TPP's impact on China should not be exaggerated.

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Earlier this year, the US-led Trans-Pacific Partnership Agreement (TPP) was formally signed, prompting widespread debate about how it would affect China. Some think that this agreement specifically targets China, because it will impact the East Asian power’s foreign trade and investment.

It is true that in a globalized world, any regional trade plan will influence the trade and investment of excluded countries. However, as the world’s second-largest economy, China is already deeply integrated into the world economy.

And, the country has great market potential that cannot be negated by a single regional trade agreement. Therefore, we should have a clear mind about China’s own conditions and view the TPP rationally, not exaggerating its influence on China.

In fact, it is unwise to exclude China from the TPP. China and TPP members are highly dependent on each other. Since China and the US established diplomatic relations 30 years ago, the bilateral economic and trade relations have been expanding in scope and depth
China is also the biggest trade partner of nine TPP members and the biggest export market of Japan, New Zealand and Australia. In 2015, the total trade volume between China and TPP member countries reached around $1.3 trillion, accounting for about one-third of China’s total for that year.

In terms of bilateral investment, in 2014, China’s direct investment in TPP member countries accounted for nearly 14 percent of its total. 

Therefore, China has actually formed a community of common destiny with TPP members, and its exclusion from the TPP is disadvantageous to both China and TPP members.
 

 

One example is the textile industry. According to data from the United Nations, the export of TPP members in the industry totaled $57.5 billion while their imports were $230.6 billion—a deficit of $173.1 billion. The gap in demand requires non-TPP members to absorb the balance, while China’s labor-intensive industry has a comparative advantage in this regard.

China’s regional trade plans include countries with different developmental conditions but mostly give priority to developing countries. Since the 18th CPC National Congress, China has always upheld the strategy of mutually beneficial cooperation and endeavored to develop a high-level open economy.

Right now, construction on the “Belt and Road” initiative is steadily advancing, and China’s free trade agreements with South Korea and with Australia officially took effect at the end of last year. Moreover, China and ASEAN have concluded negotiations on upgrading the China-ASEAN Free Trade Area, while the Regional Comprehensive Economic Partnership is making progress.

These agreements are more inclusive and more attuned to the needs of developing countries, hence more conducive to world economic growth and recovery.

China also has made great contributions to world economic prosperity and stability. The international trade pattern is after all determined by international industrial restructuring and the competitiveness of products in different countries.

China has worked to promote a balanced, mutually beneficial and inclusive multilateral trade framework around the globe. It strives to create fair, rational and transparent international economic and trade rules and systems to ensure that developing countries can participate equally in global economic governance.

These efforts include proposing free trade agreements, promoting negotiations and the “Belt and Road” initiative, as well as launching the BRICS Development Bank, the Asian Infrastructure Investment Bank and other cross-border financial institutions.

 

Shen Boping is a professor from the School of Marxism at Nanjing University.