·Chinese and Foreign Joint Research Theme Report·
The Ten Deficits Facing the Asia-Pacific Region and Our Reflections
Wang Linggui
Senior Research Fellow，Deputy Director，the Institute of Intelligence and Information Research（IIIR），Chinese Academy of Social Sciences（CASS）；the Executive Vice Chairman of Board of Directors and Secretary General of National Institute for Global Strategy（NIGS），CASS since the end of 2015
The Asia-Pacific region is the engine for the development of the world today，and one of the regions with the most growth and vitality. It is also one of the regions that continue to create miracles in cooperation. The annual APEC Leaders’ Summit in November this year will be held in Papua New Guinea. The theme of this summit will be “harnessing inclusive opportunities，embracing the digital future” and its four topics are：Improving Connectivity and Deepening Regional Economic Integration，Promoting Sustainable and Inclusive Growth，Strengthening Inclusive Growth Through Structural Reform and Strengthening Economic and Technical Cooperation，to keep discussing future cooperation and development issues in the Asia-Pacific region.
1 Ten deficits faced by the Asia-Pacific region at present
1.1 Peace deficit
In May 2017，when President Xi Jinping attended the “One Belt，One Road” International Cooperation Summit Forum and delivered a keynote speech at the opening ceremony，he stated that “peace deficit，development deficit，and governance deficit are serious challenges facing all mankind.” The peace deficit is listed as the most serious challenge facing mankind today.
The so-called “peace deficit” means there’s still a big gap between the security environment we face and the ideal security environment，and we are paying a new price for this gap. The security environment facing the Asia-Pacific region today is still subject to great uncertainty. It not only faces threats from the traditional security sectors，but also faces threats from non-traditional security areas. Like the rest of the world，the Asia-Pacific region faces religious extremism，terrorism，and separatism. These non-traditional issues are eroding the overall security environment in the Asia-Pacific region. At the same time，traditional security issues such as territorial disputes and nuclear threats also bothering the Asia-Pacific region and increasing geopolitical crisis. In recent years，the number and scale of military exercises in the Asia-Pacific region have shown an upward trend. According to the statistics of the World Arms Trade Analysis Center，from 2005 to 2014，the Asia-Pacific region ranked first in arms import trade among 10 regions in the world，with total imports accounting for 30% of the total global arms imports.[1] Geo-conflict and South China Sea disputes have all occurred within the Asia-Pacific region. In the non-traditional security field，major natural disasters are constantly eroding the fruits of growth in the Asia-Pacific region.
1.2 Survival deficit
The 400 years of industrialization has brought us a wealthy life while left us facing a huge crisis of survival. Climate change，environmental pollution and other threats to human development and individual security are becoming increasingly prominent. Rise in sea level has brought the threat of disappearance to Pacific island countries. Problems such as water pollution and frequent natural disasters have caused some people in the Asia-Pacific region to be in a state of non-development or slow development，and it is difficult to get out of the poverty trap. In an environmental report in 2016，the United Nations Environment Program pointed out that the living environment in the Asia-Pacific region is facing huge problems. The urbanization process and agricultural development have led to the erosion of natural resources and the degree of desertification is causing concerns. The average annual desertification land area exceeds one million hectares. Living and industrial pollutions are the main source of water pollution in the Asia-Pacific region；drinking water source for about 30% of the population in the Asia-Pacific region is contaminated and aquatic diseases cause 1.8 million deaths each year.[2]
1.3 Development deficit
The so-called development deficit means the global benefits gained on development is less than expected. In the prosperous present day，this is still the core issue we are faced with. According to the statistics by the United Nations Economic and Social Commission for Asia and the Pacific，[3] right now there are still 36 undeveloped countries in the Asia-Pacific. They are either landlocked or island countries and have loose relationships with other countries in the Asia-Pacific as well as the world market，some don’t even have any associations at all. Because of that，they are being referred to as countries with special need for development.[4]
1.4 Infrastructure construction deficit
