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.