China may lead free trade

Too early for China to fill void left by pro­tec­tion­ist US

Global Times - - Front Page - By Yang Sheng

If US Pres­i­dent- elect Don­ald Trump makes good on his prom­ise to back out of free trade deals and sur­ren­ders the US’ role as a global free trade leader, China could pick up the slack, but it is too early for it to com­pletely fill the void, economists said.

How­ever, China should do more and shoul­der more re­spon­si­bil­ity in pro­mot­ing free trade rather than strug­gle for global lead­er­ship with the US, they said.

Trump de­clared Tues­day that he will is­sue an ex­ec­u­tive or­der on his first day in of­fice to with­draw the US from the Trans- Pa­cific Part­ner­ship ( TPP), an act which is likely to see China ben­e­fit­ing most from in­creased US pro­tec­tion­ism, West­ern me­dia and ob­servers agree.

Ankit Panda, As­so­ciate Edi­tor of the Di­plo­mat, a Toky­obased mag­a­zine on pol­i­tics and in­ter­na­tional re­la­tions, wrote that the US “ap­pears poised to miss out on con­sid­er­able eco­nomic op­por­tu­nity as it cedes re­gional eco­nomic lead­er­ship, and its ac­com­pa­ny­ing ben­e­fits to China.” He stressed that “Pa­cific Rim states can ( and will) move for­ward on trade with­out the US.”

“This re­newed US pro­tec­tion­ist at­ti­tude will dam­age all eco­nomic en­ti­ties’ in­ter­ests around the world,” said Wang Dong, Sec­re­taryGen­eral of the Pan­goal In­sti­tu­tion, a

non- govern­ment think tank in China.

China has al­ways been an ad­vo­cate of free trade. Pres­i­dent Xi Jin­ping reaf­firmed China’s sup­port for free trade dur­ing the just- con­cluded Asia- Pa­cific Eco­nomic Co­op­er­a­tion ( APEC) met­ing in Lima, Peru.

“The US is very di­ver­si­fied. The work­ing class op­pose the TPP but busi­ness doesn’t, and this will im­pact the con­sis­tency of US pol­icy- mak­ing. So coun­tries that fol­low the US on trade will choose to find a new global leader with con­sis­tency,” Chu Yin, an as­so­ciate pro­fes­sor at the Univer­sity of In­ter­na­tional Re­la­tions, told the Global Times.

High ex­pec­ta­tions

Many coun­tries, even some TPP mem­bers, have openly said that if the US re­treats from the TPP, they would likely join a new pact led by China. Ac­cord­ing to Reuters, many Latin American states like Peru and Chile are in­ter­ested in join­ing the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship ( RCEP) which is strongly sup­ported by China.

Un­like the TPP, “which grew to in­clude strong nor­ma­tive stan­dards built around US norms, the RCEP, for ex­am­ple, is con­sid­er­ably more tol­er­ant of cen­trally planned economies with lower la­bor stan­dards. In some ways, RCEP is more of a tra­di­tional free trade deal, low­er­ing and elim­i­nat­ing tar­iffs, but do­ing lit­tle else on stan­dards and non- tar­iff bar­ri­ers,” Panda said.

“China as the big­gest trad­ing na­tion will def­i­nitely sup­port free trade be­cause this is not only good for the world econ­omy but also serves China’s own in­ter­ests, and China’s pact will not ex­clude any­one due to dif­fer­ent stan­dards or norms,” Wang said, adding that this is why other coun­tries have high ex­pec­ta­tions that China would fill the void left by the US.

Some close al­lies in the Asia- Pa­cific such as Aus­tralia and New Zealand are even turn­ing their backs on the US. Aus­tralian trade min­is­ter Steve Ciobo told the Fi­nan­cial Times on Satur­day that Aus­tralia would sup­port the pro­posal be­ing ad­vanced by China, the Free Trade Area of the Asia- Pa­cific ( FTAAP).

Ac­cord­ing to New­stalk. co. nz, a news net­work in New Zealand, New Zealand’s Prime Min­is­ter John Key said in Lima on Satur­day that “In the end if the US is not there, that void has to be filled. And it’ll be filled with China.”

Bet­ter plan

At this mo­ment, al­though other coun­tries are talk­ing about China fill- ing the gap or even re­plac­ing the US, China must keep calm be­cause “the US is still the big­gest econ­omy, and it’s too early for China to re­place the US,” Wang said.

Ex­pand­ing free trade glob­ally is also con­ducive to China’s on­go­ing eco­nomic re­forms and to re­liev­ing the pres­sure of the eco­nomic down­turn, Chu said. “It can help us re­lease pro­duc­tion ca­pac­ity, ex­pand for­eign trade, and smoothen the eco­nomic tran­si­tion.”

“China needs to re­mem­ber and learn the lessons from West­ern- led glob­al­iza­tion, and make bet­ter plans for the ‘ Belt and Road’ ini­tia­tive to fix those old prob­lems,” Wang said.

West­ern- led glob­al­iza­tion caused many prob­lems such as in­equal­ity and un­fair­ness which in turn caused the rise of pro­tec­tion­ism and antiglob­al­iza­tion move­ments. But there is no turn­ing back from glob­al­iza­tion and free trade, so the only way is to fix and im­prove the cur­rent sys­tem and build a bet­ter one, Chu said.

“US hege­mony is built on its mil­i­tary power and huge con­sumer mar­ket, but we are dif­fer­ent, we will use our own way to be a re­spon­si­ble power,” Chu noted.

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