China wins support for Asia Pacific trade pact

Mr Xi is pushing the creation of the Free Trade Area of the Asia-Pacific as part of efforts to counter US influence in the region.

BEIJING // President Xi Jinping wrapped up a summit of Asia-Pacific Economic Cooperation leaders in Beijing with an agreement to press forward toward a regional free-trade pact that he says is a “historic step”.

In a joint statement after a two-day meeting hosted by China, the leaders including US president Barack Obama and Russia’s Vladimir Putin agreed to take a first step by launching a two-year study of the initiative.

Mr Xi is pushing the creation of the Free Trade Area of the Asia-Pacific (FTAAP) as part of efforts to counter US influence in the region.

The summit was the first major international gathering in China since Mr Xi took power. The presence of world leaders gave Beijing a platform to lobby for a bigger leadership role.

The Chinese leader has emphasised his nation’s growing economic clout throughout the forum and offered tens of billions of dollars to build infrastructure along key trade routes.

“We decided to kick off and advance the process in a comprehensive and systematic manner towards the eventual realisation of the FTAAP,” said a declaration by the 21 Apec leaders. Officials will undertake a strategic study of the pact and report back by the end of 2016, they said.

Competition between different trade plans underscored the jockeying for position between the US and China at this week’s meetings as Mr Obama sought to re-balance US economic and strategic interests in Asia.

Mr Obama welcomed Beijing’s push for the free-trade deal, a day after he hailed the US-led Trans-Pacific Partnership (TPP), which includes 12 countries but excludes China – the world’s second-largest economy.

“I want to commend China for focusing this year on what Apec can do to contribute to the realisation of the Free Trade Area of the Asia Pacific,” Mr Obama told the summit.

“I look forward to the day when all of our economies can be linked together in a high-standard, 21st century agreement.”

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.

Leaders of the countries involved in the TPP talks – which includes the US, Mexico, Japan and Australia – said on Monday they were making progress. The talks have been delayed repeatedly by disputes over the sweeping nature of its market-opening proposals.

Addressing leaders of the summit, Mr Xi said Apec countries should now push ahead on the FTAAP agreement – which would involve China and Russia – as the region seeks to find new drivers of growth. The business community wants to see such a zone established, he said.

“To found an FTAAP has been a major goal of the Apec summit, but the discussion was getting nowhere until this Beijing summit, which set up a time-line to make it happen,” said Zhou Yongsheng, a professor at the China Foreign Affairs University in Beijing.

“China has been playing a leading role at this summit, and that’s a sign of things to come that the country will be more active on the world stage in the future.”

It 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 US doesn’t want China to join the TPP, then China can form its own trade groups,” said Mr Li.

Earlier this year, Beijing launched a regional development bank with 20 other governments. In May, Xi called for a new Asian structure for security cooperation based on a group that includes Russia and Iran but excludes the United States.

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.

Russian president Vladimir Putin also supported a road map being developed in Beijing to forge ahead on the Asia-Pacific free trade zone. Chile’s president Michelle Bachelet is among those who have already voiced support for the plan.

* Bloomberg and Associated Press