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Joining TPP at an Appropriate Time and of Our Own Accord Serves China’s Strategic Interests

Nov 20, 2013
  • Li Luosha

    Research Fellow, China Center of Int'l Economic Exchanges

At present, China is at a turning point of development, with its economic structure undergoing a systemic transition, its society entering a period of frequent conflicts and its reform poised to tackle a number of tough tasks. The Third Plenary Session of the Party’s 18th Central Committee, which opened recently, is expected to formulate some major strategies for China’s unprecedented reform and opening up in the next 10 years.

As far as China is concerned, ensuring a 5-10 year period of strategic opportunities serves the greatest strategic interest for China’s development. Nothing is more important than this. Such a period holds out major significance in the following three areas. First, we aim to complete the building of the moderately prosperous society in all aspects rather than to seek global leadership position or to overtake a particular superpower. Second, we aim to accomplish something really big, such as advancing institutional reforms and openness to the outside world while playing the role of a responsible major country and taking on global challenges collaboratively rather than to go through the motion. Third, we aim to achieve our goals through peaceful development rather than through conflicts or wars.

Whether or not we can ensure such a period of strategic opportunities in the next five to ten years depends on whether or not China can do all the right thing in this time of great development, great changes and great adjustments rather than if or when wars should break out; on whether or not China can avoid making strategic mistakes rather than what strategic dreams other major countries may entertain; and on whether or not China can appropriately handle and successfully resolve the complicated challenges in its face rather than if or when enabling opportunities can occur.

Shortly after becoming the world’s second largest economy, China made a strategic appeal to build a new model of major-country relationship, which was based on its utmost strategic interests for peaceful development. In history, the rise of a major power was often accompanied by tension, confrontation, turbulence and conflicts. But China has chosen to rise through peaceful development, out of the conviction that historical tragedy of deadly power collision must not be repeated in the 21st century. The new model of major-country relationship, as defined by China, is a relationship of non-conflict, non-confrontation, mutual respect and mutual benefit.

At present, the United States is pursuing a returning to Asia-Pacific strategy and energetically pushing TPP negotiations. TPP negotiations, which center around making new trade rules, are described by the first batch of TPP members as efforts to produce a 21st century trade treaty. The negotiations cover 24 areas, almost all targeted at on-shore issues, such as economic policy, labor and code of conduct for state-owned enterprises. The trade talks pay little attention to differing levels of development of participating countries which are asked to measure up to the same standard of trade liberalization. Compared with terms of WTO, TPP seems a lot more demanding particularly with respect to IPR protection and foreign access to basic industries. In essence, TPP represents one of the possible paths to a broader FTA arrangement in the Asia-Pacific region. All APEC’s 21 member economies have signed up for an Asia-Pacific FTA and all recognized TPP negotiations and 10+6 FTA (RCEP) negotiations as instrumental to creating an Asia-Pacific FTA. What is more, they all agree that the “Trans-Pacific path” will be a high standard trade agreement and the “Asia path” a cooperation framework that includes differing economies. At the 2010 Yokohama Summit, APEC leaders adopted the declaration of “Path to an Asia-Pacific FTA”, stressing that RCEP and TPP were both possible paths to a free trade area in Asia-Pacific. China, as an APEC member, should be an indispensable party to both RCEP and TPP, instead of viewing TPP as a US strategy that China must not help. China should consider joining TPP of its own accord. This serves China’s utmost strategic interests and contributes to a bigger interest of win-win cooperation in the region and the creation of an Asia-Pacific FTA.

In introducing its re-pivot strategy, the US sought to gain a strategic advantage over China by throwing greater weight in the neighborhood. But it did not want to undermine those common strategic interests it shared with China. In other words, the US wants to advance relations with its allies and emerging partners in the Asia-Pacific region while at the same time cultivate a strong relationship with China. In that sense, the fundamentals of China-US strategic cooperation have remained unchanged. The key question that China must answer after becoming a major world power is whether it intends to continue working amicably and cooperatively with the international community under the existing international order or whether it begins to seek an international order that is more favorable for itself. If it is the former, China-US relations will be more strategically convergent and mutually complementary. If it is the latter, China-US relations will be more strategically conflictual and competitive. The coming five to ten years will be a crucial period for China to complete building of a moderately prosperous society in all aspects, and building a new model of major-country relationship between China and the US will be a key component of this period. Like playing a big chess game, if China chooses wisely it will find itself in a favorable position in the global strategic configuration and its important period of strategic opportunities can be ensured and prolonged. Choosing to join TPP is tantamount to materialize its commitment to build a mutually beneficial new model of major-country relationship with the US, and to maximizing China’s own strategic interests.

Opportunities and challenges are in fact interchangeable. Proceeding from the country’s maximum interests, China should choose to become a party to TPP for the following reasons: First, it will force China to speed up its domestic reforms in certain key sectors. True, there will be security risks with domestic and external ramifications. But seclusion is even more dangerous. Our own experience with WTO membership shows that joining TPP can transform the pressure from opening up to drives for greater changes, which helps accelerate reforms in sectors that are more complex and difficult. We should link our openness to TPP with the agenda of domestic reforms. Second, it helps efforts to build a new model of major-country relationship between China and the US. By joining TPP, China will find far greater compatibility with the US in the area of national interests. They may agree to do still more together to promote trade and investment liberalization in the Asia-Pacific region and to build an Asian FTA in the future so as to maximize the respective national interests and the region’s interests as a whole. All in all, by choosing to join TPP, we can effectively safeguard and prolong our important period of strategic opportunities so as to complete our historic task of building a moderately prosperous society in all aspects. As a big country, China has little fear of storms or waves of whatever size. So long as we remain calm and persevere, we will turn challenges into opportunities and succeed in achieving overall development and making steady progress.

The key is to do a good job in managing our own affairs. While stepping up economic restructuring and achieving the shift of the growth model, we need to speed up the implementation of our FTA strategy. The first is to complete the China-ROK FTA, hopefully by the end of 2014. The second is to promote the China-Japan-ROK FTA so that it can be completed before 2015. The third is to actively push ASEAN+6 FTA (RCEP) negotiations so that an agreement can be reached or substantive progress can be made in 2015. The fourth is to speed up the conclusion of our FTA negotiations with Australia and the GCC, while launching feasibility studies on a possible China-Canada FTA. The fifth is to stay actively engaged with the APEC agenda as well as rule-making for Asia-Pacific trade and commerce. The six is to stay committed to WTO multilateral trading system as the principal channel for global trade liberalization.

Li Luosha is a Research Fellow of China Center of International Economic Exchanges

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