Europe and the US from the perspective of Machu Picchu. Troubled Pacific Ocean
By Marek Grzybowski
“Empower. Include. Grow” is the slogan under which APEC economic leaders met on November 15-16 in Lima to promote APEC priorities in the field of trade and investment, digitalization and innovation, and sustainable and inclusive growth. The undertaking was accompanied by the ceremonial opening of the port in Chancay in Peru. The “Machu Picchu Declaration” was adopted, which calls for accelerating actions for the economic growth of APEC countries. The leaders also supported the “Lima Road Map”, which sets the most important directions for the economic development of the countries of the Asia-Pacific region (2025-2040).
The European Union is developing (folding?) under the pressure of the high economic activity of the countries of the APEC and ASEAN regions. Bound by administrative and political interests, it cannot develop a coherent economic strategy, a common innovation policy, a uniform industrial and defense strategy. This is happening at a time when production of a new factory in Gdańsk is being suspended, when shipowners are contracting successive series of ships in Chinese shipyards, when shipping lines are optimizing port entries, and the scale of delays is already exceeding all standards.
At a time when entire industries are moving their activity to Asia, and especially China, the main panacea is planned to be based on the EU’s economic development strategy based on customs duties and subsidies. At that time, new dynamics of economic cooperation in the Asia-Pacific zone were given by initiatives undertaken by the United States. Among other things, it concerns the implementation of the San Francisco Principles on the integration of inclusiveness and sustainable development in trade and investment policy. It is also about supporting the Detroit Principles and Recommendations concerning, among others, equality in education, training and employment and the use of social dialogue for economic cooperation.
China is implementing APEC programs
China has been implementing the APEC proposals and programs with consistency and commitment. It is leveraging the dynamism of its industry, the innovative potential of its leading industries, and investment activity in the region. Concluding his speech at the 31st Economic Leaders’ Meeting in Lima, President Xi Jinping said: “The ancient Chinese sage observed: ‘A virtuous man, while strengthening his position and striving for success, also works to help others strengthen their position and achieve success.'”
– There is a similar saying in Latin America: ‘The only way to gainful nationality is to be generously universal.’ China welcomes all parties to continue riding the “express train” of its development and grow together with China’s economy, so that we can all contribute to the modernization of all countries characterized by peaceful development, win-win cooperation, and common prosperity,” President Xi concluded his speech.
The “Machu Picchu Declaration” and the “Lima Roadmap” Lima Roadmap to Promote the Transition to the Formal and Global Economies (2025-2040) seem more consistent than the so-called Mario Draghi report recently accepted for analysis by the European Commission.
It contains a good diagnosis and a collection of pious wishes developed by a whole group of experts from many EU countries. The “Lima Roadmap” includes areas of action and sources of financing as well as strengthening the strengths of the economies of Asia and the Pacific. A significant advantage of the programmed actions is that APEC consistently focuses on economic development, leaving political problems and disputes in the shadow.
APEC brings together 21 countries known as “member economies.” The term “member economies” is used because the APEC cooperation process focuses primarily on trade and economic issues, and members cooperate with each other as economic entities. It is worth taking a leisurely look at the list of countries that make up the organization: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Republic of the Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; and Vietnam. APEC’s economic activity is accompanied by a new strategy by ASEAN countries, which will also give APEC’s activities dynamics. We write about it here.
The 21 APEC countries are an area inhabited by about 3 billion people. This is almost 40% of the world’s population. Almost half of world trade, which mainly takes place by sea, is concentrated in this region. APEC countries generate over 60% of world GDP. China dominates. Not only in industrial production and GDP dynamics.
China and the US – APEC’s driving forces
China’s trade with other APEC economies reached a record 21.27 trillion yuan (about 2.95 trillion US dollars) in the first 10 months of 2024, according to the latest data from the General Administration of Customs. According to Chinese customs officials, this means an increase in the value of trade by 5.7% compared to the previous year, exceeding the dynamics of China’s trade by 0.5%.
