The Global Think Tank - Click here to learn more...

APEC: Views from Beijing

Penghong Cai, Wentao Li, Yuzhu Wang, Douglas H. Paal Wednesday, October 19, 2011 – Washington, D.C.
Resources

President Obama will spend more than a week in the Pacific this November, hosting the APEC leaders meeting and attending the East Asian Summit for the first time. The interaction with China will be among the main events in this high visibility effort by the United States to “rebalance” its attention to Asia. 

CAI Penghong, LI Wentao, and WANG Yuzhu, visiting experts from China, joined Carnegie's Douglas Paal to review the prospects for this interaction.

Regional Economic Dynamics

  • Profusion of Free Trade Agreements (FTAs): In the 20 years since China joined APEC, there has been a profusion of free trade agreements among countries within the region, matched by a trend towards regionalism, Cai said.
     
  • Problems Facing Integration: Li pointed out that Asia Pacific regional economic integration is problematic for a number of reasons, including competition between different Regional Trade Agreements (RTA) FTAs, disagreement over regional leadership roles, and too many competing conceptions of what  a regional economic grouping might look like.
     
  • Different Approaches: Li explained that different powers in the region back different approaches to economic integration:

    • ASEAN uses the ASEAN+1 format as a way to balance regional powers.

    • China prefers the ASEAN+3 format.

    • Japan, however, prefers the ASEAN+6 format, which includes other countries and discusses security and strategic issues.

  • An East Asian Community:  In 2009, Japanese Prime Minister Hatoyama spoke out in favor of the creation of what he called an “East Asian Community.”  China’s response at the time was unenthusiastic. Wang argued China’s President Hu Jintao did not respond to Hatoyama at that time because China was unprepared for the comment; he did not think the lack of response indicated a calculated strategy by Beijing. Vice-President Xi Jinping has since spoken favorably about the idea, but China’s main target remains domestic economic growth, Wang pointed out.

The Future of APEC

  • APEC’s Future Options: Cai cautioned that APEC’s future success ultimately depends on enacting binding reforms.  He described four different possible regional economic forms:

    • Free trade network: A network of bilateral and multilateral FTAs could be implemented. Such a network would be comprehensive but overlapping.

    • Free trade hub: A major leading free trade agreement group would play the role of a hub for the region.

    • Trade liberalization: Lowering trade barriers in the region.

    • The Trans-Pacific Partnership (TPP): A regional trade agreement proposed by the U.S. between the U.S. and eight countries, not including China.
  • Inadequate Mechanisms for Integration: Li pointed out that regional economic integration through existing mechanisms would bring complexity and uncertainty to the future regional environment.  For example, creating a new regional approach through the TPP or an ASEAN+3 grouping would be hard to develop consensus around, Li argued.
     
  • More Effective APEC: APEC’s approach emphasizes diversity, which Li argued makes it an attractive choice for a mechanism to aid regional economic integration. Li concluded that concrete actions to reform APEC and standardize RTAs and FTAs would be needed to help make APEC more effective.

China’s Preferences and Aims

  • China’s Economic Strategy: China’s economic relationships are the most effective way for Beijing to engage other countries in the region, Wang said. As a result China has made a pragmatic choice to choose regional economic integration over political or security integration.
     
  • China’s Domestic Pressures: Wang also pointed out the domestic need for economic growth in China is the prime motivator of Beijing’s push for regional economic integration. This factor should not be ignored, he warned.
     
  • Long-term Goal: Cai asserted that China’s ultimate goal is to strengthen the regional multilateral system and encourage further bilateral FTAs.  In particular, it would prefer to see ASEAN take the leading role.
     
  • China’s ‘Weird Situation’ : Wang argued China’s position as the world’s second largest economy, juxtaposed with the fact its economy is still developing,  puts China in a ‘weird situation’.  As a result, Wang said, Chinese leaders vacillate on whether to see their regional role as a leader or a less active actor.

Regional Preferences

  • China: China prefers the ASEAN+3 grouping as a way to promote quick regional integration, Wang said.
     
  • Japan: Wang also argued that Japan, as the traditional leader of Asia, does not like ASEAN+3 because it feels that approach marginalizes Japan.
     