Basic infrastructure is the premise and security for economic growth. “If you need to get rich，build roads first.” Hardware infrastructure deficit also is an obstacle in preventing Asia-Pacific region’s future joint development. The deficit here means investment in basic infrastructure cannot satisfy economic development needs in the Asia-Pacific region by far. The economic growth in a country first needs abundant infrastructure supply，and regional economic growth needs more infrastructure connectivity between countries to be strengthend. According to the estimates of the Asia Development Bank（ADB），between 2016 and 2030，the Asian region needs 26 trillion USD of basic infrastructure investment. This means an average of annually 1.7 trillion of basic infrastructure investment.[5] According to the estimates of the Development Research Center of the State Council of，from 2016 to 2020，the national infrastructure investment demand along the “One Belt and One Road” will be at least 10.6 trillion USD.[6]
1.5 Openness deficit
The so-called “openness deficit” means that the degree of openness does not match up to the economic development process，or it is lagging behind the economic development process. This has led to the fact that the role of openness in economic development is not to promote，but to delay or hinder the economic development process. In the context of counter-globalization，this issue is becoming a new problem facing the Asia-Pacific region. For a long time，countries in the Asia-Pacific region have been carrying the banner of free trade. In the past 30 years，the trade and investment liberalization and facilitation in the Asia-Pacific region have made great progress，and it has been internationally called the “Asia-Pacific model” or the “Asia-Pacific approach.” Today，however，the process of liberalization in the Asia-Pacific region has been eroded by the wave of counter-globalization and is gradually shrinking from the frontiers of the world of trade and investment liberalization. The United States，as an advocate of free trade in the Asia-Pacific region in the past，is now a pioneer in trade protectionism. After Trump took office，he first withdrew from TPP. Furthermore，he took the “US first” approach，taking up trade protectionism and even went so far as to start the “trade war” and directly pulled back the trade and investment liberalization in the Asia-Pacific region. The process has also added uncertainty to the future world development.
1.6 Fairness deficit
The so called “fairness deficit” means at the same time of economic development，social justice is not realized accordingly. The most obvious sign is that the gap of income distribution is becoming bigger and bigger. Unfair，unjust international economic rules have dimmed our development，unrestrained expansion of capital caused demand gap widen and development gap widen. According to statistics by the ADB，right now there are still 330 million people in the Asia-Pacific region that are living in extreme poverty. These people live under the poverty line，which is 1.9 USD per day.[7] The global increase of the Gini coefficient further demonstrated the existence of the previously stated gap. Wealth is accumulated at the same time as poverty. How to reduce or eliminate injustice on development opportunities and realize inclusive growth is a common issue faced by all of Asia-Pacific region right now. Since the ADB first brought up the concept of inclusive growth in 2007，how to realize inclusive growth has also become an important issue the Chinese government emphasizes on，and it’s the main background of the One Belt One Road proposal.
1.7 Innovation application deficit
The essence of economic growth comes from the fact that people’s contribution to the economy is increasing，that is，the added value is increasing. Innovation can reflect the role of people in economic growth to a greater extent，so that economic growth can have unlimited sources of growth，because the human mind is an inexhaustible and innovative carrier. The value of innovation lies in achieving sustainable and inclusive development in the region. However，innovation has always faced a dilemma. On the one hand，protecting the enthusiasm for innovation requires that we give positive returns to innovators. On the other hand，there’s the issue of applying innovation results to practice as soon as possible. What we see today is the lack of innovation and application，making it difficult for the global economic growth to move straight ahead. Sharing the fruits of human knowledge is still a dream that cannot be reached soon. For example，Americans proposed that the GDP protection period for biopharmaceutical patent rights should be 10 to 15 years. Some innovative countries are using their own technological advantages，capital advantages，and political advantages to attribute the benefits of innovation to themselves，rather than to the public.
