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'I am confident Beijing APEC will be a successful meeting'

By Li Xuejiang (People's Daily Online)    09:04, November 09, 2014
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I AM CONFIDENT BEIJING APEC WILL BE A SUCCESSFUL MEETING

- EXCLUSIVE INTERVIEW WITH HOULDEN,THE DIRECTOR OF CHINA INSTITUTE, CANADA.

OUR STAFF REPORTER

XUEJIANG LI:

In the upcoming Beijing APEC meetings, China will launch the process of the Asia Pacific Free Trade (FTA) process. Please offer your opinions on this ambitious blueprint which helps enhance the world economic growth, especially, in the Asia Pacific region.

GORDON HOULDEN:

The lowering of trade barriers is potentially important to all national economies, but it is of special importance to countries that are heavily dependent on trade to maintain their prosperity. This is certainly true of both the Canadian and Chinese economies, which have a high dependency on exports.

The Asia Pacific region now contains the three largest economies in the world (USA, China and Japan) as well as many smaller economies that collectively constitute the largest economic bloc on earth. Lowering economic barriers simultaneously between a large number of economies has clear advantages. One is that the results can be much simpler for exporters and businesses than a patchwork of much more modest agreements. A secondary advantage is that a broad regional trade effort may help reduce some of the rivalry that can emerge when there are competing FTA proposals within the same region, and where some economies may be excluded. While the best trade simplification that can occur would be global in scope, an ambitious regional grouping might be the next best solution.

A challenge for an APEC FTA would be the need to have a very broad consensus among the rather diverse membership, and the consequent risk that the process might go no faster than the slowest and most reluctant partner. A large body of members, such as the APEC membership, can also make for very slow negotiations. But sometimes difficult things are so important that they are well worth a serious effort, and reducing trade barriers between APEC members is worthy of that effort.

XUEJIANG LI:

At the Beijing APEC,, China will also actively promote the Asia Pacific comprehensive interconnectivity in HIGHWAY, RAILWAY, AIRWAY, etc. How would you like to comment on its importance for propelling the economic development of the Asia Pacific region?

GORDON HOULDEN:

The historic inter-connectivity between APEC members has been rather weak. The distances are huge (especially by European standards), and the physical barriers such as mountains have for millennia impeded economic integration.

 

Weak interconnectivity of maritime, air, road and rail in the region contributes to regional disparities in economic development both between APEC nations and within individual states. While maritime commerce is relatively well developed, landlocked economies, or the interior of states such as Russia, China or Canada face development challenges. Petroleum from the interior of Canada lacks easy access by pipeline to Canada's west coast.

A "blueprint" for increasing transportation inter-connectivity between APEC member economies could potentially boost trade linkages, and reduce transportation costs to APEC exporters and importers alike. Effective regulation of APEC transportation can also be important, and might even help reduce the frequency of air or maritime tragedies or assist in the provision of speedy international emergency help when such events do occur. 

China, with large capital pools and rich experience of large-scale construction of transportation infrastructure, be it ports, airports or railways is well-placed to play a key role in an APEC transportation "blueprint". However, to build broad APEC-wide support for a "blueprint", clearly-defined benefits for each APEC member would have to be identified.

XUEJIAGN LI:

----As the global economy growth is slowing, how would you like to comment on the importance of this APEC Meeting? Do you think it could offer some effective solutions?

GORDON HOULDEN:

In a time of slowing global economic growth, every opportunity for national leaders to discuss trade and monetary issues is welcome. The various bilateral meetings on the margins of the APEC meeting are also an opportunity for leaders to examine how to best attack the barriers to growth and how to find policy responses that can help boost economic growth and mutual prosperity.

However, historically, periods of slow growth have also often been times when there are domestic pressures in many countries to use protectionism and other trade barriers in order to protect their domestic markets, or when there can be temptation to subsidize exports in order to maintain market share for exports abroad. Both the APEC meeting itself, and the bilateral meetings associated with APEC represent a valuable opportunity to frankly discuss ways of finding solutions to problems in the current international economic situation.

XUEJIANG LI:

----What expectations do you and Canada would have of this meeting? What kind of good proposals do you think Canada could put forward at this Meeting?

GORDON HOULDEN:

From my own experience of the APEC process (I have attended two APEC summits and worked on several others) I would urge caution in terms of the outcomes. 

APEC has value as a body charges with promoting Asia Pacific economic growth and building linkages between Asia Pacific economies.

Canada is a country that maintains its high standard of living by international trade. China, as the leading trading nation, has much in common with the Canadian bias towards freer trade between APEC members.

