From talking shop to action The ‘APEC effect’ shows China is playing a key role in propelling greater regional cooperation and global economic development
InNovember, Beijing successfully hosted two big events: the Asia-Pacific Economic Cooperation Economic Leaders’Meeting and the summit between Chinese President Xi Jinping andUS President Barack Obama. The better-than-expected achievements that resulted have given rise to a powerful “APEC effect,” which will be of great significance to the region and the world as a whole.
The Beijing meeting helped lift APEC out of its persistent doldrums. Before the meeting, APEC had been labeled a talking shop, because the organization failed to make substantive contributions to pushing forward Asia-Pacific regional cooperation. The enthusiasm among its members to participate in relevant agendas was also waning. Furthermore, the Trans-Pacific Partnership Agreement and Regional Comprehensive Economic Partnership mechanisms, which have emerged in the past three years, posed big challenges to the influence of APEC.
The unprecedented Beijing meeting, however, put forward initiatives such as the Free Trade Area of the Asia-Pacific, the Blueprint on Connectivity and the global value chains, which will jointly play a leading role in driving interconnected and dynamic growth. The meeting and the initiatives will help rejuvenate and speed up Asia-Pacific economic integration, while injecting newimpetus and purpose into APEC, whose role had become obscure in the past fewyears. It is no exaggeration to describe the Beijing meeting as a “turning point” for APEC, marking the end to its waning role and the beginning of a rebound.
The success of the meeting was thanks to colossal input from the host. China’s goal is to share the fruits of its economic development with all member economies, not just seek its own interests. To ensure the complete success of the APEC meeting, China made great efforts and invested an enormous amount of money. During the meeting, China made commitments to donate $10 million to support APEC institutional and capacity building, and invested $40 billion to establish the Silk Road Fund, which will provide investment and financing support for countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road to undertake infrastructure projects. At the meeting, more than half of the initiatives that were finally adopted were proposed by China. This is a clear indication that China is both willing and capable to serve and assist Asia-Pacific cooperation, and can play an admirable role in the global economy and politics.
Some countries, however, are concerned about China’s growing influence and strength, fearing that China will seize the central position in regional economic cooperation and seek to maximize its interests through internationalization of the renminbi and the “going global” moves of Chinese companies. It is only natural for some neighboring countries to express their concerns. But China’s determination in promoting regional cooperation should not waver. In implementing projects agreed upon during the APEC meeting, it’s time for China to better explain its intentions to neighboring countries and show its commitment to regional development so as to dispel their concerns and let the “APEC effect” bear fruit.
The “APEC effect” is significant because it will serve Asia-Pacific regional cooperation and global economic development.
First, the rejuvenated APEC is expected to optimize the free trade pattern in the Asia-Pacific region. According to the Asian Development Bank, the number of FTAs in Asia had increased to 109 by the end of 2013 from 36 in 2002, and 148 more are still under negotiation – a number far exceeding any other region in the world. The region has many countries with greatly varying levels of development. This leads to FTAs with complicated rules and standards and “fragmented” development patterns.
However, the integration process of the Asia-Pacific region has progressed at a slow pace, and the process of the TPP and RCEP has also been stalled since the beginning of this year. If countries in the region continue with bilateral or smallerscale multilateral FTA talks, the situation will further worsen and the trend of “fragmentation” will accelerate resulting in a “spaghetti bowl effect”. But, if they don’t do so, they might be left behind amid the fastevolving environment and their economies might suffer.
In such circumstances, a new direction and vision for Asia-Pacific cooperation was urgently needed. The FTAAP advocated by China provides a newopportunity for speeding up regional economic integration within the APEC framework. It will be conducive to coordinating and unifying the rules and standards within the region, and will help ease and prevent the “fragmentation” in economic cooperation in the region. This will be an important step in building a more open and liberal Asia-Pacific economic pattern.
Second, China has a role to play in driving and revitalizing the stagnant global economy. At present, the eurozone is still struggling on the road of recovery and some of its economies are on the verge of plunging into recession again. The global economy as a whole faces growing risks of a slowdown, so new growth engines are needed to shore up the economy. The Asia-Pacific region, which is the engine for the global economy, shoulders the responsibility of helping lift it out of recession.
According to estimates by the Pacific Economic Cooperation Council, the high-level FTAAP, which would encompass every Asia-Pacific economy, is expected to contribute about $2.4 trillion in output value to the global economy. In comparison, it is estimated the TPP will be able to make a contribution of only $223 billion. The realization of further trade and investment facilitation and liberalization in the Asia-Pacific region holds the key to economic growth, and the FTAAP will become an important driving force for growth of the global economy.
The APEC Beijing meeting came to a successful end, with a roadmap and blueprint charted; it is now the time for action and implementation. Despite the pressure and difficulties, all APEC member economies should be fully confident of building an open and liberal economic and trade environment in the region. Just as President Xi said in his closing remarks at the APEC Economic Leaders’Meeting: “Later, when we look back at the history made here today at Yanqi Lake, we can say with pride that we did the right thing.” The author is a researcher with the Institute ofWorld Political Studies, China Institutes of Contemporary International Relations. Courtesy: chinausfocus.com