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The APEC Summit Is Happening in San Francisco. What Is APEC, Anyway?

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The APEC Summit Is Happening in San Francisco. What Is APEC, Anyway?

An introduction to the 21-member grouping and the main events to watch at this year’s summit.

The APEC Summit Is Happening in San Francisco. What Is APEC, Anyway?
Credit: Depositphotos

The United States is hosting the annual APEC summit of world leaders this week for the first time since 2011. Leaders from the 21-member Asia-Pacific Economic Cooperation group will gather in San Francisco to talk about how to better spur trade and economic growth across the Pacific region.

But the main summit event will actually be on the sidelines: A face-to-face meeting between U.S. President Joe Biden and Chinese President Xi Jinping. This year’s conference is happening against the backdrop of the frosty relationship between China and the United States and global turmoil from the Israel-Hamas war and Russia’s invasion of Ukraine.

Here’s a look at what APEC is and how it works.

What Is APEC?

APEC stands for Asia-Pacific Economic Cooperation. It’s a forum to promote trade, investment, and economic development among nations around the Pacific Ocean.

The group started with 12 members in 1989, but has since grown to 21 including China, Russia, Japan, the United States, and Australia. Notably, while most international institutions have “member states,” ASEAN has “member economies,” allowing for participation by Taiwan (which is self-ruling but claimed by China) and Hong Kong (which is part of China but has its own currency and legal system). Within APEC, Taiwan is officially registered as “Chinese Taipei,” the same name used for its participation in the Olympics.

By whatever name, APEC members pack a lot of punch, accounting for nearly 40 percent of the global population and almost half the world’s trade.

The annual leaders’ conference brings together heads of nations and other top economic and diplomatic leaders. (Don’t expect much of a presence from Russia this year; it’s a pariah as Russian President Vladimir Putin presses his country’s invasion of Ukraine and will have lower-level representation.)

White House aides say the goal for this year’s summit is to try to make APEC economies more resilient, particularly in the face of growing climate issues and following a global pandemic that killed millions of people and strained supply chains.

The Main Event

The main event of this APEC summit is unfolding on the sidelines: a meeting between Biden and Xi. The two leaders haven’t spoken in person since they met last November during the Group of 20 summit in Bali, Indonesia. A lot has happened since then to ratchet up tensions between the superpowers.

The Biden administration shot down a Chinese spy balloon that traversed the continental U.S. earlier this year. The Chinese government hacked the emails of U.S. Commerce Secretary Gina Raimondo. The U.S. government restricted the export of advanced computer chips to China, and has pushed to provide development aid to other nations to counter China’s influence.

The differences also have been exacerbated by Russia’s war in Ukraine and China’s increasing assertiveness in the Taiwan Strait and South China Sea. But representatives from the United States and China have been meeting with increasing frequency lately, working to thaw relations. Still, the Biden-Xi meeting isn’t expected to substantially alter the trajectory of China-U.S. relations.

How Effective Is APEC?

The forum has limited scope. It is centered on trade and the economy. There is no military component, and it wasn’t forged by a world-altering event like a war.

APEC’s strength lies in its ability to get countries to work together on big initiatives and to ease business relations without binding agreements. Economists point to how APEC contributed to a reduction of tariffs and other barriers to trade.

But the trade landscape is different now than when APEC began in a period of increased globalization. The U.S. strategy has been focused on economic competition with China rather than cooperation, even as U.S. leaders continue to stress the importance of cooperation. Biden is seeking partnerships with other nations in the region to develop alternatives to Chinese manufacturing imports such as electronic equipment, machinery, furniture, textiles and other goods.

Biden also is trying to highlight progress on the new Indo-Pacific Economic Framework (IPEF), started last year. The Biden administration hopes to use IPEF to shore up its economic leadership in the region without the political baggage of joining a free-trade agreement like the 11-country Trans-Pacific Partnership (TPP). Former President Donald Trump withdrew the United States from the TPP in 2017 amid domestic opposition and the Biden administration has not shown any appetite to rejoin. However, with IPEF not offering access to the U.S. market, it’s unclear how much interest it will hold for potential partners.

Friction Points

The conference has had its challenges and moments of drama in recent years.

Chile withdrew as APEC host in 2019 due to mass protests; no summit was held that year. The group met virtually in 2020 and 2021 because of the COVID-19 pandemic. Leaders did gather in Bangkok last year, but the event was again marred by domestic unrest. Pro-democracy protesters challenged the legitimacy of the Thai prime minister, prompting police to fire at the crowd with rubber bullets that injured several protesters and a Reuters journalist.

Meanwhile, Biden skipped the Bangkok summit because his granddaughter was getting married; he sent Vice President Kamala Harris in his place. That decision was regarded as a snub by some APEC leaders. Then, delegates from the United States and four other nations walked out to protest Russia’s invasion of Ukraine as the Russian representative to the conference began to speak.

This year may give rise to friction over the Israel-Hamas war. The variety of nations involved in the summit have strong views on both sides of the conflict. Typically at the close of a summit there is some kind of joint statement by all the nations, but that’s not a given this year, in part because of those differences.

There is also some participation intrigue: Taiwan will once again be represented at the summit by Taiwan Semiconductor Manufacturing Co. founder Morris Chang. The 92-year-old’s lack of a domestic political role allows him to meet with world leaders without fear of repercussions from China.

Hong Kong, meanwhile, will be represented by Financial Secretary Paul Chan. The region’s top leader, Chief Executive John Lee, who is under U.S. sanctions for his role in a political crackdown in Hong Kong, opted out of the summit, citing scheduling issues.

A potential U.S. government shutdown also could loom over the conference: The government will run out of money on Friday without a funding agreement between Congress and the president. It’s a persistent reminder of U.S. political dysfunction just as Biden seeks to project American reliability. The credit rating agency Moody’s Investors Service lowered its outlook on the U.S. government’s debt on Friday to “negative,” citing rising interest rates and political polarization in Congress.

Forum Fashion

At the end of APEC summits, the leaders typically pose together for a “family photo.” At the first leader-level meeting three decades ago, President Bill Clinton, hosting in Seattle, handed out matching leather bomber jackets similar to those worn by American fighter pilots. He apparently wanted his fellow VIPs to feel relaxed, and a tradition was launched.

Since then, the APEC leaders have posed together in batik shirts (Malaysia, 1998), Chinese jackets (Shanghai, 2001), flowing ponchos (Chile, 2004) and “ao dai” tunics (Vietnam, 2006.) The Philippines’ barong tagalog, a partially see-through, embroidered shirt sewn from pineapple fiber and silk, was featured in the 1996 summit and again in 2015.

It’s not clear if the matching outfits will be back this year. The last time the U.S. hosted the conference, in Hawaii in 2011, then-President Barack Obama nixed the idea. A reporter asked whether it was scrapped because the tradition felt too light-hearted amid ongoing concerns about the economy.

No. Obama just thought they looked embarrassing.