Skip to main content

Frank Ching is a Hong Kong-based journalist.


The agreement on the Trans-Pacific Partnership, reached after five years of often nail-biting sessions, marks a triumph for the United States, especially for President Barack Obama. But opposition to it is so strong in the U.S. Congress that its passage is far from certain next year, which will be marked by presidential election campaign rhetoric.

China, which is not a TPP member, has loomed large during the talks and, as soon as an accord was reached, the White House released a statement in which Mr. Obama said, "We can't let countries like China write the rules of the global economy; we should write those rules."

Such comments might give the impression that the accord, which binds together the economies of 12 countries that account for 40 per cent of the world economy, is somehow aimed at China. It is not.

Consider the TPP members involved: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. China is important to all of them; indeed, it's the biggest trading partner for Australia, Japan, New Zealand and Vietnam.

Moreover, many TPP countries already have free-trade agreements with China. Even the United States is negotiating a bilateral investment treaty with China.

What accounts for Mr. Obama's anti-China rhetoric is domestic politics. His own Democratic Party is opposed to the TPP, due in large part to the opposition of organized labour. Many Republicans are dubious about the deal, in particular because of the pharmaceutical industry's opposition. Mr. Obama probably feels he has little choice but to play the China card, given increasingly negative U.S. sentiments toward that country.

The U.S. Department of Agriculture estimates the impact of the TPP on China would be negligible. A People's Bank of China economist estimated it would shave China's GDP by 2.2 per cent. Hong Kong's Financial Secretary, John Tsang has said that the TPP would "enlarge the pie of regional trade and fuel demand for imports," thus benefiting even non-signatories.

Beijing seems to accept that it is currently not ready to undertake the responsibility of membership in the TPP. Commerce Minister Gao Hucheng has said China is open to any trade mechanism that follows the rules of the World Trade Organization and hoped that "the TPP pact and other free-trade arrangements in the region can boost each other and contribute to the Asia-Pacific's trade, investment and economic growth." He also said China is "willing to co-operate with the U.S. in formulating global trade regulations" – that is, they can write the rules together – to push forward global economic development.

While the United States did not want China to take part in the TPP negotiations, Mr. Obama has made it clear that China could, in future, become a member if it lives up to the high standards of the deal, such as on state-owned enterprises and the environment. Even Japanese Prime Minister Shinzo Abe, who is certainly not China's favourite politician, has said that Chinese membership in TPP "would have significant strategic meaning."

It is conceivable that China will eventually seek TPP membership – much as it asked to join the WTO in the 1990s – to spur domestic economic reform. Major reforms were announced at a party plenum in 2013 and the terms of TPP membership could be used to overcome opposition by vested interests.

In the shorter run, China is likely to seek to fast-track its own favoured free-trade accord – the Regional Comprehensive Economic Partnership (RCEP), which comprises the 10 ASEAN (Association of Southeast Asian Nations) countries plus China, South Korea, Japan, India, Australia and New Zealand. This 16-country bloc would be a larger grouping than the TPP and include the world's two most populous countries, China and India. Of those 16 countries, seven are in the TPP, so the two trade accords could overlap and certainly are not mutually exclusive.

It is even possible that, in time, the two trading blocs – assuming they are actually formed – would not just compete but also co-operate, possibly to such an extent that they may consider merging, to become a super trading bloc.

After all, in the absence of progress by the WTO in the Doha round of trade talks, the best hope for progress in the dismantling of trade barriers lies in the expansion of regional trading groups.