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Strengthening Regional Cooperation in Asia Amidst Adjustments to Globalization

Time:2017-07-12 08:56:10    Views:103125    Origin:Boao Forum for Asia

Strengthening Regional Cooperation in Asia Amidst Adjustments to Globalization

by ZENG Peiyan

Vice Chairman of the Boao Forum for Asia

Bangkok, 11 July 2017

 

Mr. Don Pramudwinai, Minister of Foreign Affairs of Thailand,

Dear Guests,

Ladies and Gentlemen,

Good afternoon. It’s a great pleasure to see Bangkok, the beautiful “City of Angels”, hosting the event of the Boao Forum for Asia. I’m deeply impressed by this ancient yet modern city, beaming with vitality, just like its hot weather. Founded 16 years ago, the Boao Forum for Asia, with an Asian focus and a global vision, has contributed to regional exchange and cooperation in pursuit of its purpose of promoting regional integration in Asia. Today, I want to share with you some of my views on Regional Cooperation in Asia, the theme of this conference.

In the past few years, “recovery” had been the most frequently used key word when people referred to the international economic situation. The world economy is now showing signs of recovery, as evidenced by growth in most of the major economies and a prospect for the first time in seven years for the international trade to grow faster than the GDP. However, since last year, “anti-globalization” and “anti-free trade” have become the new catch phrases. Brexit, the US withdrawal from the TPP and a rising number of practices against free trade have brought uncertainties to the world economic recovery, with the Asian economy bearing the brunt.

It is fair to say that globalization has served as a major engine for economic development in Asia in the past decades. Thailand and other Asian economies have created multiple “Asian economic miracles”. Admittedly, globalization, in its fast development, has had some negative impacts. Our memories of the 1997 Asian financial crisis are still fresh and Thailand was hard hit by that storm. Facing the challenges and opportunities brought by economic globalization, Asian countries realized the need for strengthened dialogue, coordination and cooperation. The Boao Forum for Asia was established exactly against this backdrop. 

I believe globalization, as a historical trend, cannot be reversed or terminated. We can’t blame globalization for all the structural problems of the world economy or find a fundamental solution to them by moves against globalization. Given our respective factor endowments and stages of development, Asian countries are heavily dependent on international trade and investment. Therefore, we should have a more reasonable and objective view on economic globalization, maximize its benefits while minimizing its negative impacts, and find a balanced policy approach. In my view, to accelerate economic integration in Asia and deepen regional economic cooperation is an effective way to adapt to the adjustments to globalization and promote economic development.

North America, the EU and East Asia can be seen as three major economic areas in the world, and each has an economic size of about US$20 trillion. As the most dynamic one among the three, East Asia has been growing at an average annual rate of about 8% in nearly three decades. In the past five years, it has maintained a growth rate of about 5%, more than two folds of that of Europe, North America and the world. Such a growth is very much attributable to the good progress in regional cooperation over the years. Last year witnessed the establishment of the ASEAN Economic Community, steady advancement of China-ASEAN and ASEAN plus Three cooperation, as well as progress in the negotiation of the China-Japan-ROK Free Trade Area. However, recent years have also seen the profound adjustment in the world economy, falling external demand, fragmentation in the trading regime and rising regional security risks. Countries have experienced pains resulting from structural transition and some have shown a rising inward-looking tendency. As a result, regional cooperation in Asia faces challenges.

In this context, President Xi Jinping of China put forward the Belt and Road Initiative three years ago, which has been increasingly embraced by countries along the routes and widely recognized by the international community. Not long ago, the Belt and Road Forum for International Cooperation was successfully held in Beijing, and delivered many outcomes. Following the principle of extensive consultation, joint contribution and shared benefits and the Silk Road Spirit of Peace and Cooperation, Openness and Inclusiveness, Mutual Learning and Mutual Benefit, this initiative is aimed at promoting policy, infrastructure, trade, financial and people-to-people connectivity of countries along the routes and the building of a community of common interests and shared future. East Asian countries, ASEAN countries in particular, are key links along the silk roads both on the land and at sea, which made important contribution to the prosperity of the ancient Silk Road. Looking ahead, the Belt and Road Initiative will shed new light on economic globalization and regional economic integration, and give a vigorous boost to the upgrading of regional cooperation in East Asia.

