ON RECENT DEVELOPMENTS
Ninth APEC Economic Leaders Meeting in Shanghai:
What Does It Tell Us About China?
23 October 2001
In the lead-up to China’s entry into the World Trade Organisation, that nation’s role as host for the recently concluded APEC meetings gives an indication of what might be expected when China becomes an integral part of the rules-based trading regime.
It also provides an opportunity
to comment more generally on APEC objectives and to consider the extent to
which those objectives have been achieved.
Its stated goal is to advance economic dynamism and sense of community within the Asia-Pacific region. According to the Website of the APEC Secretariat in Singapore, APEC has established itself as “the primary regional vehicle for promoting open trade and practical economic and technical co-operation”.
The organisation began in 1989 as an informal dialogue group with 12 members and was subsequently expanded to 21 members comprising about 2.5 billion people with a combined gross domestic product of over US$18 trillion in 1999. Its members account for over 47 per cent of world trade.
The focus of each annual dialogue, or Annual Economic Leaders’ Meeting as it has been called since 1993, is characterised by a theme and conveys specific objectives:
Blake Island 1993 (near Seattle, USA): To promote the free exchange of goods, services and investment and work toward broadly based economic growth.
Bogor 1994 (Indonesia): To achieve free and open trade and investment in the Asia-Pacific region by 2010 for developed member economies and 2020 for developing member economies.
Osaka 1995 (Japan): To establish “three pillars” of APEC activities: (a) liberalisation of trade and investment, (b) business facilitation and (c) economic and technical co-operation.
Manila 1996 (Philippines): To develop human capital, foster safe and efficient capital markets, strengthen economic infrastructure, harness technologies of the future, promote environmentally sustainable growth and encourage the growth of small and medium-sized enterprises. This is referred to as the “Manila Action Plan”.
Vancouver 1997 (Canada): To initiate voluntary liberalisation in 15 sectors and to endorse the “Vancouver Framework for Enhanced Public-Private Partnership for Infrastructure Development”.
Kuala Lumpur 1998 (Malaysia): To pursue a co-operative growth strategy to end the regional financial crisis and to strengthen social safety nets, financial systems, trade and investment flows, scientific and technological progress, human resources development, economic infrastructure and business and commercial links. The meeting endorsed the “Kuala Lumpur Action Program on Skills Development”.
Auckland 1999 (New Zealand): To strengthen markets and improve the international framework governing trade and investment flows.
Bandar Seri Begawan 2000 (Brunei): To sustain economic recovery in the Asia Pacific region by reinvigorating APEC’s programs in economic and technical co-operation and to continue the work in international forums to help shape the global economy.
Shanghai 2001 (China): The announced theme
was “ Meeting New Challenges in the New Century: Achieving Common Prosperity
through Participation and Co-operation". The theme embodied three
sub-themes (a) sharing the benefits of globalisation and the new economy, (b)
advancing trade and investment and (c) promoting sustainable economic growth.
The principal characteristic of APEC is that it operates by consensus. This means that any agreement reached, or public statement that is made, must be accepted by all members. Disagreement by any one member will necessarily result in a change in the wording of the agreement or statement.
Does this tend to produce the “lowest common denominator”? It does to an extent, but for many of the issues raised by the theme and sub-themes it may be informative to know what the “lowest common denominator” is and, if that is insufficient to “advance economic dynamism and sense of community”, to determine the precise source of the insufficiency.
Dialogue may be effective in overcoming limitations to further progress, but is necessary to know what those limitations are. This is arranged with particular meetings:
APEC Ministerial Meetings consist of discussions among foreign and economic ministers.
Other Ministerial-Level Meetings are convened in education, energy, environment and sustainable development, finance, human resources development, regional science and technology co-operation, small and medium enterprises, telecommunications and information industry, trade transport and women.
A meeting of senior government
officials is held prior to each ministerial meeting for the purpose of making
recommendations to the respective ministers and to oversee the normal
organisational tasks of APEC in convening the meetings. This includes a wide range of committees
and working groups that are described in the Website: http://www.apecsec.org.sg.
