang Group, China. Consultative Conference, and Chairman, China Federation of
meeting vis-a-vis to the government au-
Industrial Economics, painted a lucid vision for the future of the
thorities from China, Luxembourg and the Li Dongrong, Assistant Governor, People’s
Chinese economy.
world: Jeffrey Chen, Chief Executive Bank of China, China, said that it was es-
Officer, Neopac Lighting Group, China, Tai- sential for developed and emerging coun- In a special plenary session on the EU-China Agenda, Lux-
wan; Carla Cico, Chairman, Rivoli S.P.A., tries to continue to support a stable recov- embourg’s Prime Minister Jean-Claude Juncker stated that Dr. Frank-Jürgen Richter
Italy; Boris F.J. Collardi, Chief Execu- ery. He echoed the outcomes of the G20 “China’s relations with the European Union are burgeoning.” He President
tive Officer, Julius Baer Group, Switzer- Summit which took place 10 days prior to examined how China and the European Union can work together Horasis: The Global Visions Community
land; Kolapo Lawson, Group Chairman, the Global China Business Meeting. “Coop- to address global and regional issues.
Ecobank Transnational, Togo; Liang Xin- eration on global and region levels is key,” In the same session, Zeng Xianqi, Ambassador of China to Lux-
36 The Voice of Southeast Asia

5. Honouring the Chinese Busin
ness Leaders of the Year 2010
Chinese business leaders were recognized for their achie
hievements at the Sixth Global Chinese Business Meeting
Mr. Zhang Jianwei Mr. Li Ruogu Mr. Nan Cunhui Mr. Zhang Yue
This year, the Global China Business Meeting has been held Import Bank Fully is owned by the Chinese government and is
in Luxembourg, a small but very dynamic country at the heart of under the direct leadership of the State Council. The Bank has 17
Europe. Around 400 business leaders from all over the world gath- domestic business branches and representative offices as well as
ered here on November 21-22, to share their perspective on China’s three overseas representative offices in South Africa, Paris and St.
development, the globalization of Chinese firms, and their strategy
towards future China. PwC is proud to be the strategic partner of
Petersburg.
EVEN WITH THE ECONOMY
the 6th Global China Business Meeting and award four Chinese
Mr. Nan Cunhui, Chairman of the Board & Chief Execu-
tive Officer of CHINT Group Corporation. CHINT Group Corpora- SUBDUED, HOWEVER, THE TRE-
Leaders who have been chosen by a jury led by Horasis. These
Chinese decision makers excel in leadership and business strategy.
tion, formerly The Switch Factory, was founded in 1984 and is now MENDOUS ENTREPRENEUR-
They are highly significant of the economic development of today’s
one of the first class global electrical product manufacturers with
23,000 employees. IAL SPIRIT OF CHINESE BUSI-
China.
Mr. Zhang Jianwei, President of Sinotrans Limited. He NESS LEADERS HAS DRIVEN
Even with the economy subdued, however, the tremendous
entrepreneurial spirit of Chinese business leaders has driven the
is also the Director of Sinotrans & CSC Group and the Chairman of
Sinotrans Air, the managing director and deputy chairman of China
THE ECONOMIC GROWTH,
economic growth, the development and the influence of China Maritime Law Association, as well as vice chairman of China Fed- THE DEVELOPMENT AND THE
at worldwide level. Therefore, four business leaders have been
awarded for their outstanding performance as business leaders
eration of Logistics & Purchasing (CFLP). INFLUENCE OF CHINA AT
this year and for being an example for all the entrepreneurs.
Mr. Zhang Yue, Chairman of Broad Air Conditioning. He
has been granted over 100 patents for his inventions. And he also
WORLDWIDE LEVEL.
Mr. Li Ruogu Chairman and President of the Export- serves as the Vice Chair of the United Nations Environment Pro-
Import Bank of China (Exim) since June 2005. China Export- gramme’s Sustainable Buildings & Climate Initiative (SBCI).
38 The Voice of Southeast Asia

6. CHINA-ASEAN: BEY
YOND TRADE?
Asean Affairs’ managing editor explores the long and complex relationship between China and the Asean
ex r By
David Swartzentruber
countries. With the start of the China-Asean Free Trade Agreement this year, what comes next?
