Next: a Chinese Free-Trade Zone?
WITHOUT underestimating the role of Japan, there is another way of looking at economic developments in the Asian rim, the fastest growing part of the world. Over the years, scholars have referred to the Chinas as a multiple - two Chinas, three Chinas, and more.
They have in mind the major economies of that region which are predominantly Chinese. In addition to mainland China, that includes Taiwan, Hong Kong, and Singapore - and other key locations in the region where executives, traders, and financiers of Chinese background make important economic contributions.
Some analysts believe China's economy is emerging as a new epicenter for commerce and finance. This strategic area contains substantial capital, technology, and manufacturing capability (Taiwan), outstanding marketing and a services acumen (Hong Kong), a fine communications network (Singapore), and large endowments of land, resources, and labor (mainland China).
That informal economy consists mainly of midsize family-run firms, rather than huge multinational corporations. From Guangzhou to Singapore, from Kuala Lumpur to Manila, this influential network is the backbone of the East Asian economy.
Taiwan was the largest foreign investor in Malaysia and Vietnam in 1991. Foreign direct investment from the newly industrialized economies of South Korea, Taiwan, Hong Kong, and Singapore surpassed that of both Japan and the US in Indonesia as well as Malaysia and was almost as large as Japan's in Thailand.
Not surprising, the rapidly developing Asian rim countries are turning to suppliers within their own region for their imports. These newly developing countries now buy 33 percent of their imports from other nations within the region, compared to less than 24 percent in 1985. A substantial amount of cross-investment and trade takes place, often on a family basis, among the various "Chinas." Frequently, these business ties involve "overseas" Chinese who are dealing with people in the province of China from
which they or their ancestors migrated.
Private analysts estimate the foreign exchange reserves of the various Chinas at an impressive aggregation of $200 billion. Some observers already refer to the "Chinese Productivity Triangle" or even to the forthcoming "Chinese Century."
A HISTORICAL parallel comes to mind: the Hanseatic League. For many centuries during the late middle ages, the Hanseatic League tied together the merchants and cities of northern Germany and the Baltic area generally. The Hanse cities did not set up a unified government. Rather, the business and government leaders cooperated on matters of mutual economic and financial interest.
Unlike the European Community or the North American Free Trade Agreement, the Hanseatic League was not a compact among sovereign powers. Its members owed allegiance to the various political powers that controlled the region. The League was an amorphous organization, lacking legal status and possessing neither finances of its own nor an independent army or navy.
Nevertheless, the Hanse merchants cooperated in many important ways, providing mutual support in times of danger. They constituted an identifiable economic grouping which competed with Holland and Italy. Despite the obvious limitations of a nongovernmental organization spread over considerable distances - Bergen in Norway was an important Hanse location as was Novgorod in Russia - for almost five centuries the Hanseatic League was an economic power to be reckoned with.
We can't easily forecast future economic relationships in Eastern Asia. Will a modern version of the Hanseatic League be created? Will a counterpart to the European Community arise? Are the more modest arrangements developing in North America a precedent? Or will the present informal relations be relied on in view of their substantial success? Whichever course is followed, it is reasonable to expect that some response will occur to the economic unification that is now taking place in the two other major competitive areas, Western Europe and North America.