China uses APEC to boost regional role

AP News
Posted: Nov 10, 2014 10:54 PM
China uses APEC to boost regional role

HUAIROU, China (AP) — Chinese President Xi Jinping called on Asia-Pacific leaders Tuesday to strengthen trade ties at a summit Beijing is using to boost its role as a regional power with a flurry of trade and finance pacts.

Speaking at the opening ceremony of the Asia-Pacific Economic Cooperation summit, Xi called for progress on a "road map" toward closer economic integration among the group's 21 member economies. They include 40 percent of the world's population and 60 percent of global economic output.

"Clarify the goal, the direction, the road map," Xi told the leaders including President Barack Obama and Russia's Vladimir Putin. "At an early date, let prospects become reality and make the two sides of the Pacific highly open and integrated."

APEC, which also includes Japan, South Korea and Australia, is the first major international gathering in China since Xi took power. The presence of world leaders gives Beijing a platform to lobby for a bigger leadership role.

On the eve of the gathering, Beijing announced a free-trade agreement with South Korea. Also Monday, regulators approved a plan to open Chinese stock markets wider to foreign investors by linking exchanges in Hong Kong and Shanghai. That followed the weekend announcement of a $40 billion Chinese-financed fund to improve trade links between Asian economies.

At the summit, China is promoting its own regional free-trade pact, despite U.S. pressure to make progress on other initiatives. It is the first time Beijing has taken the lead in promoting a multinational trade agreement.

The moves reflect Beijing's insistence on having a bigger role in U.S.-dominated economic and security organizations to reflect China's status as the world's second-biggest economy.

China says its motives are benign. But its growing economic weight as the top trading partner for most of its neighbors from South Korea to Australia could erode U.S. influence.

On Monday, Xi met Japanese Prime Minister Shinzo Abe and shared an awkward handshake seen as a gesture toward easing two years of tensions between Asia's biggest economies.

A spat between China and Japan over islands in the East China Sea and other issues has raised fears of a military confrontation, which could draw in the United States, Japan's ally. On Friday, the two sides issued a joint statement agreeing to gradually resume political, diplomatic and security dialogues.

Tuesday's meeting took place under elaborate security at a government conference center set in rolling, forested hills north of the Chinese capital, Beijing.

In an effort to appear more open, organizers took the unusual step of allowing access from the press center to websites such as Facebook, Twitter and YouTube that usually are blocked by China's extensive Internet filters.

In other initiatives this year, Beijing joined 20 other Asian countries in launching a regional development bank, despite U.S. objections that it needlessly duplicated the World Bank's work. In May, Xi called for creation of a new Asian structure for security cooperation based on a group that excludes Washington.

On Monday, Obama insisted Washington sees no threat from Beijing's growing economic and political status.

"The United States welcomes the rise of a prosperous, peaceful and stable China," the American leader said in a speech at the business conference.

Still, American officials chafe at Beijing's insistence on promoting its proposed trade pact, the Free Trade Area of the Asia Pacific.

It comes at a time when progress on a U.S.-led initiative, the Trans-Pacific Partnership, has stalled. The chief U.S. trade envoy, Michael Froman, said Saturday the two pacts are "not in competition," but he said Beijing should focus on wrapping up a U.S.-Chinese investment treaty and a separate agreement to lower barriers to trade in information technology.

The TPP includes the United States, Japan and 10 other countries, but excludes China. Few details have been released but its promoters say it would reduce or eliminate tariffs on most goods among the member countries. That might hurt China by encouraging member countries to trade more with each other.

China's initiative is much less ambitious and is aimed at reducing conflict among overlapping trade agreements between pairs of Asia-Pacific economies.

The Chinese initiative is a logical response to being excluded from the TPP, said Li Wei, an economist at the Cheung Kong Graduate School of Business in Beijing.

"If the U.S. doesn't want China to join the TPP, then China can form its own trade groups," said Li.

Li also pointed to limits on access to U.S. markets for some Chinese technology companies such as Huawei Technologies Ltd., a maker of network switching gear, on security grounds.

"The world, with the U.S. leading, is retreating from free trade. It is moving into protectionism," said Li. "If the U.S. is saying, I should be careful about who I have free trade with, then China should take a more liberalizing role."

On Saturday, APEC trade ministers issued a cautious endorsement of China's initiative. They sent to the leaders' meeting a proposal to launch a study of the plan but held off committing to deadlines or other details.