Macroscope | China wants India to be part of its Asian free-trade pact – flexibility on liberalisation may be an acceptable price

The Regional Comprehensive Economic Partnership is China’s chance to forge a Trump-proof trade deal that can accommodate the Belt and Road Initiative. Patience with India, which wants to protect domestic manufacturing, may be the way forward

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Chinese President Xi Jinping and Indian Prime Minister Narendra Modi talk as they visit the Hubei Provincial Museum in Wuhan, China, on April 27, 2018. China wants an integrated Asian trading bloc and may be willing to accommodate India, which has prioritised domestic manufacturing. Photo: China Daily via Reuters

Published: 3:30pm, 23 Jun 2019Updated: 10:25pm, 23 Jun 2019

Global attention has understandably been fixed on the US-China trade dispute, with the spotlight occasionally turning to places as far apart as Mexico, Europe and Japan. By comparison, trade relations between China and the rest of Asia have been a sideshow – but maybe not for much longer.

The Regional Comprehensive Economic Partnership (RCEP) agreement, in the likely event that it comes to fruition later this year, will marry China’s economy with 13 other Asian economies, plus Australia and New Zealand, promising to be more of a game changer than is commonly supposed.

The free-trade agreement is less “high-level” and sophisticated than the Trans-Pacific Partnership (TPP) which the US pushed under the Obama-era “pivot to Asia”, only to dump under the bilateral-deal-inclined Trump administration. But it is moving towards realisation at a critical time for Asia.

Even if a trade-war truce is agreed when US President Donald Trump and Chinese President Xi Jinping meet in Osaka at the G20 summit this week, US economic relations – not only with China but with other key members of RCEP – have moved to a very nervous footing.

In this uncertain situation, not easily assuaged given Trump’s increasingly erratic behaviour, a new trade grouping offering manufacturing and agricultural market access, and immune from further Trump tantrums, is an appealing prospect.

Consisting of the 10 members of Asean plus China, Japan, India, South Korea, Australia and New Zealand, RCEP partners collectively account for 45 per cent of the world’s population with a combined gross domestic product of more than US$21 trillion, and make up 40 per cent of global trade.

.css-1m2rp1p{color:#34b8b5;}Macroscope | China wants India to be part of its Asian free-trade pact – flexibility on liberalisation may be an acceptable price

Macroscope | China wants India to be part of its Asian free-trade pact – flexibility on liberalisation may be an acceptable price