China will host the Asia-Pacific Economic Cooperation (APEC) this year as it coincides with the 25th anniversary of APEC’s establishment. Building upon past achievements and shaping its future, APEC has a noble and arduous task laid ahead.
To take stock of APEC’s past development, we will find fruitful results achieved over the past 25 years. It has pursued the Bogor Goals, pushed for a list of environmental goods and carried out cooperation on global supply chain. All these efforts have greatly enhanced trade and investment liberalization and facilitation in the Asia-Pacific and promoted regional integration.
Over the past 25 years APEC has developed an economic growth strategy that has enabled the Asia-Pacific to become an engine for the global economy and brought about significant changes to the global political and economic landscape. It has upheld the multilateral trading system and played an important role in concluding the Uruguay Round negotiations, WTO "IT Products Agreement" and early harvest talks of the Doha Round negotiations held recently in Bali, Indonesia.
On the other hand, we will also see challenges facing APEC. First, APEC’s relevance is on the decline. In recent years, the G-20 and other international cooperation mechanisms have emerged one after another. They have been instrumental in coordinating macroeconomic policies, advancing the reform of global economic governance and tackling the international financial crisis. By contrast, despite the rising strength and influence of APEC members, the status and the role of APEC itself has somewhat declined.
Second, APEC is short of becoming a strong, driving force for economic growth. The international financial crisis has brought not only serious difficulties to the developed economies, but also tremendous shocks to the emerging economies. Recently, there have been signs of a global economic recovery, yet such a recovery is weak and uneven. APEC needs to address the deep-seated growth problems, accelerate structural reforms and seek new growth areas and sources for member economies in order to contribute to the strong, sustainable, balanced and inclusive growth of the global economy.
Third, the trend towards fragmentation is on the rise in the region. Over the same period of time the region has witnessed a proliferation of bilateral and multilateral, regional and sub-regional cooperation mechanisms. When APEC was first established, there were only 3 free trade agreements (FTAs) in the Asia-Pacific. At present, there are 56 FTAs including 2 mega trade arrangements under negotiation, namely, the Regional Comprehensive Economic Partnership (RECP) and the Trans-Pacific Partnership (TPP). How to ensure that the various free trade arrangements in this region will complement and reinforce each other rather than engage in malignant competition? This is a serious question currently facing APEC.
Against this backdrop, China has proposed the theme of “Shaping the Future through Asia-Pacific Partnership” for this year's APEC. The theme reflects the region’s dynamism and ability to forge a closer partnership to meet challenges and achieve long-term regional growth and development. China’s main priorities as host will be working for regional economic integration, providing a strong driving force for economic growth and paving the way for Asia-Pacific connectivity.
Given those priorities, it is vital that APEC strengthen top-level design and overall planning, set out ambitious goals and blueprint for cooperation and explore APEC's mission in a new era so as to enhance the region’s economic growth and development.
China-US cooperation is indispensable for APEC working on these issues.
As the world's two largest economies, both China and the US need the sustained growth of the global economy. According to estimates by the Office of the US Trade Representative, the Asia-Pacific region accounts for 60% of the world’s GDP and 50% of international trade. Without sustained economic growth in this region, there will not be sustained growth for the global economy. Therefore, it is essential for China and the US to cooperate in resolving problems plaguing the regional economic recovery.
Additionally, both China and the US need an open, free and inclusive regional and global trading system. RCEP consists of 10 ASEAN member countries and its FTA partners (China, Japan, Korea, India, Australia and New Zealand), with a population of 3.5 billion people and total GDP of $23 trillion. On the other hand, TPP is made up of the United States, Japan, Australia, Vietnam, Peru, Malaysia, Canada, Mexico, Singapore, Brunei, New Zealand and Chile, with a population of 800 million and total GDP of $24.91 trillion, and will become the world's largest free trade zone. However, RCEP includes China but not the US, and TPP includes the US but not China. Both China and the US bear important responsibility to address issues of inclusiveness and economic integration. China and the US should step up cooperation on transparency and communication. Undoubtedly, China-US cooperation in this area will improve expectations and enhance market confidence, which will be conducive to sustained growth of the global economy.
APEC is not only an important platform for China-US cooperation, but also part of an undertaking to build a new type of major power relationship between China and the US. China’s main priorities as host of APEC this year will be to open up new areas for cooperation between the two countries. We have reason to believe that through close cooperation and communication between China and the US, APEC this year will make new breakthroughs and progress, outline a vision for future development on the basis of achieving the Bogor Goals, and add new dimensions to the Asia-Pacific Partnership. From this perspective China-US cooperation will be the key to the success of APEC’s 25th anniversary this year. Together we can work with all APEC economies to meet challenges and create a better future.
Wu Zhenglong is a senior research fellow at the China Foundation for International Studies.
