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Singapore, the Malaysian State of Johor and the Indonesian Riau Islands especially
Batam, and (3) the Yellow Sea Economic Zone comprising South Korea, Southern
Japan and Northern China. Another economic zone in the forming is the Greater
Indochina Economic Zone comprising Thailand, Indochina states, Burma and the
Yunnan Province of China. The "spillovers" of Thailand's overheated economic growth
is a major impetus for the emergence of this Economic Zone.
The prevalence of sub-regional economic zones is based mainly on the principle of
"sharing" resources and initiated by the high degree of "economic complementarity".
Since the economic benefits are so high, counteracting political forces can, in many
be overcome. We take the South China Economic Zone and the Growth
cases,
Triangle as éxamples.
of trade and investment.
relationship, all economic
Economic cooperation in the South China Economic Zone mainly takes the form
Since Taiwan and China have not established diplomatic
transactions have to be conducted via an intermediary,
usually Hong Kong. Both Hong Kong and Taiwan need the import of cheap raw
materials and semi-finished manufactures from China, whereas China needs the import
of capital goods, especially machinery for industrial purposes, from Hong Kong and
Taiwan. In fact, the prices of raw materials from China are often cheaper than those
from other developing countries in the region. In investment, since Taiwan and Hong
Kong are suffering from rising labour cost, it is no longer profitable to manufacture
labour-intensive products in these countries. As a result, over the years there has been
a massive relocation of labour-intensive production process from Hong Kong and
Taiwan to China to lower production cost. FDI of this motive mainly takes the form
of out-processing. In this case, China is contributing land and labour whereas the other
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