China and South East Asian nations to create the world's largest free trade area

The People's Republic of China has signed an agreement with ASEAN to establish the world's largest free trade area. Japan, South Korea, New Zealand, India and Australia are considering joining. ASEAN members include Myanmar, Laos, Thailand, Cambodia, Vietnam, Philippines, Malaysia, Brunei Darussalam, Singapore and Indonesia.

In the last four years China has become a major importer of oil and commodities, and a major exporter of finished goods. China has also strengthened relationships with oil suppliers in the Middle East and Africa. This pact lifts trade restrictions and removes tariffs from many imports and exports. It also allows China to continue manipulating the value of its currency in its own interests. The yuan is currently undervalued, making Chinese-made goods artificially cheap for foreign importers.

Stated in the agreement is ASEAN's intention to create a unified economy--and by implication polity--similar to the EU. This agreement will cement China's role as the center of the South Asian regional economy, and at the same time strengthening bonds between China and other countries in the region and ease their suspicions over a growing superpower.

Japanese Prime Minister Junichiro Koizumi and South Korean President Roh Moo-Hyun separately adopted accords with the 10-nation Association of Southeast Asian Nations, agreeing to launch the talks early next year. Both agreements aim for trade pacts within two years. Australia and New Zealand are expected to sign similar agreements with ASEAN before discussions close later Tuesday, although ASEAN remains wary of Australian Prime Minister John Howard's refusal to sign its nonaggression treaty. Howard played down these concerns but said on record that he reserves the right to preemptively act against terrorists on foreign soil if they threaten Australia.