Abacus | Why talk of a Chinese-led free-trade bloc is ill-conceived fantasy
In order to entice neighbouring countries into a new pact, Beijing would have to open up its markets in ways that would make it uncomfortable
Within days of his inauguration last month, US President Donald Trump made good on his campaign pledge to pull the US out of the Trans-Pacific Partnership (TPP). Signing the executive order that withdrew the US from the 12-member trade deal at the heart of his predecessor’s Asia-Pacific economic policy, Trump promised “we’re going to stop the ridiculous trade deals”.
Clearly the new president has no faith in the view, espoused by mainstream economists, that tariff-free trade benefits everyone. Instead he believes, as he declared in his inauguration speech, that “protection will lead to great prosperity and strength”.
The contrast between Trump’s words and those of Xi Jinping (習近平) could hardly be greater. Speaking days earlier in Davos, the Chinese president told his audience of business bosses: “we must remain committed to developing global free trade... pursuing protectionism is like locking oneself in a dark room.”
The stark difference between the attitudes of the US and Chinese leaders prompted a spate of weighty opinion pieces in the media. Almost without exception the authors argued that by slamming the door on free trade, the US is offering China the opportunity to forge its own multilateral regional trade deal – and so to assume the economic and strategic leadership of Asia.
They haven’t thought things through.