In the period from January to October, intermediate goods accounted for over 45% of China’s exports to other APEC economies. In the region, demand grew dynamically, in particular for supplies of electronic components, automotive parts, components for automatic data processing equipment and flat panel display modules. China’s imports are mainly raw materials and unprocessed goods. They accounted for over 80% of China’s total imports from other APEC economies. China officially joined APEC in 1991, its first entry into the regional economic cooperation organization.
APEC members are also a major destination for exports of goods from the United States. About 60% of US trade takes place in the APEC region. As many as seven of the 10 largest trading partners of the United States are APEC members, according to the US Census Bureau. In 2023, the United States was the host of APEC 2023. It was then that the concept of deepening economic ties with key regional partners based on an innovative economy and inclusive economic activity was developed.
In order to deepen ties not only with political activity but also with the private sector, the APEC Economic Leaders Week was initiated. It was attended by over 5,000 high-ranking government officials and global business leaders. The Americans emphasize that it was “characterized by broad and significant public-private cooperation, including the APEC CEOs’ Summit, the APEC Sustainable Future Forum, and other stakeholder engagement activities.”
Among other things, the Americans focus on promoting sustainable development. In this area, they undertake initiatives on climate and clean energy and the fight against waste that gets into the sea. They support the fight against illegal, unreported and unregulated fishing. On land, they support governments that fight illegal logging.
American business circles justify these directions of support in the Pacific region because “Clean energy technologies represent an important export and investment opportunity for American companies, and transparent, market-based policies and reforms in the energy sector governance will open markets for American energy and energy-related goods and services.”
– The United States has led efforts to promote just energy transitions, promote food security through sustainable agri-food systems, and protect forest biodiversity, the U.S. Embassy in Peru said in a statement following the APEC Summit.
In 2024, the U.S. government launched the Just Energy Transition Initiative (JETI), proposed by the APEC Ministers of Energy and the APEC Ministers in 2023. It will promote actions to accelerate the energy transition in the APEC region, leveraging workers, communities, private sector companies, and engaging investors in an equitable and inclusive manner. It is intended to engage groups of micro, small, and medium-sized enterprises (MSMEs), women, indigenous peoples, and people with disabilities.
JETI covers the following five thematic areas: just energy transition and energy security; fossil fuel-fired power plants and just energy transition; a just energy transition for gender equality, prosperity and inclusive sustainable development; rural electrification and access to energy; technical solutions for a just energy transition.
The Golden Dragon on the economic offensive
In turn, China is trying to take the leading role through comprehensive integration with the countries of the region. It is doing this, among other things, through direct investments. This was clearly emphasized by Chinese President Xi Jinping during the APEC leaders’ session, which took place in the capital of Peru, Lima, when he announced that China would welcome the APEC leaders to its country in 2026.
– We look forward to working with all parties to deepen cooperation in the Asia-Pacific region for the benefit of the nations in the region – said Chinese President Xi Jinping, speaking at the 31st APEC Economic Leaders’ Meeting. He was supported by Carlos Vasquez, chairman of APEC 2024, who emphasized that “China’s experience in hosting APEC twice shows that China can foster consensus, and emphasized that “China played a very important role together with several other very important economies… to achieve consensus from the very beginning again in APEC 2024 here in Peru,” Xinhua reported.
“China will play a key role in strengthening the APEC forum in 2026 when it takes over the role of host, just as it demonstrated during its successful leadership in 2014,” Xi said.
During his speech, Xi called on APEC economies to “work in solidarity and cooperation to address challenges, fully realize the Putrajaya 2040 Vision, build an Asia-Pacific community with a shared future, and usher in a new era of development for Asia-Pacific.”
The Putrajaya Vision 2040, adopted by APEC leaders in 2020, envisions “an open, vibrant, resilient and peaceful Asia-Pacific community by 2040, for the prosperity of all our people and generations to come.” Four years ago, it was emphasized that the goal was “to ensure that Asia-Pacific remains the world’s most dynamic and connected regional economy, we recognize the importance of and will continue to work together to ensure a free, open, fair, non-discriminatory, transparent and predictable trade and investment environment.”
Innovation and digitalization were also emphasized. The goal was to “enable all our workers and businesses to participate and thrive in an interconnected global economy, we will foster an enabling environment that is, among other things, market-driven and supported by the digital economy and innovation.” In this area, China is already playing a dominant role in the APEC region.
