Despite the fact that China is not exceptionally sanguine about the prospect of East Asian integration, it has taken a proactive stance on bilateral and multilateral economic cooperation. China has worked hard to push for bilateral FTAs with various East Asian states—for example, South Korea and Japan—but at the same time has strenuously pushed for economic collaboration at the multilateral level. Some Chinese analysts believe that bilateral FTAs could be beneficial to parties in the bilateral frameworks, but bilateral agreements that work parallel to each other could bring about various costs—for instance, policymaking and administrative expenditure, industrial readjustment costs and increased trade transfers that could offset the benefits of comparative advantage (Ronglin 2005). Thus, Beijing favours liberal multilateral economic cooperation.

China’s early interest in economic multilateralism had its origin in political considerations. When the former Malaysian leader Mahathir bin Mohamad made the proposal to set up an East Asian economic group in December 1990 during a visit to Beijing, then Chinese Premier Li Peng immediately responded positively, indicating that China’s consent was largely a political decision instead of one made after careful deliberation of economic costs and benefits. Former Chinese Presidents Yang Shangkun and Jiang Zemin on different occasions between 1992 and 1994 expressed China’s support for such an idea, showing China’s enthusiasm for such a regional economic grouping (Jianren 2008). China’s early interest in economic multilateralism was related partly to its desire to end its diplomatic isolation in the aftermath of the Tiananmen Square episode.

Over the years, China’s growing interest in multilateral economic regimes has been a reflection of a mixture of economic and political interests. In 2001, Beijing proposed the FTA with ASEAN together with some flexible measures such as the early harvest scheme. This move was seen widely as being driven partially by China’s political goal of reassuring ASEAN countries of its benevolence and further defusing the ‘China threat’ in the region. There are, of course, other multilateral projects in South-East Asia in which China plays an active role—for instance, the Greater Mekong River Basin project and the emerging pan-Tonkin Gulf regional economic zone. The Kunming Initiative, although supported by China, has, for various reasons, not made much progress.

In North-East Asia, China is also engaged in a number of multilateral economic projects, the largest of which is the Tumen River regional development, initiated by the UN Development Program (UNDP) in 1991. This project covers a wide range of areas, including investment, trade, transportation, environmental protection, tourism, human resources, communications and energy. Japan, however, has not participated fully, but has instead joined as an observer only (Guoping 2007). Chinese scholars have also been advocating the Bohai economic circle in order to further develop the economy in northern China and to revitalise the industrial base in north-eastern China. This subregional economic zone would require the participation of South Korea and Japan (Ziheng 2004).

China is also enthusiastic about a trilateral FTA between China, South Korea and Japan. In 2002, China made an informal proposal for such an FTA. A joint research group completed a feasibility study in 2003, concluding that a trilateral FTA would be very beneficial to the three economies. The group also conducted a feasibility study on possible modes of trilateral investment arrangements and concluded that such arrangements would contribute to economic growth in the three countries. At the informal meeting in Bali, Indonesia, in 2003, leaders of the three countries signed a joint statement on the promotion of trilateral cooperation on trade and investment facilitation. Since then, the three parties have made some progress in adopting facilitation measures in customs, networking of ports, communications and environmental protection.

In official Chinese planning, an FTA among the 10+3 countries should ultimately take shape. A Chinese study concluded that a 10+3 FTA would contribute economic growth of 1.96 per cent and 0.34 per cent to China and Japan respectively (Lijun 2007). At the 2004 ASEAN–China summit, Chinese Premier Wen Jiabao called for an FTA in East Asia and an East Asian community based on such an FTA. This clearly shows China’s strong desire to push for broader economic multilateralism in East Asia. The incentive for such preference is derived increasingly from the inherent need of China’s domestic economic growth. China is increasingly becoming the trading and production centre of East Asia. According to some estimates, the volume of China’s foreign trade is likely to overtake that of Japan and be close to that of the United States by 2020. By then, more than half of China’s imports will come from other East Asian countries. In the coming 20 years, China is likely to maintain notable surpluses in its trade with the United States and Europe and large-scale deficits with East Asian countries. On the basis of the expected economic interdependence, Chinese analysts recommend that a future East Asian FTA could be formed on the basis of China–ASEAN, South Korea–ASEAN and Japan–ASEAN FTAs (Yunling 2006). Likewise, in Central Asia, China has exhibited much interest in multilateral economic cooperation. At the 2003 SCO summit, Premier Wen proposed setting up a free-trade area among member states of the organisation. China’s active involvement in Central Asia has stemmed largely from its need for secure and diversified energy supplies to safeguard its rapidly developing economy (Andrews-Speed and Vinogradov 2000).