China’s Crucial Role in APEC

By Carlos Aquino  Rodriguez – In 1994 the Bogor goals were established Asia-Pacific Economic Cooperation (APEC) with the aim to achieve by 2020 an area of free trade and investment among all member economies, but within three years of that date, it will be difficult to reach that objective.

That is why some years ago the idea of having a Free Trade Area of the Asia Pacific, or FTAAP, was proposed, and in the 2014 APEC Leaders’ Summit in Beijing, at China initiative, a study on how to achieve that was launched.

In the 2016 APEC Leaders’ meeting in Lima, Peru, the study was presented. It recommended that member economies should continue to work towards eliminating barriers to trade and investment, facilitate business and encourage cooperation, and to work in the existing efforts by regional groups, like the TPP and RCEP, to have a broad Free Trade Area of the Asia Pacific.

But after the 2016 APEC Leaders’ summit the environment surrounding members´ economies efforts towards a free and open system of trade and investment changed with the election of a new administration in the USA. This country, that was the main one pushing for the TPP agreement, supposed one of the pillars of the future FTAAP, decided to withdraw from the TPP, preferring bilateral to multilateral trade negotiations, and assume an attitude of isolating itself of the APEC members aim to have an open system of trade and investment.

Giving that situation, and the fact that China is the most important member of APEC in terms of economic weight, and the main engine of growth in the world economy, China role in APEC should become bigger. How can this be achieved? Below are some proposals for that.

With the withdrawal of the USA the TPP scheme weakened, but now under the leadership of mainly Japan and Australia, a TPP with eleven members is being pushed up. Another round of negotiations for this TPP11 agreement has just finished in Tokyo and its members hope to conclude a deal by the coming 2017 APEC Leaders’ Summit in Vietnam. As said before, the other pillar of the FTAAP is supposed to be the RCEP, but negotiations are not advanced as desired and an agreement will be not achieved this year.

China, as the biggest economy in this group should assume a leadership role in the RCEP. How? USA could attract countries with the incentive of access to its big market. China could do also the same in the RCEP, as its economy is increasing in its size and becoming more attractive. Opening China economy more is also one objective of its economic reforms as it will give its consumers access to a wider variety of goods and services and will encourage its companies to be more competitive

China could work within the mechanism of the Economic and Technical Cooperation (ECOTECH) scheme in APEC, where more advanced member economies give cooperation and technical advice to other members in several fields. China has already achieved advances in several areas where could give that cooperation, as in the following:

Environment protection: China still suffer of environment contamination in some cities and in certain periods of the year, and because of that it is becoming the world leader in technologies to replace fossil fuels, like solar panels, wind power, electric cars, etc. China can give technical advice and cooperation to other member economies in this field, as this is a common problem, especially for the less advanced economies.

Achieving food security is one of the main priorities in APEC, and is one of the four priorities that Vietnam has for this 2017 APEC year having putting it as “enhancing food security and sustainable agriculture in response to climate change”. In this case China is also making great contributions. It is already a big achievement that China can feed a fifth of the world population with less than 7% of available land. Not only that, recently Chinese scientists had made possible to grow rice in salty waters. The increasing presence of saline and alkaline soil in arable land areas is a growing problem in many countries, and this achievement by Chinese scientists will be of great help to many people in the APEC region, especially in Asia where rice is still the main dish.

The development of human resources is a question of the utmost importance in the APEC member economies and is a priority issue in ECOTECH agenda. China has also achieved great advances in this field as has been show by the upgrading of its industry, having transformed from being mainly a producer of cheap goods using unskilled labor to becoming more and more a producer of high value added goods using skilled labor. China investment in education and on research and development is allowing this, experience that could share with other less developed APEC member economies.

The lack of physical infrastructure (roads, seaports, railways, power grids, etc.), that makes connectivity difficult to achieve is a problem for many APEC members, and its solution will facilitate trade and business in the region. In this regard the Chinese initiative of Belt and Road is a proposal that should be promoted in the APEC fora.

China has the experience, the technology, the companies, the human and the financial resources to contribute with APEC economies in solving that problem and building the needed infrastructure. But the question of facilitating business in the region is not only a question of building physical infrastructure but also of promoting a payment system to increase online shopping and a cashless economy.

In this regard China is the most advanced country in the world providing a system of mobile payments with its Alipay o Wechat Pay schemes. More than half of China population use already this system, making it easier for business and people, and allowing millions of small businesses (including grocery stores, and taxis drivers for example) to do business just with their mobile phones. China should promote this technology and system payment in the APEC member economies.

The fight to corruption is also an important issue in APEC agenda. China fighting the corruption at all levels is showing how when a government has the willingness to carry on it could achieve success. China experience in this field could also be shared with other member economies.

Lastly, but not of the least importance, is the fact that China economy should continue growing and continue being the main engine of the world economy. Also it should continue its economic reforms and open more its economy. China importance in APEC could not be underestimated as it is already the biggest trade partner for most of its members (except of Mexico, Canada and perhaps another economy), is the main investors in many of them, the one that send most of the tourists (except to the economies of the American side of the Pacific), and most of its members will directly benefit from its initiative of Belt and Road.

 

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