REACHING CONSENSUS TO ASIA-PACIFIC PROSPERITY

By+Zhou+Wenzhong

In the past few decades， Asia has been the region with the worlds most dynamic and fastest growing economic development. Since the global financial crisis broke out in 2008， Asia has once again become an important engine driving global economic recovery and growth.

During this amazing period of growth， the contribution of the Chinese economy has been obvious. The rapid growth of the Chinese economy has benefited from the open and inclusive nature of economic globalization and the countrys deep efforts in reforming its own economy.

Various changes taking place in China and other emerging economies in Asia will have far-reaching significance to the future of the Asian and world economy. Asian nations， including China， are now undergoing vital economic rebalancing and are faced with a dilemma of maintaining economic growth while embarking on structural ad- justment. How Asian nations address these new challenges will indicate the directions of future reforms across the continent.

Accelerating integration

As the opening-up policy has gradually been adopted by most Asian nations， the investment and trade relations between them have become closer， and bilateral， regional， sub-regional and trans-regional cooperation has been initiated. Exchanges and cooperation in the areas of industry and commerce， finance， science and technology， as well as culture， are intensifying. Concrete progress has been made in the building of a cooperative relationship between the Association of Southeast Asian Nations（ASEAN） and China， Japan and South Korea， and sub-regional cooperation， such as economic integration of the ASEAN， Great Mekong economic cooperation and South Asia Association for Regional Cooperation， is also underway. On a larger scale， trans-regional cooperation is in progress as exemplified by Asia-Pacific Economic Cooperation （APEC）， the Asia-Europe Meeting and the Forum for East Asia and Latin America Cooperation.

An analysis from the Asian Development Bank shows that by 2050， Asias GDP may account for 51 percent of the worlds total. The report states that regional cooperation and integration will be crucial for the future prosperity of Asia.

As distinct from the politically driven route to integration taken in Europe， Asias integration process over the past three decades has mainly been spurred forward by the market. Since trade barriers impose a largely negative impact， Asian economies have a strong desire to eliminate them. A series of bilateral free trade agreements have also accelerated economic cooperation among Asian countries.endprint

In 1993， there were only 14 free trade agreements between Asian countries， but at the end of 2013， that number totaled more than 100. Trade has played a key role in the most dynamic economic region in the world.

“Asia still does not have a common market， equivalent to the EU or NAFTA. As a result， the flow of capital and labor within the continent is not as smooth as it could be. Indeed， in many Asian countries， the domestic capital and labor markets suffer severe restrictions and the movement of capital and labor faces many policy barriers. A significant reduction in the cost of moving capital and labor across Asia can provide a strong source of growth and economic integration in the years to come，” wrote Nobel Prize winner Ronald Coase.

Coases analysis points out where Asia has fallen behind in building its own economic community， and it confirms the importance of multidimensional integration policies in Asia-Pacific economic development. Therefore although there is no common consensus on how to fully realize Asian economic integration， the policies of Asian nations and other related economies should all focus on reorganizing the process of economic alliance through free trade agreements.

Despite disagreements， there have been some common understandings： Any sensible free trade agreement should not only stress reducing tariffs， but also focus on more comprehensive trade norms on investment， services and intellectual property rights in order to ensure high-level international trade rules can be reached. The scope and comprehensiveness of a free trade agreement will decide whether or not it will bring benefits to Asian economies.

Wide participation in the process of integration， including making systematic arrangements on related cooperation， will be an important responsibility China may assume in future regional economic cooperation.

Enhancing connectivity

At present， infrastructure in the Asia-Pacific region， particularly in the transportation and energy networks， needs improvement. In this region， most countries spend less than 3 percent of their GDP in the construction of infrastructure. In the private sector， the investment in infrastructure makes up less than 1 percent of the GDP. Infrastructure remains the largest bottleneck for the economic integration of Asia.