Ag
An evolving role
During the last half of the 20th century
8 percent from the previous year, to US$212
billion, and it is expected to fall further this ASEAN HAS ADOPTED A “HEDGING” POLICY
and into the current period, the relation- year. BY COURTING THE U.S., PARTICULARLY AS CHI-
ship between China and the Asean coun-
tries has been marked by periods of friend-
There is growing nervousness that
Asean could become China’s domain.
NA HAS ADOPTED AN AGGRESSIVE POSTURE IN
ship and animosity, trust and distrust. Reportedly, every Asean leader to sit with THE DISPUTE OVER TERRITORY IN THE SOUTH
Throughout this time China has
matured through its period of revolutionary
President Obama during his Asia trip asked
questions about trade, and they all hope
CHINA SEA, OBSERVERS SAY.
zeal and its role as a diplomatic outcast to for a more active American presence in the lines to improve Thailand’s logistics, the cause more poverty.”
become a full-fledged member of the inter- region to strike a balance so that the Asean groundbreaking ceremony for a China Despite the apparent desire of the
national community. The visit of U.S. Presi- countries would not be pulled into a China- culture center in Bangkok, and increased Laotian government to promote sustainable
dent Richard Nixon to China in February dominated landscape. financing for a Thai-Chinese industrial park development, however, it’s apparent that
1972 was a major breakthrough moment for Other signs of edginess are also ap- in Thailand’s eastern seaboard. some Chinese companies and individuals
China and touched off her acceptance into pearing in news reports from the region A couple of days after the donation, are going to require a large measure of
the international community. such as the “Chinaization” of villages in Thai Prime Minister Abhisit Vejjajiva came control from Beijing.
Prior to that landmark event, however, southern Laos, adjacent to Thailand, as out for use of the Chinese yuan in trade In Cambodia, at a hydropower dam
Indonesia and Burma were among the Chinese traders make their presence felt. matters in Asia, a step that the Asian Devel- along Cambodia’s border with Thailand,
first countries (in 1950) to recognize the The future of CAFTA may well lie in opment Bank had also proposed. and in Burma, Laos and even Vietnam, Chi-
new People’s Republic of China. Most of how the Chinese economy can absorb the These efforts underline China’s na is engaged in a massive push to extend
the other Asean countries did not estab- manufactured imports of the Asean coun- increasing role in the seven continental its economic influence into Southeast Asia.
sacre. CAFTA will allow 90 percent of all tries rather than just intermediary goods.
lish diplomatic relationships with China Asean countries, many of them lacking Using investment, China is transforming a
Since 1991 the relationship between goods -- that is, around 7,000 items traded
until the 1970s. Some of this foot-dragging crucial infrastructure that when improved huge swath of territory along its southern
was undoubtedly caused by concern over
China and Asean has blossomed, culminat- between China and Asean countries -- to The cordiality and investment can serve as trade channels into and from border.
ing in the China-Asean Free Trade Agree- be zero-tariff in the six richest Asean
China’s aggressive military posturing, as
ment. At the same time, Asean has adopted countries. But the poorest four ASEAN
offensive China. “Cambodia is approaching China with
several Asean countries were members of There is a decided split within Asean Thailand is not alone. open arms. It’s how the United States took
a “hedging” policy by courting the U.S., par- members, Vietnam, Cambodia, Laos and
the U.S.-backed regional alliance, SEATO over its neighborhood. Its geopolitics,” said
ticularly as China has been involved in the Myanmar, will not need to cut tariffs to the
(Southeast Asia Treaty Organization), from Lak Chee Meng, the senior reporter on the
dispute over territory in the South China same levels until 2015. Meanwhile, by 2015,
1954-1977. Cambodia Sin Chew Daily, one of the coun-
Sea. Four Asean countries plus Taiwan duties on other “highly sensitive” commodi-
As U.S.-China relations improved, try’s four Chinese-language dailies.
claim rights in the South China Sea: Brunei, ties will be cut to no more than 50 percent,
China took important steps to move closer
Malaysia, Philippines, and Vietnam, which which would include toilet paper in China,
to the Asean countries. In 1980 China
has appealed directly to the U.S. about popcorn in Indonesia, and snowboard
The future of China-Asean
stopped supporting Chinese insurgencies relations
the issue. Japan also has had numerous boots in Thailand.
in the region and in 1989 China passed In the past 15 years the Chinese may
direct conflicts with China over territorial The level of free trade is short of the
laws requiring Chinese abroad to adopt the have learned much from their relationship
disputes in the South China Sea. EU or NAFTA trade pacts. Many firms fear
citizenship of the countries of residence. with Asean. The list of things that China
Asean’s hedging policy has been Chinese competition in various countries.
