APEC Summit

Towards Multipolarity

Print edition : December 12, 2014

Chinese President Xi Jinping flanked by U.S. President Barack Obama and Russian President Vladimir Putin during a group photo of leaders of APEC at Yanqi Lake, north of Beijing, on November 11. Photo: GREG BAKER/AFP

Xi'ah, the starting point of the ancient Silk Road. China plans to pitch in $40 billion to revive the Silk Road to Europe. Photo: THE HINDU ARCHIVES

The bust of the Chinese mariner Zengh He on the premises of the Ming Tombs near Beijing. China plans to revive its maritime silk route. Photo: R. VIJAYA SANKAR

As China steps up its role as the global growth engine, the APEC summit in Beijing opens a new chapter in the geopolitical rivalry between the U.S. and a Sino-Russian alliance for domination of Eurasia.

A string of initiatives taken by the host, China, during the Asia-Pacific Economic Cooperation (APEC) conference on November 10-11 have reinforced its standing as a core pillar of the world economy. In partnership with Russia, with which it signed a second mega energy deal a day before the formal inauguration of the summit, China also poured more concrete to strengthen the foundations of an emerging multipolar world. While the mainstream media were applauding the deal between China and the United States on climate change, which followed the APEC meeting, to suggest that the Big-2, China and the U.S., were set to commandeer the world, something much more significant happened in Beijing under the nose of U.S. President Barack Obama. In the Chinese capital, and in the presence of 21 leaders of APEC, the coffin of a unipolar world, which emerged out of the catastrophic collapse of the Soviet Union in 1991, was nailed. A new chapter in the geopolitical rivalry between the U.S. and a Sino-Russian alliance for domination of Eurasia opened.

China took major steps to convey without ambiguity that it was stepping up its role as a global growth engine. At the APEC chief executive officers’ meeting, Chinese President Xi Jinping announced that Beijing would invest $1.25 trillion in overseas projects in the next 10 years. This would nearly triple China’s existing direct investments abroad, providing a significant stimulus to the international economy.

China’s ambitious goals, though hard to achieve, are not utopian. Its overseas investments last year alone totalled $108 billion, marking a sharp 23 per cent increase over the previous year. In the first nine months of this year, there was a further increase of 22 per cent. If the current trend persists, it is highly probable that from $660 billion—last year’s figure of direct overseas investments—the magic aspirational target of $1.25 trillion, stated by Xi, will be scaled by 2024.

Xi made it clear during his address that instead of pursuing a zero-sum game, China adopted a win-win strategy. He said that the Chinese market would absorb imports worth $10 trillion in the next five years. An estimated 500 million Chinese tourists were likely to travel abroad during the same time frame, a situation that would bring substantial benefits to the host countries. “China’s development provides Asia-Pacific and the world with enormous opportunities and benefits; the commercial opportunities are limitless and permanent,” observed Xi.

Consolidation of Eurasia

With its consolidation in Eurasia firmly in focus, China also announced that it would pitch in $40 billion to revive the ancient Silk Road, radiating from China, to Europe. Without bypassing Moscow, a state-of-the-art Euro-Asia land corridor marshalled by Beijing promises to open new growth centres, which are set to benefit from massive investments in infrastructure. Expressways, railway tracks, fibre optic lines, mobile towers, energy pipelines and industrial parks could appear soon along a route, which was the haunt of trade caravans, missionaries, scholars and spies before the advent of maritime trade. Xi said other countries were free to pitch into the $40 billion base fund to develop the new Silk Road.

China also proposes the revival of the Maritime Silk Route (MSR), starting from its coastline in the Fujian province. By taking this initiative, China hopes to revive a route taken by Zheng He, the 15th century Chinese mariner, during his serial voyages in sections of the Pacific and Indian Oceans. Officials in Fujian said China would finance the development of the marine industry, including shipbuilding, logistical infrastructure and industrial parks, in countries that participate in the MSR initiative.

With funding for such mega projects dependent at present on Western-backed financial institutions, China has decided to form the Asian Infrastructure and Investment Bank (AIIB). The move rebuffs the decision of the International Monetary Fund (IMF) to limit China’s role to a paltry 3.8 per cent of the votes. Little wonder then that the U.S. is unhappy with the AIIB initiative, which will give China and its partner countries far greater financial autonomy than they enjoyed earlier. Officially, the U.S. said it had “concerns about the ambiguous nature of the AIIB proposal as it currently stands”. But behind the scenes, a seething diplomatic battle has ensued, visible in the hectic U.S. lobbying to persuade allies such as Australia and South Korea not to join the AIIB. This has been countered by the exertions of Jin Liquin, the Chinese official handpicked for the top job in the bank, who has shuttled between Beijing and other Asian capitals to woo prospective partner countries for the initiative. Twenty-one Asian countries, including India, signed a preliminary agreement on October 24 to establish the AIIB. The bank is set to be open for business in 2015.