In a document entitled “Guidelines for Hosting APEC Meetings”, APEC is specifically defined as a grouping of economies, not as a grouping of nations. This was of course agreed upon in order to allow Hong Kong and Taiwan to become members.
Other than the APEC logo, it is inappropriate for any member to use anything, such as flags, emblems or anthems, which may imply the “political status” of any member economy and/or to identify participants or delegations in conjunction with the meeting.
Furthermore, It is essential to use “accepted APEC nomenclatures (both spoken and written)”, during the course of the meeting and in all related documents, including the preparation phase. The members of APEC should be referred to as "member economies" or "members" or "economies".
This protocol helps to explain the nature of the clash between mainland China and Taiwan during the Shanghai meetings. Taiwan had earlier proposed that Li Yuan-zu, one of President Chen Shui-bian’s senior advisers and a former vice president to represent Taiwan. China refused to send an invitation addressed specifically to Mr Li, saying that the protocol requires an economics leader.
Taiwan's Economics Minister, Lin Hsin-yi, was already in Shanghai and was present at a media briefing chaired by China’s Foreign Minister Tang Jiaxuan, during which a Taiwanese reporter asked a question about the invitation and used the term “communist China”. Mr Tang ruled the question improper in not following the protocol about member economies and did not allow Mr Lin to answer it.
The Taiwanese delegates boycotted the remaining meetings and left a statement from Chen Shui-bian expressing ''profound disappointment and great rage'' and calling on APEC members to condemn the mainland. According to reports, no APEC member issued a condemnation and the APEC Secretariat indicated that proper procedures had been following by the Chinese.
This indicates, firstly, that China was determined to follow rigidly the protocol established in the original APEC Memorandum of Understanding. With one exception (mentioned below in reference to the APEC Leaders’ Statement on Countering Terrorism) all documents and media releases for this set of meetings used the word “economies” rather “nations”.
It also indicates that China
took advantage of the opportunity to have discussions with American President
George Bush with no “back of the room” pressure from the Taiwanese.
We could be forgiven for saying yes. The official banquet in the Shanghai International Convention Centre on 20 October had 1,000 guests with an hour of entertainment including 10 segments of Chinese dance, folk songs and acrobatics.
The official photographic session, which the media refer to as the “silly shirt session”, made use of traditional Chinese garments, but this time with a choice of colours.
The People’s Daily reported that several kinds of souvenirs were presented to the APEC leaders. One was a mahogany box containing a “brocade bag holding a pen”. The small box is designed in an antique style and is decorated with a small bronze abacus on top. The atricle reported that the cost of the box is about 100 yuan (US$12).
Another gift is a mahogany paperweight that is decorated with a small compass and an APEC logo. "The compass is an ancient Chinese invention and implies economic direction in the 21st century," according to the report. The gift to be given to the top leaders of APEC economies was kept secret.
We hasten to add this “fashion
show” description that, as many readers would know, the Chinese are very good
with formal ceremonies and presentations.
This part of the APEC meetings undoubtedly went well and the Chamber
has always been a strong supporter of exchanges of people with a mixture of
“culture and business”.
The full text of the APEC Economic Leaders’ Declaration, which is referred to as the “Shanghai Accord” is available online from the People’s Daily (http://www.peopledaily.com.cn). The preamble contains the following statement:
We wish to send a clear and strong message on the collective resolve of the Asia-Pacific community to counter terrorism. We are determined to reverse the current economic downturn and maintain public confidence at a time of uncertainty by fighting protectionism and committing to the launch of the new WTO round at the upcoming WTO Ministerial Conference. These efforts are consonant with and contribute to the pursuit of the APEC vision of peace, harmony and common prosperity.
Most of the remaining part of the document is a reaffirmation of previous commitments, but the choice of language in this reaffirmation is instructive, particularly since the Chinese authorities had a direct role in drafting it. Specifically, Item 7 states:
In this context, we pledge to accelerate our domestic efforts to build capacity and deepen structural reform so as to strengthen the market fundamentals across the region.
To this end, we emphasise the importance of sound economic policies and corporate governance as well as the important role and responsibility of governments in shaping the legal and regulatory framework that encourages competition and innovation, with an increased emphasis on capacity building.
