TPP and China

The main driving force of TPP is United States and as expected, US has successfully tried to keep China at bay from TPP. The group’s economic significance has increased with the addition of Canada and Mexico and has become even more when Japan and Vietnam have joined it.

The Chinese view regarding TPP was that it would be a US-led alliance for reducing China’s strategic clout in the Asia Pacific region.  Critics put forth the point that in the wake of increasing china’s influence through its soft power diplomacy under “Maritime Silk Road” and ‘One Belt One Road Initiative’ will be countered by the U.S presence in Asia-pacific region.

U.S ambition to engage the countries of the region can be gauged by Obama’s statement wherein he said that ‘ we’ve got to make sure we’re writing the trade rules in the fastest-growing region of the world, the Asia-Pacific, as opposed to having China write those rules for us’. Therefore TPP will pull Vietnam and other signatories economically closer to the United States, thus, reducing Chinese economic preponderance. Given that South Korea is likely to quickly join in any completed TPP agreement, these shifts can have a long-run economic impact on China.

Further the deal is seen as a relief by various countries in Asia. They envision it as a counterweight to China’s efforts to expand its influence not just in trade but in other areas, including its island-building in the disputed South China Sea and its assertiveness in maritime disputes. Some of the potential signatories to the TPP, such as Vietnam, South Korea, Japan, etc, are hoping for such an outcome.

However, undermining China at such phase when TPP is yet to come into operation is not a good idea. China has very strong trade and investment links with several TPP members. Since 2005, China has been taking more steps to improvise its own regional integration efforts. These include:

  • ASEAN+3: China is part of ASEAN+3 (China, Japan, Korea)
  • East Asian Summit (EAS) : this includes ASEAN, China, Japan, Korea, India, Australia, New Zealand, US and Russia.
  • Regional Comprehensive Economic Partnership: RCEP involves the integration of the ASEAN’s FTAs with non-ASEAN Asian economies. It would aim to consolidate the FTAs that ASEAN has with Australia, New Zealand, China, India, Japan and Korea. The consolidation would result in the ASEAN connecting to the rest of the major Asian economies in a ‘hub and spoke’ economic framework with ASEAN as the hub.

In the years to come, there is an expected growth of both TPP and RCEP. The TPP is having a head-start over the RCEP. These negotiations might be influenced by developments in the TPP since there are members common to both such as Australia and New Zealand and ASEAN countries like Brunei, Malaysia, Vietnam and Singapore. The common members would probably include Japan and Korea too in the long term. Further, financial picture is also changing rapidly, with China becoming the major lender in the region. The China led Asian Infrastructure Investment Bank has the support of 47 regional and 20 non-­regional members, including TPP nations, such as Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam.

Therefore it is certain that challenges lay ahead for china once TPP gets implemented but the exact outcomes will only become clear with time.

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