Power play at APEC - Gateway House

The Asia Pacific Economic Community (APEC) summit, held from 13-15 November, returned to Peru after eight years. Given that APEC has 21 member economies, Peru has hosted the summit frequently: in 2008, 2016 and now in 2024. The theme was ‘Empower. Include. Grow.’ It’s an essential call for a region with stalled economic integration, growing protectionism, geo-political tensions and restricted growth prospects.

The APEC Leaders endorsed the consensus Machu Picchu Declaration,[1] pursuing efforts to achieve robust economic growth. The Lima Roadmap to Promote the Transition to the Formal and Global Economies (2025-2040) and Ichma Statement on A New Look at the Free Trade Area of the Asia-Pacific Agenda, were adopted alongside. The Declaration had a companion Chair’s Statement, manifesting discussion on the Ukraine and other crises.

Just Energy Transition Initiative, Achieving Food Security Through Sustainable Agri-food Systems, Agricultural Biotechnology, Combatting Illegal, Unreported, and Unregulated Fishing and illegal logging and facilitation of remanufactured consumer electronic goods, were among the ideas agreed upon.

Will this word salad of resolutions have meaningful implementation or impact? It’s not clear it will. However, some dimensions of the meeting deserve attention. First, with this summit, Peru has brought itself into the international limelight. Contiguity and advance planning with Brazil, which hosted the G20 summit on November 18-19 immediately following APEC, meant that nine G20 leaders could attend both. With the number of global summits growing, their proximity to each other in location and dates helps maximize attendance.

Second, Peru attracted many leaders. Most eyes were on Xi Jinping of China, who came ready to cut the ribbon on his $3.6 billion investment in the Chancay Port, on the Pacific coast of Peru. This is one of China’s largest investments in Latin America and is causing concern in the U.S., which does not like seeing China getting too deep in the Pacific. But Peru then facilitated China by announcing that Beijing would host the 2026 APEC summit.

Unlike the G20, APEC Summits hosts aren’t selected by rotation but rather, countries seek a convenient year. China last hosted in 2014, and, it seems, has bypassed processes thanks to Peru, to be 2026’s APEC president.

For its part, this seems to be Peru’s way of signalling its growing proximity to Beijing. The two other APEC presidents, however, are fixed and selected according to APEC norms: Korea will host the Summit in 2025 and Vietnam in 2027.

China certainly pressed home its colligation and influence over Peru. It demanded restricted Taiwanese representation unless it was by an individual they could approve of. Taiwan, one of the 21 member economies of APEC, has, like its peers, normally selected its own special envoy. This time, it was former Vice President Chen Chien-jen, known as a public health expert. Alas, he fell afoul of an assertive Beijing which saw him as too close to the ruling party’s sovereign agenda. Ultimately, Taiwan was represented by senior presidential adviser Lin Hsin-i.[2]

The U.S. President participated, but Joe Biden is now at the end of his tenure[3], and the other leaders were keen to understand the next administration led by Donald Trump. That will take time for APEC economies to understand. Russia was represented by Deputy PM Alexey Overchuk, as President Vladimir Putin did not travel to Brazil for the G20 either.[4]

There were many new faces at the summit, thanks to the multiple elections which took place around the world in 2024. Among the APEC members, there were new leaders from Indonesia, Japan, Mexico, New Zealand, Singapore and Thailand. APEC has had its share of churn over the last year.

An APEC membership expansion moratorium has been in place since 1998. Initially set till 2008, this was extended indefinitely in 2010. Hence, unlike SCO and BRICS which have expanded over the last two years, APEC is not discussing new members, although India, Cambodia, Colombia, Macau, (China), Costa Rica, Mongolia, Pakistan, Panama, Sri Lanka, and Ecuador have evinced interest from time to time.[5]

An equally important event that was held alongside the summit and its preceding ministerial segment was the APEC CEO Forum Expectedly, it had a large Chinese contingent, displaying openly their interest in the Latin America region.

The discussions at the CEO Summit, however, were all about the return of Trump, and this impacted the discourse on how trade relations would develop in the months ahead. Xi Jinping warned against protectionism, since he is evidently preparing for a further tariff war by the U.S. Artificial Intelligence, now ubiquitous in all global discussions, was a recurring theme during the CEO Summit, as it is expected to alter the nature of many industries and requires adjustment to ensure that labour markets are not negatively impacted. The number of Chinese businessmen dealing with AI who attended seeking opportunities understand well how other economies are dealing with it; their knowledge was impressive. Financial inclusion was prioritized, particularly by those from emerging markets, like Vietnam.

