China Climbs Tech Ladder, Firms In South-East Asia Should Strive For Complementary Development With China’s Mid-Level Tech Firms.
Asean has become more important to China economically and there are opportunities to be had for the regional grouping as China grows. But Singapore and South-east Asian countries need to be more humble when doing business with China, economist Tan Kong Yam said on Monday (April 5) at a forum on China’s parliamentary sessions in March and its 14th five-year plan.
This is because while China’s coastal regions have developed high technology, including artificial intelligence, South-east Asian countries, including Singapore, still lack top-rate technology in these areas. As China Climbs The Technology Ladder, Firms In South-East Asia Should Strive For Complementary Development With China’s Mid-Level Tech Firms, he said, adding that China and South-east Asia have many areas of complementarity.
Singapore with its hub status in the region has an advantage in that it can play a role in helping Chinese firms branch out to countries in the region but with little understanding and knowledge of the local situation, he added. Professor Tan, who teaches at Nanyang Technological University and has extensive experience in China, including as senior economist at the World Bank in Beijing, was speaking at the forum in Mandarin that was organised by Business China and Lianhe Zaobao.
Asean became China’s largest trading partner last year, overtaking the European Union, which dropped to No. 2, while the United States is No. 3. Some of that trade has to do with Chinese exports to the US being channelled through South-east Asian countries such as Vietnam to avoid high tariffs imposed by the former Donald Trump administration in Washington, noted Mr Tommy Xie, the other panellist at the forum.
However, Chinese firms are also coming to Asean to invest because the regional bloc is also a bridgehead for Chinese firms going overseas, said Mr Xie, who is head of greater China research at OCBC Bank. In particular, many digital companies that are coming out of China now are private ones set up only in the past 10 or 20 years, such as Alibaba, with little experience overseas. “They need very much this Asean platform, whether as cooperation partners or advisers,” he said.
“Therefore I believe in future cooperation between China and Asean will become very important,” he added. Prof Tan noted that as China and Asean countries grow economically, their domestic consumption will also increase, making them increasingly larger end-markets themselves and not just channels for exports to other markets.
The panellists also agreed that China would overtake the US as the world’s largest economy, but not because of China actively pushing for such an outcome. They see it as a natural outcome of China’s economic growth and a historical trend. Noting that China’s population at 1.4 billion is four times the size of the US population of about 330 million, Prof Tan said that if China’s per capita GDP is just one-quarter that of the US, its economy will be larger than the US’.
He added that the risk is not whether China will overtake the US but that China will become overly proud of its success so that it will miss noticing the dangers ahead. Noting that China has its weaknesses, he said other countries that are afraid of it would want to get together to exploit these weaknesses.
This news was originally published at Straits Times.