First, it will boost the upgrading of development plans of regional countries. The Belt and Road Initiative provides a broad platform for the countries along the routes to pursue common development. Indonesia, for instance, has initiated the strategy of the Global Maritime Fulcrum, and Thailand has put forward the Thailand 4.0 policy and the Eastern Economic Corridor Development project. Other countries have also come up with their own development plans with a focus on industrial upgrading and economic transformation. Promoting complementarity between these plans and the Belt and Road Initiative will help the countries realize their respective national goals with greater synergy. Meanwhile, national development plans can go global and play a bigger role through the platform offered by the Belt and Road Initiative.

Second, it will boost the upgrading of the integrated regional market. The Belt and Road Initiative will consolidate and enhance the economic interdependence of East Asian economies and further unleash the potential of the market demand in East Asia, a region with 2.2 billion people and an economic size of US$20 trillion. The construction of multiple economic corridors under the Belt and Road Initiative will help forge closer economic and trade ties between East Asia and Central, South and West Asia, and more effectively explore European and African markets. In this way, the market can double its size and directly serve more than 65% of the world’s population.

Third, it will boost the upgrading of infrastructure connectivity. With an infrastructure capital stock per capita less than one-fifth of that in North America and Europe, Asia has much room for improvement in areas such as railways, expressways, aviation, power, power grids and telecommunications. As envisioned by the Belt and Road Initiative, a comprehensively upgraded transport network including railway services linking Asia and Europe, oil and gas pipelines, maritime routes and Silk Road in the air will significantly reduce the logistics costs of long-distance and trans-regional transport and provide easier access to distant markets. Some countries in the region have long been plagued by poor transportation access. If infrastructure connectivity is achieved with accessible maritime, land and air routes, these countries will greatly increase their openness and development potentials.

Fourth, it will boost the upgrading of institutional arrangements for trade and investment. Realizing regional economic integration calls for a corresponding institutional environment. While Asian countries differ a lot in development stages, factor endowments and cultural traditions, the Belt and Road Initiative follows the principle of achieving inclusive development and mutual benefit through extensive consultation while seeking common ground wherever possible. This will help establish regional institutional arrangements that suit the region’s realities. East Asian countries should take an active and prudent approach to implement the outcomes of the negotiations on upgrading the China-ASEAN Free Trade Area and conclude negotiations on the China-Japan-ROK Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP) at an early date. Countries can also leverage relevant economic and trade arrangements under the Initiative to discuss and negotiate with other regions trans-regional economic and trade agreements.

Fifth, it will boost the upgrading of financial services and security systems. Asia has for long relied mainly on external capital, with high financing costs and unstable capital sources. This has made it vulnerable to the impact of international speculative capital. The Belt and Road Initiative has put emphasis on the role of multilateral financial institutions and policy-based financial systems and provided strong support to major infrastructure projects that take a long time to build. Both the Asian Development Bank and the Asian Infrastructure Investment Bank have made infrastructure a priority area for future lending. China has decided to contribute an additional RMB 100 billion to the Silk Road Fund and conduct overseas RMB fund business with an estimated amount of RMB 300 billion, and the China Development Bank and the Export-Import Bank of China will set up special lending schemes worth RMB 380 billion equivalent. The Initiative will also support the efforts to establish regional credit rating systems, improve cross-border capital regulation, and increase currency swaps and transactions in local currencies to jointly uphold economic and financial stability in the region.

Ladies and Gentlemen,

Dear Friends,

The world economy is gravitating towards the east. As a major champion of globalization, Asia should continue to be a pioneer of regional cooperation, seize the opportunities brought by the Belt and Road Initiative to enhance the region’s competitiveness, and better adapt to and integrate into economic globalization. This way, Asia will create a new growth miracle.

Thank you.