The focus is on Asia, and a global perspective is adopted. Since 2001, the Boao Forum for Asia (BFA) has been endeavoring to build consensus, foster cooperation, and increase globalization for 18 years in a row. As regional economic integration picks up steam, the BFA launched its first annual flagship academic report in 2011, went beyond its research areas of economic integration and competitiveness reporting, and included regional financial development, among others, resulting in a multi-faceted reporting system with different emphases at different levels.

 

Looking back at the phenomenal year of 2018, the global multilateral trade and economic system was put to the test. Compared to a decade ago, how did the Asian economy perform? On the 26th, Secretary General LI Baodong and his team of experts preparing the reports showed up at the press conference of the Annual Conference 2019 and released the flagship reports. From the new four annual reports, we can gain a glimpse of the prospects of the Asian regional economic cooperation that bucks the downward trend.

 

In his speech, LI Baodong stressed that when preparing for the forum, he was aware that unilateralism and protectionism were of common concerns and grave worries among entrepreneurs, scholars and media people, while shared development in the context of globalization is a common aspiration of all. Globalization is not promoted merely to follow the trend, but to benefit the people and society and bring opportunities for development. Only by safeguarding the international order based on trade rules, keeping internationalization and international rules, making joint formulation for common compliance, communicating and implementing reform can we truly resolve international disputes and achieve common development and progress.

 

 

Root for Asian economic and regional cooperation

The traditional three annual reports Development of Emerging Economies, Asian Economic Integration and Asian Competitiveness were compiled by Professor Zhang Yuyan, member of the Chinese Academy of Social Sciences; Professor Lin Guijun, Director of the Academic Committee of the University of International Business and Economics; and the research team of China Center for International Economic Exchanges in concert with the BFA Research Institute.

 

The new Asia Financial Development Report is the first theme report prepared by the BFA Research Institute in cooperation with four regional international organizations namely ASEAN+3 Macroeconomic Research Office (AMRO), Asian Financial Cooperation Association and CAREC Institute. The first report stresses infrastructure investment. Given the underdeveloped financial industry in Asia and the ever-growing demand for infrastructure, the report sums up the overall status of the region and the characteristics and potentials of the four regions – East Asia, Central Asia, West Asia and South Asia, and results in corresponding policy recommendations and risk warnings. The report was prepared with the advice and guidance by experts from the International Monetary Fund, the European Bank for Reconstruction and Development, the Asian Infrastructure Investment Bank and China Development Bank.

 

 

Asian economic vitality is maintained

The Asian Competitiveness Report points out that in the face of an adverse external environment, Asian economies continue to forge ahead with the reform, improve the business environment, and better themselves. As long as no large-scale political turmoil occurs, the comprehensive advantages accumulated by Asian economies will not disappear overnight. Thanks to the development momentum, the major Asian economies maintain steady growth and become one of the main drivers of the world economy. It is worth mentioning that among the quantitative indicators set forth in the competitiveness report, 27 economies saw higher scores compared with the previous year, and the gap among the economies was narrowing, reflecting a healthier, balanced overall situation. 

 

The weighted statistics in the Emerging Economies Report indicate that the economic growth of the E11[1] countries in 2018 saw an economic growth rate of 5.1%, which was basically consistent with the forecast data last year. Especially in the first half of 2018, the growth rate of trade surpassed 10%, which had a significant effect on driving the economy. There is downward pressure on the economy in the short term and some market players are cautious and even pessimistic about their host countries. Nevertheless, as structural adjustment and deepening reforms in the various countries show increasing dividends and the developed countries, especially the United States and Germany, increasingly adopt neutral monetary policy, the momentum of the medium and high growth in emerging economies is expected to continue in 2019.

 

 

Trend of globalization is irresistible

According to the Asian Economic Integration Report, 17 new free trade agreements were concluded in Asia in 2017-18, and around 70 bilateral agreements are currently under negotiation, and high-level agreements such as CPTPP and RCEP have significantly picked up speed. Undoubtedly, the Asia-Pacific region is one of the most active regions, and its dependence on the Asian economy continues to increase.

 

The report sets great store by the RCEP, which is rapidly advancing, because it exceeds existing ASEAN Free Trade Agreement and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in terms of trade coverage and trade share. As the RCEP covers several trading partners that have not yet reached a bilateral agreement (such as China-Japan, Japan-South Korea, and China-India), it is actually an attempt to establish a new trading system in the Asian region.

