Page last updated at 02:59 GMT, Monday, 13 April 2009 03:59 UK

China offers funds to boost Asean

Some of the Asean members at the summit
Chinese, Asean and other leaders had to be airlifted out of Thailand

China has unveiled plans to establish a $10bn (£6.8bn) investment fund for south-east Asian countries.

It has also offered credit of $15bn to the Association of South-East Asian Nations, or Asean.

Chinese Prime Minister Wen Jiabao had planned to announce the fund at the cancelled Asean summit this weekend.

Asean was set up in 1967 in part to counter influence from communist China but has since become a vehicle for close ties.

The collapse of the Asean summit, scheduled in Pattaya, Thailand, this weekend, delayed the conclusion of a key investment agreement between China and the economic bloc.

That deal is intended to create the world's largest free trade area, covering nearly two-billion people.

China funds

China's Foreign Minister, Yang Jiechi, announced the new funding plans in Beijing to a gathering of envoys from the 10 members of Asean - Indonesia, Singapore, Malaysia, Thailand, the Philippines, Brunei, Burma, Laos, Cambodia and Vietnam.

The $10bn investment fund was designed for cooperation on infrastructure construction, energy and resources, information and communications, China's state news agency Xinhua quoted Mr Yang as saying.

Over the next three to five years, China planned to offer $15bn in credit, including loans with preferential terms of $1.7bn in aid for cooperation projects.

China also planned to offer 270 million yuan ($39.7m) in special aid to Cambodia, Laos and Myanmar to meet urgent needs, inject $5m into the China-Asean Cooperation Fund, and donate $900,000 to the cooperation fund of Asean Plus-3, the side grouping of Asean plus China, Japan and the South Korea.

Asean leaders at signing ceremony, Vientiane 2004
Several South- East Asian economies rely heavily on exports to China

China said it would provide 300,000 tons of rice for the emergency East Asia rice reserve, and more government scholarships.

"The overall thought for China-Asean cooperation is that the two sides should rise to difficulties in face of the grim global financial crisis, and make efforts to convert unprecedented challenge into opportunity for closer pragmatic cooperation and common development," Mr Yang said.

Region watching

China has played a larger role in recent years in the export-dependent economies of South East Asia, as a market for goods and raw materials and as a source of investment.

It has been active in building roads and other transport links through Laos, Burma and Cambodia, linking southern China to South East Asian resources and ports.

During the financial crisis of 1997-98, China also offered support to South East Asian economies.

Analysts have noted that while its economic role is increasing, Asean remains strategically linked to the stronger military power of the US.

Tensions persist between China and the many south-east Asian claimants to groups of islands in the South China Sea.

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