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Asia's growth lies in Northeast
2004-08-04
China Business Weekly
Direct transportation links will enhance economic co-operation throughout Northeast Asia, but the road to a regional free trade pact remains a bumpy ride, experts suggest.
China, Japan and Russia are considering building a trans-Northeast Asian transportation network, Hong Kong Commercial Daily reported recently.
Experts from the three countries met recently in Vladivostok and proposed the establishment of direct land and ocean container transport between Russia's far eastern port of Nakhodka, Khasansky District, China's Hunchun-Tumen River area and Japan's northern ports, the newspaper reported.
A direct link between the three areas could serve as the first phase of a trans-Northeast Asian transportation network, the newspaper reported.
Officials with China's National Development and Reform Commission, reportedly in charge of China's position, declined to comment on the issue.
"China is still holding discussions with other countries. We have not received instructions to kick off the project," an official with the Ministry of Communications' International Co-operation Department, told China Business Weekly.
The official spoke on condition of anonymity.
Development of subregional transportation links is crucial for economic co-operation among northeastern Asia's nations, experts said.
Northeast Asia covers China, Japan, the Democratic People's Republic of Korea (DPRK), the Republic of Korea (ROK), Russia's Far East and Mongolia.
Northeast Asia is the world's largest economic zone -- in terms of population, natural resources, potential market size and the vast trade and investment opportunities.
Compared with Southeast Asia, it is neglected, in terms of economic co-operation.
Northeast Asia does not have its own subregional organization, such as the Association of Southeast Asian Nations (ASEAN), or a free trade agreement.
"Regional economic co-operation is a general trend. Northeast Asia is a natural economic territory, given the complementary economies within the region," said Liu Huaqin, a researcher with the Chinese Academy of International Trade and Economic Co-operation.
The academy is a think-tank affiliated with the Ministry of Commerce.
"Adequate transportation links are the basis of regional economic co-operation. Removing deficiencies and administrative obstacles could greatly lower trade costs and boost trade volume," Liu told China Business Weekly.
Railways and ports must be linked and administrative obstacles must be cleared if there is going to be substantial progress in Northeast Asian economic co-operation, she added.
The existence of different railroad gauges, missing links, technical incompatibilities and bottlenecks at border crossings restrict the enormous potential for economic development within the region, experts said.
"The driver of East Asia's economy is not in Southeast Asia, but in Northeast Asia," said Lu Jianren, a senior researcher with the Chinese Academy of Social Sciences' Institute of Asia-Pacific Studies.
The combined GDP (gross domestic product) of China, Japan and ROK makes up 91.2 per cent of East Asia's GDP.
The three nations have developed close trade relations in recent years.
Japan is China's largest trading partner. The bilateral trade volume reached US$133.57 billion last year, a year-on-year increase of 31.1 per cent.
China is Japan's second-largest trading partner, after the United States.
ROK is China's sixth-largest trade partner. The nations' trade volume reached US$63.2 billion last year, up 43.3 per cent year-on-year.
China is ROK's third-largest trading partner, after the United States and Japan.
"Russia is eager to use the economic development of Northeast Asia, especially that of China, as a platform to stimulate the economy of its Far East region, which has abundant natural resources," Liu said.
Efficient allocation of Russia's natural resources, Japan and ROK's capital and China's inexpensive labour is conducive to the nations, Liu said.
"Smooth transportation serves only as a 'lubricant,' not a decisive factor. The real driver of a free trade pact is these nations' strong desire to co-operate and complement each other in economic development," said Zhao Ruyu, a professor at Jilin University's Northeast Asian Studies Academy.
The road to a free trade agreement in Northeast Asia is beset with many obstacles, including political differences and a gap in economic development, experts said.
Liu said Russia's dispute with Japan over the ownership of four islands, located off the northeast coast of Hokkaido, the stalemate between DPRK and ROK, and the lack of trust between China and Japan are obstacles.
"These nations' fighting to dominate the process of establishing the free trade pact also impedes the progress," Zhao said.
"Everybody wants to have the strongest voice in shaping the regional co-operation system."
The fact Russia is not a World Trade Organization member and that DPRK is not a market economy also makes free trade talks more difficult, Liu said.
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