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With TPP Dead, China Officially Launches Its Own Pacific Free-Trade Deal

As we noted on Thursday, "it was ludicrous for Obama to leave China out of things. China is the second biggest economy in the world, third if you treat the EU as a block. Had China been in the deal all along, we may not have seen the ludicrous provision that allowed companies to sue governments. That provision was one of the key reasons the deal failed. With the election of Trump, TPP is officially dead. China, not the US, will be at the center of a new Asian trade pact."

Furthermore, as Mish Shedlock pointed out, on November 10, in the wake of Trump’s election, Beijing quickly sought to fill the void left by TPP by reviving its proposed Free Trade Area of the Asia-Pacific pact.

"Xi Jinping is rekindling efforts to promote a rival to the US-led Trans-Pacific Partnership trade agreement in the wake of Donald Trump’s election victory, Chinese officials said on Thursday. With Mr Xi set to travel to Peru this month for the annual Asia-Pacific Economic Co-operation summit, Li Baodong, vice-foreign minister, said China’s plan could fill the void. Chinese officials have previously sought to promote the proposal at Apec, only to encounter resistance from US officials who wanted to prioritise TPP negotiations.

 

“Protectionism is rearing its head and the Asia-Pacific region faces insufficient growth momentum,” Mr Li said at a briefing on China’s plans for Apec, which starts next weekend. “China believes we should set a new plan to respond to the expectations of industry and sustain momentum for the early establishment of a free trade area.”

US officials have warned for months that the failure of the TPP would open the door to China to promote its own trade agreements, and that's exactly what happened today when at the meeting of Asia-Pacific Economic Cooperation (APEC) member states in Lima, Peru, Chinese President Xi Jinping officially called for the launch of the Free Trade Area of Asia-Pacific for "institutional guarantee of open economy."

From Xi’s point of view the free trade area will be an institutional guarantee for opening economies of the APEC countries, the Xinhua news agency reported. The president said that the Asia Pacific region should play a leading role and seek new paths for global growth. He also said that China was going to expand foreign investment access to its market and to offer more capital, products and business opportunities for other nations.

Xi noted that China was going to absorb $600 billion investments and to invest $750 billion in next five years. He expects Chinese import volume to reach $8 trillion in five years.

The Chinese leader pointed out that Chinese economy was steadily growing contributing more than 25 percent to the world economic growth in recent years despite difficulties and challenges it faced.

China's president said the  Asia-Pacific region must play leading role and find new path for global growth:

Peru has been hosting APEC's all-year-round meetings that culminating with the economic leaders' summit in Lima on November 19-20. The APEC leaders are expected to work out a strategic vision and guidelines for economic cooperation in the Asia-Pacific region for 2017, which will be laid down in the Lima declaration.

While the US will not be among the signatories, we are curious which pro-US, Asia-Pac countries will, and by doing so telegraph a shift in their "allegiance" from a US-centered trade  world, to one in which China is the dominant sovereign.

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Asia
China
United States
Asia-Pacific Economic Cooperation
Asia-Pacific