Regional Economic Integration : The Chinese Way

Chinese regionalism presents a distinctive blueprint pattern of regionalism, primarily motivated by political or geopolitical considerations rather than economics. Notwithstanding exceptional cases of some least-developed countries, in terms of economic orthodoxy such as Jacob Viner and his classic customs union theory, South-South agreements generally produce welfare reducing trade diversion or a deeper protectionism and decrease in efficiency, rather than welfare-enhancing trade creation. Despite the successes of the orthodoxy of Western models and theories, such as the models of the EU and NAFTA, China proposes a model of regional integration that is primarily motivated by political or geopolitical considerations. Such policies include focusing on ASEAN becoming China's first FTA partner, export-based growth (the unorthodox) rather than import-based growth (the orthodox), and moving for bilateral free trade agreements with developing countries and economies (the unorthodox) rather than North-South FTAs (the orthodox). Moreover, non-market-led cooperative regionalism (the unorthodox) rather than market-led cooperative regionalism (the orthodox) motivated the 2004 ASEAN-China FTA. According to orthodox economic theories, such as Viner's thesis on customs-union theory, FTAs should premise on economic (orthodox/market-led) justifications and not political or geopolitical (unorthodox/nonmarket-led) justifications, thereby leading to trade creation rather than diversion. Notwithstanding issues of efficiency and efficacy of its regional economic integration strategies, China's new blueprint pattern of regionalism presents a host of issues, ranging from US strategic interests in East Asia, to China's growing influence in East Asia and the Southeast Asia-Pacific region, including both Chinese and Western dialectic visions of world order