A TPP trial balloon shot down in China skies

opinion March 23, 2017 01:00

By Suthichai Yoon
The Nation

2,513 Viewed

China joining the TPP? At first, the idea was floated from Beijing. But it was shot down almost immediately. Of course, one safe way out of an embarrassing situation for officials is to blame it on a “misunderstanding” by “certain media outlets”.

If you weren’t paying close attention, the story might have passed you by.

In a way, the “trial balloon” strategy worked. It gave China a chance to cement its rising role in international trade circles – and also to bury the Trans-Pacific Partnership concept once and for all while at the same time raising Beijing’s profile in the RCEP (Regional Comprehensive Economic Partnership) in a significant way.

The balloon was first floated by Foreign Ministry spokesman Geng Shuang when he said that China should not be absent from TPP talks on March 14-15.

An invitation had come from host country Chile, he said.

China Daily then quoted “experts” as suggesting that Beijing’s participation would not only add value to the trade deal but also facilitate China’s domestic reforms and opening-up.

The story went on to say that since the US had pulled out of the 12-country trade alignment in January, member countries including Chile and Australia had been eager to invite China to become a TPP member “to enhance the integration of the Asia-Pacific region”.

Chinese Premier Li Keqiang, speaking at the end of the National People’s Congress on March 15, said that China, as a beneficiary of globalisation, will take an open attitude towards regional free trade arrangements and, where conditions are in place, should seize the opportunities of globalisation through opening up its markets.

His statement, however, could in no way be interpreted as an official stance ruling out China’s joining the TPP. In fact, Wang Huiyao, president of influential Beijing think-tank the Centre for China and Globalisation, vigorously advocated that option. Writing in China Daily he said:

“We should fully recognise the anticipation of Asia-Pacific countries that China will participate in the TPP, seizing the chance to take part in further negotiations and meetings to take advantage of a mature trade agreement.”

He even suggested that the TPP had formulated a “mature framework” while the RCEP championed by China was still “facing a number of challenges”.

Of course, it’s open to interpretation whether his push for Beijing to “take part in further negotiations and meetings” was equivalent to urging China to eventually become a member of TPP. His line of  argument was, however, clearly in support of Beijing moving closer to the TPP than ever before now that Washington has left a huge void.

The next day, a trade researcher at the Ministry of Commerce by the name of Mei Xinyu shot the idea down in an opinion piece in the same newspaper.

China and the TPP, he declared plainly, “are not made for each other”.

He said the Foreign Ministry’s announcement that China was considering sending a delegation to the Pacific Alliance dialogue in Chile, which also saw the attendance of TPP members, had been “misinterpreted” by some media outlets to mean that China was preparing to join the TPP.

That, he concluded, was definitely not true. “China is not averse to the idea of the TPP but since the TPP is not in line with its interests the chances of China joining it are remote.”

Mei went on: “Those who speculate China could join the TPP refuse to accept the real state of the global economy. China is already the world’s largest exporter and second-largest importer – and it cannot expect to gain much by joining the TPP. Moreover, the TPP is not a high-level free trade agreement, as some US experts want us to believe, because it is full of content that violates basic economic rules.”

The TPP, he argued, is only a regional economic agreement and the number of members is just a fraction compared to that of the World Trade Organisation. “And because of the US’ withdrawal, the gap between the TPP and WTO has widened,” he wrote.

The Commerce Ministry official concluded with a strongly worded statement, perhaps with endorsement from his bosses:

“The Trump administration’s withdrawal from the TPP and its plans to ease domestic controls and loosen financial supervision and medical care insurance are all signs that the US economy is out to fight against restraints. … But China has no reason to invite new shackles in the form of TPP membership to suffocate its trade.”

Hence, conjecture about China joining the TPP is “nothing but wishful thinking”, he declared.

There are two ways you can view this series of reports in the Chinese press on the highly interesting TPP-RCEP “flip-flop”: Either it’s a rare robust public debate, or it’s a trial balloon hurriedly shot down in a very public manner.