What TPP will bring to China?
- By Zhang Lijuan
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E-mail China.org.cn, October 12, 2015
One determinant is China's economic growth. The Wall Street panic on August 24 of this year is fresh evidence that China's slowdown matters to the U.S. and the rest of the world. To stabilize its economy, China needs to not only engage in difficult domestic reforms, but it must become less dependent upon trade.
Another determinant is how China's FTA negotiations will progress. China has been making great efforts to establish FTAs with Asia-Pacific nations, already has bilateral FTAs with some TPP nations (Brunei, Chile, Malaysia, New Zealand, Singapore, Peru and Vietnam). With ASEAN's Regional Comprehensive Economic Partnership (RCEP) on the agenda, China will continue work to establish Free Trade Area of the Asia-Pacific (FTAAP), a substantially larger FTA. If the China-Japan-Korea FTA can progress smoothly, the TPP effects on China will have to be re-examined. For the U.S., excluding China from TPP might be a smart strategy now, but not for the future.
Additionally, there is China's further capital and financial market sector reform. Trade in services is now on China's top agenda. How well China can integrate itself into the global economy will no longer depend on its trade volume but its financial credibility and liquidity. The TPP can set a higher bar for investment and trade in service, but China will not accept it with sacrificing its domestic reforms and stability.
Finally, the U.S.-China relationship is another key element. We live in "the age of nonpolarity" as Richard Haass has argued, "a world dominated not by one or two or even several states but rather by dozens of actors possessing and exercising various kinds of power." Obviously, the better the U.S.-China relationship, the better the world economy will be.
Today, mainstream scholars and politicians in China believe that China's development and prosperity requires reasonable efforts by China in utilizing its resources in a more efficient way. It is fair to say, U.S. economic statecraft is focused on the world, while China's economic statecraft is more domestic.
The TPP's ripple effects will come, but no disastrous economic effects will occur to China. The partnership will not isolate China from the world trading system. If you do not agree, ask the American farmers, they know the answer.
Zhang Lijuan is a professor with Shandong University, China. She is a columnist with China.org.cn.
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