Economic cooperation emerges as key

June 12, 2000

Summit of two Koreas, possible WTO entry by China point to progress in region, Asia specialists say

Staff writers

Asian experts are finding more to be optimistic about after three years of sometimes devastating financial woes. At the 6th international conference on "The Future of Asia," sponsored by Nihon Keizai Shimbun Inc., specialists on the region stressed that renewed collaboration on the economic front seems closer to becoming a reality because of China's expected entry into the World Trade Organization, this week's summit between the two Koreas and other positive signs.

Following are highlights from the conference, held June 8-9.

-- Japan-South Korea relations

Gong Ro-myung, chair professor of Dongguk University and South Korea's former foreign minister, said South Korea was seriously considering establishing a bilateral free-trade agreement in the long run despite its trade deficit with Japan.

Since the 1980s, Gong said, both South Korea and Japan have talked of tightening ties and improving relations, but in October 1998, South Korean President Kim Dae-jung and then-Prime Minister Keizo Obuchi actually released a joint declaration for a new South Korea-Japan partnership in the 21st century. "Some issues have been considered too sensitive, almost taboo. But now the taboo has been broken. We can realize a productive and future-oriented relationship," Gong said.

Choi Woo-sock, president of Samsung Economic Research Institute in South Korea, urged Japanese companies to invest more aggressively in South Korea. He pointed out that while the U.S. and Europe have respectively invested one-third of the direct investment flowing into South Korea in 1999, Japan invested only 10%.

"Renault, a French automaker, decided to take over Samsung Motors after a short negotiation," said the former reporter of an influential local newspaper. "In contrast, a large Japanese company gave up acquiring the petrochemical plants of the Samsung and Hyundai groups even after long negotiations. Even though the Japanese company might have had adequate reasons and its own economic logic, it seems regrettable that it might have lost opportunities because of too much cautiousness and perfectionism."

-- North, South Korea summit

Gong played down the scheduled meeting between the two Korean leaders starting on June 12, quoting South Korean President Kim, who said a spoonful will not fill the stomach. "I guess he cautioned us not to expect too much out of the meeting," Gong said. "Looking at the North-South relationship at this present stage, I believe a proper division of labor between South Korea, the U.S. and Japan is indispensable. In order to resolve the problems of the peninsula, we must also have consultations with China and Russia."

-- China's WTO entry

Zhao Qizheng, director of the information office of China's State Council, stressed the significance of China's entry into the WTO. "After entering the WTO, the opening of China's will reach a new level," he said.

China has approved the founding of more than 300,000 foreign-funded enterprises and has used more than $250 billion in direct foreign investment, Zhao said. "When the Chinese economy joins the world economy, we shall open wider to the outside world in various fields and shall adopt various ways to absorb foreign capital for the transformation of state-owned enterprises," he said.

His idea was echoed by Hu Angang, research fellow of the Center for China Study at the Chinese Academy of Sciences. Hu dubbed the WTO entry an important steppingstone toward economic globalization. "Economic globalization helps China fully use domestic and foreign capital, technology, resources and the market," he said. "China's integration into the world economy will surely have deep impact on Asia and the world as a whole."

To meet the challenges of globalization, Hu suggested the government adopt people-oriented policies. "The major challenge for China is to make highly efficient, highly effective and sustainable growth that creates employment opportunities and provides equal development. The accession to WTO will be an engine of change from outside," he said.

When discussing regional currency issues, Hu advocated further strengthening of the yen.

-- Taiwan and China

Wu Rong-i, president of the Taiwan Institute of Economic Research, said there is a ray of hope for better Taiwan-China relations. "Because of China's refusal to give up the possibility of using force to resolve the Taiwan issue, the cross-strait relationship is still in a hostile state," he said. "However, a dim light is emerging, bringing the prospect of improved Taiwan-China relations. On the one hand, Taiwan's new president, Chen Shui-bian, has constantly released goodwill since his election victory, and on the other, both sides of the Taiwan Strait are expected to enter the WTO this year. It is a historical opportunity for the two sides to strengthen economic cooperation."

China's Zhao said, "We believe that only a resolution of the Taiwan issue according to the principle of 'one country, two systems' can benefit the stability of both sides of the strait and the whole of Asia. We hope that the new leaders of Taiwan will thoroughly abandon advocacy of separatism and go down the bright road of peaceful reunification."

(The Nikkei Weekly June 12 Issue)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.