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 Tokyo-based 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, Secretary-General 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 filling 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 anti-globalization 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.
http://www.globaltimes.cn/content/1019636.shtml
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