China emerging as economic leader
By Ted Anthony
CABO SAN LUCAS, Mexico Economically, it's entirely uncharted terrain: a nation of 1.3 billion people moving away from a planned communist system, riding globalization's wave as it experiments with capitalism and generates ripples that are beginning to change the world.
After two decades of reform, the Chinese economy stands alone eyed hungrily by investors, watched warily by rivals, its every move scrutinized by neighbors at the Asia-Pacific Economic Cooperation forum who see it as the beefiest kid on the block.
APEC's 21 member economies including Hong Kong and Taiwan, both inexorably linked to the Chinese mainland met last week in this Mexican resort with a China that, by simple virtue of its size and accompanying power, is forcing them to continually rethink their places in the economy of the Asia-Pacific region and the world.
Since last year's APEC meeting, China has joined the World Trade Organization, considered a pivotal step in its efforts to become a global player. And it places great importance in casting itself as a leader in regional economic and diplomatic matters.
With each passing month, it accumulates more of the credentials required to do so.
"It is the first time in the history of mankind that a country of China's size has changed so fundamentally in such a short period of time," Siva Yam, president of the U.S.-China Chamber of Commerce, said earlier this year.
Annual economic growth has consistently topped 7 percent as investors pump in dollars by the hundreds of millions. Imports and exports have more than doubled in the past five years.
The nation has become a manufacturing base and, under the WTO, China is expected to open its markets even further if reluctantly to foreign investment.
But the economic restructuring that permits such dynamism is roiling some of China's most stable structures. State-owned enterprises, once havens for lifetime employment, are laying off workers and swelling the migrant population, and labor unrest is bubbling up more often. Product piracy runs rampant despite the government's promises to rein it in. And as Shanghai, Beijing and southern China's Pearl River Delta convulse with progress, inland regions, especially China's far west, remain stagnant.
In this environment, China says it looks to regional groupings such as APEC and the Association of Southeast Asian Nations as places to share knowledge and study what has worked for others.
"We are still learning," said Li Baodong, Beijing's top representative to APEC. "We have the same feeling as other developing countries. We need assistance."
The region, however, has reason to worry about China even as it benefits from the spillover of reforms begun a generation ago by Deng Xiaoping, who took the communist planned economy and transformed it into what the leadership now calls a "socialist market economy."
China is the giant now, doing things in epic proportions. And many believe the wisest strategy for Asia's smaller economies is for each to play to its strength in effect, be the mom-and-pop specialty stores that survive the opening of the Wal-Mart just outside town.
"Everybody's being forced to find a niche they're good at," says Fariborz Ghadar, director of Penn State University's Center for Global Business Studies.
Thus, Thailand focuses on healthcare. Singapore, a financial center, becomes what Ghadar calls "the Switzerland of the region."
For now, China is talking multilateralism. It says it wants to work with the rest of the region economically, and last week its official news agency, Xinhua, lauded a plan for a China-ASEAN free-trade zone as useful to increase export opportunities and "reduce overdependence on the developed economies such as the United States."
"China (is) emerging rapidly as one of the key poles of the world economy," Pascal Lamy, the European Union's trade commissioner, said on a visit to Beijing this month. "China remains very much on track, both economically and politically, to claiming her rightful place at the global economic top table."