APEC’s significance now lies in its comprehensive strategy for regional recovery and resilience across sectors. In the wake of post-pandemic problems, APEC has enhanced its economic coordination, and its members have implemented fiscal assistance ranging from 1% to 20% of their GDP to stabilize domestic health systems and facilitate the uninterrupted supply of necessary products. This collaborative structure is perceived to foster a layer of enduring economic recovery.

Digital transformation is integral to APEC’s agenda, particularly within creative sectors that generate $2.2 trillion globally. APEC advocates digital competencies and infrastructure to empower smaller countries, positioning creative sectors as catalysts for innovation and inclusive development. APEC’s activities on climate resilience and food security highlight its current significance – given that 22% of the South American continent is forest[6], and it accounts for a quarter of global agricultural and fisheries exports.[7] APEC plans to issue climate bonds and regional carbon networks,[8] and has introduced new food security measures to safeguard key supply lines during unforeseen global disruptions.[9] Collectively, these initiatives provide APEC an essential forum for addressing pressing economic, social and environmental issues and remain relevant.[10] [11]

Can APEC be that model of collaborative governance and promote long-term prosperity and balanced development in the region? The follow-up to the Peru resolutions over the next year will show whether it can. Meanwhile, distractions abound, most particularly the new rivalry between China and the U.S. before APEC meets again in Korea in 2025.

Gurjit Singh is a former Indian Ambassador to Germany. He is currently promoting the impact investment movement for implementing SDGs in Africa.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

Support our work here.

For permission to republish, please contact outreach@gatewayhouse.in

References

[1] 2024 APEC Leaders’ Machu Picchu Declaration, APEC, 16 November 2024, https://www.apec.org/meeting-papers/leaders-declarations/2024/2024-apec-leaders%27-machu-picchu-declaration

[2] Thompson Chau, Taiwan feels APEC pinch, Nikkei Asia, 14 November 2024, https://asia.nikkei.com/Politics/International-relations/Taiwan-feels-APEC-pinch-as-host-Peru-welcomes-Xi-and-Chinese-megaport?utm_campaign=IC_asia_daily_free&utm_medium=email&utm_source=NA_newsletter&utm_content=article_link&del_type=1&pub_date=20241114190000&seq_num=3&si=00109458

[3] APEC 2024, State Department, https://www.state.gov/asia-pacific-economic-cooperation/#:~:text=Their%20host%20year%20will%20include,for%20APEC%202024%20is%20%E2%80%9CEmpower.

[4] Russia’s Putin says presence at G20 in Brazil will ‘wreck’ summit, Al Jazeera, 18 October 2024, https://www.aljazeera.com/news/2024/10/18/russias-putin-says-presence-at-g20-in-brazil-will-wreck-summit

[5] No plans to discuss APEC expansion at Peru summit, Tass, 14 November 2024, https://tass.com/economy/1872205

[6] ‘Vegetation in South America,’ European Space Agency, https://www.esa.int/SPECIALS/Eduspace_Earth_EN/SEM94FNW91H_0.html

[7] ‘Why Latin America is vital to solving the world’s food crisis,’ World Economic Forum, Jan 16, 2024, https://weforum.org/stories/2024/01/latin-america-solution-food-insecurity/

[8] APEC businesses propose climate bonds and carbon credit network, Kathari News, 4 August 2024, https://kathari.news/2024/08/04/apec-businesses-propose-new-climate-bonds-carbon-credit-network/

[9] Policy Partnership on Food Security, APEC, https://www.apec.org/groups/other-groups/policy-partnership-on-food-security

[10] APEC Priorities Page, APEC, https://www.apec.org/2024-peru-priorities

[11] The Aotearoa Plan of Action enhances APEC’s governance by emphasizing accountability and broadening partnerships with regional organizations such as ASEAN and the Pacific Islands Forum for a unified policy strategy. The recent structural improvements detailed in the Second Strategy for Modernization of the Finance Ministers’ Process use a “troika mechanism” to enhance coordination among host economies, accompanied with sunset provisions to optimize policy efficacy.