1.8 Governance deficit
The so-called “governance deficit” means that the current global governance is far from meeting the needs of reality. Global governance of fairness and justice is a necessary condition for the common development of all countries. Currently，we face lack of necessary governance not only in the global public domain，such as climate change，environmental issues，and ocean issues，but also in the traditional public product provision domain，we also face problems such as lack of principals and lack of responsibility. The governance deficit is impacting the common development of mankind.
1.9 Civilized communication deficit
Insufficient civilized exchanges are challenging the bottom line of human mutual recognition. Huntington’s civilized conflicts have emerged in various forms and even turned into the policies of some countries. The main sign is that one civilization does not agree with the other，and even uses force to solve the conflicts. This requires that we use cultural exchanges to transcend the barriers between civilizations，to learn from other civilizations to transcend conflicts，to coexist instead of feeling superior，and promote understanding，respect，and mutual trust among nations and civilizations.
1.10 Community construction deficit
How can we move towards the Asia-Pacific community of common destiny？The concept has long existed，[8] and the proposal is one of the solutions brought up Chinese president Xi Jinping for the future development of the Asia-Pacific region. However，building a community of common destiny in the Asia-Pacific region cannot be achieved overnight or instantly. Community construction requires material inputs，such as the completion of the Asia-Pacific interconnection planning. It also requires emotional investment and capital investment，and may require more investment in understanding. Asia-Pacific members need to accept the concept of community，agree with the concept of community，and be willing to make their own efforts to achieve the concept of community，rather than drift away. This is our opportunity as well our challenge，but this challenge will certainly turn into an opportunity.
2 Our reflections
Xi Jinping pointed out：“The world we live in is full of hope and full of challenges. We can’t give up dreams because of the complexity of reality，we can’t give up pursuit because of the ideals are far away. No country can cope with the challenges facing humanity alone，and no country can return to an island of self-enclosure.” Addressing the above challenges and issues and solving the above challenges and issues will add certainty，predictability and inclusiveness to the future development of the Asia-Pacific region，which will benefit the Asia-Pacific partnership building and help promoting the building of the Asia-Pacific community of common destiny. To this end，China’s proposed solutions to the deficit are：
First，China is willing to discuss the resolution of the peace deficit with countries in the Asia-Pacific region. The peace deficit comes from the disagreement between the two sides on each other’s thinking. To this end，Xi Jinping pointed out：“We must build an Asia-Pacific partnership of mutual trust，tolerance，cooperation and mutual benefit. Like-mindedness makes partners. Seeking common ground while reserving differences can also make partners. The more friends one has，the better one can walk his road. We should increase trust and dispel doubts through frank and in-depth communication；we should uphold the different concepts and respect each other’s choice of development path；we should adhere to mutually beneficial cooperation，play our advantages and promote joint development；we should turn ‘winner takes all’ into win-win，making the cake of great Asia-Pacific development bigger and jointly promote the prosperity of the Asia-Pacific region.”[9]
Second，China is willing to discuss with countries in the Asia-Pacific about solving the survival deficit. It requires us to walk a non-traditional path. Therefore，Xi Jinping pointed out，“We should make economic globalization more open，inclusive and balanced so that it benefits different countries and people of different social groups. We should proactively adapt to the evolving international division of labor and actively reshape the global value chain so as to upgrade our economies and build up new strengths. We should support the multilateral trading regime and practice open regionalism to make developing members benefit more from international trade and investment.”[10] “We will speed up institutional reform for ecological conservation，pursue green，low-carbon and sustainable development，and implement the strictest possible system for environmental protection. By 2035，there will be a fundamental improvement in the environment；the goal of building a Beautiful China will be basically attained. We will actively tackle climate change，and protect our common home for the sake of human survival. China’s carbon dioxide emission is expected to peak around 2030，and we will make every effort for such emissions to reach the peak ahead of time. We will increase the share of non-fossil fuels in primary energy consumption to around 20% by 2030. Once we set a target，we will not stop our efforts until it is met！”[11]