China scored a major victory at the APEC conference, when all the 21 countries in the group agreed to undertake a joint strategic study for the formation of a Free Trade Area of the Asia-Pacific, marking the official take-off of the FTAAP process. The FTAAP aspires to galvanise Asia-Pacific’s economic integration with China as its centre. Under the FTAAP framework, the Chinese visualise the formation of a giant FTA, which will effectively scrap fragmented free trade agreements that currently bind the Asia-Pacific economies. Xinhua, China’s official news agency, reported Foreign Minister Wang Yi as saying that the FTAAP “will help to integrate regional, bilateral and multilateral cooperation mechanisms and reduce the risk of overlap and fragmentation”.

The FTAAP, frontally challenges the Tran-Pacific Partnership (TPP), a free trade proposal steered by the U.S. The TPP glaringly excludes China but includes top U.S. allies, including Japan and Australia in its 12-member star cast, giving rise to valid suspicions that the purpose of the alliance is to seek China’s economic diminution.

It is, therefore, not surprising that China views the TPP as an “economic NATO [North Atlantic Treaty Organisation]”, an extension of the U.S.-led “Asia Pivot”, a military containment doctrine that draws additional U.S. troops into China’s periphery in alliance with partners that include Japan, South Korea, Australia and the Philippines.

China sees the Silk Road integrationist initiatives and the formation of the AIIB and the FTAAP as a strategic response to the military encirclement and economic squeeze of it by the U.S.-led “Asia Pivot” and the TPP project.

In posting its geopolitical riposte to the U.S.-determined inroads, China has found in Russia a willing strategic partner. A fundamental shift in their relationship took place when the NATO led the assault to assassinate Libyan leader Muammar Qaddafi in October 2011. There is enough literature available in the public domain to infer that both Moscow and Beijing interpreted Qaddafi’s killing as an illustration of “regime change” rather than as an advancement of “democracy”, under the flawed notion of Arab Spring or a revolution for change. With the U.S. intervention in Libya as the turning point, China and Russia began their joint opposition at the United Nations Security Council to legitimise the use of force against the government of President Bashar al-Assad in Syria, which has been under severe pressure from NATO and its allies in the Persian Gulf. Russia and China recognised that the defence of Syria was essential to prevent Iran, on the periphery of the Eurasian corridor, from becoming a victim of another “regime change” push. So far the two countries, especially Russia, have prevented the fall of the Assad government, seen as the first line of Eurasian defence, with Iran as the close second.

The arrival of Xi as China’s President in 2013, and his bonding with his Russian counterpart, Vladimir Putin, has consolidated the Sino-Russian alliance. China’s Silk Road initiatives that followed Xi’s arrival at the centre stage, have imparted conceptual cement to fortify the Eurasian corridor and prevent it from becoming a playground of the West.

A day before the APEC formally kicked off, Xi and Putin oversaw the signing of a preliminary agreement on another massive energy agreement with China. The project can dwarf Europe as a consumer of Russian gas.

Russia's eastward pivot

The proposal, marking Russia’s eastward pivot, has set a target of supplying 30 billion cubic metres (bcm) of gas to China every year along the so-called “western” or “Altay” route. This will supplement the proposed supply of 38 bcm of gas to China through Russia’s “Power of Siberia” pipeline passing along the “eastern route”. The “eastern route” deal, worth $400 billion, was signed in May. Work on the project has commenced.

Aleksey Miller, a senior member of Putin’s inner circle and head of the energy giant Gazprom, announced that the deal would hedge Moscow’s dependence on the European energy markets. “After we have launched supplies via the ‘western route’, the volume of gas deliveries to China can exceed the current volumes of export to Europe,” he observed.

From an energy security perspective, China is pushing for Russian gas supplies, sent along a more secure land corridor, fearing that shipments of oil and gas along the sea route are more open to disruption following the announcement by the U.S. of its China-centric “Asia Pivot” military doctrine.

Putin’s presence at the APEC summit resulted in another agreement that could allow the China National Oil and Gas Exploration and Development Corporation to pick up a 10 per cent stake in Vancorneft, which is part of Rosneft, another Russian energy giant.

China and Russia are also in the crosshairs of the U.S. because of their increasing tangential shift from the dollar economy to rouble and yuan as currencies to settle their trade transactions.

Russia has angered the U.S.’ powerful financial oligarchy by de-pegging the rouble to the dollar and euro. The Russian bank VTB signalled its intent to leave the London Stock Exchange for Shanghai. Russian energy giants are already flocking to Hong Kong, which is set to become linked to Shanghai directly.

With their relations with the U.S. structurally impaired, a military dimension of the Moscow-Beijing partnership is acquiring greater salience. Russia is now selling China its “game-changing” S-400 air defence missile system and has plans to supply the superior S-500 missile system, which is designed to intercept intercontinental ballistic missiles.

As China begins to enforce its plans to emerge as a powerful engine of the global economy and a nerve centre of geopolitics in conjunction with Russia for the defence of Eurasia, a collision of fundamental interests with the U.S. is becoming inevitable. Post-APEC, the stage is set for the emergence of a multipolar world, either peacefully through dialogue or through an escalation of conflict with extremely dangerous consequences, raising serious concerns about international peace and security in the future.

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