As Vice Chairman of the BFA Zeng Peiyan says， exchange and cooperation in planning for the development of infrastructure between Asias individual economies should be strengthened， so that individual infrastructure development plans and regional infrastructure connectivity promotion targets are closely coordinated. Asian economies should hold the discussions and exchanges necessary to attain a shared vision with regard to cross-border， cross-regional and inter-basin infrastructure networking. This would mean that a consensus or plan could be shaped in accordance with different areas of specialization. Medium- and long-term planning and arrangements could then be set out accordingly for the respective economies， so as to promote free flows in the Asian region within economic， cultural and human spheres， by means of more open and effec- tive infrastructural networks.endprint

By increasing investment in infrastructure construction， expanding domestic demand and creating new economic growth points， we can also remedy the shortcomings in past rapid development. Infrastructural improvements will promote structural adjustment， and drive forward the rapid development of certain emerging industries. In this context， economic structural adjustment， stable economic growth and employment protection will all be more effectively addressed.

The BFA sets store by the value in this field. We have held a seminar in Bali， Indonesia， on connectivity and inclusive growth in the Asia-Pacific region， sharing opinions and showcasing thinking in different fields and at different levels.

Financing difficulty represents another bottleneck for infrastructure construction in Asia. The ADB has estimated that， in the decade from 2010 to 2020， Asia must invest $8 trillion in infrastructure construction overall if it is to maintain its current level of economic growth. It is thus clear that Asias infrastructure has massive financing needs. To address this issue， Chinese President Xi Jinping said at the opening ceremony of the BFA Annual Conference 2013 that China will increase connectivity with its neighbors， actively explore the building of a regional financing platform， advance economic integration within the region and thus increase its competitiveness.

Underdeveloped infrastructure also presents enormous potential for the growth of emerging economies in Asia. In the past 30 years， China has made huge achievements in infrastructure， providing a valuable experience to other emerging economies in Asia. Increasingly powerful Chinese companies can also provide capital and technology for cooperation with other countries in infrastructure construction.

China proposes establishing an Asian Infrastructure Investment Bank and stands ready to offer financial support for infrastructure construction in developing countries in order to promote interconnectivity and economic integration in the region. The establishment of such an institution will， through a new regional platform for investment and fundraising， channel more funds into infrastructure， reduce capital flow out of Asia and ensure that capital is instead invested into Asias vigor and growth. The bank will not only accelerate the development of Asian nations， but also stimulate global economic recovery.

Joint development

In the 21st century， economic globalization and regional development require mutual exchange and cooperation between Asian countries， and in turn， Asia also needs to enhance its cooperation with other regions of the world. How to cope with the challenges brought by economic globalization， to maintain sound development of the region and to strengthen mutual cooperation have become a topic jointly faced by various Asian nations.endprint

It is beyond all doubt that the economic development of China and other Asian countries together with Asian integration are playing an increasingly important role in the global economic structure.

The year 2014 is a critical period for reform in Asian and emerging economies. China， Japan， India and Indonesia are all making vigorous efforts to advance their new reform agenda. Asian economic growth cannot look to impetus from the external economy as it has in the past， but must now primarily rely on domestic forces to achieve growth. To nurture such domestic forces， communications， cooperation and mutual support between Asian countries will be particularly important.

The BFA is the first international organization that is led by Asians and guided from the perspective of Asian interests and views. It can thus dedicate itself fully to the discussion of Asian issues and aim to enhance cooperation and exchanges among Asian countries， and between Asian countries and other parts of the world.

The BFA is committed to serving Asia and opening it to the world and has closely followed and actively responded to both regional and global issues. It has become an important platform for political， business and academic communities from countries and areas in Asia to conduct dialogue and exchange views， increase mutual understanding， expand mutual trust and promote regional cooperation.

Moreover， the forum has built another type of “expressway” in the Asia-Pacific and related regions—it gathers opinions， thoughts and wisdom and then employs them to guide particular economic behaviors.endprint