China is expected to make concessions including reducing tariffs in a bid to push forward stalled talks on a mega regional trade deal when it hosts the 15 other nations involved at a summit, observers say. It will be the first time China has hosted negotiations on the Regional and Comprehensive Economic Partnership (RCEP) since it was proposed in 2012. Trade ministers from the 10 members of the Association of Southeast Asian Nations (Asean) plus six other countries in the region – China, Japan, South Korea, Australia, New Zealand and India – will meet in Beijing from August 2 to 3. Commerce ministry spokesman Gao Feng said China, as host, would “continue to respect and uphold the pivotal role Asean plays in RCEP negotiations and make a contribution to forging communication, cooperation and consensus to support the negotiations to be finalised within the year”. Ahead of the summit, talks will be held in the Chinese city of Zhengzhou, Henan province between July 22 and 31. There have been 26 rounds of negotiation on the RCEP so far, with the most recent wrapping up on Wednesday in Melbourne, Australia. Talks on the deal had made slow progress until the past few years, amid growing opposition to free trade and tariff pressure from US President Donald Trump. Many in the region fear that Trump’s tariff threats could have a devastating impact on global supply chains, particularly at their heart in East and Southeast Asia. But while officials from Asean member nations as well as China and Japan have repeatedly expressed the hope of concluding negotiations on a deal this year, there have been reports that India – worried about a higher trade deficit with China – has been reluctant to lower tariffs. Explained: Regional Comprehensive Economic Partnership (RCEP) Observers said Beijing would make concessions in an effort to clinch a deal after years of negotiation, which, if it happens, could be seen as a win for China amid its year-long trade war with Washington, and may strengthen the role of Asia and China in the global trading system. “Over the past few years China has already slashed tariffs across a wide range of items, and so China is likely comfortable enough to keep promoting this tariff liberalisation agenda,” said Nick Marro, an analyst with the Economist Intelligence Unit in Hong Kong. China has been lowering trade barriers for other countries since the start of last year, according to a recent analysis by the Peterson Institute for International Economics. While the average Chinese tariff rate on US products has jumped to 20.7 per cent amid the trade war, Beijing has reduced duties on competing products from other World Trade Organisation countries to an average of 6.7 per cent. The regional trade deal is also believed to be among the issues raised when Indian Prime Minister Narendra Modi met the leaders of Indonesia, Thailand and Singapore on the sidelines of the Group of 20 summit in Osaka, Japan last week. In the latest attempt to break the deadlock, the trade ministers of Indonesia and Thailand, as well as the Asean secretary general, will travel to New Delhi next week to meet Indian Commerce Minister Piyush Goyal, according to Indian media. Wang Huiyao, a Chinese cabinet adviser and founder of the Centre for China and Globalisation, was optimistic about the first summit to be held in China, saying Beijing would seek to achieve real progress and push forward a trade agreement. “This is a very good opportunity because China – as well as Japan, Australia and the Asean nations – have been proactive in pushing [the deal],” Wang said. “For India, Modi has started another five-year term and if there were any worries about the political uncertainties [before], now it’s a good time.” He added that a trade pact that covered 16 nations and accounted for roughly 32 per cent of global GDP, 28 per cent of global trade and 3.5 billion people, would be “the best comeback” in the face of increasing protectionism and unilateralism. He Ping, an associate professor with Fudan University in Shanghai, said while disputes over tariffs were a “structural issue” that was hard to overcome, China and India could try to bridge the gap by, for example, making an exemptions list. “Or they could focus on other issues where they share the biggest common ground to push forward the deal,” he said. But observers agreed that the road ahead for the trade deal may be difficult. “While both countries are looking to expand trade, India may feel that it is not yet ready, and China may also need to continue to push forward its reforms,” Wang said. “Political wisdom is needed and India should recognise the benefits from greater regional integration.” Biswajit Dhar, a professor with the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Delhi, said the tariff liberalisation the RCEP seemed to be demanding was the biggest concern for India, and he doubted Modi would be able to convince industry to accept the deal. “Agriculture, dairy and poultry businesses are equally worried about their lack of competitiveness vis-à-vis their counterparts from other RCEP countries,” he said. “Many of the sectors, especially agriculture, have spoken of job losses that could occur, and this would be a serious deterrent for the government moving forward.” China won’t buy US agricultural products if Americans ‘flip-flop’ in trade talks – state media While officials in Asia have vowed to finalise the deal this year, Marro said that target could be complicated by another trade pact already in force – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP – which has allowed tariff elimination among 11 member states but excludes China. “The presence of a strong, existing multilateral trade framework reduces the urgency of the region to create a new one. Countries not yet part of CPTPP may focus their efforts on joining, rather than navigating the painful process of establishing an entirely new framework,” Marro said. “This may sap momentum away from concluding RCEP as a result,” he added.