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Varied Purposes for Japanese and Chinese Investment in ASEAN

One of the more important means by which South Korean companies were able to achieve their global brand recognition and market share was through the support of their government. Korean diplomats and politicians pursued ‘trade diplomacy’ so as to link investment with political goals. Many countries pursue similar policies: US trade representatives and diplomats, for example, regularly expect to have an important input into the economics decisions made by governments of other countries.

While individual companies may be making their investment decisions on a purely commercial basis, the governments involved may be looking at a bigger picture. It is clear that this has been happening in the case of China. Chinese and Taiwanese diplomats, for example, have been chasing each around the world to influence host governments to support their intentions. Yet the Chinese government has other intentions in ASEAN. Of course, ASEAN nations are important in terms of their domestic markets and as sources for labour for manufacturing facilities, but there are other motivations.

First, China is interested in improving its reputation and influence around the world and especially in this important region of the world. It also needs to do its part to sustain the global economy, given the enormous amount of dollar-denominated assets that it holds. ASEAN countries also act as the owners of important resources – for China, in the twenty-first century, pretty much all resources are important because they will act as inputs into industrial activities either now or in the future. The news of significant finds of oil and gas in Cambodia and Myanmar, meanwhile, have produced new commercial battlegrounds as India and China, among many others, spar for access to those resources.

China has for years been supplying the Myanmarese military government with the materiel it needs to sustain its power and to prosecute its many campaigns against rebel ethnic minority groups. It has also been, as some would have it, colonizing the northern part of the country around Mandalay to lend additional stability to the area. The one thing that China will not want to see is a breakdown in public order in Myanmar and the concomitant growth in crime and migration. If it is successful in securing a pipeline direct to Yunnan from Myanmar, then this will be an additional potential target.

While Chinese motivations are quite apparent, therefore, those of Japan are less obvious. Japan has been stepping up its diplomatic efforts in the Cambodia-Laos-Vietnam sector in particular. Japanese companies have not really left the region, having been important investors and employers since before the Second World War. The presence of the Japanese has always provoked a measure of resentment because of what has happened in the past and, no matter how polite people might be in public, this remains a factor that underlines actions that are otherwise difficult to understand. Overcoming those feelings would be a long-term goal of the Japanese and it works in reasonable harmony with the various Economic Partnership Agreements that it has planned to establish, which mix private and public sectors in providing support for host countries to receive training for people to work in Japanese-owned companies.

However, there are of course other goals to pursue. Japan has pursued its interests in Laos because Vientiane has contacts with North Korea and Japan does not. Laos might provide a useful conduit for exchanges of information with the creaking and increasingly bizarre state of Kim Jong-Il. The little brother is also being encouraged to join the International Whaling Commission (a little strangely, since land-locked Laos probably has only a handful of people who have ever even seen a whale), presumably to bolster support for the Japanese desire to eat the meat of the mostly endangered creatures. There is also, linking all of the countries of the region, the continued controversy over the Spratly Islands and the need to broker some kind of peaceful resolution over their ownership. Preferably, this will be a settlement that provides access to the resources that might be found beneath the seabed. Rivalry with China is also an issue not to be overlooked.

ASEAN states generally understand their strategic role for their would-be partners. The important thing from their point of view is to negotiate win-win agreements that suit them over the short and the long-terms.

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