Canadian proposals at APEC will reflect the Canadian bias towards open markets and reduced regulation of trade in the Asia Pacific basin.

XUEJIANG LI:

----What kind of role do you and the Canadian Government will expect of China to play in this meeting?

GORDON HOULDEN:

I have every confidence that China will do a magnificent job of hosting the APEC meetings, having seen the Chinese hosting of the 2008 Olympics in Beijing, and the 2010 World Exhibition in Shanghai. China also has hosted the APEC Senior Leader's Meeting in Shanghai in 2001.

China's role as host began months ago with China hosting a range of meetings at the level of ministers and senior officials. From this successful start I am confident that Chinese officials will have laid the groundwork for a successful meeting. Of course, with Beijing as host APEC is a priceless opportunity to present the great city of Beijing to the thousands of visitors who will visit Beijing, and see both the traditional Chinese capital as well a very modern national capital.

As host, China will have opportunities in the run-up to the meeting, as well as during the meetings, to put forward ideas, and as host to seek consensus among the APEC members. Chinese leaders and officials will be able to play a high-profile role during APEC in a way that a host country can do. However, in order to achieve significant progress on Asia Pacific issues positive contributions from all of the APEC members will be necessary.

XUEJIANG LI:

How would you like to assess the contributions that China has made to Asian Pacific region and the global economies in the past decade? And what kind of role do you think China could and should play in spurring the current slowdown growth around the world and in maintaining the sustainable and balanced economic growth in the Asian-Pacific region and the world.

GORDON HOULDEN:

As the largest economy in the Asia Pacific region China plays an indispensable role in spurring regional and global economic growth. Weak economic growth in China would have global implications, while the reverse, a buoyant Chinese economy can be a tonic to the entire global trading system.

Of course China, even as the second largest economy in the world cannot fix all of the ailments of the global economy, and the challenges of European financial woes, Japanese slow growth, and America's debt problems are not of China's creation, and cannot be fixed by China.

However, China's economy is not of such a size that Chinese economic expansion can be a major positive factor spurring GDP growth across the Asia Pacific region and the world. 

XUEJIANG LI:

Why do you think the Canadian Government would not like to consider negotiating the Free Trade Agreement with China? What do you think are major obstacles to commencing this negotiating process?

GORDON HOULDEN:

Free trade agreements can have profound effects on national economies. I believe that even where the adjustment period can sometimes be difficult, the end results are usually positive for both sides. Canadians were very nervous about the economic effects of NAFTA, but I believe that the outcomes were beneficial to the Canadian, Mexican and US economies.

However, where the economies differ significantly in structure and policies the difficulty of negotiating an FTA are substantially greater. This is perhaps why relatively few Western countries have concluded FTAs with China, although I would note that the China - New Zealand FTA has clearly led to trade growth for both countries. 

The China - Australia FTA, now over a decade under negotiation, and hopefully to be completed this year, took so much time in part due to the sensitivity of some sectors for each party. Canada has a much larger industrial sector than China, and some Canadian industrial companies fear that unrestricted Chinese competition would pose unmanageable risks.

My own view is that the right agreement could prove useful to both countries. But in view of some of the misgivings on the part of Canada, perhaps a partial agreement that stopped short of being a full FTA could over time reassure both sides that a more complete model is both achievable and desirable. 

Whether a full FTA or some form of other model of closer economic relationship the negotiation of such an agreement requires trust and compromise from both parties. To this end, a strengthened political relationship would play an important part.

XUEJIANG LI:

In which areas do you see substantial potentials in further developing bilateral co-operations between Canada and China?

GORDON HOULDEN:

It is hard to imagine two economies that have such distinct characteristics as Canada and China. But this very diversity can be a strength and a source of compatibility.

Canada has a small population, but one which still represents an important destination for Chinese exports that are rapidly growing in quality. Canada is not a powerhouse, for example, in consumer electronics where China has many strengths. Canada has huge energy and agricultural surpluses, which combined with a very stable economic and political landscape, can offer China reliable sources of supply that also reduce Chinese dependence on less stable countries.

In my youth Japanese and Korean automobiles were seen as unreliable and of low quality. Both of these Asian states not only now have huge sales in the Canadian market, but both also have set up auto assembly plants in Canada, to reduce transportation costs and to be within the NAFTA FTA zone.

I will not be surprised to see China not only ship cars to Canada in the medium term, but also to eventually set up manufacturing facilities for a range of industrial products in Canada, in part due to rising Chinese labour costs. 

The compatibility of the export sectors of both Canada and China, driven by the natural advantages of each economy makes me confident of a bright 21st century for economic collaboration.(end) 

(Editor:Gao Yinan、Liang Jun)
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