Asean, RCEP trade partners unlikely beneficiaries from US-China trade war, Deloitte economist says
- An initial agreement for the Regional Comprehensive Economic Partnership (RCEP) was agreed in November 2019, and could be signed towards the end of 2020
- China and the US agreed their phase one trade deal on Wednesday in Washington, but the United States is not involved in the proposed regional trade pact
An unexpected effect of the US-China trade war has been an apparent acceleration of the process to forge an Asian trading bloc that does not include United States, according to Deloitte China’s chief economist Xu Sitao.
It involves the 10-member Asean bloc plus Australia, China, Japan, New Zealand and South Korea, with India eventually deciding not to participate.
The trade war has brought a positive effect … the RCEP, where you'd have previously thought would require many years to negotiate for. But unexpectedly, an agreement has been reached
Vietnam and Indonesia have also benefited as alternative manufacturing locations to China.
Taiwan’s InvesTaiwan, a interministerial organisation focused on boosting investment, recorded that 164 Taiwanese businesses pledged to invest NT$711.6 billion (US$23.8 billion) in the island last year. The trend has prompted officials to lift the 2019 economic outlook to 2.4 per cent from the previous 2.19 per cent. In its forecast for 2020, global consulting firm Deloitte projects the Taiwanese economy to grow by 2.1 per cent.
And for Xu, China’s promises to open up its market could be an effective way to ease many of their existing economic structural problems.
“I believe China has many areas it needs to reform. For it to address so many aspects at the same time would be difficult, but to reform, I think the best entry point would be [widening] market access,” said Xu.
“Because allowing market access will naturally lead to changes to [resolve] existing problems. Not that the problems will disappear, but they could be partly eased.”
I believe China has many areas it needs to reform. For it to address so many aspects at the same time would be difficult, but to reform, I think the best entry point would be [widening] market access,
Market access, or lack of it, has long been central to the US’ criticism of China’s unfair practices by restricting American companies’ presence, demanding technology transfers in exchange to enter the Chinese market and arming Chinese firms with generous subsidies and cheap loans to rival foreign firms in the most lucrative industries.
“What needs to be done is to implement what has been agreed in the deal,” Xu added.
Chinese Vice-Premier Liu He told Chinese media after the deal was signed that the concessions made by Beijing to Washington would also be applied to China’s other trade partners.
