Asia-Pacific adapting to changes

China is promoting economic transition and innovation to seize the new opportunities and it is willing to work with others in the region

The Asia-Pacific region is experiencing some profound changes, and its economies should be prepared for possible reshaping of economic patterns in an era of slower economic growth.

The region benefited from the first wave of the digital revolution starting in 1990, which caused manufacturing outsourcing and made it possible for low-cost labor in China, India and other Asian countries to participate in the global chain of trade. However, with the second wave of the digital revolution that features smart devices, as well as Europe and the United States trying to revive their manufacturing industries, the market demand for low-cost labor has declined, replaced by a demand for high added-value human capital, which means a primary advantage of these populous nations is gone.

Higher level globalization is another trend. Openness, modern market regulations and innovation are three driving forces propelling various economies to participate in international trade and cooperation more deeply. That's a double-edged sword for developing nations, because it offers hope for prosperity, but implies risks of a financial crisis, even legal and political conflicts.

Together with globalization comes trade protectionism. While propelling the Trans-Pacific Partnership Agreement and Transatlantic Trade and Investment Partnership, the United States and several developed countries have set higher standards for labor rights, and the protection of the environment and intellectual property rights in global trade, which constitute a higher threshold excluding developing economies.

These changes pose challenges to Asia-Pacific economies, but are also opportunities for them to innovate and improve their economic structures. China especially needs to take measures to accommodate these changes. In a speech at the Boao Forum of Asia in April, Premier Li Keqiang said that the Regional Comprehensive Economic Partnership, initiated by the Association of Southeast Asian Nations, would reach agreement in 2015 and become the largest free trade area in Asia; China also holds an open attitude toward the Trans-Pacific Partnership and is pushing another round of reform and opening-up.

China's ongoing reform is also a profound change with lasting influence in the region, even the world.