Developing the social safety net is a high priority, as it can make an important contribution to reducing the harmful effects of economic shocks on vulnerable groups.
As noted in the 2001 Economic Outlook, enhancing financial efficiency is also essential to promoting growth. We thus welcome efforts made in these areas in APEC, including strengthening economic legal infrastructure, supervision of capital markets, corporate governance, and implementation of international financial standards, as exemplified by the work done through the Finance Ministers' process.
Items 10 and 11 contain the following:
We emphasise the importance of capacity building, both human and institutional, as a key answer to the challenges and opportunities of globalisation and the New Economy. Capacity building constitutes a key element of the balanced approach essential to the success of APEC along with market opening and full participation.
In this context, we reiterate that human capacity building (HCB) remains a central theme this year and the years ahead. We commend the success of the High-Level Meeting on Human Capacity Building, and welcome the Beijing Initiative as a comprehensive set of principles for human capacity building, which also provides opportunities for further work in the New Economy.
These and related items did not receive much attention from the media. This is not surprising since interest was focused on the announced intention of US President George Bush to seek support for the War on Terrorism (which is mentioned in the following section).
It is nevertheless important to note that the practice of rotating the APEC Chair annually results in a specific commitment that is linked to each host member. China is thus committed to the Shanghai Accord and, additionally, is committed to having it reaffirmed at future meetings.
Perhaps more than anything else,
this link and its related obligations can result in a more workable Asia-Pacific
Item 1 and 2 state, respectively:
Leaders unequivocally condemn in the strongest terms the terrorist attacks in the United States on September 11, 2001, and express their deepest sympathy and condolences to the victims of a large number of nationalities and their families and to the people and Government of the United States of America.
Leaders consider the murderous deeds as well as other terrorist acts in all forms and manifestations, committed wherever, whenever and by whomsoever as a profound threat to the peace, prosperity and security of all people, of all faiths, of all nations. Terrorism is also a direct challenge to APEC's vision of free, open and prosperous economies, and to the fundamental values that APEC members hold.
This is the only instance for which Shanghai Meeting documents carried the word “nations”, and in this instance it applies to a situation that extends beyond the Asia-Pacific region.
The media noted that the statement fell short of a commitment to direct military action in countering terrorism. It did, however, contain the following, in Item 5:
Leaders commit to prevent and suppress all forms of terrorist acts in
the future in accordance with the Charter of the United Nations and other
international law, pledge to implement the UN Security Council Resolution
1368 and 1373 faithfully and immediately, strongly support all efforts to strengthen
the international anti-terrorism regime, call for increased co-operation to
bring perpetrators to justice, and also call for early signing and
ratification of all basic universal anti-terrorist conventions including the
International Convention for the Suppression of the Financing of Terrorism.
China’s membership in a regional, trade-related organisation was an important selling point for APEC. It was known since the 1980s that China wanted to participate in the General Agreement on Tariffs and Trade, which was subsequently reconstituted as the World Trade Organisation, but it was not known how China would participate in such an organisation.
Would the Chinese authorities work consistently within the objectives of GATT, and later WTO, or, after becoming a member, would they use their influence to modify the objectives according to specific national interests or advantages?
The answer cannot be known with certainty before the event, but the conduct of the Chinese in hosting the Ninth APEC Economic Leaders’ Meeting suggests that they will collectively be a strong advocate of that which was formally agreed upon.
Perhaps more importantly, China’s foreign policy recently acquired a quality of consistency that is becoming increasingly scarce in the rest of the world. As stated by Zhang Tianguang in the title of his article published in the South China Morning Post (19 October 2001), China’s foreign policy finally comes of age.
Hopefully circumstances in the
near future will add to that maturity, rather than take it a step backward.
China Daily: http://www.chinadaily.com.cn
People’s Daily: http://www.peopledaily.com.an
South China Morning Post: http://www.scmp.com
All sources have a special section devoted to the Shanghai meetings, though it is difficult to be certain how long that will be retained. From past experience, the People’s Daily will keep it online for some time and it is also the only source that published the full text of the Leader’s Statements.
The analyses and commentaries
published in the South China Morning Post are