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The Expansion of the Economic of China


The expansion of the economic aspect of the country of China has been under the observation of a lot of analysts. On its way to becoming among the superpowers of the modern world, the economic development that has been taking place in the said country may appear to be a threat in the neighbouring regions with regards to foreign direct investments. However, upon probing deeper in the situation, one could surmise that this is not the case. The following discussions will present that the existence of the Chinese development does not affect the countries in the Southeast Asian region. Discussion with regards to its historical dealings, foreign policies, and regional plans will be among the bases of establishing of the position of this paper regarding the issue of China and FDI of Southeast Asia.      




China's affairs with Southeast Asia have grown to be ever closer. China's return to Southeast Asia is not merely history replicating itself. In the end, the tenure of the 'Son of Heaven' has departed long ago, and China no longer perceives itself as the centre of humankind. (Stuart-Fox, 2003) The Middle Kingdom is dwelling in a new world with novel strategic objectives. Its global perspective and method to Southeast Asia have to transform. China's affairs with Southeast Asia have been well documented. What is prominent as an important strong point of the work of Stuart-Fox (2003) is its effort to recognize what it labelled as the 'international relations culture' that takes into account the principles, standards, and prospects concerning the appropriate accomplishment of international relations. Conventional Chinese international affairs traditions were anchored on the Chinese perspective that is looked into at the beginning of Stuart-Fox's (2003) study. Traditionally, the Chinese perspective of the world highlighted the harmony of Heaven, Earth and people, the authority of the emperor and the conviction that barbarians would be represented by the means of the emperor to distinguish the dominance of Chinese society and the cosmic standing of the emperor. The acknowledgment was represented by the tributary system. This is characterized as a system where barbarians respectfully tender their tribute at Chinese court and appreciatively acquiring presents in return.


This tributary system prevailed over China's affairs with Southeast Asia up until the later part of the nineteenth century, when China was considerably frail to defend against Western incursion and Southeast Asia developed into colonies of European powers. (Stuart-Fox, 2003) Moreover, the tributary system was not actually onerous for Southeast Asian polities. It similarly indicated that China as an empire stretched out but was not predominantly in an expansionist level.


Moreover, China's global relations traditions in the years of the Cold War developed from its past. Being 'a civilisation whose pretensions to superiority are deeply embedded in the national psyche', (Stuart-Fox, 2003) China was intending to develop into an international great power and to resume international ranking and deference. It required to be acknowledged as such within its individual direct field of influence. The People's Republic, similar to empire China historically, similarly had faith in the authority and dominance of Chinese paradigm. Traditionally, it was the good worth of the emperor that granted the ultimate model. During the Cold War, it was China's radical revolutionary, communist agenda that prevailed. Moral dominance was another historical component that continued to have an effect on China's foreign policy. Its Bandung directive of co-existence and non-intrusion in the dealings of other nations and later procedures of anti-hegemonism were declared as moral standards. This historical perception of China's global affairs traditions does give some explanation on China's participation in the two Indo-China wars and its sustenance for revolutionary actions in Southeast Asia.


That account still functions a huge part in today's affairs involving China and Southeast Asia is apparent in discussion of 'bilateral relations regimes'. Even supposing that early regimes were determined by China, they were acknowledged by Southeast Asian governing leaders. (Stuart-Fox, 2003) The development of bilateral affairs regimes anchored on not only a happenstance of interests but similarly a level of concurrence of worldviews and mutual historical knowledge. Alongside this setting, Southeast Asian nations will not adhere to a balance-of-power alliance to control China and will together favour accommodation with China. (Stuart-Fox, 2003)




Based on the previous discussion, there has been historical basis on the affairs of China and the Southeast Asian region. This entails the creation of such policies on the part of China. It appears that the Chinese leadership is satisfied with the balance of power scheme on the part of the Southeast Asian countries. The subsequent efforts to preserve and uphold a balanced relationship with the United States, Japan, and China; together, it evades abandoning other countries such as Russia and India. (Cheng, 1999) This ASEAN plan assists to put off any key power, counting the United States, from controlling the Asia-Pacific region in terms of trade. This is in proportion to China's strategic concerns given that China does not have the wherewithal and consequently the purpose to develop into the major authority in regional affairs. Therefore, China receives the ASEAN's balance of power scheme and espouses the regional organization in participating in a dynamic position in the Asia-Pacific region.


In addition, Chinese leaders recognize China and the ASEAN countries as developing nations in Asia; they have a substantial sense of shared identity; and they possess comparable perspectives on values, human rights, democracy, and several concerns in global relations. Therefore, they should be capable of lending a hand, present each other aid, and equally be in opposition to hegemonism and power politics. Chinese leaders do not deem that ASEAN will turn out to be a component of a coalition intended to controlling China. In its place, ASEAN's dynamic diplomatic profile is perceived as easing the progress on the direction of multipolarity in the Asia-Pacific region, and causative to regional permanence. (Cheng, 1999) Furthermore, ASEAN is alleged as functioning as a balance in the middle of the United States, Japan, and China and as a force evening out in this triangular association. Similarly, the ASEAN will also assist to discourage the hegemonism of Western powers in the area, in so doing lessening the latter's stress on China and convalescing the diplomatic setting for it.




