The Trans-Pacific Partnership (TPP) trade deal may be controversial in the US, but in China it appears to be the object of great worry and, in some respects, seems to be driving policy in Beijing, MarketWatch reports.
The TPP agreement, strongly supported by President Barack Obama, would create the world’s largest free-trade zone, stretching across half the globe. The treaty itself, as well as the “fast-track” negotiating authority sought by the Obama administration, has come under criticism by some US lawmakers, as well as various labor and business groups concerned about everything from wages to national security.
But in Beijing, the TPP is frequently seen as an “anyone but China” trade club that threatens the Chinese economy as a whole and even the country’s very future.
“The development of the TPP has profound impact on China’s economic reforms,” Partners Capital International Ltd. Chief Executive Ronald Wan told MarketWatch. “In a way, it is directed at China, and China needs to take the initiative and deal with it,” he said.
The US “has been vigorously promoting and building” the treaty, setting high bars for service trade, intellectual property, labor rules and environmental protection, the State Council (China’s cabinet) said.
Implementation of the TPP will “further impair China’s price advantage in the exports of industrial products and affect Chinese companies’ expansion” abroad, it said.
Given the perceived threat of the TPP, not to mention a proposed free-trade deal between the US and the European Union known as the Transatlantic Trade and Investment Partnership, China has been taking various measures to safeguard its trade position.
Domestically, the country has expanded its creation of new free-trade zones after seeing some initial success in Shanghai, using the program as a way to lure foreign investment on a wider scale. Abroad, it has started its own series of trade initiatives, described as the “New Silk Road.”
Likewise, China has also created a new multinational lending organization — the Asian Infrastructure Investment Bank (AIIB) — along the lines of the World Bank and Asian Development Bank, often seen in China as under the effective control of the US and Japan, respectively. In spite of all this, Partners Capital’s Wan says China would see fierce trade competition and a rise in related disputes if the TPP forms with it excluded.