Third，China is willing to solve development deficit with other countries in the Asia-Pacific region. In the future，China will walk a new development path in order to solve the development deficit in the region. Xi Jinping pointed out，“We will be guided by a new development philosophy，put quality first，give priority to performance and develop a modernized economy. We will pursue supply-side structural reform as our main task，work hard to achieve better quality and higher efficiency performance，and create more robust growth through reform. We will raise total factor productivity and accelerate the building of an industrial system that promotes coordinated development of the real economy with technological innovation，modern finance，and a talent pool. We will endeavor to develop an economy with more effective market mechanisms，dynamic micro-entities，and sound macro-regulation. All these efforts will make China’s economy more innovative and competitive. We will promote further integration of the internet，big data，and artificial intelligence with the real economy，and cultivate new drivers of growth in digital economy，sharing economy，clean energy and other areas.”[12]
Fourth，China is willing to work with other countries in the Asia-Pacific region on solving the infrastructure construction deficit. China actively pushes for connectivity construction in the region，investing in the Silk Road Fund and in establishing an Asian Infrastructure Investment Bank. Xi Jinping pointed out，“Connectivity will make the Asia-Pacific economy more vibrant，which will in turn increase potential in economic and social development … Through connectivity efforts，regions and countries can trade in production factors，complement each other’s industrial advantages and production capacity，and learn from each other’s development experience. The supply chain，industry chain and value chain of the Asia-Pacific need to be improved so as to achieve economy of scale and combined effects in the interest of overall invigoration of the Asia-Pacific economy.”[13]
Fifth，China is willing to work with other countries in the Asia-Pacific region on solving the openness deficit. Faced with conservative ways of some members in the region on openness，China will actively push for the construction of Asia-Pacific free trade zone. Xi Jinping pointed out，“We will adopt policies to promote high-standard liberalization and facilitation of trade and investment. We will implement the system of pre-establishment national treatment plus a negative list across the board，significantly ease market access，further open the service sector，and protect the legitimate rights and interests of foreign investors. All businesses registered in China will be treated as equals. We will grant more powers to pilot free trade zones to conduct reform，and explore the opening of free trade ports. We will speed up negotiations with partner countries on the concluding of free trade agreements and investment treaties，advance the building of FTAAP，work for the speedy conclusion of RCEP negotiations，and endeavor to establish a global network of free trade areas.”[14]
Sixth，China is willing to work with other countries in the Asia-Pacific region on solving the justice deficit. Right now China is increasing efforts on solving the poverty issue，listing precision poverty alleviation into one of the three tough wars in China’s future. Xi Jinping pointed out，“Always bearing in mind the most direct and immediate interest of the people，we will build a new development mechanism that features equity，justice，joint efforts and sharing of benefits by all. In this way，we can make economic development more inclusive. We will concentrate our efforts on some tough issues. For example，in the next five years，all the remaining 70 million-plus rural people living in poverty by existing Chinese standard and all the designated poor counties will be lifted out of poverty，which will be an important part of our efforts to implement the 2030 Agenda for Sustainable Development.”[15]
Seventh，China is willing to work with other countries in the Asia-Pacific region on solving the innovative application deficit. Xin Jinping pointed out，“This is an area where the Asia-Pacific should take the lead by adopting new approach，model and pathway of development. Efforts should also be made to expedite industrial upgrading so that science and technology innovation will bring about new products，management and business models，move Asia-Pacific economies up in the global supply chain and enable us to jointly build and benefit from a coordinated，open and inclusive global value chain. While developed economies need to be more forthcoming about sharing best practices and transferring technologies，developing economies should explore more boldly，increase input and try to catch up more quickly. We need to leverage the role of APEC as a policy platform and an ‘incubator’ for strengthened cooperation in such areas as Internet economy，blue economy，green economy and urbanization，with a view to improving the region’s capacity for independent innovation.”[16]
Eighth，China is willing to work with other countries in the Asia-Pacific region on solving the governance deficit. Xi Jinping pointed out，“The evolving global economic environment demands more from the system of global economic governance. We should uphold multilateralism，pursue shared growth through consultation and collaboration，forge closer partnerships，and build a community with a shared future for mankind. This，I believe，is what we should do in conducting global economic governance in a new era.”[17] As China’s comprehensive capabilities increase，China is able and willing to provide more public products to the Asia-Pacific and the world，especially to provide new proposals and envisage to the deepening development of regional cooperation.
