Published: 17:04, September 15, 2023 | Updated: 12:33, September 18, 2023
China, ASEAN seen propelling global growth
By Prime Sarmiento in Manila

World will see economic center shift to Asia-Pacific region, analysts say

Indonesian President Joko Widodo walks in the cabin of a high-speed train for the Jakarta-Bandung High-Speed Railway in Indonesia, Sept 13. Widodo said the rail would officially start commercial operation in early October. (PHOTO / XINHUA)

Southeast Asia and China are together poised to become one of the key drivers of the world economy following their commitments at this year’s ASEAN summit, analysts say.

The 43rd Association of Southeast Asian Nations Summit concluded last week in Jakarta, Indonesia, with the adoption of the ASEAN Leaders’ Declaration on the region as an “epicentrum of growth”. China participated in several summit meetings.

“It is probable that in the future the growth center will relocate to the Asia-Pacific region, and eventually the region will take over the position of the United States and Europe, and become a place of developed countries,” said Sawidji Widoatmodjo, dean of the school of economics at Tarumanagara University in Indonesia.

“If China’s economic power is put together with the power of ASEAN’s economy, it would not be an exaggeration to say that China and ASEAN will be the leaders of global economic growth, while the US economy and the European economy will see low growth and will continue to slow down,” Sawidji added.

Geoffrey Williams, professor and dean of the Institute of Postgraduate Studies at the Malaysia University of Science and Technology, said the US and Europe were once viewed as the engines of the global economy owing to their high per capita incomes and huge consumer demand.

However, this trend has changed, as there is a shift in global demand, with China, India and ASEAN collectively providing big markets.

“Although per capita incomes (in developing Asia) are lower, the billions of consumers make these very large markets,” Williams said, adding that the nations are benefiting from high growth, relatively young populations and educated workforce.

“China is of course a major economic force not just in Asia but globally. It will remain a major force because of its size and growth as well as its influence politically and through the Belt and Road (Initiative) investments. In this way it can support ASEAN through trade and investment,” he said.

Josua Pardede, chief economist at the Permata Bank in Jakarta, said China and ASEAN’s growth is “interdependent” because China is a major trade partner and investment source for ASEAN.

Chinese investment focuses on the manufacturing sector, establishing an industrial supply chain in the region and spurring growth, he added.

International Monetary Fund Managing Director Kristalina Georgieva, in her report delivered at the plenary session of the summit, said ASEAN countries are contributing 10 percent to global growth, or more than twice their weight in the global economy.

Erica Tay, an economist at Malaysia’s Maybank Investment Banking Group, said people and technology are the two forces propelling Southeast Asia’s growth in the next decade.

She said the Philippines, Indonesia, Malaysia, and Vietnam are poised to reap demographic dividends thanks to their sizable and growing working-age populations.

“As wages rise and more workers enter the ranks of the middle class, Southeast Asia will also come into its own as a key consumer market,” Tay said, adding that advances in connectivity will allow ASEAN countries to overcome geographical barriers. 

“There is immense scope for China and ASEAN economies to work together in these areas. Southeast Asian firms can learn from China’s leading companies, not just in terms of their technological prowess.” 

Hafidzi Razali, director of BowerGroupAsia, said China can support ASEAN by offering funding, project expertise and knowledge transfer. 

Williams from Malaysia added that ASEAN’s growth must be broad based, and that the region also has to nurture trade with the US, Europe, the Middle East and India.

Leonardus Jegho in Jakarta contributed to this story.

prime@chinadailyapac.com