Policy Alert #87 | November 13, 2014

Over the past several days, world leaders gathered in Beijing to attend the Asia-Pacific Economic Cooperation (APEC) summit, where they discussed regional economic integration, including China’s proposal of the Free Trade Area of the Asia-Pacific (FTAAP). On the sidelines, many bilateral summits were held among the participating nations, including a much-awaited meeting between China and Japan. In this Policy Alert, we examine commentary from China, Russia, Japan, South Korea, and India on the outcomes of these diplomatic meetings.

CHINA

China played an active role at APEC summit, proposing a Free Trade Area of the Asia-Pacific (FTAAP), pledging $40 billion USD to set up a Silk Road Fund to strengthen connectivity and improve cooperation in China’s neighborhood, launching the Asian Infrastructure Investment Bank (AIIB) designed to fund infrastructure projects in underdeveloped Asian countries, and Chinese president Xi Jinping holding bilateral meetings on the sidelines of the summit with U.S. president Barack Obama and Russian president Vladimir Putin. Chinese media responded positively to outcomes of the APEC meeting, defending China’s activities at the summit as part of its “peaceful rise” strategy.

• The state-run Xinhua lauded Beijing’s role in the summit, stating “Beijing’s endeavor to reshape the APEC initiative at a time of staggering world economic recovery -by expanding free trade and improving connectivity -will no doubt leave an indelible imprint in the course of regional cooperation and global economic development.”
• The “rich harvest” from the APEC meeting, which “Xi fittingly described as fruitful, indicates that the now 25-year-old APEC is a lot more than just a showpiece,” declared China Daily.
• Another China Daily editorial praised China for its work on APEC, which underlies China’s “peaceful rise” strategy. It noted that this strategy “underlies the global strategy for China’s development, which necessitates its stance of seeking win-win cooperation with as many countries as possible.”
• Xinhua writer Li Li wrote, “The TFAAP is by no means a ‘solo show’ of China. Rather, it is the shared aspiration of all APEC members that will bring them a wealth of benefits. In addition, the FTAAP is not aimed at forcing out other free trade arrangements in the region, but at integrating them and making regional movements of goods and services more efficient.”
• “Washington still cherishes the wishful thinking that it is able to hammer out a US and Japan-led free trade system by means of the TPP as the framework, by which they canbend China’s will to their wishes so that it will follow their lead after joining the system,” wrote People’s Daily senior editor Ding Gang. “The facts have shown that rules which are made without China’s participation will not end up well.”
• “Some have rushed to interpret the aim of the China proposed AIIB as a challenge to Western backed institutions such as the World Bank and the Asian Development Bank,” wrote Huang Yinjiazi in Xinhua. “It is high time that the developed countries, which have been benefitting from the growth of the developing world and its expanding market, allow their developing counterparts to have a say in global economic governance…shaking off suspicion to welcome an organization like the AIIB might be a good start.”

RUSSIA

Russian analysts and media focused on Chinese president Xi Jinping’s skillful maneuvering of Presidents Barack Obama and Vladimir Putin at the APEC summit, questioning whether China will benefit the most from tense relations between the US and Russia.

• Noting that “the shifting trend of economic power towards the Asia-Pacific region is obvious,” Dr. Alexander Yakovenko, former Russian deputy foreign minister (2005-2011) wrote that “Russia is planning to expand its cooperation with Asian countries in many spheres.”
• Moscow Times writer Ivan Nechepurenko observed that “in the ongoing crisis between Russia and the West over the fate of Ukraine, China so far appears to be the victor. Beijing has become a strategic imperative in recent months, as both Moscow and Washington have decisively pivoted toward Asia.“
• Sergei Lukonin, head of the Chinese Economics and Politics program at the Institute of World Economy and International Relations, expanded on the current state of relations between China, Russia, and the US. “If you imagine a triangle connecting Russia, the US and China, tensions between two angles are beneficial to the third. The current situation could mark the culmination of a new multipolarity in the modern international community.”
• Russia Times noted that President Putin’s act of placing a shawl around the shoulders of China’s First Lady Peng Liyuan during a chilly fireworks display -which sparked animated headlines by Western commentators -was quickly erased by Chinese media censors.

JAPAN

Japanese Prime Minister Shinzo Abe held at a much-awaited summit with Chinese President Xi Jinping, which was made possible by a prior bilateral agreement that recognized the existence of “different views” on the Senkaku/Diaoyu Islands dispute and promised to overcome the “political difficulties” surrounding history issues.

• Prime Minister Abe said that he believes the summit “marked the first step to improve relations, with Japan and China returning to the starting point of a mutually beneficial relationship based on common strategic interests.”
• The summit itself did not directly address maritime disputes and the controversial Yasukuni Shrine issue, but both sides agreed to “start administrative work to implement the maritime liaison mechanism” aimed at preventing potential clashes in the East China Sea.

Japanese newspapers in general welcomed the summit, urging both governments to make further efforts to improve bilateral relations.

