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2016 | Book

Chinese Global Production Networks in ASEAN

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About this book

This volume examines the role of Chinese businesses and industries in Asian production networks. By presenting different case studies of the Asian region, the contributors illustrate how China successfully exports the Chinese business model, based on Chinese ethics, social networks and production integration. The contributors also discuss topics such as the implications and ramifications of global product sharing within Asia; the prospects of free trade agreements in Asia; the economic advantages of Chinese family lineage and Guanxi − an influential Chinese network; collaboration of overseas Chinese with mainland Chinese, as well as direct Chinese business involvement and investment in other Asian countries.

Table of Contents

Frontmatter
Emerging China and Its Interaction with ASEAN Economies
Abstract
The emerging of China as the largest trader, second largest economy, and the third largest outward direct investor of the world definitely has a great impact on all Asian economies during the past decades. This chapter will first examine the role of China in terms of its regional economic growth and its spillover effect through the analysis on the pattern and co-movement of many macroeconomic measures.
The chapter would then like to highlight China’s integration with Asian economies within the global production network via the evolution of the sophistication and value added of merchandise trade. Their integration is also closely connected to China’s rising direct investment and commercial service providing, mainly, construction contracts, to these economies. The authors believe that the free trade agreement between China and Asian economies and the liquidity swap agreement between Renminbi and their currencies will ensure this region to become one of the most active economic zones around the world.
Yuning Gao, Junyi Zhang
RCEP vs. TPP: The Pursuit of Eastern Dominance
Abstract
ASEAN, when defined as a single regional bloc, can be perceived as being one of the most prominent battlefields between two new economic powerhouses: the USA and China. When compared to efforts in the prior half-century, the USA’s regional integration efforts were derided politically and economically since the 2007 Western financial crisis. This was predominantly due to a plethora of reasons similar to the fact that post the impasse, the ASEAN nations’ credence of the USA as a political and trading partner greatly eroded. As a late runner, China exemplifies her regional prowess via an influx of Chinese emigration in those targeted regions. This enables the ASEAN nations to centre their trade around the Chinese economy in lieu of that of the USA. This is galvanised by the wealth of the ethnic minority that efficiently entwine the ASEAN nations with China as the nucleus. Through the Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership (TPP) Agreement, two subsequent agreements were penned, and these concepts are examined from the Chinese perspective, and the effects that are encompassed are further amplified throughout the course of this paper.
Young-Chan Kim
The Malaysia–China Economic Relationship at 40: Broadening Ties and Meeting the Challenges for Future Success
Abstract
This chapter discusses China’s growing impact on Malaysia’s economy through bilateral trade and foreign direct investment between the two nations, including the contributions of the Malaysian–Chinese business community in facilitating bilateral economic ties. We will also discuss the burgeoning tourist link between the two countries and how the MH370 tragedy might impact on this relationship. Chinese tourists are one of the major sources of inbound tourism for Malaysia. Malaysia is expected to attract two million Chinese tourist arrivals in conjunction with Visit Malaysia Year 2014. At the same time, China is one of the most popular destinations for outbound Malaysian tourists, especially among the Malaysian–Chinese community. As the economic relationship between the two countries enters its fifth decade, some challenges are emerging. Perhaps chief among these for Malaysia is the growing importance of the Chinese economy, which threatens to shift the bilateral economic relationship in China’s favour. As China moves up the value-added chain, there is the potential that Malaysia will lose its comparative advantage in the regional production network. We will conclude by discussing these economic challenges and how these challenges might be addressed in the future.
Hooi Hooi Lean, Russell Smyth
Indonesia–China Economic Relations in the Twenty-First Century: Opportunities and Challenges
Abstract
This chapter aims to highlight the opportunities and challenges of Indonesia–China relations in the twenty-first century. Departing from the Cold War hostility, post-Suharto Indonesia has significantly strengthened its ties with China not only in the economic arena but also in the political and security arena. Looking at the evolution of economic relations, this chapter highlights that the growing ties with China have brought expanding opportunities for Indonesia, particularly in the form of China's investment, while at the same time exposing Indonesian manufacturers to greater economic competition. With particular attention to the implementation of the ACFTA, this chapter highlights that increased economic competition with China has driven segments of the Indonesian business sector to demand greater protectionism, deliberately provoking the perception of the ‘China threat’. It is emphasised that despite recent improvements, Indonesia–China relations have not entirely broken away from the difficult past as suspicions and sensitivity continue to characterise these relations. In fact, the perception of China's aggressive penetration in the Indonesian market, if not managed well, could combine with the long-standing resentments concerning the economic role of the Chinese minority to potentially destabilise the bilateral relationship.
