Asia sees hope as giants join hands amid crisis

Last week, when China and Taiwan opened direct air and sea links, there were good vibrations in the air all over East Asia. After 59 years, the two sides began bilateral contacts that would boost trade and investment and people-to-people exchanges. Most importantly, such direct contacts, especially the air links, would save time and money. The steady improvement in cross-strait relations augurs well for another major improvement of relations and cooperation up in the Northern Sea.

In mid-December, China, Japan and South Korea met for the first time exclusively in Fukuoka, Japan to forge not only closer ties among the trio but also a renewed commitment to make Asia the centre of global trade and economic vitality.

They agreed unanimously that Asia must continue to be the engine of growth to counter the global financial turmoil by revving up their economies with infrastructure projects and bolstering domestic demand.

That was an important commitment because these three Asian giants have to do more than just talk, as they have to match their words with economic performance, investment and of course mutual coordination. Both China and Japan have come out already with massive domestic stimulus packages. Korea has also followed suit.

All these economic measures would help stabilise Asia's economy and continue to stimulate growth in the region, albeit in a restrained way given the ongoing global financial crisis. The purpose is clear - to ensure that the Asian economic engine would not lose steam.

For decades, the cooperation in East Asia and the effort to create an East Asian Community (EAC) have been marred by the on-and-off acrimonious relations between China and Taiwan on one hand and among the trio on the other hand.

For decades, the rivalry between China and Taiwan has been undermining cooperation in East Asia as it constrained economic opportunities within the region. Taiwan remains today one of the largest investors in Southeast Asia.

Asean does not want to jeopardise its good relations with China by becoming too friendly with Taiwan. However, in the future, there is optimism that China would allow more international space for Taiwan in ways that would not threaten its position and interests. As China, Japan and Korea move closer both in economic and financial policies and cooperation, the uncertainty faced by the region during this global financial crisis would be somewhat mitigated. This is good news for Asean and its effort to cope with the dire consequences of the global financial crisis.

The stronger friendship among the East Asian stakeholders will help Asean to realise the EAC in the next decade or even faster. It would also help the overall integration of the East Asian economy, known as Asean plus three.

When the EAC concept was floated in the early 1990s, it was dismissed as too focused on the region. The US at the time was also very hostile to the idea as it perceived it as a plot to isolate Washington from Asia's economic dynamism. However, the ongoing financial crisis has underlined the region's financial resiliency and importance for the US' overall economic health.

To accelerate the establishment of the EAC, the nuclear crisis on the Korean Peninsula must be resolved as soon as possible. At the moment, North Korea's nuclear ambitions remain the main obstacle to peace and stability within the region.

Pyongyang's isolationism and centralist economic system must be integrated with the rest of the region. This will take time. With all the East Asian stakeholders working together in better collaborative spirits, North Korea's leaders, especially Kim Jong-il, might have second thoughts and try to hop on the bandwagon.

A stable and forward-looking China will be crucial in influencing its eastern neighbour that the only path to peace and prosperity lies in its abandonment of its nuclear arsenal and participation in developmental paths that the rest of region is concentrating on.