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The Art of the Deal
China Aims to Fill US Trade Vacuum

China is wasting no time pushing its own Pacific trade agenda now that the Trans-Pacific Partnership (TPP) is on its last legs. Reuters reports:

China will seek support for a Beijing-led Asia-Pacific free trade area at a regional summit in Peru later this month, Chinese officials said on Thursday, after Donald Trump’s U.S. election win dashed hopes for a U.S.-led free trade pact. […]

Briefing journalists ahead of President Xi Jinping’s departure for the Asia-Pacific Economic Cooperation (APEC) summit in Peru from Nov. 19-20, China’s Vice Foreign Minister Li Baodong warned of the rise of protectionism and said the region needed a free trade agreement as soon as possible.

“Trade and investment protectionism is rearing its head, and Asia-Pacific faces insufficient momentum for internal growth, and difficulties in advancing reforms,” Li said.

“China believes we should set a new and very practical working plan, to positively respond to the expectations of industry, and sustain momentum and establish a free trade area in Asia-Pacific at an early date,” Li said.

With the election of Donald Trump, the TPP is effectively dead, as the president-elect has promised to withdraw from the pact on his first day in office. That is good news for China, which was not party to negotiations over the trade agreement and has long viewed it suspiciously, as an American-led attempt to contain Chinese influence. President Obama has played the China card himself in advocating TPP, arguing that it allows America rather than China to “write the rules” on international trade.

Now China sees an opening to write those rules in its favor. Beijing’s free trade alternatives are the long-gestating Free Trade Area of the Asia-Pacific (FTAAP) and the Regional Comprehensive Economic Partnership (RCEP). Neither plan imposes the labor and environmental standards required by the TPP, and they are likely to get a new hearing in anxious Pacific countries that were previously betting on TPP. China has been advocating its own initiatives for some time now, but expect a renewed diplomatic push as Beijing courts Pacific countries hungry for a deal.

Ironically, given his appeal as a strongman who will stand up to China, Trump’s rejection of the TPP could give Beijing a major geopolitical victory. Although protectionists on the right and left have criticized the agreement and argued that it would ship jobs overseas, the TPP’s geopolitical implications have earned less attention. When the TPP dies, China is well positioned to become the dominant dealmaker in the Asia-Pacific, which will only cement Beijing’s growing influence, at Washington’s expense.

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  • Frank Natoli

    You can write as much about “protectionism” as you like. It’s a free country, or at least so we’re told. But there actually are more than two trade extremes, one being the present where some countries have unlimited access to American markets but American manufacturers are hindered at every turn from those foreign markets, the other being what writers say Trump plans, heavy tariffs for all imports, which is not what Trump has said or planned.
    Two way street. Is that really asking too much?

  • FriendlyGoat

    “Neither plan imposes the labor and environmental standards required by the TPP”

    You can bet that many American companies would rather see the Chinese version.

    Meanwhile, the Trump voters might want to measure the inflation rate on store products over the next few years at Walmart where virtually all of them shop.

    • JR

      “Meanwhile, the Trump voters might want to measure the inflation rate on store products over the next few years at Walmart where virtually all of them shop.” Your contempt for your fellow citizens startled me. But then I remembered that as a totalitarian Statist it is your solemn duty to hate those who stand in the way of your Statist dream. Never change, Comrade FG. I need you to remind me exactly what I am fighting against.

      • FriendlyGoat

        Contempt? I have been shopping at Walmart for a full 45 years—-longer than most people because I lived in the circle from which it originally sprang out of Bentonville, AR. I still shop at Walmart, nearly every week. Lots of liberals not living on the coasts do too.

        It’s not a slam on Walmart or its shoppers. It’s a realization that nearly all of the real folks of red-state America have been benefitting from the so-called “Walmart effect” for a long time where they “Save Money—Live Better” to the tune of a couple of thousand or more per year in large part due to Chinese imports. This can be “taxed” to those people in higher prices when you start messing with tariffs.

        • JR

          As long as I am able to fight the forces of Statism and Collectivism and Socialism, I will. I fought against it in Russia, I fought against it in the darkness of the Obama era. I see no reason to stop now.
          Also, given your recent track record of political predictions, how sure are you that this particular set of predictions will come true. On a scale of 1 to 10, with 1 being “Not sure at all” to 10 being “HRC is a lock. It’s a done deal”. But humility and ability to listen to their fellow human beings is not something liberals are good at.

          • FriendlyGoat

            You didn’t answer the post. Walmart is as “country America” as Blake Shelton and Kenny Chesney. You put tariff costs on what it sells? You charge the Trump voters and the Clinton voters, but perhaps more especially the Trump voters because of where they live. Hardly a communist plot. Just a USA reality.

          • JR

            You missed the part where Trump promised to ensure fair treatment of the American worker (those rubes who ended up voting for him) which would theoretically raise their wages at a rate faster than inflation, thus increasing their real income.
            So now we are all about answering questions that are posted? Sure, I’ll play. At what income level do you think much higher tax rates should be implemented? What percentage of income do you think that tax should be? Awaiting your detailed answer with a lot of numbers in it. That, or you slithering away like a cockroach that has a light shined on it. Whichever you prefer.

