Joining trade pact to boost China growth
Central bank's chief research economist believes China must join Trans-Pacific Partnership talks
China would add about 2 percentage points to annual economic growth by joining a Pacific trade pact in the view of the central bank's chief research economist.
The country should join negotiations on the Trans-Pacific Partnership (TPP) as soon as possible to reap the benefits, Ma Jun of the People's Bank of China said in an internal presentation in mid-June. South Korea and Vietnam would also add more than 2 percentage points to their growth rates as part of the TPP, the presentation said.
While joining the talks may help China counter an economic slowdown without resorting to large-scale stimulus, the 12 nations currently negotiating the TPP are expected to conclude an initial agreement before new members are admitted. The US and Japan said in April that there was "still much work to be done" on outstanding issues.
The pact would link an area with about US$28 trillion in annual economic output, or 39 per cent of the world total, and would be the biggest trade deal in US history. In addition to the US and Japan, nations seeking the deal are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Ma, who came to the PBOC earlier this year from Deutsche Bank, sees the benefits from joining the TPP talks to China's GDP expansion accruing over several years to eventually reach 2 percentage points, the presentation showed. It did not give forecasts for China's actual pace of growth. The PBOC did not immediately respond to a request for comment. Ma did not respond to an e-mail seeking comment.
Commerce Minister Gao Hucheng said in March the nation is paying close attention to the TPP talks and hopes others can be open and inclusive on the accord.
Ma's projection is based on the assumption of having 16 countries in the TPP, including the additions of China, South Korea, Thailand and Indonesia, according to the presentation. China is projected to grow 7.3 per cent this year. That would be the slowest pace since 1990.
The TPP goes beyond usual deals that focus on tariffs and traditional goods such as agriculture. It would establish rules for digital commerce and include environmental standards and protection for companies that compete against government-backed businesses.
If China joins the TPP, Ma sees industries including textiles, apparel and electronic equipment benefiting while those including petrochemicals, mining and vehicles would be hurt the most, the presentation said.
The trade pact is unlikely to be reached this year and the opportunity to sign it is more likely in the first half of 2015, Australian Trade Minister Andrew Robb has said.