China's "South-South" trade with Southeast Asia: unequal exchange and combined and uneven development

China’s unprecedented emergence as an economic and political power has created a new geopolitical economy for its neighbouring semi-industrialised and developing economies in Southeast Asia. China and the other BRICS countries’ emergence as major political and economic powers has important implications for other developing economies. Development policy and practice need to be re-though in alignment with existing and possible future trends. This paper examines China’s trade relationships with Thailand and Indonesia using the concepts of uneven and combined development (UCD) with unequal exchange. The key features of UCD in China and then Thailand and Indonesia are analysed. The mass of surplus value obtained through China’s trade with the developed economies has flowed into the considerable expansion in China’s imports from developing countries since 2000. China has maintained a consistent trade deficit and imported goods. Many developing economies have benefited from the resulting increase in exports. Yet the national-based historical processes of UCD have remained a major factor that determines the degree of economic development benefits that have flowed to China’s trade partners. Countries such as Thailand with existing developed class relations and manufacturing capital have engaged in the advantageous mutual exchange of more technologically intensive and skilled goods. These are produced with a similar organic composition of capital as China. The results has been a further consolidation of the hegemony of these sectors of capital. Indonesia, on the other hand, has a political system and economy long dominated by resource exploitation linked fractions of capital. The result has been a surge in primary goods exports. The current commodity price cycle has meant these goods exchange at prices above their value. Any looming price correction, however, may have negative repercussions. In the meantime, the concentration in raw materials exports is helping to prevent the emergence of a circuit of productive capital in manufacturing. The evidence in these cases suggests the degree that other developing economies can benefit from China’s combined and uneven development remains highly contingent on the outcomes of processes of UCD within these other national social formations. Above all there is the degree to which manufacturing sectors of capital can obtain hegemony.