The Rupp Report: China Rules The Way

The Rupp Report already informed its readers in some articles after the annual ITMF conference in Beijing about the Chinese government’s desire to lead the way in many sectors of the industry. China again made global news at the recent summit of the Asia-Pacific Economic Cooperation (APEC).
As with World Trade Organization (WTO) negotiations, APEC is another way to reach free trade agreements among Asia-Pacific countries. Similar to at the ITMF conference where the Chinese delegation pushed some ideas it wished to implement, China’s state and party chief Xi Jinping presented some ideas at the APEC summit.
The Chinese Dream
It is obvious to see that China wants to be back at the top. Just before the summit started Xi presented his “Asia-Pacific Dream” to business leaders, based on China’s economic strength and the mutual benefits of which the entire region would profit.
Just like the new president ITMF President Wang Tiankai, Xi wants to use APEC to improve China’s regional interests. He announced the creation of an investment fund for his project of a so-called “Maritime Silk Road.” Also, the recently initiated Asian infrastructure investment bank, which is a clear counter-project to the Asian Development Bank and the World Bank, is part of this strategy. Xi previously presented his vision of the Asia-Pacific at the APEC summit a year ago in Bali. However, just like at the ITMF congress, China was the host country for the APEC summit and set some important points on the agenda.
In Search Of Some Agreements
In the Asia-Pacific region, there are several attempts to create larger regional free trade agreements (FTAs). To push the free trade area for the Asia-Pacific region, China wanted to finalize a kind of road map, which should include a feasibility study. APEC foreign ministers declared this vision could become a reality. However, instead of a feasibility study there should be only a strategic study, which proved to be a damper for China.
As a counterpart, the United States mentioned these talks are not the start of a new free trade zone, but the confirmation of a long-term target to be sought after. Certainly the United States was thinking about the plans for a Trans-Pacific Partnership (TPP), which was launched without China’s participation. However, it seems that China also is interested in joining the TPP. Despite troubles, it must be mentioned that APEC with its membership structure is the only regional group that includes China, the United States, Russia and Japan. Virtually half of world trade and more than half of the global gross domestic product is generated by the 21 Member States.
United Against Corruption
Despite discrepancies, there was one Chinese success: The adoption of an agreement for cooperation in corruption cases. The APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies (ACT-NET) should help prevent corrupt people finding refuge in other countries. However, the network does not solve legal problems. China has treaties with only a few countries, and many states are reluctant to participate because of the non-free and politicized justice of China.
The Wind Changes
A few days later, the sound of the music changed. Indeed, a final declaration was published advancing the FTA Asia-Pacific (FTAAP) in the focus of the final document. Host Xi again called on the 21 statesmen gathered from East Asia, the Americas and the Pacific region to accelerate liberalization of trade. The vision should become reality as soon as possible. However, foreign ministers of the other participating countries supported the Chinese project somewhat less enthusiastically.
Nevertheless, the final document contains a multi-page “Beijing roadmap for the participation of APEC in the realization of FTAAP.” This is, however, like all statements, kept relatively open. Action should be taken to create a strategic study, and not the feasibility study proposed by China. In addition, this study will not be part of the APEC actions, but developed alongside. The TPP and the Regional Comprehensive Economic Partnership (RCEP) initiated by the Association of Southeast Asian Nations (ASEAN), are often understood as competing projects, now should be seen as compatible to FTAAP structures.
Whether the pursued objective of the FTAAP since 2006 gets a new push, as Xi mentioned in his final words at the end of the summit, is questionable, despite Chinese support. On top of the anti-corruption activities, the final APEC document also includes other euphonious initiatives such as global flow of goods, economic reforms and mutual social exchange.
Agreement Between China And The United States
For outsiders, is it somewhat difficult to understand how long it takes to get to a final agreement. However, the 21 countries — from China to Russia, Japan, Australia, Chile and the United States to Papua New Guinea — are such an economically different group of countries that the summit much serves as a platform for bilateral exchanges. Here the most concrete results were achieved. The United States and China announced that they have agreed in principle to an agreement to eliminate tariffs on information technology goods. However, it doesn’t mean this is a conclusion of the negotiations — this should be achieved by December. On the other hand, a solution would open the way for a new agreement inside WTO about information technology. This agreement was up-to-now not finalized because of disagreements with China.
What Is China’s Role?
For some time, China’s leadership has tried to take the lead in different areas of some existing, but more or less inactive, U.S. or European multilateral organizations and agreements for its ideas of a new world order. In this game, the role of China is quite inconsistent, and the results are poor. This doesn’t mean it will be this way forever. Beijing is increasingly setting the agenda, and given its economic power no one has the courage to hesitate to play a part in it.
All these activities seem to be a part of an orchestrated puzzle that China wants to bring together to play the role it wants to play. As the “Rupp Report: Wake Up, Western world!” stated a few weeks ago, “the global economy is probably facing its biggest transformation since the start of the industrial revolution in the 18th century.” And it seems, with a little push from China here and there, we’re getting closer to that every day.
November 25, 2014