The greatest challenge for creating an East Asian community is that East Asian countries are very diverse and varied in religion, culture, language, history, economic systems and levels of economic and social development such as trade openess, GDP per capita.

China’s vast size and unbalanced development levels between its internal regions with their respective levels of industrial stages and comparative advantages enable China to cooperate efficinelty with different countries in the region and in the world be it poor or rich, advanced or underdeveloped both veritucally and horizontally. This is to say that, China’s multi-layor and unbalanced economy enables the country to cooperate with variety of countries at different stages by giving a full cooperation in East Asia.

When the foreign direct investment began horizontally spread to China and to other East Asian countries, the early existed initiaitves such as the flying-geese and ladder patterned intra regional industrial trade and linkages were transformed into a chaos of comeptition in which countries in the region had started to compete with each other for more capital and financial resources and for an export market. It is often the case for China, not China facing a greater or direct competition but the other countries in the region who face a direct comptition with Chinese products.

Indeed, the rise of China and its rapid economic growth had a great impact on the traditional economic relations in the region and to the division of labour. Traditionally, trade was patterned under north-south linages with the comparative advantages, but since the drastic transformation in the East Asian trade relations form 1990s, the traditioanl linkage was replaced by vertical division of labour, which wasexpanded susbtantially in East Asia partly due to the global trade of spare parts. Countries such as Japan, United States and the EU took advatange from the manufacturing network in East Asia and outsourced their