China's regional aims in Southeast Asia seem to be connected to China's general strategic stance. Even as some analysts acquire a "zero sum" technique to mounting Chinese authority and American power in the region, others involve the highlighting in China on the strategy of a "peaceful rise" or "peaceful development" and acquire a more benevolent outlook of China's objects, both internationally and inside a regional background in Southeast Asia. China's quiet increase possibly stands for a major departure from previous policy which intended to wear away America's control in the region. (Sutter, 2004) Confirmation of Chinese restlessness with America's attendance in Asia carries on. To some Chinese observers America's long-drawn-out global posture ever since the September 11 terror attacks has brought about an American squeeze of China. Others acquire a perspective that China's foreign policy on the direction Southeast Asia is an offshoot of its conventional imperial tribute system.


Ever since the middle part of the 90s, China has been aggressively looking to expand its connection with Southeast Asia by means of more accommodating approaches. This is chiefly obvious in the episode from the financial crisis of 97. (Stuart-Fox, 2003) Similarly, China's 2002 agreement to the ASEAN code of conduct on disagreements in the South China Sea, the change in importance to ASEAN in addition to China, Japan and South Korea, as against the Asia Pacific Economic Cooperation (APEC) structure which takes account of the US, and progress on the direction of an ASEAN-China Free Trade region all signify a basic change in the affairs involving China and ASEAN. (Stuart-Fox, 2003) This highlighting on economic and diplomatic relationships is a major variation from earlier military confrontation as confirmed by past border and territorial disagreements. China's deeds point to some that it is concerned in more than merely extended economic and trade connections with the region.




Regardless of substantial concerns in policy spheres that a boost in foreign direct investment flow to China is to the detriment of other regional economies, it has been established that those economies can essentially take advantage from it. (Chantasasawat, Fung, Iizaka, Siu, 2004) This may possibly be connected to the production networking actions among Asian nations in addition to the augmented resource demand by a rising China. The proof of production-networking among China and other Asian economies can be established in the extensive two-way trade of intermediate and final goods in the similar industries among those nations. The Table below summarizes the FDI of China from the early seventies to the recent years.


Table 1. Contracted and Realized Foreign Direct Investment, 1979-2002

(Source Chantasasawat, Fung, Iizaka, Siu, 2004, 6)



A lot of the nations observed in the study of Chantasasawat, Fung, Iizaka, Siu (2004) are greatly concerned in vertical specialization which can be perceived in the allocation of two-way trade in the similar industry in the whole quantity of trade among the states. The economic connections of mutual reliance among them have been getting deeper swiftly since the 90s. The importance of the effect of the development of China in the context of FDI inflows to this group of Asian states may reveal such interdependence. (Chantasasawat, Fung, Iizaka, Siu, 2004)  Thus a boost in China's FDI is certainly and considerably connected to FDI inflows in other Asian countries. It is thus observed that until now the investment-developing consequences prevail over the investment-diversion impact so that on the whole, China is a positive power for FDI inflows into other Asian nations with regards to their economy.


The minor consequence of trade liberalization of the Asian states on the inflow of FDI can be in excess of double of that of the effect of the economic development in China. Trade obstacles can acquire a variety of shapes like local content conditions, technology transfer conditions, domestic sales and export prerequisites. This connotes that decreases in the different kinds of trade obstructions can take part in a crucial function in developing FDI to those states. (Chantasasawat, Fung, Iizaka, Siu, 2004) In general, issues that have an effect on the FDI inflows into Southeast Asia are the positive impact of the economic development China, policy variables like the level of openness to trade and the excellence of infrastructure and the world provision of the FDI. Moreover, the overriding indicators of the Asian economies' components of FDI into all developing nations are the unconstructive effects the economic development in China, policy variables like openness to trade, corporate tax charges and infrastructure in addition to the institutional issue of government firmness.




China requires a peaceful global setting to focus on economic progress. Therefore, the Chinese leadership favours a multipolar world in which the superpowers can build up responsive relations with each other and in which non-zero-sum competitions are the standard. Both China and ASEAN mean to function a more noteworthy role in the Asia-Pacific region and in the international community, particularly in the UN. Their quests are a non-zero-sum competition and can be equally helpful. The Asia-Pacific region requires efficient agents in intercessions with the Western nations and in a variety of global organizations. China and ASEAN, on the strength of close bilateral and regional discussions, can carry out that task jointly. In spite of everything, they have no purpose of separating each other in regional matters, and they do not have the objective and aspiration of acquiring a major leadership position in the region.






Chantasasawat, B., Fung, K., Iizaka, H., Siu, A. (2004) FDI Flows to Latin America, East and Southeast Asia and China: Substitutes or Complements?. Available in: cgi?article=1052&context=ucscecon. [Accessed 17 April, 2006]

Cheng, J. (1999) China's ASEAN Policy in the 1990s: Pushing for Regional Multipolarity. Contemporary Southeast Asia. 21 (2)

Stuart-Fox, M. (2003) A Short History of China and Southeast Asia: Tribute, Trade and Influence. Allen & Unwin. Crows Nest, N.S.W.

Sutter, R. (2004) "Asia in the Balance: America and China's "Peaceful Rise," Current History, Sept.




Malc said…
This comment has been removed by the author.
Malc said…
This is a good news for China! Good Luck! Just in case, China can be on Guam Base expansion for more economy progress for their military...

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