Yuki Fukuoka, Kiki Verico
People’s Republic of China (PRC): Thailand Economic Relationship After Signing of Free Trade Agreement in 2005
Abstract
The bilateral trade relations between People’s Republic of China (PRC) and Thailand have considerably increased following the signing of the PRC—ASEAN Free Trade Agreement (CAFTA) on ‘Trade in Goods’ in July 2005, the ‘Trade in Services’ in 2007 and ‘Investment’ in 2009. The aim of this chapter is to explore the micro level comparative advantages between China and Thailand from the perspective of CAFTA. Revealed comparative advantages (RCA) indices have been estimated and tested for exports at SITC-2 digit level. PRC has RCA for 39 of the 60 industries at two-digital SITC in 2010–2013. This finding is useful to promote Regional Comprehensive Economic Partnership (RCEP) which is currently under negotiation.
Ying Liu, Kankesu Jayanthakumaran
Is Urban Food Demand in the Philippines Different from China?
Abstract
It is essential to understand the consumption pattern of food and how it changes over time to formulate sound economic policies as well as marketing and pricing strategies. In this study, we estimate the Quadratic Almost Ideal Demand System with six rounds of the Family Income Expenditure Survey exploiting the conditional linearity of the demand system. We find that the Filipino diet has become westernized and that the changes in urban food demand elasticities are qualitatively similar to those in urban China, especially for meat, fruits, and vegetables. We also offer some policy and business implications.
Tomoki Fujii
Greater China, Cambodia, and the Garment Industry
Abstract
Cambodia has struggled to diversify its economy in the past decade despite nearly double-digit growth per annum. Chinese interest and investment during this time comes at a critical juncture. This investment is driven from Taiwan and Hong Kong and spilled into multiple industries, but most notably the garment industry which represents 35 % of Cambodia’s GDP and is by far its largest foreign exchange earner. Moreover, Mainland China’s courting of Cambodia in front of a helpless America is seen as a beachhead for China’s string of pearls throughout Southeast Asia. A greater question arising is, what effects will Chinese influence have on Cambodia? The specific investment in garments demonstrates hand-in-hand governance, where governments and firms work together to create an environment generating growth, and thus far has produced positive results. A major point to consider relates to governance and how it may change when Cambodia continues to become entangled with Chinese interests and influence. Surprisingly, Cambodia has been able to achieve significant growth with foreign investment despite poor governance. The garment industry is an exception to the rule and may have enjoyed good enough governance to succeed.
Sophal Ear
Politics of Economic Relations Between China and Myanmar
Abstract
This chapter will look at the political ramifications of China’s economic relations with Myanmar. It looks at the impact of the changes of Myanmar’s international position from an international pariah country into an accepted democratizing member of the international community and how this affects its economic ties with China. Firstly, the focus is on the “political competitiveness” of Chinese economy in Myanmar markets after Myanmar’s position now allows the country to choose its economic partners. Secondly, the chapter will look at how the increasing Chinese political power affects its economic relationship with Myanmar. Will China remain anti-hegemonic with no interest in interfering in Myanmar’s domestic economic decisions? Thirdly, the chapter will look at domestic political realities in Myanmar and their impact on the economic relationship between the two countries.
Timo Kivimäki
A Study of Singapore as a Developmental State
Abstract
Singapore has gone through a rapid transformation during the half a century, from an entrepot, predominant towards shipping transit in the mid-1960s, into an economy, which presently specialises in high-value manufacturing activities and financial services. This chapter aims to examine the issues of the developmental role of state and foreign companies and to analyse their role in achieving a rapid economic growth in the country. The study emphasises that historical, strategic and domestic factors are important determinants in Singapore’s struggle towards modernisation and steady economic growth. This research uses the secondary information methodology to examine policies and mechanism to understand Singapore’s government policies. The study finds that the favourable international environment, MNCs and the role of state, especially vision and commitment towards economic diversification, contributed to achieve rapid economic development.
Kalim Siddiqui
Vietnam–China Economic Relations and Recommendations for ASEAN–China Cooperation
Abstract
