China’s interest in CPTPP membership seen as a chance to ease Sino-US tensions

By Xie Jun and Qi Xijia Source: Published: 2020/11/21 21:27:07

Photo: Xinhua

 China's bold decision to consider joining a massive Asia-Pacific trade agreement shows the country's intent to seek higher-level opening up, a move which would breathe new life into free trade at a time when many countries are trying to shift away from the US-initiated penchant for protectionism in order to save their pandemic-stricken economy. 

The potential joining of China in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) might also create an opportunity for China and US relations to evolve from tense standoffs to seeking of more communication, experts predicted. 

During a virtual meeting on Friday at the 27th APEC Economic Leaders' Meeting, Chinese President Xi Jinping reaffirmed China's commitment to multilateralism and building an open world economy, and said China will "favorably consider" joining the CPTPP.

Effective since December 30, 2018, the CPTPP deal was signed by 11 countries including Australia, Canada, Chile, Japan and Malaysia. The size of the pact covers 498 million population and approximately 13 percent of the world's total economic output. 

Chinese commitment to globalization 

China's open attitude toward joining the CPTPP shows that the country is seeking further progress in its level of opening-up by looking to be part of a free trade agreement that represents the highest level of international trade standard, experts said. 

Unlike trade pacts like the Regional Comprehensive Economic Partnership (RCEP), the CPTPP targets more at new business models like high technologies, intellectual property rights and digital 

economy, said Wang Huiyao, president of the Center for China and Globalization (CCG) think tank.

CPTPP is an updated version of a giant deal originally backed by former US president Barack Obama but was abandoned by Donald Trump as the latter alienated trading partners with an "America First" policy. 

"CPTPP represents the world's highest-level free trade agreement, and China's interest in joining it shows the country's desire and determination for deeper, higher-level opening up," Wang told the Global Times. 

Yang Zerui, director of research at the China National Committee for Pacific Economic Cooperation, noted that China's interest in joining the CPTPP shows China is not shutting its doors, when there are doubts as to whether China will focus more on domestic demand with launch of the "dual circulation" strategy.

Yang said when globalization is facing headwinds and APEC needs new momentum to promote cooperation, the CPTPP is the best means to stimulate Asia-Pacific teamwork. 

"It is a kind of 'Chinese vow' on promoting Asia-Pacific cooperation and globalization," Yang said. 

A chance to China-US cooperation

China's interest in joining the CPTPP would also create a new chance for China and the US to seek common ground and work out their divergences, and this, to make the best estimate, might be an answer to the US-China trade row. 

It may or may not happen, as the US political situation still has lots of uncertainties. Although the current US administration yet to complete a seemingly "reluctant" transfer of power to president-elect Joe Biden, many economists in China are holding optimism about a thaw in the relations between the world's two largest economies. 

"The US global influence is waning as a result of the protectionist measures taken by the Trump administration, I believe the next administration is sure to correct that, and a US return to the CPTPP is expected to happen in the future," Yang said. 

At that time, when both China and the US are under the CPTPP umbrella, they have to "cooperate" instead of "fight", as they will share a common direction of setting a free trade zone in the Asia-Pacific region, Yang said. 

Wang echoed the optimism, saying that the two countries' membership of the CPTPP will help push the China-US relations away from a vicious circle and into a healthier, cooperative direction. 

"Once China and the US start talking on the CPTPP issues, the two countries will have another platform to communicate with each other. This will surely benefit the relations between the two sides," he told the Global Times. 

Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute, said that China's interest in joining the CPTPP shows that the country is taking more responsibilities when protectionism hurting the world economy, and the US is not fulfilling its obligations as a major power.

"So far, the US still leads on the governance of many global issues, but the gap between China and US in this regard is narrowing," he said. 

Ready to enter 

After China sends out the signal to join the CPTPP, the world will monitor its progress, that is, whether China will actually become a member of the trade pact, and what obstacles will await the country in acquiring the membership. 

Bai said that after China submits the application to join the CPTPP, the existing members will hold negotiations on whether to accept it. The negotiations might cover issues like certificate of origin, small enterprises, labor standards and environmental protection. 

Experts are not very worried about the qualifications for China to be a part of the pact. 

"In sectors like intellectual property rights, data transfer, environmental protection and state-owned enterprise reforms, China is moving closer and closer to the CPTPP standards," Wang said. 

Yang said that every country has issues of special concern in the CPTPP negotiations. For China, issues like state-owned enterprise subsidies, transparency of government purchase and labor rights may be the focus of such negotiations. 

He also noted that consensus will be more easily reached in areas like financial opening-up and environmental protection. 

"Overall, it should take about five to 10 years for China to join the agreement," he noted. 

In the past, it took 10 years for the RCEP agreement to be signed, and the Trans-Pacific Partnership (TPP) agreement took 20 years. 

Wang also said that the CPTPP membership would provide an incentive for China to further improve reform and opening-up, in order to fit in with the CPTPP requirements.

Challenges remain

Experts noted that China's interest in joining the CPTPP will stimulate WTO reforms, which would prompt the international trade system to develop in a healthier manner.  

"If China and the US can reach a consensus on the CPTPP issue, then why can't the obstacles under the WTO framework be solved? I believe it will be an incentive to push WTO reforms," Wang said. 

He further noted that once such reforms are done, the global structure will be "remolded" under a new global business model, and the world will develop in a more balanced, comprehensive and reliable manner, while the voices of anti-globalization will fade. 

Besides contributing to the world economy, Wang anticipated that the CPTPP will create chances for Chinese industries to elevate themselves, and there will be less crackdown on Chinese companies like the cases of Huawei and TikTok as they will be protected by relevant terms of the agreement.

However, challenges still remain for China to get the "ticket" to board. For example, China might need to launch further reforms on issues like government purchase, to be able to fit in with the CPTPP requirements. It might also meet with opposition from some members of the pact, so that there will be a process of "bargaining", Yang said. 

Externally, possibilities also exist that Biden might make moves to thwart China's membership after he becomes US president. 

"It's not clear if Biden will ask Canada and Mexico to elbow China out, and if the US will put forward harsh terms for China if it returns to the CPTPP which it once dropped out," Bai noted.

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