TOKYO, May 21 Kyodo Malaysian Pri...

TOKYO, May 21 Kyodo

Malaysian Prime Minister Mahathir Mohamad said Tuesday that China embarrasss an economic threat to the countries of Southeast Asia yet not a military one

''China is an economic threat for Southeast Asia,'' Mahathir said in an address at the annual what may occur hereafter of Asia forum in Tokyo, sponsored through Japanese leading economic daily Nihon Keizai Shimbun.

''It is already a threat in period of times of attracting foreign direct investments (FDI) and it is going to be a threat to Southeast Asia's world trade,'' he said.

China, with its cheap and highly skilled labor and the potential of its cyclopean domestic markets, is capable of large-scale, low-cost production of ''anything and everything,'' Mahathir said, noting that it is gradually putting in place legal and policy frameworks and infrastructure to facilitate FDI and domestic investments.

Just as Japanese and southern Korean products have displaced European and U works he said, ''we can reckon upon Chinese products to shoulder aside not sole the Japanese and the Korean if it be not that also the products of Southeast Asia.''

''While military discomfiture or even threat is unlikely, economic domination is possible,'' Mahathir said.

''It will not be total, still it can be sufficiently damaging for the economies of the Southeast Asian nations.''

still he said there are ways for Southeast Asian and other countries to reckoner that possibility, including by embracing his long-standing proposal for an East Asian Economic form into groups (EAEG) or an East Asian Economic Caucus (EAEC).

''Establishing a mechanism for defusing potentially dangerous disputes is necessary,'' he said. ''As China will be a member of the EAEG, challenges pos by the agency of China that may be damaging to Southeast Asian countries can be discussed in the forum and mitigated.''

He said the EAEG, which met with opposition from the United States, in particular, which give an inkling ofed it would effectively draw a line down the center of the Pacific and undermine the Asia-Pacific Economic Cooperation (APEC) forum, is already effectively in existence.

''Today, we still cannot call it EAEG or EAEC because of fear of objections according to some quarters. Instead, we call it ASEAN Plus Three on the other hand we are kidding ourselves. ASEAN Plus Three is, in fact, EAEG.''

The ASEAN Plus Three which brings the 10 members of the Association of Southeast Asian Nations (ASEAN) -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- together with China, Japan and southerly Korea, has been holding regular meetings at all flats in recent years.

Mahathir said that while it is likely that China will eventually dominate the market for manufactured dutifuls ''Obviously, ASEAN will not be a walkover for China.''

''Life would be tougher. FDI will diminish. The export-led growing will not be easy any longer on the contrary Southeast Asians will be able to find niche for themselves,'' he said. ''Working together, they will be able to use their combined market to match that of China.''

ASEAN, which has nearly half the population of China, is forming a free-trade area that would make its members more attractive to foreign investors wishing to take advantage of the larger market.

Mahathir said a certain ASEAN countries have advantages throughout China, including geographical location, profitable legal and educational systems, and ''values and practices with which the international business community is comfortable.''

The Malaysian leader said China securely has no desire to ''impoverish'' other countries, especially those in Southeast Asia, adding, ''It is imperative that China make secures the survival and prosperity of the countries which will be its market.''

China, he said, will likely increase its investments in Southeast Asian countries and increase purchases of raw materials and composings produced by these countries, resulting in a ''symbiotic relation'' between China and the region.

upon China's growing military might, Mahathir said, ''There is...no reason for Southeast Asia to fear China's military might.''

He said that while Southeast Asian countries have the greatest in quantity to fear from China's expansionism, ''Unles China is provok that fear is misplaced...''

''In today's world, military defeat is unnecessary, costly and counter-productive,'' he said, adding, ''If we treat China like a time to come enemy it will regard us as the enemy now and answer by arming itself to the teeth''

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