Economy

Trading barbs

New Trans-Pacific accord fuels debate

Obama

No room for China

Anti-American sentiment seemed to have plummed new depths in China in the wake of the bombing of the Chinese embassy in Belgrade in May 1999. But six months later Chinese Premier Zhu Rongji managed an unlikely pivot: final agreement with the US on China’s entry into the World Trade Organisation (WTO).

Zhu had lobbied hard for China’s accession to the WTO (for 16 years, in fact, which was long enough to “turn black hair white” according to Zhu). He argued that WTO membership would be the key to fostering further market reforms in China. The Party’s hardliners, however, believed that Beijing had made too many concessions to Washington, so much so that Zhu and his fellow negotiators were branded “traitors selling the country with unequal treaties” (see WiC261).

Chinese economists have been debating a similarly divisive topic after the recent announcement of a landmark trade liberalisation deal between the US and 11 other Pacific countries this month.

Known as the Trans-Pacific Partnership (TPP), the pact – if ratified – will set new terms for both trade and business investment among the 12 members (the Pacific Rim nations involved – such as Japan – represent roughly 40% of global GDP and one third of world trade).

Of course, many analysts see the new deal as a strategy for the US and Japan to outmanoeuvre China in the region, which pointedly hasn’t been invited to join the new grouping.

American President Barack Obama has also made plain his intention to balance Beijing’s economic heft in the Pacific. “We can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment,” he said in a statement.

Not surprisingly this earned a barbed reaction inside China, with the Beijing News describing how the TPP is known in some circles as “the economic NATO” and regarding it as a clear attempt to contain China’s influence in Asia.

“China must speed up bilateral and multilateral trade talks with its trading partners,” it urged. “The best counter-strategy to the TPP is the One Belt One Road plan.”

China has already signed 14 free trade agreements with countries including Australia, Switzerland, Peru, Chile and Pakistan, and more are in the pipeline.

But if the TPP is an ‘anyone but China’ club, the country’s official media has done its best to sound unflappable. “The TPP is not an opportunity China cannot afford to miss. Any global trade framework will not be perfect without China’s participation. We have nothing to be insecure about,” the Global Times pointed out, although it also added that “accelerating reforms is the only way to cope with the TPP” and that China needs to “repeat its 1990s determination before it joined the WTO”.

That said, there are newspapers that want China to join the new trade grouping, including the more liberal Southern Metropolis Daily, which suggested that China should “embrace the TPP” so as to instil a greater sense of urgency in overhauling the nation’s overly-statist economic model.

Of course the TPP could prove divisive for member countries. It has already attracted criticism from the likes of US presidential hopeful Hillary Clinton and it also became a controversial topic during the Canadian election this month. Caijing magazine says the accord has yet to gain formal approval from any of its prospective members.

Given that TPP negotiations have largely taken place in secret, the magazine adds we can expect further twists when the pact’s details go before national parliaments. That could lead to delays, vetoes and fresh rounds of negotiations – and perhaps open a window for China to join in future. “China may yet have a say in shaping the TPP rules, although the process could be as painstaking as during the WTO accession talks,” it predicts.


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