This article examines Vietnam–China economic relations since 1991 as a case of China’s cooperation with ASEAN countries. The analysis on achievements and shortcomings of Vietnam–China economic relations in three periods (in the 1990s, 2000–2009, 2010–2015) revealed the impacts of political ties on outcomes of economic collaboration. Overall Sino–Vietnamese economic cooperation made contribution to economic growth and manufacture of Vietnam. However, there has been mainly quantitative growth in bilateral economic relations, while qualitative development is still not enough. Consequently, Vietnam has been encountering with a number of issues related to increasing trade deficit and negative impacts of Chinese investment projects. From regional perspectives, China has implemented different policies toward Southeast Asian countries divided into two groups: the ASEAN-6 and the CLMV. Trade and investment structures of China in CLMV countries are different from those with ASEAN-6 which have increased disadvantages of CLMV. As a result, the widened development gap between the two groups has been an obstacle to a fully established and efficient ASEAN Economic Community (AEC). Implications of China’s initiatives, particularly the RCEP, to Southeast Asia emphasize the importance of a candid and efficient ASEAN Community, as well as ASEAN’s independence in launching its own new initiatives and in making decisions.
Nguyen Thi Bich Ngoc
Tai-shang (Taiwan Business) in Southeast Asia: Profile and Issues
Abstract
In the process of Southeast Asian integration, a silent force that drives economic development in many localities has been long ignored, that is, the “overseas Taiwan business” (Tai-shang). Since the late 1950s to March 2015, Taiwan has invested in most of the Southeast Asian countries for more than USD85.2 billion. The foreign direct investment (FDI) has flowed to Vietnam, Indonesia, Thailand, and Malaysia and facilitated labor-intensive industries such as food, plastic product, and textile product manufacturing for decades. Growing investment in Southeast Asia has also triggered bilateral trade between Taiwan and ASEAN counterparts, and contributed significantly to local and regional manufacturing productive networks.
This chapter aims at portraying the changing faces of Taiwan’s economic and commercial ties with ASEAN by providing an overview of Tai-shang’s transformation in Southeast Asia. Accordingly, this chapter sheds light on the presence of Tai-shang in Southeast Asia via four parts. The first part distinguishes China business and Taiwan business. The second part deals with incentives of Taiwanese investment in Southeast Asia. This chapter also discusses the role of Tai-shang in the context of regional integration of Southeast Asia. It proceeds to the survey of national profiles of Taiwan business in the region. Finally, the conclusion sums up the discussions by evaluating the contributions of and challenges faced by Taiwan business in the region.
Alan Hao Yang, Hsin-Huang Michael Hsiao
India and China: “Awakening Giants” Towards a Win–Win Future?
Abstract
The present chapter is set against the backdrop of the recent emphatic revival of “South–South” economic relations and cooperation in a massive post-crisis shifting away of global economic power from the advanced “North” to the developing “South” in standard trade parlance. For now, it is unequivocally China that is driving the burgeoning South–South economic flows by dint of its ability to deploy an unorthodox growth model with investment as the crucial cornerstone in its ambition to climb up the industrial value chain (UNCTAD 2015). The imminent “seismic” shift in global power has profound implications for paths of industrial progress in the developing world and areas of strategic developmental cooperation (ibid). Among emerging economies, India today stands on nearly equal footing with the formidable China in the global economy. The present chapter examines some salient aspects of the India–China relationship, going beyond production, industry and trade to touch upon some of the strategic and institutional factors that have to a large extent defined and shaped crucial national and international policies in both economies. We conclude with a look at the future possible directions in which the critical mutual Sino–Indian relationship seems to be headed.
Manjira Dasgupta
Economic Cooperation and Interdependence Between China and ASEAN: Two to Tango?
Abstract
The objective of this paper is to examine the economic cooperation and interdependence between China and ASEAN through trades and flows of production factors in the context of increasing regional integration in East Asia. In particular, we assess the dynamic development of China–ASEAN economic relations and examine the changes in bilateral trade flows and trade patterns between China and ASEAN in the context of increasing significance of regional production fragmentation and investigate more closely how the China–ASEAN Free Trade Area (CAFTA) and China’s recent “Belt and Road” initiative will eventually reshape production and trade relationships between China and the ASEAN member countries. It also sheds light on the opportunities and challenges brought forth to both parties for further development of economic relations and cooperation due to their structural similarity in trade and lack of economic complementarity.
Fengming Qin, Tao Xu, Zhaoyong Zhang
Metadata
Title
Chinese Global Production Networks in ASEAN
Editor
Young-Chan Kim
Copyright Year
2016
Electronic ISBN
978-3-319-24232-3
Print ISBN
978-3-319-24230-9
DOI
https://doi.org/10.1007/978-3-319-24232-3