China eyes regional trade deal void left by Trump’s win
Xi Jinping expected to lead push to promote Beijing-backed regional pacts at Apec summit as momentum for US-led agreement stalls
China will step into the political vacuum created by Donald Trump’s US presidential election win to forge stronger ties with Latin America and advance Beijing-led free-trade deals at the Apec summit in Lima, Peru, this week, analysts said.
The drive will be spearheaded by President Xi Jinping, who heads to the Peruvian capital for the Asia-Pacific Economic Cooperation summit this weekend.
Heading a delegation that includes more than 400 businesspeople, Xi is expected to seize the chance to promote the China-backed Regional Comprehensive Economic Partnership (RCEP), as the US-led Trans-Pacific Partnership unravels.
The RCEP is a proposed deal between the Association of Southeast Asian Nations and six other countries in the region.
Vietnamese Prime Minister Nguyen Xuan Phuc said yesterday his country would scrap plans to ratify the TPP, and Australian Trade Minister Steve Ciobo said Canberra would work to wrap up a study on the Free Trade Area of the Asia-Pacific, another regional pact advanced by Beijing.
Trump has repeatedly called the TPP – a pillar of US President Barack Obama’s pivot to Asia strategy – a “death blow” for US manufacturing jobs and threatened to pull out of the deal. The White House said last week it would not push for ratification.
Observers said the uncertainty brought by Trump’s election gave China the chance to win greater support from its neighbours.
Gavekal Dragonomics economist Arthur Kroeber said Trump’s lack of interest in regional trade pacts such as the TPP “gives China an opportunity to execute geopolitical influences and sort of write the rules of regional integration in the Asia-Pacific region”.
Kroeber said China’s economic growth now depended much more on domestic spending rather than exports to the US, so Beijing would be less concerned about “poaching influence from the US”.
“The Chinese can have a stronger position to exert greater political and economic influence in the region, which the government has been interested in for a while and they don’t face any significant economic costs,” he said.
Other countries have also signalled a shift away from the TPP. Both Japanese Prime Minister Shinzo Abe and Malaysian Trade Minister Mustapa Mohamed have said their countries are turning their attention towards RCEP.
Peruvian President Pedro Pablo Kuczynski said last week that the TPP could be replaced with a new deal that includes US rivals China and Russia.
Charles Morrison, president of the East-West Centre in the US, said there was no need for panic over Trump’s trade policy because comments by presidential candidates on the campaign trail, including by Obama, often did not translate into policy or action.
“I think when the president of the US or any other countries meet each other, just like everybody else, they just want to do things together. They don’t want to be bad boys and they don’t want to be isolated,” Morrison said. “I have a feeling that when Donald Trump becomes more knowledgeable about the public and the government and international relations, he will probably be a very international president.”
Cementing ties with resource-rich Latin America, China announced on Monday that it had signed US$2 billion in deals with Peru, covering light industry, textiles, agricultural products, medicine and metals, CCTV reported.
Kevin Gallagher, a professor of global development policy at Boston University, said that as Trump was building a wall, Xi was building bridges across Latin America. “Xi and China have become South America’s leading trading partner, source of development finance and ... have engaged in ‘south-south’ cooperation on a number of fronts,” he said.
“Now the agenda will be on infrastructure and industry and how to do so in an environmentally sustainable and socially acceptable manner.”
Additional reporting by Kristin Huang, Wendy Wu and Reuters