China should ‘carefully consider’ whether to join Japan-led trade pact, ex-minister says

A former Chinese commerce minister has cautioned that Beijing should carefully assess whether to join a Japan-led multinational trade pact abandoned by the US three years ago.

Speaking at a Tsinghua University forum in Beijing on Saturday, Chen Deming said China must not make a hasty decision on the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), despite calls from economists and experts for it to join.

Chen, who was commerce minister from 2007 to 2013, said Chinese policymakers needed to consider Japan’s role in the pact when weighing up the move.

“Japan is now the leader on CPTPP … so we need to study what the deal is between the US and Japan [on this] and where the new Japanese Prime Minister Yoshihide Suga stands on the issue,” he said.

“[China] has looked into it and we understand that Japan does not actually see itself as the real master behind the CPTPP and it’s more like a proxy for the US,” said Chen, now president of the government-led China Association of Enterprises with Foreign Investment.

“What it wants is for the US to later rejoin the group, that’s why Japan is ambivalent about China taking part in the CPTPP and why it hasn’t shown much enthusiasm for it. This is the crux of the matter and we need to carefully consider the problem in deciding if we should join the CPTPP.”

US President Donald Trump withdrew Washington from the Trans-Pacific Partnership – predecessor of the CPTPP – in January 2017, claiming it was a “bad deal” for America. Japan has since taken the lead and shepherded 10 other countries – including Australia, New Zealand, Chile, Malaysia, Singapore and Vietnam – into signing the deal and making the CPTPP the third largest free-trade area in the world by GDP.

Chen’s remarks come as Chinese economists are debating whether Beijing, locked in a bitter feud with Washington on multiple fronts, should join the CPTPP and fill the gap created by the US withdrawal.

The agreement could also expand after Britain, Thailand, South Korea and Colombia all expressed interest in joining.

Although Beijing has yet to say if it will sign up, Premier Li Keqiang fuelled speculation in May when he said China held a “positive and open attitude about joining the CPTPP”.

Meanwhile, Huang Qifan, the outspoken former mayor of Chongqing, last month said China should join as it could help to “win over the majority” with the US out of the picture.

“If we join the CPTPP and the US does not, the Americans will be the ones who are eventually decoupled,” Huang said in an article published on the Sina news website. He said Beijing would be able to make its voice heard in CPTPP negotiations and being part of the pact would give China an advantage when it came to setting international trade rules.

Cai Liang, a researcher with the Shanghai Institutes for International Studies, said Chen’s remarks reflected the uncertainties in the international environment, especially ahead of the US election.

“Given the possibility that a different leader could be about to take office in the US after the election, there could be a shift in US policy from unilateralism to multilateralism, and the US may seek to rejoin the CPTPP,” Cai said.

“If that happens, the CPTPP will be jointly led by the US and Japan, and that will create huge uncertainty over whether China will be able to join the pact,” he said.

“The US could return to the path of multilateralism and join with other developed countries in making rules to contain China’s rise,” he said, referring to a possible scenario if Democratic challenger Joe Biden wins the election on Tuesday.

While Beijing has not made clear whether it will join the CPTPP, it has stated that China is keen to reach an agreement on the proposed 15-member Regional Comprehensive Economic Partnership by the end of this year. The free-trade pact is being negotiated between the 10 member states of the Association of Southeast Asian Nations plus China, Japan, South Korea, Australia and New Zealand. India has refused to take part because of concerns over its growing trade gap with China.