While the U.S.-led Trans-Pacific Partnership has potential to split Asia Pacific, it could be used as a foundation for truly free trade, along with other free trade plans in the region.
Their economies have never been more interdependent, and many global and regional key issues hinge on their collaboration. Simply put, the two powers just cannot afford to head into a zero-sum game due to their increasing convergence of interests.
A recent McKinsey Global Institute report titled “The China Effect on Global Innovation” finds that China has the potential to evolve from an innovation sponge – absorbing and adapting global technologies and knowledge – to an innovation leader. As a matter of fact, China is far better at innovation than is generally known and, in some kinds of innovation, is already emerging as a global leader.
Because existing trade terms mean 80% of TPP members’ exports to the U.S. are already duty-free while even a bigger percentage of China’s manufactured goods enjoy that status, the agreement’s bottom-line impact on trade is negligible for now. The deal is more about who gets to write the long-term rules of global governance, which for China is both a challenge and an opportunity to reshape its economy in the direction it was going anyway.
Based on what we know from leaks, Transatlantic and Pacific trade deals disproportionally empower corporations. Instead of trade regionalism driven by corporatism and overrated security imperatives, the EU, the USA and China, should join forces and with a trilateral trade commission shape a vast economic space from the Atlantic to the Pacific Ocean.
Open to insiders and restrictive to outsiders, as they lower trade barriers among member economies, regional FTAs tend to build higher trade barriers against non-member economies. Often tools for working around loopholes in the WTO, such regional agreements buck the trend toward globalization.
China certainly experienced a turbulent summer, owing to three factors: economic weakness, financial panic, and the policy response to these problems. But none on its own would have threatened the world economy. The assumption that China is now the global economy’s weakest link is highly suspect.
For China and the United States, a new type of economic and trade relationship with each other is in the best interest of the two major powers, and they should work towards this end. That will require Washington to view the new TTP through the lens of its best economic interests, and join China in creating the world’s largest free-trade zone by around 2030.
Despite President Xi Jinping’s efforts to assuage the concerns of U.S. business executives while in Seattle, Hugh Stephens argues that these statements don’t reflect reality—that China imposes a much wider range of restrictions on U.S. investors than is the case for Chinese investment in the US.
Supporters of the Trans-Pacific Partnership say the trade deal would help counter China’s influence over the Pacific, but that argument is flawed. China’s dominance is inevitable.
Whether or not the struggling talks produce an agreement soon, the US and China do not need to be defensive about the TPP. Instead, they should open an obstruction-free channel for dialogue, through which both countries can use anticipatory diplomacy to enhance mutual trust.
As Xi Jinping heads to the United States he might need to check that he takes his irony meter with him, for there seems little evidence that anyone in the Western media has one they might be willing to lend him.
Thanks to misguided stories about President Xi’s reforms, America risks losing the opportunity to participate appropriately in China’s massive economic rebalancing and reform drive.
China’s stock-market correction was predictable after its wild rise, but it does not signal a sustained economic slump. However, “China shock” did influence the U.S. and European stock markets, despite the effect being psychological and temporary. During the first half of September, U.S. and European markets have been rising steadily, despite the lingering struggles for Chinese stocks. With an expected mild rebound by the end of the year and beyond, it is likely that China’s imports will gradually pick up, thus contributing more to the world commodities demand recovery.
In 1997, at the height of the East Asian currency crisis, I wrote an article, “The Sky is not Falling (天塌不下来),” basically saying that the Chinese economy would be able to emerge from the crisis more or less unscathed.