Yingshi Gao, Journalist – CGTN
On Nov.15, leaders from 21 economies in the Asia-Pacific area will gather in San Francisco for the 30th Asia-Pacific Economic Cooperation (APEC) summit. Established in 1989, the APEC has become a regional economic forum connecting the Asia-Pacific region. Its foundation rests on the principle of voluntary cooperation among its members instead of formal treaties, with decisions made by consensus.
In recent years, the increasing Asia-Pacific region’s economic position has leveraged the APEC position. The member economies of APEC vary widely in terms of area, population, and level of economic development, but collectively, they represent over 60% of global GDP. APEC members cover nearly 3 billion people, about 38% of the world’s population. The APEC works to lower trade barriers across the Asia-Pacific region, facilitating an easier and more efficient exchange of goods, services, and investment among member economies. It also promotes the integration of the regional economies, thereby helping to create larger markets and opportunities for businesses. The APEC Trade Facilitation Action Plan (TFAPI) has contributed to a reduction of 6% in the cost of business transactions across the region between 2002 and 2006.
Within the APEC framework, the intricate dance of diplomacy between China and the United States takes center stage. As the world’s leading economies, their interaction within APEC provides insights into the broader state of their bilateral relations.
In recent years, the trade war launched by the US and increasing competition have worsened China-US relations and created barriers to bilateral communications.
This heightened competition has led to uncertainty, not just within the spheres of the two superpowers but across the global marketplace, as nations and businesses watch and react to the fluctuating levels of cooperation and contest. However, we might see changes in this downward relations trend in the upcoming APEC summit.
In 2023, both sides start to send positive signals to save this endangered relationship. US Secretary of State Antony Blinken’s visit to Beijing in June, along with his discussions with Chinese leadership, was a significant step towards diplomatic re-engagement. Correspondingly, Chinese Foreign Minister Wang Yi’s visit to the United States and his talks with President Biden have set the groundwork for President Xi Jinping’s participation in the APEC summit.
That’s why the APEC summit presents an opportunity for both nations to adjust their way of interaction. China-US relation observers will be watching the APEC summit closely for signs of rapprochement or further divergence. In some way, the upcoming summit has become a Waterwane for China-US relations.
Besides its political function, APEC remains an important crisis response platform that allows economic officials to coordinate economic policies in response to potential global economic slowdowns.
Historically, APEC has been crucial in navigating past economic crises. During the Asian economic crisis of 1997-1998, APEC played a significant role in mitigating the crisis by promoting regional economic integration and cooperation. Its response to the crisis was focused on reinvigorating growth and investment in the region by pushing forward on trade and investment liberalization, strengthening markets, and institutional and human capacity. At the
2008 Financial Crisis, world leaders gathered at the year’s APEC summit in Peru and reached a consensus to promote economic recovery through free trade and increasing investment.
The current climate necessitates a multilateral approach to economic policy. According to the New York Fed recession probability indicator, there’s a 56% chance of US economic recession in the next 12 months, and APEC’s role becomes increasingly crucial. APEC economies may consider deploying a mix of fiscal, monetary, and structural policies tailored to the individual and collective needs of the member economies. This could include coordinated stimulus measures, targeted support for vulnerable sectors, and commitments to maintaining an open trading system that has been the cornerstone of APEC’s economic philosophy. Of course, this coordination couldn’t have happened without rebuilding trust between the two largest economies. APEC’s ability to facilitate this process — ensuring that the US and China work collaboratively rather than at cross-purposes — will significantly influence the effectiveness of measures taken to cushion the impact of the anticipated downturn and could set a precedent for global economic cooperation in the face of uncertainty.
During the trust-building process, while the leaders’ summits may capture the headlines, it is the profound yet less visible interactions at various subordinate levels that are often the most critical. Throughout the year, APEC hosts a series of meetings, workshops, and policy dialogues involving ministers, senior officials, and technical experts across different sectors such as trade, finance, education, energy, and technology. These gatherings are crucial in developing consensus on pressing regional issues.
In addition to government-to-government communication, APEC also encourages people-to-people ties through its Business Advisory Council (ABAC) and various forums that connect industry professionals, scholars, and civil society. These connections help to build a fabric of trust and cooperation that underpins peaceful and productive relations within the region. By providing these channels of communication, APEC plays a vital role in reducing tensions and fostering a sense of community within the Asia-Pacific region, thus contributing to the broader objective of regional stability and prosperity.
The upcoming APEC summit will show the strategic interplay of Asia-Pacific economic cooperation and serve as a bellwether for China-US relations. With the tradition of encouraging economic cooperation, the summit aims to navigate the global economy through threats of looming recession. Moreover, the summit is a chance to reaffirm the importance of open communication and trust-building at all levels of diplomacy beyond the spectacle of leader summits. By doing so, the APEC could strengthen its role as a platform promoting Asia-Pacific stability and prosperity.
