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U.S. Losing Influence to China?

from the October 21, 2003 eNews issue

US President George Bush is hoping that his visit to the Asian economic summit will continue to demonstrate the United States' commitment to building strong economic and political ties in the region, in spite of the growing interest many Asian countries have had in China.

While the United States has maintained a strong relationship with many Southeast Asian countries, several in the region are starting to seek long term economic cooperation with China over the United States. Some Asians believe the US is too focused on terrorism at the expense of the economic issues facing the region and have increasingly seen opportunities for economic partnership with China. Previously, China's advancements in technology and research and development were seen as threats to other Asian nations, but now the economic advancements that have been made are seen as good for the whole region. Free trade deals have increased to the point that there is talk of a greater regional free trade zone by 2015.

Some analysts are concerned about the type of impact that US allies will have on the region as their relationship with China grows. Two key allies, Japan and South Korea, have become very dependant upon the Chinese economy. Japan's imports from China have for the first time surpassed those from the United States, and China is becoming South Korea's largest trading partner.  Some wonder what type of political ramifications these developments might have in the future. 

In order to remain a strong trade partner, last year the United States offered bilateral free-trade agreements to Southeast Asian countries that were members of the World Trade Organization. Singapore was the first to accept and Thailand is expected to follow.  Robert Zoellick, the US trade representative, believes these free-trade agreements will be more valuable for individual Asian countries than the deals with China.

In the meanwhile, President Bush has called for China to clean up its trade practices. US manufacturers complain that China has greatly undervalued its currency - by from 15 to 40 percent - giving it a large and unfair advantage in international trade. The United States will also urge China to stick to the standards it agreed to when joining the World Trade Organization in 2001.

The United States still represents almost 25 percent of the world's economy and is not expected to lose its influence in Southeast Asia anytime soon. However, as Singapore's president Goh Chok Tong said, "All Asian leaders are looking ahead at the relentless economic march of China."


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