APEC to work on China-backed trade deal
A response to a US-led Trans-Pacific Partnership that excludes China.
HUAIROU, China — Leaders of Asia-Pacific economies agreed to begin work toward possible adoption of a free-trade pact proposed by China, the Chinese president announced, giving Beijing a victory in its push for a bigger role in making trade policy.
After a two-day Asia-Pacific Economic Cooperation summit, leaders agreed to launch a two-year study of the initiative, President Xi Jinping said at a news conference. Xi, the meeting’s host, called the decision by leaders including US President Barack Obama and Russia’s Vladimir Putin a “historic step.”
China is promoting the proposed Free-Trade Area of the Asia Pacific despite US pressure to wrap up other trade negotiations. Analysts see it as a response to a US-led initiative, the Trans-Pacific Partnership, which includes 12 countries but excludes China.
The APEC leaders also endorsed a proposal to work more closely to combat official corruption, Xi said.
Beijing has launched a series of trade and finance initiatives in pursuit of a bigger role in US-dominated economic and security organizations to reflect Beijing’s status as the world’s second-biggest economy.
APEC was the first major international gathering in China since Xi took power. The presence of world leaders gave Beijing a platform to lobby for a bigger leadership role.
“Regional economic integration is the long-term driving force for growth in the Asia-Pacific region,” Xi said.
On the eve of the gathering, Beijing announced a free-trade agreement with South Korea.
Regulators have also 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.
Earlier this year, Beijing launched a regional development bank with 20 other governments. In May, Xi called for a new Asian structure for security co-operation based on a group that includes Russia and Iran but excludes the US.
China says its motives are benign. But its growing economic weight as the top trading partner for most of its neighbours from South Korea to Australia could erode US influence.
Obama said the US “welcomes the rise” of a prosperous, peaceful and stable China. Still, American officials chafe at Beijing’s insistence on promoting the Free Trade Area of the Asia Pacific.
US trade officials say the two proposals are not competitors. But they want Beijing to wrap up a US-Chinese investment treaty and a separate agreement to lower barriers to trade in information technology. Washington and some other governments argued the Chinese proposal would be a distraction at APEC but Beijing made it the centrepiece of the meeting.
Few details of the US-led proposal have been released but 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.
Leaders of the nations involved in TPP talks, including the US, Mexico, Japan and Australia, met Nov. 10 and issued a statement saying they were making progress. The talks have been delayed repeatedly by disputes over the sweeping nature of its market-opening proposals.