hankyoreh

on the day the TPP negotiations were completed in Atlanta

The Trans-Pacific Partnership (TPP), a trade agreement largely led by the United States, was finalized on Oct. 5, and is expected to fuel the competition between China and the US for economic ground in East Asia. That’s because the TPP is essentially the rival to the Asian Infrastructure Investment Bank (AIIB), an initiative for an international financial institution initiated by China.

On Oct. 5, The Wall Street Journal reported that the TPP “marks a victory for Japan and other U.S. allies in the battle with China over shaping the future of global commerce.” President Obama also lauded the agreement on Monday, saying the US cannot allow “countries like China write the rules of the global economy.” He added that the US should write such rules so as to open “new markets to American products.” It was a forthright expression of US intentions to curb Chinese economic influence.

The TPP is a crucial element to the US policy “rebalancing” Asia, an expression of US intentions to exercise greater influence in a region of 12 countries that constitute 40 percent of global GDP. Just as individual drivers and pedestrians must obey traffic laws, member countries of the TPP will have to follow the rules set by the United States.

The problem, however, is that China, a country that’s still largely operated by a oligopoly of state-owned companies, is unlikely to embrace an agreement that fortifies intellectual property rights, revokes support for state-owned enterprises, and reinforces regulations to protect workers and the environment. This helps explain why voices in China are claiming the TPP is an economic bloc designed to exclude China.

On the surface, China has expressed its official support, saying that it hopes the TPP will facilitate free trade in the region. A statement from China’s Ministry of Commerce called the TPP “one of the key free trade agreements for the Asia-Pacific region,” adding that China is “open to any mechanism that follows rules of the World Trade Organization and can boost the economic integration of the Asia-Pacific.”

Internally, however, China is not pleased. To start, the product portfolio of TPP member Vietnam contains goods similar to those of China, meaning the country’s exports and move to attract foreign companies are likely to suffer. Tancent (www.qq.com), a Chinese economic portal, has stated that the TPP intensifies China‘s exclusion in the region by diverting the attention of its trade partners elsewhere, adding that it could potentially harm Chinese exports.

The TPP has properties meant to offset China’s AIIB initiative, which was officially signed by member countries in June. Proposed in 2013, AIIB discussions began much later than those of the TPP, which has been under discussion since 2010. Yet the influence of the AIIB is not to be ignored, as 57 prospective founder countries have joined talks on the proposal, which was introduced on the pretext of developing Asia’s lagging social overhead capital. Obama’s aggressive push to finalize TPP agreements can be viewed as part of a countermeasure to China‘s AIIB initiative. 　

As regards China’s next step, The Wall Street Journal has predicted that China will continue on its own path, as opposed to rushing to join the TPP under the United States. In addition to the AIIB, China is set to push its One Belt, One Road initiative (an economic belt meant to join the maritime and continental Silk Roads) in its campaign to dominate economic activity in Asia. China is also expected to hasten the finalization of the Regional Comprehensive Economic Partnership (RCEP), an agreement largely led by China that includes South Korea, Japan, the ten countries of the Association of Southeast Asian Nations (ASEAN), Australia, New Zealand, and India. The RCEP is not as open as the TPP, however, being a trade agreement designed to include a specific circle of countries.

By Yi Yong-in and Seong Yeon-cheol, Washington and Beijing correspondents

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