South Asian countries’ drive to diversify trade away from China is reaching a critical stage after the 16 countries signed an agreement Tuesday to work on a free-trade deal.
The agreement marks the latest of several moves by Asian nations to confront the growing influence of China, which has been buying billions of dollars in Indian and Indonesian infrastructure and is thought to be laying plans to build a canal across Sri Lanka. The South Asian bloc of countries, along with Turkey, and five smaller African nations, all long dependent on China, are now looking westwards for their economic future.
Indonesia’s foreign minister on Tuesday, confirmed that they were working on a pact with South Korea. Sri Lanka has also launched its own free-trade agreement talks with Singapore. Malaysia’s Economic Minister said his country would join the talks, as well.
China, meanwhile, has cast a bitter eye at Singapore, which said last year that it would enter talks for a free-trade agreement with ASEAN — the grouping including 10 of the country’s neighbors in Southeast Asia.
Back in 2015, Singapore’s Prime Minister Lee Hsien Loong said at the time, “We may be the wealthiest country in ASEAN but we would be the last one to benefit from the regional alliance unless Singapore is allowed to enter into one of these bilateral free-trade agreements that would open Singapore to significant external competition.”
The goal of the alliance’s Free Trade Agreement with ASEAN is to contribute to the region’s socioeconomic progress by expanding trade and investment between the 16 member states, and in turn, raising their living standards.
The 16 members are Bangladesh, Brunei, Cambodia, China, the Democratic People’s Republic of Korea, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Thailand and Vietnam.
However, China has been strong in its traditional trading partner Hong Kong and has recently been becoming increasingly active in the greater China region.
Earlier this month, the free-trade agreement between Hong Kong and China was extended for another five years. This comes just after Beijing extended its one-country, two-systems export tax regime for another decade.
President Xi Jinping’s “One Belt, One Road” initiative is a vast plan to link China through nations in the Middle East, Eurasia and Central Asia through the construction of what have been billed as infrastructure projects ranging from high-speed trains to ports and rail networks.
The Associated Press contributed to this report.