• The Mainichi Shimbun appraised the summit as “an end to the unusual situation” of no dialogue between the two leaders for two-and-a-half years and the implementation of the maritime liaison mechanism as “significant in that it prompts a move by the Chinese military.”
• Admitting that the summit “alone does not resolve” any of the differences between China and Japan, The Japan Times still lauded the two leaders’ efforts “to match their words with deeds to manage their divergent views.”
• The Asahi Shimbun also remained optimistic, arguing that “it is still possible to seek coexistence and co-prosperity even when issues of contention remain” and urged “both sides to focus on common ground and make steady efforts to promote mutual interests.”
• The Yomiuri Shimbun viewed the meeting as an opportunity to change the bilateral relationship “from one of confrontation to cooperation,” but still argued that Beijing should “correct its stance of changing by force the status quo in the East and South China seas” and “refrain from the anti-Japan propaganda campaigns” to make progress on history issues.
• The Sankei Shimbun cautioned against Japan’s further concessions on the maritime dispute and history issues, suggesting that Beijing may claim the existence of a territorial dispute over the Senkaku Islands based on the joint agreement that acknowledged “different views” on the East China Sea.

SOUTH KOREA

On the sidelines of the APEC summit, Korean President Park Geun-hye held a meeting with President Xi, reaching an “effective conclusion” on a bilateral free trade agreement (FTA). She also expressed her “strong support” for China’s FTAAP roadmap, which counters the U.S.-led Trans-Pacific Partnership (TPP). Korean newspapers discussed the opportunities and challenges of these economic initiatives.

• The Chosun Ilbo posited that while the FTA deal with Korea’s biggest trading partner, China,  presents a great opportunity for Korean exports, it may fall short of expectations as it shields a 10 percent of all good exchange from tariff abolition,compared to just 0.1 percent with the U.S. and 0.4 percent with Europe. With the tariffs in place, Korea manages to protect its agriculture industry, including rice, but China can keep its trade barriers on Korean manufactured goods.
• The newspaper also argued that the FTA has security implications because stronger economic ties will strengthen political and diplomatic relations between the two countries. But it also warned that the Korean government “will have a difficult balancing act to perform so strengthened ties with China do not undermine the vital alliance with the U.S.”
• Deepened Sino-Korean cooperation “requires Seoul officials to be more careful to keep the country’s key security alliance with the U.S. intact,” warned The Korea Herald. “Korea will also have to make a difficult decision on how to respond to China’s initiatives to restructure the global economic and financial system, currently dominated by the U.S. and its allies in the West.”
• Kim Han-kwon, director of the Center for Regional Studies at the Asan Institute for Policy Studies, argued the FTA offers “an opportunity to enhance the two countries’ strategic cooperative partnership.” But he admitted, “Amid heightened strategic competition between the U.S. and China in Northeast Asia, Korea is currently in a difficult position pressured to choose sides on several issues between the U.S. and China.”
• Yun Duk-min, chancellor of the Korea National Diplomatic Academy, expressed a contrasting view. “Until now, Korean diplomacy has been conducted within the larger frame of the United States, but a sense of balance has been reached through the conclusion of the FTA with China.”

INDIA

India’s Prime Minister Narendra Modi did not attend the APEC summit, although he received an unprecedented, personal invitation from President Xi despite India’s non-member status. Meanwhile, Prime Minister Modi is heading to other multilateral forums in the coming days, including the India-Association of South East Asian Nations (ASEAN) Summit and the East Asia Summit (EAS) in Nay Pyi Daw, Myanmar, the G20 meeting in Brisbane, and the South Asian Association for Regional Cooperation (SAARC) summit in Kathmandu. Against this backdrop, Indian commentators discussed the future of India’s multilateral diplomacy.

• C. Raja Mohan, a distinguished fellow at the Observer Research Foundation, New Delhi, argued that faced with other great powers attempting to shape the international order in their favors-the United States with the TPP and China with the FTAAP-it is time for India to abandon its “defensive multilateralism” and consequent international isolation. India must implement “pragmatic multilateralism” showing that the country is prepared to make reasonable compromises in multilateral economic negotiations and to become a “rule-maker” in the region and in the world.
• Ambassador Neelam Deo claimed that the upcoming multilateral summits offer India “an opportunity to enhance regional position and economic links.” While Beijing has a greater economic influence on ASEAN and SAARC countries than New Delhi, China’s thorny relationships with these countries over the maritime disputes in the South China Sea will give India “the strategic space to balance Beijing’s influence” in the region.
• Prime Minister Modi “can transform India’s multilateral diplomacy” in the upcoming summits, argued the Business Standard. “For too long have Indian politicians and diplomats imagined that their primary duty at such multilateral forums is to block agreements out of fear. A more assertive India will perhaps see that there is an opportunity to be proactive at such forums instead, and to lead the search for a solution to various outstanding issues.”