This is important as, for example, Asean may have picked up from Asean could
invigorated by the pro-active policy of the Indonesia, which wanted to reopen parts
member Thailand has the largest popula- include the removal of suspicions, coop-
Obama administration, which has shown of the deal, has not readied itself for freer
tion of Chinese-Thai residents of any of the erative security, multilateral consultation,
increased interest in Southeast Asia. trade. On the other side of the coin are
Asean members. dialogue consensus, and non-coercive ways
Asean members Singapore, Malaysia, Indo-
Beijing’s official contact with Asean
began in July 1991 when Chinese Foreign
China-Asean Free Trade nesia and the Philippines that are four of of handling disputes.
Agreement China’s major trading partners. The trade Will these lessons translate into how
Minister Qian Qichen was invited to attend Chinese conducts itself in Asia and else-
Ten years after it was envisioned, the pact also lacks a mechanism for the resolu-
the 24th Asean Foreign Ministers’ meeting. between the Asean countries that are The Laotian government is already where?
China-Asean Free Trade Agreement (CAF- tion of trade disputes.
This reaching out by China was in many located on the Asian continent and those taking some steps to prevent Laotian A good case to look at is the South
TA), the world’s largest free-trade area by The major goods China imports from
ways an attempt to overcome the world’s offshore-Indonesia and Philippines. The people from being exploited and to protect China Sea dispute, where China prefers to
population, came into effect on January 1. Asean countries are intermediary goods
condemnation and sanctions imposed after continental countries have a stronger and biodiversity. Most of the illegal wildlife traf- engage in a unilateral approach in settling
The agreement between China and the 10- such as machinery, minerals and fuels,
the June 4, 1989 Tianamen Square mas- more tangible relationship with China. ficked winds up in Chinese restaurants. the various claims with the four involved
country Association plastics, fats and oils, rubber, and organic
Thailand is a case in point with a “The highest level of government Asean countries. The multilateral approach
of Southeast Asian chemicals. China uses these imports to
large Chinese Thai population and where does take illegal wildlife trade seriously,” is favored by these Asean members and
Nations (Asean) cov- manufacture low-cost goods that are ex-
Chinese-language newspapers are still be- explains Bouphanh Phanhthavong of the they have been supported by the United
ers nearly 1.9 billion ported to the United States and the EU.
ing printed. Ministry of Agriculture and Forestry. “The States.
people. In terms of In 2010 Asean traded more with both
Following the recent flooding in national poverty reduction plan clearly It should also be mentioned that sev-
economic value, this Japan and the EU than it did with China,
Thailand that claimed more than 200 lives, states that environment protection is one of eral Asean countries _ Indonesia, Malaysia,
is the third-largest and other important trade partners are
a Chinese official paid a visit and gave 10 three pillars to reducing poverty. The other Philippines, and Thailand _ have moved far-
regional agreement, South Korea, Australia and India. Prior to
million yuan (US $1.5 million) to aid relief two are economic growth and sociocultural ther along the path toward a participatory
after only the EU and 2009, China-Asean trade expanded rapidly,
efforts. This followed closely after the Thai development. If the natural resource base and democratic system than has China.
NAFTA, the North with volume skyrocketing from US$78
Parliament approved a largely Chinese- is depleted or destroyed, local people’s Is China’s ascent the start of a new
American Free-Trade billion in 2003 to US$231 billion in 2008.
financed project for two high-speed rail livelihoods will also suffer and ultimately Monroe Doctrine in Southeast Asia?
Agreement. However, China-Asean trade in 2009 shrank
The Voice of Southeast Asia

7. INSIDE CHINA: INSIGHTS FROM THE RED BARON
T
Jean Christophe Iseux, Baron von Pfetten, in ian relief in both cases. instead of “bigger”.
an interview with Li Hui Wei of Contemporary Major achievements in terms of giving a better standard State-owned capital should change from “profit-oriented”
World, the official monthly publication of the of life to the Chinese farmers after successful ongoing land reform to “public interest oriented”.
policies. Such change of the people’s mindset is a prerequisite for a
International Department of the Communist China’s entry into the World Trade Organization. sound implementation of new rules and regulations enacted from
Party of China’s Central Committee (CPCCC), Chinese government’s intelligent use of the LU Xun “Yang the central government.
reveals unique insights gained over a decade of Qi” model to take the best from the West and leave the rest.
working inside China.This interview was published China’s international status as a “responsible” member of Q: We hear that your biggest wish is to join the Communist
in Chinese in the November 2010 edition of the the international community with well recognized China involve- Party of China (CPC). May we know the reason why you
publication and translated into English for Asean ment in United Nations peace forces and the exceptional market- want to join the CPC and what you think about the develop-
Affairs. ing of the 2008 Beijing Olympics and 2010 Shanghai Expo. ment of the CPC?