  • TPP: Beijing is still not sure about how the TPP will affect regional economic performance, both Wang and Li noted.

 

 
Source: www.carnegieendowment.org/events/?fa=eventDetail&id=3410
Featured Publication
Financial Times, October 5, 2011

U.S.-China Trade War: Congress Beware What You Wish For

Far from resolving America's economic woes, targeting China's currency will only result in higher prices for U.S. consumers and reduced global demand.

More Related Publications...
Related Events
 

Carnegie Resources

Quotes on Carnegie - Praise for the Global Think Tank
“[Carnegie is]…one of the centers of gravity of thinking about national security matters in our country.” – General Martin Dempsey, Chairman of the Joint Chiefs of Staff
“Carnegie remains a first-rate source of policy analysis and practical guidance on all the major international issues and I rely on the advice and counsel of many Carnegie scholars.” – John McCain, U.S. Senator
“The Carnegie Endowment has been a training ground for many of the all-stars in the State Department….” – Madeleine Albright, Former Secretary of State
“I appreciate its work in the area of peace.” – Kofi Annan, Former Secretary-General of the United Nations
“I cannot think of a better alignment of communication, information, and getting people together.” – Eric Schmidt, Executive Chairman of Google
“The Carnegie Endowment for International Peace is the #3 think tank in the world.” University of Pennsylvania 2011 Global Think Tank Rankings
“[T]his great vision of becoming a global think tank [is] badly needed in an interconnected world.” – Nicholas Burns, Undersecretary of State for Political Affairs
“One of the most globally trusted talking-shops.” The Economist
“The Carnegie Endowment for International Peace is the #3 think tank in the United States.” University of Pennsylvania 2011 Global Think Tank Rankings
“It is truly a global think tank…completely and appropriately reflective of the nature of the challenges that we face today.” – John Kerry, U.S. Senator
“A force for global peace and security for 100 years.” – John Brennan, Homeland Security Advisor
“An excellent institution that does important work to help establish stronger international laws and organizations.” – His Royal Highness Prince Turki Al-Faisal
“The Carnegie Moscow Center is the top think tank in Central and Eastern Europe.” University of Pennsylvania 2011 Global Think Tank Rankings
“The Carnegie Endowment…has for a century been dedicated to understanding and preventing war and its myriad causes.” – Robert Gates, U.S. Secretary of Defense
“The Carnegie Endowment is known on both sides of the aisle with great deal of respect for your active international engagement….” – Michael Turner, U.S. Congressman
“[This event is]… a testament to the success that you’ve had in transforming Carnegie… into a truly global think tank.” – Leon Panetta, U.S. Secretary of Defense
“The Carnegie Middle East Center is the top think tank in the Middle East and North Africa.” University of Pennsylvania 2011 Global Think Tank Rankings

From Carnegie's Global Network

Syrian Regime Cannot Conceal An Economy in Rapid Decline

Ibrahim Saif
Tuesday, May 22, 2012

No one is fully knowledgeable about the state of the Syrian economy, how exactly it has been affected by the events taking place in the country, or how to interpret the choice economic indicators issued by Syrian officials.

Future Challenges for U.S.-China Relations

Michael D. Swaine, Yan Xuetong, Paul Haenle, John Pomfret, Yuan Peng
Tuesday, April 17, 2012

The U.S. pivot to the Asia-Pacific has created both tension and opportunity in its relations with China.

Saving the Euro without Losing the Europeans

Stefan Lehne
Wednesday, May 23, 2012

Eurozone; Euro Crisis The gap between the efforts to deepen integration in order to save the euro and what most people really think should happen is wider than it has ever been before.

Why I'm Optimistic About Putin's 4th Term

Nikolay Petrov
Monday, May 21, 2012

The Russian political system is likely to undergo some changes this year, perhaps even serious ones — not because Putin wants them, but because elements of Putin's inner circle are convinced that the government must take some of the protesters' demands seriously.

Connect with Carnegie

Stay in the Know

Sign up for Carnegie announcements and publications—including Carnegie This Week—by filling out the form below. Note—fields marked with an asterisk (*) are required.

Personal Information
 
 
 
1779 Massachusetts Ave. NW Washington, DC 20036-2103 Phone: 202 483 7600 Fax: 202 483 1840