The meeting between Chinese President Xi Jinping and US President Barack Obama in the Hague on March 24 further reinforced the common goal of building a new model of major power relations between the two countries, with the backdrop of a complicated international situation, especially the Ukraine crisis.

United we stand [By Jiao Haiyang/China.org.cn]

In the economic realm, the two presidents agreed to collaborate within the S&ED and JCCT, and also expressed the desire to accelerate Bilateral Investment Treaty (BIT) talks. Besides the bilateral arena, China-US collaboration will undoubtedly involve multilateral activities. APEC, among others, could also serve as a key platform for fostering this new model of major power relations between the world’s two largest economies.

APEC: Top Economic Importance for both China and the US

China is the host country of APEC in 2014. Founded in 1989, APEC has 21 member economies, covering nearly all the economies around the Pacific. They include both the developed (US, Japan, Canada, Australia, Singapore and S Korea) and emerging economies (China, Russia, Mexico, Peru, Chile, Indonesia, Malaysia, Vietnam and others). The total GDP of APEC 21 was $ 41.28 trillion in 2012, 57.0% of the world’s total. It is not only a prime engine of world economic growth, but also the most important trading partner for either the US or China.

APEC member economies cover all the 12 TPP negotiations partners, and thus mean more than the latter for the US economy, trade and investment. According to USDOC data, United States’ total trade volume with APEC members increased from $2032.94 billion in 2008 to $ 2449.78 billion in 2013, which was up 20.5%, compared to 13.4% growth in its total global trade over the same period. As a result, APEC’s share in its total global trade also rose from 60.0% in 2008 to 63.7% in 2013. During the past 5 years, 91.7% of the net increase in US global trade came from APEC members, or $416.84 billion out of a global total of $ 454.62 billion.

A basic reason for APEC’s weight in US trade is China, which is not a TPP partner. According to the same USDOC data, United States’ trade with China increased from $407.51 billion to $562.25 billion, an increase of 38.0%, with a net increase of $ 154.74 billion, 37.1% of its net trade increase with APEC. If China is excluded, the US trade with non-China APEC (including all 11 TPP partners ) would have increased by only 16.1%, marginally higher than its global trade growth ( 13.4%). Non-China APEC share in total US global trade would have been only 47.9% in 2008 and 49.1% in 2013, both of which were less than half of the world total.

APEC is also extremely important for China. APEC members account for 60% of China’s total world trade, a similar share as in the US case. They account for 70% of China’s total outbound direct investment and 83% of China’s total inbound investment inflows. Of the top 10 largest trading partners for China, 8 are APEC members. The US alone had a trade volume of $520.0 billion with China, according to China Customs statistics, by far the largest country trading partner, accounting for 12.5% of China’s total world trade and over 20% of China’s APEC trade. Both China and the US are partners in a wider FTA in APEC, namely the Free Trade Area Asia and Pacific ( FTAAP), the common goal of APEC for over 10 years.