A: Beyond my 1999 party report I would like to add:
Q: As a French scholar with a noble family background, you Q: What problems do you think China is still faced with in CPC has an historical meaning for the Chinese people: the
are regarded as an “overseas Lei Feng” in China. What at- her economic development? party assures the stability of the country and is giving the Chinese
tracts you to China? A: The most important problem facing the Chinese economy is the people back their pride after so many centuries of foreign humiliation.
A: The two most attractive elements of China for me are: increasing gap between the countryside and the city. China is still CPC has an historical meaning for the world: the CPC-
a. The Chinese people – particularly the good-natured a developing country with a rather low gross domestic product per strengthened China is the only country giving alternative ideals
Chinese farmers. I am fond of Chinese cleverness (street wisdom), capita. since the fall of Soviet Union and insures stable economic develop-
humor, hospitality, friendliness and sense of honor (face). Since I would like to add the following: ment for the country to enable the country to become the engine
1997 I have stayed a few days each month in the countryside living Continue to expand domestic demand and stimulate the of growth for the world at large
with Chinese farmers. consumer market away from foreign direct investment and the CPC current ideals are very close to those of my great-
b. The Chinese culture. I am particularly fond of Tang export oriented economic growth model. Efforts are needed to grand-uncle, Joseph Faisant, that were embodied in the Radical- Baron JC hunting at his estate in Burgundy, France, Nov 2010
Dynasty porcelain, Ming Dynasty furniture, Qing Dynasty archi- increase the income of residents in raising the minimum wage Socialist Party of France in the1920s. He was MP and helped to
tecture, Beijing Opera and Chinese modern paintings (like the one standard. It would be helpful to raise the minimum purchase price organize young Chinese to work and study in France, including J.C. ISEUX,
next to my home). I have visited every Chinese province at least of grain and boost the income of farmers. Deng Xiaoping in 1921, who worked at the steel mill of my family
Manage the growth of urbanization carefully. Implementa- in Burgundy. These ideals can be simplified into a vegetable called
BARON VON PFETTEN,
once. On every visit I try to better understand the local culture.
tion of land reform raises the possibility that farmers will trade “The Radish”: Red outside (socialist), White inside (traditional
Q: You’ve stayed in China for more than 10 years. How do their land use rights, thus depriving them of an important security. values) and always very close to the butter plate (attention to the
you perceive China’s achievements in reform and opening Support the service sector, which is environmentally economy and well-off society). I personally particularly subscribe
up? friendly and instrumental in job creation. The government can pro- to the making of an “Harmonious Society” which still remains to
A: The last 30 years of Chinese achievement since the start of the vide incentives for starting one’s own business, effectively giving be achieved in China and the rest of the world.
open door policy is straight-forward: more support to the rising private economy.
Major macroeconomic developments in terms of gross Bolster the international influence of the renminbi and Q: Recently, China’s position in the international commu-
domestic product growth, making China the engine of growth for encourage Chinese companies to establish international footholds nity has been rising. However, there are some unfriendly
Asia-Pacific economies. and acquire valuable resources and assets overseas. comments about China. In your opinion, how should China
Major microeconomic achievements with 20 state-oper- I would also suggest that China’s current development trans- improve her image in the international community?