          • FriendlyGoat

            If you wanted fair treatment for the American worker, you should not have elected a GOP Congress and President at the same time. Trump’s rhetoric is completely irrelevant. The chance of wages rising by any significant amount in Walmart America from enacting the Chamber of Commerce wish list is a joke.

            BTW, I own a little Walmart stock. After years of being browbeat for its low starting wages near federal minimum, Walmart undertook a program to voluntarily and moderately raise them to $9.00, soon $10.00. I endured the slide in the stock price for that.

          • JR

            And you slithered away like a cockroach with a light shining on it. How delicious.

          • FriendlyGoat

            I write about real things in a real way, JR. I don’t sit here and wait for your game of twenty stupid questions. We’ve been through this before.

          • JR

            I thought your life long goal IS a real thing. Also, I’m not in a habit of asking questions to which I already don’t know the answers. Of course the answer is 100%. How can it be anything but that….
            I just enjoy watching you slither away. What can i say, little things in life bring me joy.

    • Disappeared4x

      Wal-Mart was directly responsible for accelerating the loss of American manufacturing in consumer products – I saw it starting in the early 1990’s.
      Explains why they are now advertising their commitment to Made in the U.S.A.

      • FriendlyGoat

        Yes, this is true. The favorite store of bargain-minded shoppers in thousands of American towns is selling them cheaper stuff because it got the stuff made cheaper overseas. Everybody knows it, everybody gripes about it, and everybody buys it anyway—-all over both rural and urban America.

        A similar effect exists with products affiliated with Duck Dynasty. Although the Robertson family makes duck calls in America and sells the show as all-American fare, it licensed its name to be put on over 2,000 different consumer products—-most of which were never made here.

        • Disappeared4x

          For some of us, “Made in the USA” is #1 decider, e.g., most non-durable goods.

          Guess FG did not get the memo in 2012, when Wal-Mart ‘discovered’ ” “Made in the USA” is a strong driver of purchase decisions – second only to price….”

          http://news.walmart.com/events/2016-us-manufacturing-supplier-summit
          “The Walmart Customer – “Made in the USA” is a strong driver of purchase decisions – second only to price. Hear from Tony Rogers Walmart’s Chief Marketing Officer, and Matt Kistler, SVP Walmart Global Customer Insights
          and Analytics, as they discuss how consumer perceptions of your brands and items are impacted by the Made in USA label. This session will focus on customer insights and how Walmart and Suppliers are communicating to our
          customers, and how you can engage with Walmart thru the marketing of your products. …”

          • FriendlyGoat

            Walmart has always tried to source a lot in the USA and they still do as well as from many foreign countries, especially China.
            The advertising of Made in the USA is important, but don’t skip what they said—–second only to price.

            I am sticking with my original thoughts on this. Most thrifty families, especially in rural America, have been benefitting in their household budgets from Walmart’s lower prices for decades. I’m not against American jobs, but I know who is going to pay for any tariffs put on whatever is sold at Walmart from overseas—–the consumers of rural America. The bigger the tariff, the bigger the bill at checkout. There is no other answer.

          • Disappeared4x

            Wal-Mart’s disruption of manufacturing in the 1990’s was one of the reasons my career “disappeared” by 2001.

            I think it ironic that Wal-Mart had to start a program to revitalize American manufacturing in 2012.

            FG reminds me why I stopped voting for Democrats. He lives in his own echo chamber.

          • FriendlyGoat

            I’m sorry to hear about your job situation. But Sam Walton and Walmart are considered as American as apple pie by conservatives all over this country. Seriously, a Walmart came to my Missouri home town in 1971, then my college town, then my young-married town, then the large city I moved to, then the next large city we lived in. Right now I live in a rural area between two of them—-five miles one way and eight miles the other.

            I KNOW WHO IS AT WALMART. It’s your political tribe in very large part. This has been my personal experience for 45 years living in mostly red political places. If you want to talk bad about the supposed liberals who won’t go anywhere but Target (which also has imports), this would all make more sense.

          • Disappeared4x

            FG needs remedial work in reading comprehension. By 2001, manufacturing of most clothing, shoes, costume jewelry, housewares, small electrics, electronics, and toys* had moved offshore. For the first time in the history of the corrugated box, shipments declined. (*in the toy category, only board game manufacturing stayed in the USA)
            I prefer Target. After all, I was a registered Democrat until 2016. Now, I am registered Un-Affiliated, but glad the local Target here has a uni-sex bathroom. If only Target would get rid of that orange-red color…

          • FriendlyGoat

            Once again, I’m sorry about the career losses you have suffered as a result of manufacturing decline. To whatever extent you believe Donald Trump and a Republican Congress are going to mitigate that, I’m also sorry for your coming disappointment in that regard. Feathering the nest of working people in America is not in their DNA. To whatever extent you believe Trump is going to get a better Iran deal without an all-out war, good luck with that too.

