It's the geopolitics, stupid: US-led TPP trade pact less about boosting economies than about containing China's rise
Don't let the names fool you - the US-led TPP 'trade pact' and China's RCEP are more about influence on the global stage than economics
Trade pacts, as their name suggests, should be all about economics. So it would be easy to believe that by lowering trade barriers among the 12 nations scattered around the Pacific Rim, the Trans-Pacific Partnership (TPP) was aimed at increasing trade and investment among its partners and stimulating growth.
Yet from the start, this particular trade pact has been as much about geopolitics as economics. President Barack Obama, who has pushed for the trade pact as a centrepiece of his "Pivot to Asia" policy, did not hide US motives - saying the pact was important because "we can't let countries like China write the rules of the global economy".
Some Chinese officials view the pact as a US conspiracy aimed at the economic containment of the mainland.
The US-led free-trade agreement, joined by Japan, Canada, Mexico, Chile, Peru, Australia, New Zealand, Singapore, Brunei, Vietnam and Malaysia, represents 40 per cent of global gross domestic product, 30 per cent of global exports, 25 per cent of imports and 793 million consumers.
The exclusion of China, the world's largest merchandise trader with combined exports and imports worth US$4.3 trillion last year, speaks volumes.
"It is more than just a trade agreement and it represents a large market led by the US," said Jianguang Shen, chief economist with Mizuho Securities Asia.
Matt Ferchen, a resident scholar at the Carnegie-Tsinghua Centre for Global Policy, in Beijing, said: "Geopolitically, and especially in terms of US versus Chinese influence in the Asia Pacific, the TPP deal is important because it is the most tangible economic element of America's 'pivot' towards Asia."