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China’s ongoing financial liberalization and outward investment will also put the region’s markets and regulators to the test in managing the risks while supporting the financial integration of the region.
China’s ongoing financial liberalization and outward investment will also put the region’s markets and regulators to the test in managing the risks while supporting the financial integration of the region.

Asian Integration Vital to Global Trade Regime

Asia’s place as the dynamic heart of the world economy can only be entrenched and reinforced by regional commitment to lowering barriers to the movement of goods, services, capital and people

Asian Integration Vital to Global Trade Regime

The Trans-Pacific Partnership is dead; the largest free-trade zone in the world, the European Union, has splintered; and the global economy is on the way to notching up a decade of sub-par growth in trade and output following the global financial crisis.
Given the backlash in the industrial world against globalization, the economic and political juncture at which Asian countries find themselves is hardly conducive to a push for further integration. But that’s exactly what’s needed. It’s imperative that Asian integration continues to forge ahead, East Asia Forum reported.
Given slower growth elsewhere, Asia’s place as the dynamic heart of the world economy can only be entrenched and reinforced by regional commitment to lowering barriers to the movement of goods, services, capital and people—and, crucially, by investing in the infrastructure that makes integration and connectivity a practical reality. That is as important now to the global trade regime as it is to the success of the Asian development enterprises.
On the infrastructure front, China’s Asian Infrastructure Investment Bank is a welcome initiative, but the sums required to finance the kind of connectivity that Asian economies require is immense, and coordination of infrastructure investment is more important than ever. China’s ongoing financial liberalization and outward investment will also put the region’s markets and regulators to the test in managing the risks while supporting the financial integration of the region.
Regional Architecture
EAF editor Ponciano Intal asks whether East Asian regional institutions are up to the test.
"One remarkable development in East Asia over the past three decades is the emergence of a regional architecture—a coherent network of institutions that work together for prosperity and stability—that has revolved around small and middleweight countries with support from the Pacific’s big powers. What is equally important is that this architecture has been characterized by open regionalism—the removal of trade barriers within the region without discriminating against outsiders—and a cooperative multilateral perspective on security."
East Asian regional economic architecture is ordered around principles that are under severe challenge by the new US administration and a decisive minority in Europe. It stands for everything that appears to be in total retreat in the industrial world. And what sits at the center of this architecture is ASEAN—a group of countries often disparaged as the ‘Balkans of the Far East’.
Intal says, ASEAN’s centrality in the regional architecture developed not because it was an East Asia economic powerhouse but because it provided a structure for political stability that engendered "peace, neighborliness and cooperation among the founding countries".
ASEAN’s cooperative approach to security—"security is best gained not by working against others, but rather by working with them"—contrasts sharply to the realist "balance of power" approach. The cooperative security approach is defined by an emphasis on dialogue, diplomacy and consensus. "The approach is workable", says Intal, "because it represents a realistic means by which the small and middleweight powers can assume diplomatic centrality in security arrangements involving all major regional powers".
Commitment
For most of Asia, including China, Indonesia and India, economic development is a work in progress and commitment to international economic integration and connectivity are still their essential and necessary adjuncts. But, as Intal points out, territorial issues in the South and East China Sea have raised regional security uncertainty, while the ascendance of a more nationalist, less open "America First" administration in the United States has dramatically elevated uncertainty in the economic and trade environment.
There is undoubtedly now a bigger load on East Asia’s regional economic and security architecture.
The form that Asian integration will take is still open. The eclipse of the TPP means that the Regional Comprehensive Economic Partnership spearheaded by ASEAN looks to be the only game in town for regional trade and investment liberalization. If it’s to help turn around the tide against globalization, RCEP has to be a platform for ongoing cooperation, and not just another "noodle bowl" of Asian economic agreements.

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