 

The Emerging Economies Report also drew similar conclusions. According to statistics, of the G20 countries, the developed economies and emerging economies launched 663.8 and 433.3 trade protectionist measures respectively, most notably measures introduced by the United States and Germany, indicating that developed countries are the main drivers of trade protectionism. At the same time, the status of developed economies in the foreign trade of emerging economies has gradually been declining, while the trade dependence between emerging economies has gradually increased and reached a record high.

 

The Asian Competitiveness Report attributed the resurgence of populism and conservatism to the irrational distribution of globalization dividends today, and the rising trend of “national interests first”. The report points out that based on the current technology platform, the current world economic recovery draws on the dividends of international cooperation; once globalization is impeded, international cooperation will not yield dividends, and the world economic recovery and the growth of various economies will be unsustainable. The open road of regional cooperation and economic integration offers the fundamental way out of the current “prisoner's dilemma.”

 

 

Build a road to achieve wealthy

The Asian Financial Development Report, a comprehensive report in English launched by the BFA in 2019, reviews the progress of regional integration from the perspective of infrastructure, analyzes the development dilemma of insufficient infrastructure financing in Asia and provides relevant policy recommendations.

 

The report points out that the lack and inefficiency of infrastructure has become a bottleneck restricting the economic and social development of some countries. Even in the most economically developed East Asia, there is still insufficient investment for infrastructure. Infrastructure construction has played a tremendous role in promoting trade and investment growth, poverty alleviation and development. According to statistics, following the implementation of infrastructure investment in the Belt and Road Initiative, the cost of connecting the economies along the Belt and Road has been slashed, and the cost of trade with other economies along the Belt and Road has fallen by 3.5%. Due to the spillover effects of infrastructure, the cost of trade among these economies and the rest of the world has also dropped by 2.8%, which amply shows the pivotal role of infrastructure in economic development. 

 

Economic and social development requires the prerequisite of infrastructure. As the demand for smart, green and sustainable high-quality infrastructure grows, countries in Asia and beyond have come up with a slew of initiatives on interconnection, such as China’s Belt and Road Initiative, ASEAN Connectivity 2025, and EU-Asia Connectivity policy by the European Union. International organizations, chiefly multilateral development institutions, and developmental financial institutions of various countries have exerted an increasingly important influence and impetus in the field of infrastructure financing, providing a solid material foundation for Asian integration.

 

While analyzing the current status and difficulties of infrastructure financing in East Asia, Central Asia, South Asia and West Asia, the Asian Financial Development Report focuses on the seven regional cooperation case studies in each region in view of the immature infrastructure financing, such as the China-Laos Railway in East Asia, the Almaty–Bishkek Economic Corridor in Central Asia, the sub-regional electricity market in South Asia and the Ankara–Istanbul high-speed railway in West Asia. These cases reflect different attempts by the countries and regions to solve insufficient infrastructure financing from different perspectives, including introducing international organizations and multilateral development banks, harnessing regional financial centers to promote regional savings flows and encouraging the private sector to invest in infrastructure. Such measures provide important reference for follow-up policy development.

 

 

Build consensus and keep the original aspiration undiminished

At the press conference, Secretary-General LI Baodong summarized the information the Annual Conference hopes to convey as “adopting multilateralism, pursing more balanced and healthier globalization, and bringing more benefits to the peoples of the world”. Secretary-General Li pointed out that as a non-governmental non-profit organization, the BFA was established during the Asian financial crisis at the end of the last century and consistently upholds an open, inclusive cultural tradition. Policy makers, scholars or entrepreneurs can share views openly and frankly on this platform, and cope with the challenges facing the regional economy.

 

Due to the competition among major countries and the multilateral trading system under impact, whither the world economy? How do Asian countries rise to challenges and achieve better development? The BFA stands ready to provide a platform for high-end dialogue for all parties, encourage the brainstorming of different views for the path of innovation and development. Released on the first day of the BFA 2019 annual conference, four flagship reports provide the basis for discussion in the next four days.

 

The reports take full account of the complex situation facing Asia and emerging economies and are full of confidence of the prospects of Asian economic and regional cooperation. As a new round of high-profile regional trade agreements and interconnection initiatives are under implementation, emerging Asian economies are not only an important engine of the global economy, but will continue to be an important driver of globalization as well.