China will miss out if it stays outside TPP trade pact but Singapore, others would benefit : PBOC chief economist

An employee working among stainless steel sheets at a steel factory in Taiyuan, Shanxi province, China.
An employee working among stainless steel sheets at a steel factory in Taiyuan, Shanxi province, China. PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's textiles, clothing and electronics industries will miss out by not joining a US-led Pacific trade pact, according to an article by Ma Jun, chief economist of the People's Bank of China's research department.

China would see a 0.5 per cent annual increase in economic output over four years if it were to join an expanded 16-member Trans-Pacific Partnership and its economy would be 2.2 per cent larger after several years, according to the article published in the Shanghai Securities News. That assumes other nations that are not in the existing grouping including South Korea, Indonesia and Thailand are also added.

A dozen Pacific Rim countries announced an agreement this week for a TPP pact designed to boost commerce by providing duty-free trade on most goods and reduced tariffs on others. The 12 TPP countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.

Countries enjoying close trade ties with China such as South Korea and Japan would also miss out in an expanded 15 nation TPP that still excluded China, according to the researchers.

But Singapore, the European Union and Vietnam would benefit if China stayed out, they said.

TPP inclusion would improve competitiveness and boost China's growth potential by lowering the bar for private capital and helping improve standards of intellectual property protection, the authors wrote.