Pressure on China to counter agreement's impact: Analysts

A Chinese flag flies near apartment buildings in Beijing on Sept 11, 2015.
A Chinese flag flies near apartment buildings in Beijing on Sept 11, 2015.PHOTO: AFP

China, the biggest economy to be excluded from the Trans-Pacific Partnership (TPP), has made a veiled call for the trade pact to observe international rules and contribute to the Asia-Pacific.

The Chinese Commerce Ministry said yesterday that China is "open to any mechanism that follows the rules of the World Trade Organisation and boosts the economic integration of the Asia-Pacific". "We hope the TPP and other free trade arrangements in the region can boost each other and contribute to the Asia-Pacific's trade, investment and economic growth," the ministry added in a statement on its website.

The Chinese media has mostly downplayed the TPP - viewed here as one of Washington's tools to curb Beijing's rise - and questioned whether members could get domestic approval in time.

Observers say the TPP would pose challenges for China's economy and influence, making its counter-efforts more crucial now. These include revival of two ancient trade routes under the "One Belt, One Road" (Obor) initiatives aimed at deepening trade links.

People's Daily senior editor Ding Gang noted that the TPP would affect China's manufacturing sector, given that a prescribed proportion of a product would have to comprise items sourced from TPP members to enjoy lower tariff. He also believes the pact could affect the Obor initiatives, as they do not have any free trade element. "Some countries might be more inclined to join the TPP," Mr Ding wrote in a commentary yesterday.

China is aiming to conclude talks this year on the 16-nation Regional Comprehensive Economic Partnership comprising Asean as well as India, Japan, South Korea, Australia and New Zealand. China has also inked several free trade agreements lately, such as with Australia, to counter the TPP's impact.

Debate was again stirred yesterday on whether China should join the TPP. Some observers say joining the free trade agreement before China can meet the standards may do more harm to its image and businesses.

Financial commentator Lei Sihai said the key obstacle is the TPP's investor-state dispute settlement mechanism, which allows foreign investors to take action against host states over the impact of national laws or policies. "In the light of the impact on our national sovereignty, the likelihood of China joining the TPP is remote. China will need to use its own tactics to counter the US' master plan," he wrote in a commentary yesterday.

A version of this article appeared in the print edition of The Straits Times on October 07, 2015, with the headline 'Pressure on China to counter agreement's impact: Analysts'. Print Edition | Subscribe