Ninth，China is willing to work with other countries in the Asia-Pacific region on solving the civilization communication deficit. Xi Jinping pointed out，“Civilizations have become richer and more colorful with exchanges and mutual learning. Such exchanges and mutual learning form an important drive for human progress and global peace and development. To promote exchanges and mutual learning among civilizations，we must adopt a right approach with some important principles.” “Indeed，we need a mind that is broader than the sky as we approach different civilizations. Civilizations are like water，moistening everything silently. We should encourage different civilizations to respect each other and live in harmony，so that exchanges and mutual learning between civilizations will become a bridge promoting friendship between people around the world，an engine driving progress of human society，and a bond cementing world peace. We should draw wisdom and nourishment and seek spiritual support and psychological consolation from various civilizations，and work together to tackle the challenges facing mankind.”[18]
Tenth，China is willing to work with other countries in the Asia-Pacific region on solving the deficit of construction of community of common destiny. Xi Jinping pointed out，“No blueprint will just automatically come true. When it comes to realizing the goals we set，all APEC members need to work hand in hand. We must step up policy dialogue and coordination and use APEC as a platform to create synergy. We must focus on development，spare no effort in fostering an environment of peace conducive to development and never allow anything to disrupt the Asia-Pacific development process. We must adhere to the concept of win-win cooperation and community of shared future，cooperating while competing，and achieving common development through cooperation. We must recognize diversity in development path，respect each other’s development paths chosen in light of our specific conditions，and resolve differences through dialogue and consultation.”[19]
Since the establishment of APEC，its field of activity has been expanding（Table 1），and regional issues that to be solved are also increasing. The reason is that with the increase of interdependence，the common problems faced by all members of the Asia-Pacific region are also increasing. The problems of the one country are increasingly becoming regional problems. In particular，national issues of the same nature are often more easily recognized by other members and become a common problem. At the same time，problems that did not exist between countries in the past have also emerged and become new regional issues. This requires us to change our mindset and re-examine the traditional path of solving problems in the Asia-Pacific region.
Today，the “One Belt and One Road” is providing a new way of thinking for the development of the Asia-Pacific region. The “One Belt，One Road” is based on peace and cooperation，openness and inclusiveness，mutual learning and mutual benefit，and win-win progress. With the “five links”（policy communication，facility connectivity，trade flow，financial intermediation，and people-to-people links），efforts have been made for the road to become the Road to Peace，the Road to Prosperity，the Road to Openness，the Road to Innovation，and the Road to Civilization，and in turn provide a main route for eliminating the deficit in the Asia-Pacific region and provide a model for the development of other regions.
APEC has established a deep relationship with the “Belt and Road.” During the APEC Leaders’ Summit held in Beijing in 2014，the Chinese government announced that it will invest 40 billion USD to establish the Silk Road Fund to provide investment and financing support for infrastructure projects，resource development，industrial cooperation and other related projects in countries along the “Belt and Road.” At the same time，the Asia-Pacific Free Trade Zone blueprint and the promotion of regional interconnection and other issues were listed as the three key issues during the meeting. The meeting approved the APEC Interconnection Blueprint and proposed an action plan for the three pillar areas of hardware interconnection，software interconnection and personnel exchange，as well as established the goal of “seamless connectivity” in the Asia-Pacific region by 2025，[20] and formed the “Belt and Road” interaction with APEC to activate the traditional functions of APEC and use more power to promote regional economic growth.
