#dnaEdit: Dragon moves

With the season for big time global summits over for the time-being, one can take stock of the geo-economic picture with hindsight. The G20 summit is over at Brisbane, without showing much to its credit. But the Asia Pacific Economic Co-operation (APEC) summit in Beijing, held a week before the G20 meet, has kicked up dust which is yet to settle. China had effectively used the APEC summit to project its global vision, particularly as a foil to the US. 

Almost a quarter of a century back USA had promoted APEC and it was deeply interested in it. Since then, its strategic priorities have changed and it is now more interested in the Trans Pacific Partnership (TPP), sans China.

TPP is being viewed as not only an economic cooperation platform but eventually the US is crafting it as a mirror image of the European Union in its aspect as a free trade bloc. China resents a competing bloc and it is positioning itself as a no-less-bountiful patron of APEC.  

In the run-up to the APEC summit, Chinese President Xi Jingping addressed a powerful group of CEOs luring them with the assurance that  China would import goods worth US$10 trillion over the next five years, that China would invest over $1.5 trillion outside the country, that it would spend $40 billion in improving the traditional Silk Route for trade between Asia and Europe and some 500 million Chinese would travel overseas in the next 10 years. There are numerous other benefits he promised, including setting up a large bank — the Asia Infrastructure Investment Bank (AIIB) — to fund infrastructure projects across Asia. The bank will in effect dwarf the Asian Development Bank and eventually the World Bank, which are dominated by Japan and the US respectively. 

China held an air show where it, for the first time, presented its latest fifth-generation fighter jets and commercial aircraft. This gave rise to a debate that the design for the fighter was stolen through cyber-spying. Admittedly, the made-in-China fighter jet looks strangely similar to the American F36. 

At the same time, China-US economic relations have become inextricably interwoven. Their trade turnover is the largest between any two countries — running upwards of $520 billion a year. Their investments are above $100 billion a year. The two countries are negotiating a bilateral investment treaty (BIT) which is at a fairly advanced stage. They are reportedly working out a bilateral tax treaty as well which should further ease the operation of corporations in each other’s countries. 

China is appearing to be playing an infinitely clever geo-economic game. In its bilateral negotiations with the US, China is masking its huge economic muscle, arguing that it is a developing country and the US still has a leading role. China recognises that the post-Second World War global architecture is still what the US had crafted and in which the US has a “prime role” which nobody else can really replace. USA with an over $16 trillion economy is far ahead and China brushes aside any suggestions that on the basis of purchasing power parity China has already surpassed USA.

But, independently, China is projecting its economic power, including the treasure chest it has accumulated over the years which is now available for investment around the world. China is engaging in multi-layered economic links through its engagements in various regional bodies. These include China’s ASEAN-plus 10, Shanghai Co-operation Organisation, even at the WTO where it forges and snaps ties with special groups among emerging economies or the least developed countries. 

India must take into account these developments in formulating its strategic vision.