ated enterprises listed in the Fortune 500, with Petrochina topping formation be accompanied by a profound reform of people’s ideas: A: I am very surprised by the last three years of increased misun-
the list. The phrase “economic growth” should be replaced with derstanding of China by the rest of the world, particularly Europe,
China’s rapid response when faced with major cata- “economic development”. probably due to the financial crisis which is still very damaging
strophic events such as the 1998 flood and the 2009 earthquake. Local government officials should switch from “rich na- in terms of its decreasing wealth and increasingly protectionist
I would like to particularly praise the People’s Liberation Army tion first” mentality to “rich people first”. mindset. I now feel that the Chinese government should better use
when more than 1 million soldiers were dispatched for humanitar- The economic cake should be made “better” China’s rich culture to win the hearts and minds of Western people
by promoting Chinese cultural
centers abroad, for instance; and
also use foreign voices to represent
China outside. Given its rapid eco-
nomic growth, some commentators
have argued China has become a
global power and is no longer a de-
veloping country. Others say China
should redefine itself a “responsible
THE MOST IMPORTANT PROB-
stakeholder” helping maintain the LEM FACING THE CHINESE ECON-
present international order. These
arguments are inconsistent with
OMY IS THE INCREASING GAP
China’s reality. For all the hype BETWEEN THE COUNTRYSIDE
about China’s rise, its per capita AND THE CITY. CHINA IS STILL A
GDP ranks 104 worldwide in a World
Bank report, lower than many other DEVELOPING COUNTRY WITH A
developing countries. China should RATHER LOW GROSS DOMESTIC
JC Iseux, left, with General Fidel Ramos, former president of the
Philippines
In 2005, Professor von Pfetten, left, is greeted by General Cao
Ganggquan, then Chinese Minister of Defense, right.
and will continue to align itself with
other developing countries. PRODUCT PER CAPITA.
The Voice of Southeast Asia

8. THE NEW SILK R
ROAD TO CHINA
With domestic markets stagnant, European firms may wish to travel the New Silk Road to dynamic Asian markets.
Seven centuries ago, the Silk Road Asean, India, Central Asia and the Middle nominal GDP is expected to exceed that of will grow at 15 per- The Rise of Asian Consumer Markets
described by Venetian trader Marco Polo East, are projected to be the fastest grow- the United States, making China the world’s cent per year, with
in ‘Il Milione’ _ the account of his travels ing regions of the global economy over the largest economy, broadly similar in size to demand for branded
to Cathay _ comprised a series of transport next two decades. The markets of the New the combined GDP of the European Union. goods growing even 18
By
Rajiv Biswas
routes overland and by sea from Southern Silk Road economies therefore offer con- Indian nominal GDP is projected to exceed more quickly, at 16
Europe through Central and South Asia siderable opportunities for European busi- that of Japan by 2025, and the size of the In- around 20 percent OUTLOOK
through to China. In the 13th Century, nesses, in contrast to moderate economic dian economy is also expected to be larger 14
per year. Western The shift in economic power from
China was one of the world’s leading civili- growth at best in Europe. than any individual EU economy. multinationals can 12 West to East brings new opportunities for
zations, and the Silk Road not only opened The world economy is currently The importance of the New Silk Road no longer operate 10 Europe at a time when it faces tremen-
up flourishing trade between East and experiencing a major shift in economic to the European economy is demonstrated effectively without dous structural challenges from ageing de-
West, but also the importation of significant power from West to East, as China and by the rapid growth in EU merchandise 8
a strategic focus on mographics, high government debt levels,
new technology from China that facilitated India emerge as new global economic exports to China, which tripled between the Chinese market.” 6 and deep-seated financial sector prob-
Europe’s economic development and scien- giants. While East Asia’s export-driven 2000 and 2009. In terms of actual values, However, 4 lems. With growth in domestic European
tific advance. growth model during the 1980’s and 1990’s total EU merchandise exports increased other Asian growth consumer markets expected to be very
by 56 billion euro between 2000 and 2009, 2
engines are also weak for decades, the greatest opportuni-
rising from 26 billion euro in 2000 to 82 rising in importance, 0 ties for European companies will be in
billion euro in 2009. With the value of ser- notably India, which -2
2001-05 2006-10 2011-2015 2016-2020 2021-25
the fast-growing consumer markets on the
vice exports from the EU to China having within a decade is New Silk Road, including the Middle East,
reached 18.5 billion euro in 2009, total EU projected to become South Asia, ASEAN and China.
exports to China amounted to around 100 an economy roughly However, the economic ascendancy
China summits which allow for a regular
billion euro in 2009. As the global recovery the size of China’s economy today. Asean is of the East is also giving rise to new com-
exchange of views. Our positions converge
strengthened in the first half of 2010, total also expected to become one of the world’s petition for global economic governance,
on a significant number of issues.”
