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Asian Regional Cooperation: Turn Challenges into Opportunities and Cooperate to Weather Hard Times

Time:2017-07-08 17:01:50    Views:152813    Origin:Boao Forum for Asia

In addition to the increasingly serious challenge of de-globalization, today’s world is also beset by slowing world trade, shrinking international investment, volatile financial markets and frequent security issues—which has put a drag on the fast growth of Asian economies.

Can Asia weather the hard times and continue to be the “engine” of the world economy? History and reality tells us that openness and cooperation is the only solution to the developmental issues of Asia.  

Turn challenges into opportunities and cooperate to weather hard times

Initially, Asian regional cooperation was not smooth sailing. With a combined population of over 4 billion, the continent has 48 countries, most of which are still developing economies that vary significantly from each other in terms of economic prosperity, political system, religion and culture.

Zeng Peiyan, Vice Chairman of the Boao Forum for Asia and former Vice Premier of China, once pointed out that due to various reasons, Asian economies are not as close-knit or cohesive as North America or Europe. Particularly, there are long-standing disputes among certain countries with regards to historical, religious, territorial and maritime issues. If not properly managed, these disputes may threaten regional security.

Looking back, Asia has benefited enormously from globalization. In 1981, nearly 1.6 billion people were characterized as living in poverty; today, this figure has dropped to 330 million. Such an accomplishment would be impossible without our openness, cooperation and active participation in globalization.

At the same time, we must be aware of the opportunities hidden in the challenges to regional cooperation, as well as the fact that cooperation will be the “magic wand” to help us out.

Almost no country found itself immune from the financial crisis that swept through Asia in 1997, which made Asian governments appreciate the importance of regional cooperation—Asian countries suffered huge losses as a result of their missing the best window of opportunity due to the absence of regional platforms that could enable timely communication, provide early warnings for central banks and coordinate policy efforts among governments. In the wake of the crisis were created a number of multilateral cooperation frameworks, such as the ASEAN Plus Three and the Chiang Mai Initiative that was launched to expand the scope of currency swap among Asian nations. The post-crisis 10 years also witnessed radical banking reforms and strengthened cooperation among governments and central banks across the continent. These frameworks helped minimize the impact of the 2008 US subprime mortgage crisis and stabilize regional economic growth thanks to Asian countries’ quick, coordinated policy responses.

“Faced with these new developments and new problems, we countries in Asia should continue to act in the spirit of solidarity in face of difficulties, turn our strong economic complementarity into mutual support for each other's development, expand convergence of interests and achieve mutually beneficial coexistence and win-win development,” Chinese Premier Li Keqiang said at the opening ceremony of the 2016 BFA Annual Conference.

Asian Economic Integration: The Way Ahead—how can Asia deal with trade protectionism?

Trade protectionism is the biggest “weapon” of anti-globalists. Some countries attribute their job losses to unfair trade caused by globalization. However, more and more research pinpoints the Internet, automation and technological advancements as the cause.

On April 21, 2017, Jim Yong Kim, President of the World Bank, and Christine Lagarde, Managing Director of the International Monetary Fund, both made a call for all countries to promote openness and fair trade while resisting trade protectionism. Kim said that free trade should not be blamed for the loss of jobs and appealed to developing countries to increase investment in human capital to address the negative impact of technological progress on the job market.

How can we deal with the rising tides of anti-globalization? Stephen P. Groff, Vice President of the Asian Development Bank, once elaborated in an article on the importance of regional integration as a countermeasure against protectionism. He argues that a higher degree of regional integration will reduce the likelihood of resorting to trade protectionism in an economically unstable period.

The speakers at the “Asian Economic Integration: The Way Ahead” session are all senior personnel in the domain of Asian trade, who are opinion leaders and policy advisors from different countries. They are the witnesses of the entire evolution of Asian economic cooperation.

At the BFA Melbourne Conference in December 2016, former Chinese Minister of Commerce Chen Deming predicted that international, regional and bilateral cooperation would reach a low ebb in the next two years. He also added that people will not return to globalization and free trade until after they have felt the negative impact of such a low ebb.

Is it time for people to return now? At this session, participants will focus on trade to explore the future of Asian regional cooperation.

Connecting Asia: Infrastructure and Supply Chain—How can connectivity drive Asian regional cooperation?

The experience of emerging economies shows that infrastructure investment is critical for fast economic growth in developing countries. Inadequate urban transport and power supply infrastructure in Thailand has already become a drag on its economic development—a situation commonly found in West, Central and South Asian countries.

The “Meeting Asia’s Infrastructure Needs” report released by the Asian Development Bank on February 28, 2017 points out that infrastructure needs in developing Asia and Pacific will exceed USD 22.6 trillion through 2030, a figure doubling the forecast in 2009, if the region is to maintain growth momentum.

Infrastructure development and production capacity cooperation have become a new engine for Asian regional cooperation. In the real economy, China is aligning its Belt and Road initiative with other regional and national development strategies; in finance, the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund are accelerating the supply of funding for infrastructure projects, while expanding cooperation with their “forerunners” such as the World Bank and the Asian Development Bank.

AIIB President Jin Liqun repeatedly emphasized through the platform of BFA the importance of infrastructure improvement in Asia. He points out that no country loses in a globalized economy; they just benefit from it to varying degrees. The AIIB serves as a starting point to promote infrastructure investment, which can enhance cross-border interconnectivity and promote inter-governmental dialogues and therefore benefit more people.

ASEAN-China (10+1) Free Trade Area: Trade, Investment & Financial Cooperation—How can 10 plus 1 be bigger than 11?

ASEAN will soon celebrate its 50th anniversary in August 2017. Over the past half century, ASEAN has achieved substantial progress in regional cooperation, which is being continuously advanced by regional frameworks such as the ASEAN-China Summit, ASEAN Plus Three Summit and East Asia Summit.

It has been 25 years since China started its first dialogue with ASEAN; today, their bilateral relations are shifting from the “golden decade” to “diamond decade”. During the past 25 years, bilateral trade has increased by nearly 60 folds. China has been the largest trading partner of ASEAN for 7 consecutive years, while ASEAN has been the third largest trading partner of China for 5 straight years. The upgraded CAFTA agreements also took effect in 2016 following the establishment of the ASEAN Economic Community. Negotiations on the Regional Comprehensive Economic Partnership are being accelerated, which will elevate Asian regional cooperation to a new altitude.

In his keynote speech at the opening ceremony of the 2016 BFA Annual Conference, Thailand Prime Minister Mr. Prayuth Chan-ocha pinpointed the ASEAN Economic Community and its close relations with its partners as one important guarantee of a better future for Asia. Many of our dialogue partners are important players in Asia; we need to work together for Asia’s peace, security and prosperity.

As a paradigm of Asian regional cooperation, China and ASEAN have built deep political trust and strong economic relations. The upgrade of the CAFTA agreement, the Belt and Road initiative and E-commerce have opened new doors for the two sides to deepen their cooperation and strengthen their economic ties.

Currently, China-ASEAN relations are in a strategic transitional stage, and both sides are faced with new development opportunities. We need to look at the big picture when developing and pushing our bilateral relations to new heights. Looking into the future, the two sides should deepen cooperation in various sectors and create new drivers of cultural exchanges; build new powerhouses for sub-regional cooperation, strengthen communication and cooperation regarding international and regional issues and add impetus to economic globalization and regional integration; and explore the possibility of upgrading the China-ASEAN strategic partnership and draw up a blueprint for improving our bilateral relations, so that 10 plus 1 can be bigger than 11.

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