APEC summit: What the media didn’t see

China has become the most consequential economic player in Asia – can the US retain a leadership pos

China's President Xi Jinping arrives with other APEC leaders to pose for a photo [AFP]

Far from becoming another dull meeting among political leaders and business executives, this year’s Asia-Pacific Economic Cooperation (APEC) summit quickly transformed into one of the most eventful gatherings in recent memory. Russia’s newly bachelor president, Vladimir Putin, (once again) caught the global attention – and sent Chinese censors into a hyperactive mode – when he allegedly flirted with China’s first lady, Peng Liyuan, by suavely slipping a shawl over her shoulders.

Meanwhile, Australia’s conservative Prime Minister Tony Abbott, a fierce critic of Putin over the crisis in Ukraine, studiously avoided making eye contact with his Russian counterpart. Amid a bitter territorial dispute in the South China Sea, China’s leader, Xi Jinping, in turn, showed little interest in holding an informal talk with his Filipino counterpart, Benigno Aquino, who will host next year’s APEC summit. The Philippines is the only country to have filed a legal complaint against China’s perceived maritime expansionism. The two leaders are yet to hold a single formal bilateral meeting. It was a game of cat-and-mouse among leaders in attendance.

The highlight of the event, however, was the historic meeting between Xi and his Japanese counterpart, Shinzo Abe. By all means, it was an awkward meeting. Traditionally, Chinese leaders are expected to wait for and warmly welcome their guests, with beaming smiles and fierce handshakes adding to the overall festivity. This was precisely how Abe met Xi’s predecessor, Hu Jintao, back in 2006. This time, the Japanese leader, forlorn and anxious, waited for his Chinese host to arrive at Beijing’s Great Hall of the People. What followed were cold handshakes, no smiles, and a stiff, sullen facial expression on Xi’s face.

Bitter rivals

For centuries, China and Japan have been bitter rivals in Asia. And recent years have seen a dangerous spike in territorial tensions, with Beijing and Tokyo risking an all-out conflict over seemingly inconsequential features, the Senkaku/Diaoyu Islands, in the East China Sea. For months, Abe struggled to secure a formal meeting with Xi, who eventually relented. To appease his Chinese counterpart, Abe reiterated Japan’s long-standing apology over its historical atrocities against China, called for broader bilateral diplomatic engagement, and the preservation of high-stake bilateral trade and investment ties.

China and Japan leaders hold talks in Beijing

It was clear that both sides acknowledged the importance of focusing on bilateral economic ties, establishing crisis-management mechanisms to avoid military conflict over their territorial disputes, and resume institutionalised dialogue between their relevant bureaucratic agencies. The meeting was a much-needed icebreaker in Sino-Japanese relations.

Hosted by Beijing, the gathering served as a coming out party for Xi, widely seen as the most powerful Chinese leader since Deng Xiaoping, who has vowed to restore his country to its historical glory – as the centre of the East Asian order.

For more than a year, Xi has ferociously sought to consolidate power at home, purging low- and high-level enemies, placing himself at the centre of all major domestic reforms, and striking fear into the fabric of the Chinese Communist Party (CCP) by launching an unprecedented anti-corruption crackdown. More confident than ever, Xi utilised the summit to highlight China’s emergence as the pre-eminent economic power in Asia, proposing the establishment of the Free Trade Area of the Asia-Pacific (FTAAP), which was widely welcomed by almost all leaders from across the region.

Since China is already the biggest trading partner of almost all countries in the region, Xi’s proposed FTAAP would simply streamline and integrate existing bilateral free trade agreements – between China and its major trading partners – into an overarching pan-regional network. But with global heavyweights such as China and the US in attendance, there was bound to be some disagreement in the room.

Clash of titans

Reeling from a devastating midterm elections at home, which saw the Republican opposition securing a majority in both houses of the US Congress, President Barack Obama tried to project strength and called upon China to underwrite – rather than undermine – the liberal international order.

More confident than ever, Xi utilised the summit to highlight China’s emergence as the pre-eminent economic power in Asia, proposing the establishment of the Free Trade Area of the Asia-Pacific…

In Washington’s view, China has actively sought to challenge the US-led regional order. In recent decades, China has been creating alternative regional and international platforms, such as the Shanghai Cooperation Organization (SCO), the Conference on Interaction and Confidence Building Measures in Asia (CICA), the New Development Bank (NDB), and the newly inaugurated Asia Infrastructure Investment Bank (AIIB), which aims to provide large-scale capital and technology for infrastructure projects in neighbouring countries.

The US and its allies are not full-fledged members in the SCO and the CICA, while the NDB is an initiative of Brazil, India, Russia, China, and South Africa. The AIIB’s inauguration ceremony was boycotted by Washington’s top allies in the region, namely Japan, South Korea, and Australia.

Now, if the China-proposed free trade area is actualised, it would render the Washington-led Trans-Pacific Partnership Free Trade Agreement (TPP) gratuitous. The TPP, a cornerstone of the Obama administration’s Pivot to Asia policy, has been hobbled by a deadlock in negotiations.

So far, it seems that China has managed to pull off a colourful event, with the APEC summit hosting a historic meeting between Asia’s two most powerful states. The event also underlined how China has become the most consequential economic player in the region. It remains to be seen how the US will try to retain its leadership position in Asia.

Richard Javad Heydarian is a specialist in Asian geopolitical/economic affairs and author of “How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings.”