AAS Annual Meeting

Interarea/Border-Crossing Session 297

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Session 297: Economic Relations Between East and Southeast Asia: Historical Ties and Contemporary Issues of Power, Trade and Investment

Organizer: Eric Harwit, University of Hawaii, Manoa, USA

Discussants: Brantly Womack, University of Virginia, USA; Daniel C. Lynch, University of Southern California, USA

The papers in this panel take a broad view of economic relations between East Asia -mainly China and Japan - and Southeast Asia. They offer a comprehensive analysis of both historical and contemporary economic ties between the two regions, and a focus on forces that have shaped interaction in the past, and that determine present and future trends in economic strength, trade, and investment. David Kang’s work sets the stage by considering political, cultural, and economic traditions in both East and Southeast Asia, with a focus on the 14th to 18th centuries. He analyzes the ways China and Southeast Asia interacted during these centuries, and considers the implications for current economic relations. Alice Ba builds on Kang’s study, positioning contemporary China in a leadership role in the region, while assessing the ways Southeast Asian nations can be a counterforce to the PRC’s political and economic might. Guan-Yi Leu focuses on agreements that stand to establish regularized trade patterns in the region. She considers the utility countries find in such pacts, and indicates the agreements have increased trade among the major players, while allowing Japan to lessen its dependence on ties with its economically powerful neighbor, China. Finally, Eric Harwit provides fieldwork-based empirical evidence to expand on all of these themes. He probes for reasons for success and failure of East-Southeast Asian economic progress, assesses the role of a rising China based on Chinese companies’ experience in Southeast Asia, and explores Japanese corporate strategies to balancing trade and investment with both China and Southeast Asia. In doing so, he finds evidence of key trends that will affect future economic patterns among the major nations of East and Southeast Asia.

China, ASEAN, and Asia’s Transitioning Regional System: The Constraints and Possibilities of Leadership
Alice D. Ba, University of Delaware, USA

This paper investigates the role played by China as a force for regional integration with reference to the concept of leadership in international relations, especially as regards regional integration. Building on broader notions of hegemony that highlight the consensual, as much material, foundations of leadership, this paper considers regional leadership to be an evolving and negotiated relationship (domestically and internationally) that has social, normative, as well as material, properties. Thinking about leadership as a negotiated relationship introduces the idea that power – the ability to influence and shape contexts and situations – may rest not only with the preponderant powers of the system but also with the so-called lesser powers of the system. By focusing on recent policies and interactive dynamics, this paper aims to shed additional light on both the current state of China-ASEAN relations and questions of leadership in relation to the shape and content of Asia’s still evolving regionalisms and regional political economy.

Coooperation for Diversification: The Origin and Partnership Selection of China and Japan's Preferential Trade Agreements in East Asia
Guanyi Leu , , USA

This paper provides an alternative, “diversification explanation,” for policy shift by East Asian States toward intra-regional Preferential Trade Agreements (PTAs). The analysis will center on two pairs of intra-regional PTAs: China-ASEAN and Japan-ASEAN PTAs. The diversification argument consistently and dynamically elucidates the systemic rise of PTAs across East Asia and the variation of partner selection within East Asia. First, it explains the general incentive of East Asian states to diversify trade dependence, particularly export dependence on extra-regional markets toward the East Asian intra-regional market. Given the function of PTAs for trade diversion and reversing current trade diversion, PTAs aim to diversify signatories’ preexisting trade and investment patterns and to avoid overdependence on narrow sources of imports and exports. Second, it explains the patterns of partner selection among East Asian states. It specifies that neighbor states with declining or insignificant economic ties may share mutual need to diversify and expand the scope of economic ties with each other, which encourages them to choose each other as priority partners and to finalize agreements. The studied cases reveal the above logic. ASEAN, China and Japan have all intended to strengthen their ties inward to East Asia. The Japan-ASEAN PTA reinforces decreasing ties on trade, investment and ODA, while reducing Japan’s increasing trade dependence on China and ASEAN’s decreasing attraction of FDI to China. The China-ASEAN PTA facilitates and expands the scope of trade and investment among the two sides, since their economic ties have been the least developed, relatively, within East Asia.

Chinese and Japanese Investment in Southeast Asia: Case Studies in Vietnam, the Philippines, Thailand, and Indonesia
Eric Harwit, University of Hawaii, Manoa, USA

This paper examines recent trends in China and Japanese trade and investment strategies and policies toward some of the major nations of Southeast Asia. While Japan has been an active economic participant in the region for more than half a century, China’s ties to the region have only become meaningful in the past 20 years. The paper looks at the evolving dynamics as both major East Asian nations deepen their ties to their neighbors to the south. China and Japan have had different and evolving reasons for growing economic ties to Southeast Asia. For Japan, there were early interests in raw materials, low-wage labor, and potential new markets. Chinese leaders seem to see the nations in similar terms, but growing nationalism in the PRC fuels pressure to extend economic power to neighboring countries. In response to China’s rise, the target nations have come to represent, for Japan, an alternative to Japan’s growing economic interdependence with the PRC. This essay uses several months of interview data with Chinese and Japanese corporations and government officials in Vietnam, the Philippines, Thailand and Indonesia to assess the current development of the East Asian nations’ economic presence in the region. How do Chinese and Japanese resident in the region see their roles? How do their goals and motivations mesh or differ from those of their home governments? This paper uses this empirical data to assess the current status and possible future evolution of Chinese and Japanese trade and investment policies in key Southeast Asian nations.