            One of the disadvantages of leaving your Disqus account not set to “private” is that people can look at your other posts, even from years back and make assessments about your credence in the present, especially people (like me) who are being attacked by you for being on the side you claimed you were on until 2016. After all the carping about Obama, Clinton and De Blasio, I’m unconvinced of your allegiance to or alignment with much of anything. That’s my reading comprehension.

          • Disappeared4x

            Criticism is not an “attack”. Everyone does NOT have to think, and say, the same things.

            unless you are a Progressive, circa 2008- present.

            All I want from Trump is to kill the Plague of Political Correctness.

            (being a registered Democrat until 2016 does not mean what FG thinks it means. e.g., In 2008, I was enmeshed in Obama’s campaign, until the death threats and bullying triggered endless depression )

          • FriendlyGoat

            If only the things you were saying to me added up to coherence. I agreed with your first reply to me and for some reason the next two from you were snarky. Just strikes me as an odd way to introduce yourself. And then there is the doubletalk. People who make fun of progressives and political correctness strike me as conservatives. I think you are and might have been that since 2008—–maybe longer. Just pointing that out, ’cause there is an appearance that you don’t know.

            As for that habit of speaking to someone you hardly know as though you are speaking about a third party, well, that one is too weird for words. Bye, dude.

          • Disappeared4x

            I do not “make fun” of Progressives. They are direct descendants of the Puritans, and would lock me in the stocks for heresy on fracked natural gas.

            Bill McKibben’s war against ALL hydrocarbons is embedded in the 2016 DNC Platform. Unleashing America’s rich hydrocarbon resources will lower manufacturing costs, and will help drive GDP growth above 3%.

            Until 2009, conservative Democrats, usually fiscal conservatives, were called Blue Dog Democrats. We were rejected, and expelled, by the Obama coalition.

            Whatever FG’s work history, clearly NOT in manufacturing.
            Did you never hear of “import replacement” or “non-tariff trade barriers”?

            You insist that tariffs will be the SOLE outcome from DJT re: China. That shows ignorance of manufacturing, and trade.

            Did you know that unit labor cost in Germany, without medical insurance, is so high that America is cheaper?

            I see making medical insurance PORTABLE as a big driver for import replacement-manufacturing because then America’s unit labor cost will be competitive with Canada, which welcomed one million manufacturing jobs from America between 1998 – 2001, the last year I had access to trade statistics.

            Without the burden of medical insurance as part of unit labor cost, lower cost energy, AND a much reduced regulatory burden, American exports will be more competitive. Supply chain issues already make China problematic, at least for some non-durable goods, so de-linking medical from unit labor cost can stimulate import replacement manufacturing, even from China.

          • FriendlyGoat

            As a matter of fact, FG was the financial controller of a manufacturing company for more than two decades. It had over 1,000 employees when I left it. I’m not as unfamiliar with either the pressures on manufacturing or on the whole issue of health insurance as you think. Beyond pointing that out together with my understanding of Blue Dog Dems as generally indistinguishable from Republicans on anything that matters, I think I’ll stick with Bye, dude.

          • Disappeared4x

            FG sees “Blue Dog Dems as generally indistinguishable from Republicans on anything that matters,”
            which is why the Obama+Pelosi+Reid-Clinton Democratic Party failed to have any ‘conversations’ with anyone outside of their echo chamber, and just lost a wave election.
            pesky non-tariff trade barriers must be too complicated for transnational postmodern ideologues

  • Fat_Man

    “With the election of Donald Trump, the TPP is effectively dead, as the president-elect has promised to withdraw from the pact on his first day in office.”

    You assume that Trump remembers his promises, cares about what he said, and fulfills his promises. I saw nothing in the man’s character or conduct to make me believe that nay of those is true. We, like every one else, must abide events.

  • Nevis07

    The Atlantic just posted an interview with Henry Kissinger in which China is very much on his mind. I very much respect Kissinger and as usual I agree with him. He alludes to my great fear as the most likely source of eventual conflict with China sparking from a trade war. Five years ago, it wouldn’t have been likely, but now I believe it very much to be possible.

    And while I voted for Trump and agree with him regarding China, trade is one of the most difficult areas from him to now pull back from, campaign rhetoric-wise. Russia is a nuisance and will do what it always does but can be worked with and a relationship managed. China on the other hand, has no intention of doing anything other than what helps it build its power.

    For those interested:

    https://www.theatlantic.com/magazine/archive/2016/12/the-lessons-of-henry-kissinger/505868/

  • rpabate

    Without the huge U.S. market, China is in a heap of trouble. If the U.S. pulls back, the EU is sure to follow, as I suspect that the Trump victory may set in motion similar election surprises in the EU, NZ and Australia. China is already suffering from years of U.S. economic stagnation that poses serious social unrest. In addition, the march of technology and automation poses a huge additional threat to China, and as well to all countries. Robotics and artificial intelligence threaten workers all over the world. That is another reason we need to control our borders, because as technology (think 3D printing) replaces unskilled human labor, there will be even more reason for people to head to the rich countries looking for handouts and service jobs. Luckily for the U.S., we still have the ability to feed ourselves and to be energy independent, given a cooperating government, both things China lacks.

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