TPP is big, but China-Africa is key also

By Mark Kapchanga Source:Global Times Published: 2016/6/13 0:08:01

US President Barack Obama's three-day visit to Vietnam in May was dominated by the talks on the grand trade bloc that involves 12 countries. The tour was widely seen as a chance to celebrate the signing of the Trans-Pacific Partnership (TPP), an American-led free-trade agreement that was signed in February 4, 2016 after seven years of intense lobbying and negotiations.

Implementing the TPP has been one of the top trade agenda objectives of the Obama administration. A recent World Bank analysis shows that if ratified by all the signatories, the TPP pact could raise gross domestic product in member countries by an average of 1.1 percent by 2030. TPP, the World Bank found out, could also expand member countries' trade by 11 percent by 2030.

Under the TPP, for instance, Vietnam would see a boost in GDP of 10 percent by 2030 and increase garments and shoes exports due to lower foreign tariffs. Besides these accrued benefits, critics say the TPP would reduce Vietnam's dependence on China.

In what appears to be America's abnormally high appetite for cutting China's growing global influence, in January this year, the National Association of Manufacturers announced its support for the TPP, arguing that without it, the US would be ceding its economic prowess to other global powers (read China), letting them set the rules of the game in the world.

To the business fraternity, this 12-country agreement brings China's neighbors closer to the US, translating to a reduced reliance on Chinese trade. What this means is that if ratified, TPP would strengthen US influence on future rules for the global economy.

The constricted thinking is that this move would make the Chinese economy less competitive. It will also deny Chinese leadership the opportunity to write the rules of trade in East and Southeast Asia.

To put pressure on the Congress to ratify the pact, Obama said recently that "if we don't pass this agreement - if America doesn't write those rules - then countries like China will."

Indeed, to many pro-US policy analysts, the failure to conclude the TPP could allow China to define tenets of regional commerce through its own trade and investment plans.

While the TPP sounds lucrative, and perhaps very promising to the masses, the negative impact on China seems deliberately skewed. Beyond its Asian neighbors, China is continuously enriching its global reach through social, economic and political ties.

The most notable one has been its relations with Africa, whose trade numbers have risen tremendously by more than 700 percent in the recent years. Today, China is Africa's prime trading partner.

With the deepening ties, currently there are more than 1,000 Chinese corporations doing business in Africa. Most of them are private-run firms investing in energy, roads, agriculture, real estate and banking. In countries like Kenya where modern technology seems to be defining the future, China has not been left behind in investing in technology-related businesses.

Now, most startups are teaming up with experts from China, who introduce relatively superior technology to the running of businesses.

Africa-China cooperation may be overlooked, but its future seems more promising, perhaps even more than the much-hyped TPP. Africa offers massive economic and investment opportunities. If well managed, they could define determine the world's trade and geopolitics.

China is already on its way to upping the continent's profile through heavy investment in energy, roads and ports which have in turn transformed Africa's investment climate. Intra-Africa trade is rising, so is Africa's trade with other continents across the world.

TPP is no doubt a hot issue today, but China-Africa ties should not be forgotten; there is huge economic potential underneath them.

The author is a journalist on African issues based in Nairobi, Kenya. Follow us on Twitter @GTopinion

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