Earlier in November, Beijing successfully hosted two big events – the APEC Economic Leaders’ Meeting and the Xi-Obama summit. The better-than-expected achievements have given rise to a powerful “APEC effect,” which will be of great significance to the Asia Pacific and the world as a whole.
The Beijing meeting helped lift APEC out of persistent doldrums. Before the meeting, APEC had been nicknamed a “talk shop,” because the organization failed to make substantive contributions in pushing forward Asia-Pacific regional cooperation. The enthusiasm among its members to participate in relevant agendas was also waning. Furthermore, the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) mechanisms, which 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 (FTAAP), 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 new impetus and purpose to APEC, whose role became obscured in the past few years. It will be of no exaggeration to describe the Beijing meeting as a “turning point” for APEC, which marked the end to its waning role and the beginning for a rebound.
The success of the meeting came with colossal input by the host. China’s goal is to share the fruits of its economic development with all member economies; not to seek only its own interest. To ensure a complete success of the APEC meeting, China made great efforts and invested enormously. During the meeting, China made commitments to donate USD 10 million to support APEC institutional and capacity building, and investing US 40 billion to establish the Silk Road Fund to 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 now has both soft and hard power 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 grab the central position in regional economic cooperation and seek to maximize its interest in renminbi internationalization and Chinese companies’ “going global” moves. China should know that it’s only natural if some neighboring countries express their concerns. But this could not, and should not, waver China’s confidence in promoting regional cooperation. In implementing projects agreed upon during the APEC meeting, it’s time for China to better explain to the neighboring countries and show its commitment to regional development so as to dispel their concerns and let the “APEC effect” bear fruits. The “APEC effect” is significant because it will serve the Asia-Pacific regional cooperation and the 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 complicated rules and standards of the FTAs and the “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 they continue with bilateral or smaller-scale multilateral FTA talks, it will further worsen and accelerate the trend of “fragmentation” and the “spaghetti bowl effect.” But, if they don’t do so, they might be left behind amid the fast-evolving environment and their economies might suffer. Under such a circumstance, new direction and vision for Asia-Pacific cooperation are urgently needed. A lunch for discussion of the FTAAP process, advocated by China, will provide a new opportunity for speeding up the regional economic integration within the APEC framework, will be conducive in 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 enlivening the stagnant global economy. At present, the Eurozone is still struggling on the road of recovery, and some countries there are on the verge of plunging into recession again. The global economy as a whole faces mounting risks of a slowdown, so new growth engines are needed to shore up the economy. The Asia-Pacific region, which is known as an engine for the global economy, shoulders the responsibility in helping lift the global economy 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 USD 2.4 trillion in output value to the global economy, and in comparison, the TPP is estimated to be able to make a contribution of only USD 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 in building an open and liberal economic and trade environment in the region. Just as President Xi Jinping said in the closing remarks of the APEC 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.”
