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"Japan's Role in Regional Growth and Stability"

June 8, 2001

Yoichi Morishita
Chairman of the Board Matsushita Electric Industrial Co., Ltd.

Today I would like to participate in this session from the position of Japanese industry.

The Asian economy has been put in a difficult situation from the very beginning of this year, affected by the slowdown in the US economy and the IT industry, which is expected to continue throughout the year.

Under such circumstances, I think China is going be the biggest focal point as it continues to grow by itself.

During this session, based on the recognition that we cannot discuss the future of Asia without talking about China, I would like to first make some observations on such issues as "The Impact of China on Japan and the ASEAN" and "The prosperity of Asia as a whole and China".

The Impact of an Emerging China

Talking about the growth of China, taking the example of the electronics industry, China is the world's largest consumer market as well as the producer of such familiar home appliances as TVs, air-conditioners and refrigerators. China also can boast of itself as being the world's leading producer of such items as microwave ovens, cellular phones, VCRs and CD players, and is rapidly gaining export competitiveness in these products.

This kind of growth in China is expected to continue further and China will increasingly share greater weight in Asia as a whole. Consequently, the presence of Asia in the world will further increase in importance.

However, it is a fact that this kind of emergence by China tends to be regarded as a threat to Japan, the ASEAN and also Korea.

In the case of Japan, such things as production transfers to China and damage done to domestic manufacturing by the rapid increase of imports from China, are beginning to affect the very structure of many industries.

In the case of the ASEAN countries, anxiety is felt over such things as a decrease in foreign investment, intensified competition with Chinese products in export markets, and the transfer of existing production bases to China.

Also, in the case of Korea, it is unavoidable in that they have to compete with Chinese products both in the domestic and overseas markets.

I think that everyone would agree that finding out how to overcome the impact of the emergence of China will become a major issue for the growth and stability of the Asian economy.

There may be some industries such as the electronics industry which will have to cope with the issue by dividing roles among regions, and there also may be other industries which will be required to take different measures.

I think it is vital that each industry meets the challenge with a method that matches the peculiar characteristics of the respective industry.

Toward the Prosperity of Asia as a whole - Beyond the "China Threat" Theory

What I have been talking about so far is the so-called "China Threat" theory. However, it should not be given too much emphasis by itself.

For certain, the development of China with the real opening of a market of 1.2 billion population is unparalleled in the world economic history and will temporarily bring various shocks and have influence on the world.

However, from a long-term perspective, it will become a plus factor for Asia as a whole. I think we must take it in a positive way and aim toward realizing a balanced prosperity for all of Asia.

Of course, the prerequisite condition is that not only China but every country will make progress based on the rules of the international economy.

It is required for China to open up its markets for entry into the WTO in such ways as lowering tariffs and deregulating foreign capital, as well as to legislate and steadily enforce laws in such areas as intellectual property rights.

For the ASEAN, it is indispensable to improve competitiveness by having an early realization of the AFTA (ASEAN Free Trade Area) and an acceleration of Intra-ASEAN cooperation in such areas as the liberalization of trade and investment.

And above all, what is most important is that Japan succeed in its economic recovery and get on the right track for stable growth and sustainable development. For that purpose, structural reform of the economy must be promoted speedily, through further opening of domestic markets and through deregulation.

At the same time, it is important that Japan takes the initiative in liberalization by such moves as the ratification of the FTA (Free Trade Area) treaty with Singapore and Korea.

Asia has already been establishing world-class manufacturing infrastructures.

If such a network of international division of labor and complementary structure can be developed further to a higher level through competition and cooperation, it will surely lead to the maintaining of vitality and the enhancement of competitiveness in Asia as a whole.

Based on these perspectives, I believe that it will become extremely vital to promote and develop, in multi-layered ways, various kinds of intra-regional collaboration such as the AFTA, the ASEAN+3 (Japan, China and Korea) and the bilateral FTAs.

Asia which is abundant in diversity must not bind itself by unitary frameworks and rules, but rather must realize intra-regional liberalization on the basis of open "Loose Collaboration".

Today, in this session, I hope that we can discuss these points as well.

Thank you.

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