The meeting in Peru noted that this vision of shared prosperity and lasting stability is facing increasing challenges. 2024 is a time of tension and geopolitical turmoil. It noted that China is operating under the pressure of disruptions in the global economy. It noted that protectionism and attempts to “decouple” and “reduce risks” have put unprecedented pressure on the region’s stability and growth.
“We should remain committed to multilateralism and an open economy, firmly uphold the multilateral trading system with the World Trade Organization at its core, fully revive APEC’s role as an incubator of global economic and trade rules, and promote regional economic integration and connectivity,” Xi stressed.
In interviews with Xinhua, experts and officials from the Asia-Pacific region noted that China’s remarkable success with high-quality opening-up has given them a deep understanding of the importance of an open global economic system and the critical need to promote multilateral and win-win cooperation.
As a major country in Asia-Pacific, China has “steadfastly adhered to the development path that is in line with APEC’s spirit of openness, inclusiveness and mutual benefit,” said Woo Su-keun, director of the Institute of East Asian Studies in Korea. “It is more important for countries to show strong leadership through concrete actions rather than words,” Woo told Xinhua.
EU and the USA in the shadow of the Chancay Port
Trade and the dynamically developing economic cooperation in the Pacific region cannot do without good logistics infrastructure, including shipping connections and seaports. The opening of the Chancay Port during the APEC conference was therefore spectacular and was a signal of the direction in which closer economic ties in the Pacific region are heading. The port was built by the Chinese logistics company Cosco Shipping in cooperation with the Peruvian operator Volcan. The port was officially opened on November 14 this year and is undoubtedly a new quality on the economic map of Latin America. Through its connections with China, the port will certainly be a strong logistics corridor conducive to the integration of the economies of the People’s Republic of China and South America, especially Brazil and Peru.
It is forecasted that approximately 1.5 million TEU will be handled annually in the automated container port. The total turnover, together with Callao located near Lima, may exceed 5 million TEU. According to the Peruvian government, the Chancay port is to shorten the travel time of goods from South America to China from 35 to 25 days.
– China is the largest trading partner of many Latin American countries, including Brazil, Peru and Chile – emphasizes Leszek B. Ślazyk, expert and editor of the China24.com portal, and informs that according to the International Monetary Fund, Latin America’s trade with China has increased from about $12.5 billion in 2000 to about $483 billion in 2022. China’s share in the total volume of trade in the region has increased to 16% from 2% two decades ago, when the US share fell from 52% to 39%. Today, a large part of the goods sent from Latin America to the US are those manufactured from raw materials, components and parts originating from China – emphasizes Ślazyk.
China is the EU’s second largest trading partner in goods after the United States, with bilateral trade reaching €739 billion in 2023. This is a 14% decrease compared to 2022, according to Eurostat data. China is the EU’s third largest export partner and the largest import partner. The EU-China trade balance is consistently favourable to China. In 2023, the EU’s deficit was €292 billion. EU exports to China amounted to €223.6 billion, while EU imports from China amounted to €515.9 billion, down 3.1% and 18% year-on-year. Over the past 10 years alone, EU economies have pumped at least €2,600 billion into the PRC economy. In addition, there is foreign direct investment, the cumulative value of which since 2020 has approached €180 billion, according to Eurostat data.
The European Union (EU) and five South American countries cooperate under a trade agreement known by its Spanish acronym Mercosur, which was launched in January 2019. On the South American side, the agreement includes Brazil, Argentina, Uruguay, Paraguay and Bolivia. According to the European Commission, the agreement creates a market for 780 million people and will allow European companies to save over €4 billion a year in tariffs. EU investors have €330 billion ($360.5 billion) of investments in the five South American countries.
The opening of the Chancay Port was not only spectacular. It showed that the PRC’s activity in the Pacific and Latin American countries is taking on a completely different level than the EU and US cooperation with the countries of the region. Direct investment and technology transfer, as well as the creation of lasting economic ties, are being prioritized over simple trade. These changes can be clearly seen from the top of Machu Picchu.