EU exports to China rose by 43 per cent leading growth engines, due to the rapid with the rising economic powers of Asia
The transport routes of the New Silk
over that of a year ago. growth of Indonesia and Vietnam, whose increasingly pressing for a greater role in
Road are also strengthening significantly,
With the size of Chinese GDP expect- consumer markets are currently growing international political and economic gover-
helping to enable the rapid growth in trade
ed to continue to expand rapidly over the strongly. nance. This has already led to the emer-
in goods and services amongst the econom-
next two decades, the For Europe, gence of the G-20 as the new forum for
ic regions that comprise the New Silk Road.
implications for Euro- which faces the international economic policy-making, and
The traditional sea lane from the Strait of
pean trade and invest- prospect of decades greater voting rights for emerging markets
Hormuz to the Malacca Strait and north to
ment are far-reaching. of weak growth in de- at the IMF and World Bank. This poses a
the South China Sea remains of vital stra-
Furthermore, there mand from domestic challenge to the old governance structures
tegic importance as a key shipping route
More than 700 years later, Europe is was heavily driven by the strength of is a major rebalanc- consumer markets, that Europe used to dominate within the
for Middle Eastern oil and gas to energy-
beset by structural economic problems, demand from the U.S. and Europe, by 2010 ing taking place in the rapid growth in IMF, World Bank and BIS.
hungry East Asia, and also for exports of
including demographic ageing and rising the ascendancy of China as the world’s the structure of the retail sales projected The Asian ascendancy and rapid
East Asian manufactures to European mar-
fiscal burdens of pension and health care second largest economy has also resulted Chinese economy, for the Asia-Pacific growth of the New Silk Road economies
kets. However, China is at the forefront of
provision, amidst fiscal debt crises in a sig- in Chinese demand becoming a key driver with a significant region, notably for brings new hope for Europe at a time when
initiatives to strengthen high-speed rail and
nificant number of EU member countries. of exports from other Asian countries. shift away from the China, offer very at- it faces significant structural challenges.
highway links across the region, improving
With domestic growth and market expan- Over the next decade, the Asia-Pacific traditional growth en- tractive opportunities However, it also has its price, as Asian
land transport links from Northeast Asia
sion limited, Europe’s focus is again turning region is projected to remain the fastest- gines of exports and for a wide range of countries will increasingly challenge the
to Southeast and South Asia, Central Asia
to the countries along the Silk Road as the growing region of the global economy, investment, towards export industries. post-World War Two status quo of a global
and also to Western Europe. Air transport
fulcrum of opportunity in the 21st century. with both China and India growing at an domestic demand- The Prime governance model dominated by the U.S.
infrastructure is also being rapidly devel-
Indeed, the economic regions com- average rate of around 8 per cent per year. driven growth. Rapid Minister of Luxem- and Europe.
oped across most of
prising the New Silk Road, including China, Within 15 years, by the year 2025, Chinese growth in wages is bourg, Jean-Claude Asia, with significant
expected to support Juncker, stated at the investment in airport
Europe’s New Silk Road strong medium-term Horasis Global China infrastructure and
expansion in consum- Business Meeting rapid expansion of
er demand, helping in November that Asian airline capacity
6 to boost the share of “Europe’s 21st cen- projected over the next
consumption in GDP tury will be shaped
5 twenty years. Oil and
over the long term. by emerging market gas pipeline networks
4 Mr Liang Xinjun, Vice Chairman economies, of which China’s economy from Central Asia
and CEO of the Fosun Group, a leading will be by far the most important. For the
3 and Russia to China
Chinese conglomerate, expects the Chinese EU, China already is a key trade partner, are also the focus of
consumer market to grow very strongly ranking second only to the U.S. China and
2 ambitious development
over the coming decades. Speaking at the the EU are strategic partners, with EU- projects.
1 Horasis Global China Business Meeting
in November, he projected that “within 10 Rajiv Biswas is a professional economist with extensive experience in Asia-Pacific macroeconomic, trade and financial market issues. He is
0 the Asia-Pacific Chief Economist for IHS Global Insight. His previous experience includes working as the Director for Southeast Asia for The
years, China will become the world’s larg-
2001-05 2006-10 2011-2015 2016-2020 2021-25 Economist Group and as Executive Director for Asia-Pacific Country Risk for UBS. He has also worked as a senior economist for the Com-
est consumer market. If China’s GDP grows
monwealth Secretariat and as an international economist for the Royal Bank of Scotland. He is a graduate of the LSE and Imperial College,
at between 7 and 8 percent per year over London University.
the next five to 10 years, domestic demand
44 The Voice of Southeast Asia