MEETING OF MINDS
 
Growing economic cooperation on the agenda as heads of ASEAN and neighboring nations gather in Vientiane
I!y PEARL LIU anil ALFRED KOM AN N ln I long Kung Fbr China Daily Asia Weekly
Relatively slcepy by the standards of many Asian cities, Vientiane, the capital of Laos, is gearing up to turn into a hub of world leaders. Vientiane hos a population of well under 1 million — about the size of a suburb in Jakarta, Beijing or 'Ibkyo — but Laos currently holds the rotating chair of the Association of Southeast Asian Nations and will host the ASEAN Summit on Sept 6.
A series of meetings will bring together ASEAN leaders, and will also mark significant anniversaries of relations between the grouping and neighbors like China, South Korea and Japan (which make up the ASEAN+3 framework) and broaden that to other trade and diplomatic partners.
Chinese Premier Li Keqiang, US President Barack Obama and Russian President Vladimir Putin, along with leaders from Japan and South Korea, Australia and New Zealand are among those planning to attend.
The meetings, perhaps the most significant since the official launch of the ASEAN Economic Community (AEC) on Dec 31, could give the world's newest economic community a boost
"I think that it would provide a good opportunity for East Asian countries to strengthen their cooperation. ASEAN as a whole, particularly with the ASEAN Economic Community launched last year, is a big market," said /.huang Juzhong, deputy chief economist at the Asian Development Rank (ADB), who is based in Manila.
"Because of their proximity, ASEAN members are closely linked with other countries in the region, including China, Japan and South Korea."
This proximity has led to clase tr.ide and economic relations that have grown exponentially over the past few decades.
A case in point is the growth in economic ties between ASEAN and ci lili;» Bilateral trade in 1991 added up to just under $8 billion but that grew to $472 billion by last year, expanding almost 60 times in a quartcr century.
Chinese investment in ASEAN has also grown from $500 million in 1991 to $160 billion in 2015.
China has long been a participant in these meetings, attending the first ASEAN meeting in Kuala Lumpur, Malaysia, in 1991.
"With the long history of interaction, we see a solid foundation for cooperation between China and ASEAN countries," said Tang (Jifang, associate research fellow with the China Institute of International Studies, who described the cooperation as a "solid and niatnrr Kvstcin"
new strategic pinus, citing the China-led Belt and Road Initiative, which aims to Improve Infrastructure and trade along the historical Silk Roads, and thi' trade bloc's newly launched \KC
"What we would like to see is how the two sides work together to integrate their plans and roll out concrete projects that could benefit local people," she said.
The spate of meetings in Vientiane will cover a number of issues and mark a variety of events, including the 25 th anniversary of China-ASEAN relations, which will be marked on Sepi 7 with the 19th China-ASEAN Leaders Meeting.
Premier LJ has plans to attend this meeting and also the 19th ASKAN-Chlna, Japan and thi- Republic of Koica Leaders Meeting around the same time.
World leaders, particularly those from ASI'jVN countries, will lu1 looking to tackle some longstanding issues among members and observers, including differences over the South China Sea
Leaders will also be looking for ways to boost trade, investment and economic growth, a persistent challenge amid a difficult global outlook,
lilis particular topic is timely, with the AEC ramping up the beginnings
of what may eventually turn out to be one of the most significant economic groupings in the world.
The aim of the AEC is to create a single production base and develop more intra-regional trade, along with more foreign investment for each member of the grouping. Implementation has been slow, however, and there are still restrictions on a number of g(xxls, while trade in services remains fragmented,
Intra-ASKAN trade accounts for just 22 percent ofoverall'exports and imports for the group as a whole.
At the same time, in 2015 investment dows within ASEAN were just 16 percent of what foreign Investors poured in, according to Frederic Neumann, co-head of Asian economics research at HSBC
Some members, like Vietnam, are Struggling to benefit from the launch of the AEC
In the first seven months of this year, Vietnam suffered a trade deficit with other ASEAN countries of some $3.6 billion. The biggest deficits were with Thailand, Malaysia and Singapore, said Vietnam's Deputy Prime Minister Vuong Dlnh I Ine on Aug 26.
Speaking lo China Ilaihi Asia Weekly, the ADB's /huang said: "We all know the challenge is that global .economic growth is still weak, which affects the exports that AS MAN coun-tries heavily depend on. We've seen
that demand is not as strong as it used to be.
"But I think ASKAN countries are still coping well. We (the ADB) see the average economic growth rate of ASEAN countries standing at 4.5 percent for 2016, which is still slightly higher than last year's 4.4 percent"
/huang said the negative effect of ekternal demand is offset by stronger domestic demand, both consumption and investment. In the Philippines, loi- instance, public .spending on basic Infrastructure construction has been increasing, hc explaincd.
"This is an important event for Laos as it could gain global and regional presence and it will help bring foreign investment to the country/1 said Zhuang.
"Laos needs to diversify its busi ness and develop its manufaclur ing industry. It could leverage its relatively cheap labor and start with labor intensive manufacturing, and then it could gradually move up."
l'he way lang from thi' China
institute of [nternational studies sees it, however, the discussions should focus on how to Improve trade, not just boost it.
"Both China and ASEAN countries depend heavily on trade; however, we have seen a weakening of that during the past year," said Hing "< >f course, exports arc still important but the cooperation should pay more
attention to developing an inward regional production chain with u different end-user group."
While the focus of production throughout ASKAN has long been consumers in the United States and Europe, the growing middle class in China and some ASEAN countries could easily fuel internal demand, she explained.
"Both sides should foster innovative ways to boost their economic growth and complement each other ln those new sectors. Sustainable energy, for example, is one sector that has huge potential a.s China has advanced technology while many ASKAN countries enjoy rich natural resources," 'Hing said.
"Labor resources ore another edge held by the 10 Southeast Asian coun tries. Unlike China, with an aging population, they have a large group of young (workers). However, the downside is that they cannot maintain a stable employment rate in those markets."
The upshot is that "China and ASKAN countries are quitc comple-mcntary to each other in many ways"
One big advantage that China enjoys for boosting trade with ASEAN is land borders that amid help drive cooperation in various industries by, for ekample, building gas and oil pi|>elines or sharing electric grids.