THE Asia-Pacific Economic Cooperation (APEC), founded in 1989, is a regional economic organization for inter-governmental cooperation. It currently has 21 members. China, together with the special regions of Hong Kong and Taiwan, joined the organization in 1991. The only regional economic organization of which China is a member, APEC provides for China an arena in which to participate in regional and international economic activities, and also helps propel the course of China's opening to the outside world.

Characteristics and Influence

Unlike other regional economic organizations, such as the European Union and the North American Free Trade Zone, APEC does not impose internal laws or agreements that limit the activities of its members. It has instead an unbinding mechanism that propels regional economic cooperation and expands its members' common interests. In its actual operations, APEC conducts regional economic cooperation in a progressive manner, through self-initiated arrangements, negotiations, and consultation, on the basis of mutual respect and equality. It advocates "open regionalism," and offers the fruits of its economic cooperation to non-member countries on an equal basis.

Over the past decade, APEC has developed and improved greatly. Its activities involve mainly three aspects: freedom of trade and investment, ease of trade and investment, and economic and technological cooperation. Desired measures leading to freedom of trade and investment include the elimination of tariff and non-tariff barriers among APEC members, and freedom within investment and the service trade. APEC has set itself a schedule in this respect: free trade and investment for developed members is to be realized by 2010, and for developing members by 2020 -- a goal documented in the agreement reached by APEC members in 1994.

Ease of trade and investment aims to facilitate the business activities of enterprises in the Asia-Pacific Region by simplifying customs formalities, realizing paper-free trade, establishment of agreements based on mutual approval, and formulating competitive policies. Quite remarkable progress has been achieved in this respect. At the 2000 Brunei meeting, APEC launched its e-trade website, bizapec.com, which provides enterprises access to the latest information on developments within APEC, helping them identify business opportunities, all of which contributes towards achieving the organization's goal of making trade and investment free from constraints. APEC aims to promote common prosperity and development within the region through economic and technological cooperation among its members, its main priorities in this respect being within the fields of human resources development, the capital market, infrastructure, technology, environmental protection, and small and medium-sized enterprises. So far, APEC has expedited more than 400 cooperation projects.

APEC's influence on China will become manifest in several aspects. First, it will help to expand China's economic interests in the Asia-Pacific Region, which currently takes up 80 percent of China's foreign trade and 90 percent of its foreign investment. At the APEC investment fair held in Yantai, Shandong Province, this year, China signed foreign investment agreements amounting to US $2.64 billion, and import and export trade agreements of US $580 million yuan, US $200 million of which represented imports. Through APEC, China is able to join hands with its fellow members in achieving common development, thus contributing to the economic development of both China and the Asia-Pacific Region.

The APEC Forum will also promote policy exchanges among its members. The annual informal meeting of state leaders provides a relaxed channel through which China might become familiar with the policies of other member countries and regions, and an opportunity to make known its own policies, ideas and development information. China's efforts to reduce tariffs and eliminate non-tariff barriers since the 1990s have been expedited mainly through APEC.

China's Opinions and Contributions

As the largest developing country within APEC, China has, on the basis of mutual benefit and cooperation, played an active role in the organization's various activities throughout the region since it joined APEC in 1991.

China has always held to the following principles. One, that it advocates adherence to the APEC mode, i.e. to respect the diversity of its members and acknowledge the differences in their levels of development, and their different interests and needs; to emphasize flexibility, progressiveness and openness; to respect equality and mutual benefit; to seek consensus through discussion; to acknowledge common points of interest and differences; to emphasize initiative and free will; and to combine unilateral and collective operations. The above views were advanced by President Jiang Zemin at the 1996 Subic meeting, and later became major guiding principles for cooperation among APEC members. Two, China urges equal emphasis on free trade and investment and economic and technological cooperation. China has always maintained that these two aspects complement one another, forming an integral and inseparable whole. Three, China holds that APEC is, and should remain, an economic organization, and should not become involved in politics.

