HONOLULU -- Southeast Asian politicians and business professionals continue to insist that China's rise is "an opportunity, not a threat" to their future. That sounds a lot like whistling past the graveyard. The Chinese market is so big and has such a wealth of human and material resources that conventional remedies won't afford Southeast Asian business a future. Rather, their governments need to radically readjust their thinking and their policies to deal with the new economic order that China is creating.
Thailand is doing just that. In a little noticed experiment, the government of Prime Minister Thaksin Shinawatra is mobilizing resources to embrace a new development strategy, one that turns its back on head-to-head competition with China in mass export markets and focuses on its comparative advantage in smaller-scale production. The Thai program has won applause from analysts despite initial skepticism (and concern about the way funds are used).
Southeast Asia has depended on an export-oriented mass manufacturing model as the engine of its economic development. The model is drawn from the Japanese experience and has been remarkably successful -- at least until China began its meteoric rise.