China wary after Trump’s U-turn could see US rejoining TPP
US President signals America may sign up to Trans-Pacific Partnership as trade tensions between Washington and Beijing rise
Chinese analysts have said they are wary about the possibility that the United States will rejoin the Trans-Pacific Partnership (TPP), but shrugged off the immediate need to make policy changes.
US President Donald Trump asked his economic officials to look at the possibility of reopening talks about the TPP after talking to a group of Congressmen who expressed concern about a possible trade war with China and suggested that rejoining the Pacific Rim pact was the best way to pressure China.
The prospect was welcomed by Japan and other signatories to the deal but Trump, who had previously pulled America out of the TPP, later tweeted that he would only rejoin “if the deal were substantially better” than the deal Barack Obama agreed.
Trump also indicated that he was keen to pursue bilateral deals with Japan and other countries in the region.
The pact excludes China and was conceived as a way of countering China’s increasing economic influence in the region, although Beijing has said it has a “positive attitude” towards any deals that are transparent, open, inclusive and help to maintain the WTO-centred global free trade system.
He Weiwen, a former counsellor at the Chinese consulate in New York, observed that the TPP was one of more than 400 international trade arrangements, but said its rules could help China to open up its economy in fields such as technology, trade and investment.
However, he continued: “The TPP is a geopolitical instrument for America’s Asia-Pacific rebalancing, which is not good for China.”
China has pushed forward talks on forming a Regional Comprehensive Economic Partnership, a free-trade proposal to include 16 countries in the western Pacific, including the Asean nations, Australia, Japan and India.
He said the RCEP could be more inclusive than the TPP and could pave the way for talks on forming a broader Asia-Pacific Free Trade Area.
Huo Jianguo, former research head with the Ministry of Commerce, said China has little cause to worry about Trump’s latest U-turn and there was no need for a policy response.
Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama. We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!
— Donald J. Trump (@realDonaldTrump) April 13, 2018
“We should remain consistent and focus on stabilising the economy and opening up to ensure the Chinese market remains attractive to foreign investors,” Huo said.
China’s Ministry of Commerce, which is in charge of China’s trade deals, did not immediately comment.
The TPP was designed to cut trade barriers in the Asia-Pacific region as well as countering China’s rising economic and diplomatic power.
Trump, who opposed multilateral trade pacts in his election campaign in 2016 and criticised it as a “horrible deal”, pulled the US out of the agreement in his first week in the White House in early 2017.
The remaining 11 countries – including Japan, Australia, Canada and Vietnam – finalised a revised version of the trade pact in March and renamed it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.
Yorizumi Watanabe, a professor of international politics and economics at Keio University in Tokyo, said Japan would certainly welcome the return of the US in the TPP because Japan “has been making its best efforts to bring the US back to the TPP”.
“Mr Trump has finally realised the geopolitical value of the TPP in its confrontation with China,” Watanabe said.
But he argued that China should not be excluded from the TPP, but rather encouraged to join
Nguyen Xuan Hai, an assistant professor at the department of economics with the Chinese University of Hong Kong, said Vietnam had been disappointed when Trump pulled out “because Vietnam was expecting to gain the most from the TTP deals” and the prospect of the US rejoining was a “good thing” for the country.
While China is a major trading partner for Vietnam, Hanoi is also looking to places such as the US and Australia to sell its agricultural products, and a trade deal could help its exports, Nguyen said.
At the same time, negotiations with Trump might prove tough and Vietnam was “maybe less excited than the first time”, he added.
Trump’s apparent change of attitude came as Washington and Beijing locked horns in a tit-for-tat trade dispute. The US announced it would slap 25 per cent import tariffs on more than 1,300 Chinese products. China hit back quickly to impose similar tariffs on more than 100 American products, such as soybeans, pork and cars.
The Trump administration may further unveil tariff details of another US$100 billion of Chinese products and is now working on restrictions against Chinese investment in the US.
Additional reporting by Reuters