Think tanks，as the mastermind for regional cooperation and development，should play a more important role in the development of the Asia-Pacific region. The research and suggestions should target to provide new ideas and plans for the future development of the Asia-Pacific region，and to clarify the basis for the future efforts to promote cooperation in the Asia-Pacific region. It should be based in topics discussed in APEC and take the top 10 deficit issues as a starting point for joint discussion，strengthen the research work on the top 10 deficits，and continuously enhance understanding，increase consensus，and communicate between people in research.
Table 1 APEC topics for discussion （1993-2017）
Table 1 APEC topics for discussion （1993-2017）-Continued
Table 2 One Belt One Road and APEC members’ cooperation
[1] Ming Fang，“Global Military Expenditure on the rise，” People’s Daily，April 12，2017，http：//www.xinhuanet.com/mil/2017-04/12/c_129529945.htm.
[2] United Nations Environment Programme，Global Environment Outlook：Regional Assessment，United Nations，2016.
[3] Asia-Pacific Countries With Special Needs Development Report 2017：Investing in Infrastructure for an Inclusive and Sustainable Future，UN 2017.
[4] According to ESCAP definition，countries with special needs mainly refer to least developed countries，landlocked countries and developing island countries.
[5] Asian Development Bank，Meeting Asia’s infrastructure needs，Mandaluyong City，https：//www.adb.org/sites/default/files/publication/227496/special-report-infrastructure.pdf.
[6] Research Group of “Development and Research Center of the State Council” “China’s “One Belt and One Road” Facilities and Connectivity Research Group，Liping Zhang，“The Belt and Road Infrastructure Investment and Financing Demand and the Role of China”，Investigation and Research Report [2017 No. 17（Total No. 5092）]，2017-2-15，http：//www.drc.gov.cn/n/20170215/1-224-2892687.htm.
[7] The Key Indicators for Asia and the Pacific 2017（Key Indicators 2017），ADB 2017.
[8] The United States proposed building a community at the first APEC Summit in Seattle. Of course，the concept of this community is to require members of the Asia-Pacific region to accept the values of the United States，to develop in accordance with the American or Western model，and to share the same values as the United States. Later，this concept was rejected by APEC members.
[9] Xi Jinping，“Seek Sustained Development and Fulfill the Asia-Pacific Dream：Keynote Speech to the APEC CEO Summit，” Xinhua News Agency，Nov. 9，2014.
[10] Xi Jinping，“Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Da Nang，Vietnam，Nov. 10，2017.
[11] Xi Jinping，“Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Da Nang，Vietnam，Nov. 10，2017.
[12] Xi Jinping，“Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Da Nang，Vietnam，Nov. 10，2017.
[13] Xi Jinping，“The Leading Role of the Asia-Pacific in Meeting Global Economic Challenges：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Manila，Philippines，Nov.18，2015.
[14] Xi Jinping，“Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Da Nang，Vietnam，Nov. 10，2017.
[15] Xi Jinping，“The Leading Role of the Asia-Pacific in Meeting Global Economic Challenges：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Manila，Philippines，Nov.18，2015.
[16] Xi Jinping，“The Leading Role of the Asia-Pacific in Meeting Global Economic Challenges：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Manila，Philippines，Nov.18，2015.
[17] Xi Jinping，“Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Da Nang，Vietnam，Nov. 10，2017.
[18] Xi Jinping delivers an important speech at the UNESCO headquarters in Paris，Xinhua News Agency，Paris，March 27，2014.
[19] Xi Jinping，“The Leading Role of the Asia-Pacific in Meeting Global Economic Challenges：Keynote Speech at the Asia-Pacific Economic Cooperation（APEC）CEO Summit，” Xinhua News Agency，Manila，Philippines，Nov.18，2015.
[20] “APEC Interconnection Blueprint（2015-2025），” China Youth Daily，November 12，2014，p.7.