China's contributions to APEC over the past decade include the following.

As regards its objective of achieving free trade and investment, China has taken the step of cutting tariffs. At the 1995 Osaka meeting, China stated its decision to begin large-scale import duty reductions in 1996. At the 1996 Subic meeting, it stated its intention to cut import duties to an average level of 15 percent by 2000. At the 1997 Vancouver meeting, China announced that it would join in the Information Technology Agreement, and that it would reduce its industrial product tariffs to an average level of 10 percent by 2005. China's tariff rate accordingly decreased from 35 percent to 23 percent in 1996, to 17 percent in 1997, to 16.7 percent in 1999, and currently stands at 13 percent.

China has, at the same time, taken measures to eliminate non-tariff barriers. Since 2000, China has cancelled quantity limits on sugar, caoutchouc and cotton, instead adopting a tariff policy. Currently only 372 commodities are subject to non-tariff barriers. China has also taken step-by-step measures to realize freedom within service trades and in investment. For example, in 1999 China eliminated geographical restrictions on foreign banks. In September 2000, it allowed the foreign exchange interest rate to float. China has also accelerated its speed of opening up in insurance, retail sales, transportation, tourism and telecommunications.

China is active in promoting economic and technological cooperation. At the 1994 Bogor meeting, President Jiang Zemin proposed holding a conference for ministers of science and technology. At the 1995 Osaka meeting, President Jiang pushed for industrial cooperation within APEC and suggested that economic and technological cooperation be a key topic at the 1996 Manila meeting. At the Manila meeting, President Jiang called for the establishment of "scientific, technological and industrial parks oriented towards the APEC forum," so as to promote cooperation and exchange among such parks in the region. Adoption of the agenda for scientific, technological and industrial cooperation within APEC in the 21st century was also proposed by President Jiang at the 1998 Kuala Lumpur meeting. It was at this time that China announced its decision to earmark a fund for cooperative projects in these fields, with an initial sum of US $10 million, and to establish a Chinese entrepreneur conference. At the 1999 Auckland meeting, China proposed intensification of economic and technological cooperation, expanding technological cooperation to include research and development, industrialization of mature technologies, and risk investment. China also pushed for cooperation among developing countries that would be beneficial to both sides. With the rapid development of the new economy, the "digital gap" has become a barrier for the development of some APEC members. At the Brunei meeting last year, China suggested co-sponsoring the 2001 APEC summit on the capability construction of human resources with Brunei. All the above suggestions have been adopted at the respective summit meetings.

Apart from these suggestions and proposals, China has accelerated the opening of its high-tech development zones. There are currently 10 high-tech industrial development zones in Beijing, Suzhou and other areas that are open to APEC members.

2001 Beijing Summit

The 9th informal meeting of APEC state leaders will be held in Shanghai this month (October). The Chinese government will take the opportunity to hold discussions with its fellow members and promote its long-held policies and ideas. China has decided that the theme of the summit shall be: "Meeting fresh challenges in the new century: Promoting common prosperity through participation and cooperation." The emphasis is on the future, and the intention is to reflect the latest characteristics in international and regional development, to meet the objective needs of cooperation in the region, to maintain the continuity of APEC, to respect diversity, and the principle of reaching consensus through discussions at APEC, and to identify the nearest converging point of interests of various entities, so as to promote common development and prosperity.

There are three major topics tabled for this year: one, strengthening economic and technological cooperation, with emphasis on the capability construction of human resources; two, promoting the freedom and ease of trade and investment, for example, by adopting an unbinding principle of convenience for trade and investment; and three, promoting sustained development of the Asia-Pacific Region, for example, by strengthening dialogues on economic macro-policies and conducting financial projects. China takes a pragmatic stance as regards promoting APEC development.

By ZHAO JIANGLIN is an APEC expert with the Institute of Asian and Pacific Studies under the Chinese Academy of Social Sciences.