Trans-Pacific Partnership

Trans-Pacific Partnership may do more harm than good for China

Woo Jun Jie and Suvi Dogra say joining US-led initiative may undermine its regional influence

PUBLISHED : Monday, 10 June, 2013, 12:00am
UPDATED : Monday, 10 June, 2013, 3:35am

That the Trans-Pacific Partnership has gained significant currency in the Asia-Pacific region became evident when the Ministry of Commerce announced last month that it was studying the possibility of joining the pact. Interestingly, China's decision comes a month after Japan's entry into the negotiations. While the trade agreement promises significant economic benefits and market access, China's interest is more likely to be politically driven.

Negotiations currently involve the US, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Japan. The partnership has largely been seen as a significant part of the US "pivot" to Asia. This makes it a vehicle for consolidating US interests and influence in the Asian-Pacific region.

Described as a 21st-century agreement, the partnership involves high standards of free trade and policy harmonisation. This poses significant barriers to China's entry and potentially dilutes the economic gains to be realised should China become a member.

Such disincentives, and the need to defer to the US as leader of this Pacific pact, highlight the political aspect of China's interest.

Being part of the partnership would allow China to join in the regional conversation as well as improve ties with the US. Given the ongoing territorial disputes in the East and South China seas, and its own rapid military modernisation, China's participation would help temper its aggressive image and assure its neighbours of its peaceful intent. This could earn Beijing some much-needed diplomatic brownie points, which would complement its global efforts at a charm offensive.

The US, too, seems to be warming to the idea of actively engaging China. At the recently concluded Shangri-La Dialogue in Singapore, US Secretary of Defence Chuck Hagel called "a positive and constructive relationship with China" an "essential part of America's rebalance to Asia".

Importantly, China's decision to consider joining the trade partnership after Japan's own entry into negotiations signals a desire to compete with Japan for regional influence. This comes amid recent efforts by Japan to boost economic ties with Africa, in a bid to counter China's influence and increase Japan's share of trade, investment and resources on the continent.

Nor is China's competition with Japan limited to economics; the two countries are also embroiled in a territorial conflict over the Senkaku, or Diaoyu, islands. Joining the Trans-Pacific Partnership would provide China with another platform on which to compete with Japan for both political influence and economic resources.

Of course, China and Japan are already major partners in trade and investment. China accounts for about 18 per cent of Japan's total exports and 20.7 per cent of its total goods imported. Japan is also China's leading source of foreign direct investment, with Japanese investments in China reaching US$2.29 billion for the first three months of this year.

With China facing an imminent slowdown and Japan's rebound still in its infancy, economic co-operation between the two powers is necessary for growth. Given the complexities of co-operation and competition between the two, China's decision on the Pacific pact is likely to be guided by both a desire to seek a greater regional influence, at Japan's expense, as well as to build ties with Japan.

Nonetheless, China also has good reason not to join the trade partnership. Being a member would mean having to accept America's leading role. American leadership and dominance is likely to be cemented should the partnership emerge as the dominant trade order for the Asia-Pacific. This would not only pose threats to China's regional role, but would also not go down well at home.

Furthermore, China is also involved in the Regional Comprehensive Economic Partnership that comprises all 10 members of the Association of Southeast Asian Nations, plus Australia, India, Japan, New Zealand and South Korea. Essentially China-led, this trade pact has been seen as a rival to the Trans-Pacific Partnership.

If China joins the Pacific pact, it may jeopardise prospects for its own initiative. This could lead to consolidation of American leadership of the regional economic infrastructure, and an eventual coalescence to an Apec-style regional order dominated by the US.

By contrast, focusing on the Asean-based economic structure, which has evolved out of the Asean Plus Three and East Asia Summit frameworks, to culminate in the Regional Comprehensive Economic Partnership, would allow China to lead. In other words, a greater role in this, rather than in the Trans-Pacific Partnership, may allow China to consolidate its position as regional leader.

Woo Jun Jie is a PhD candidate at the Lee Kuan Yew School of Public Policy, National University of Singapore. Suvi Dogra is a research officer for the Geo-economics and Strategy Programme at the International Institute for Strategic Studies, New Delhi