Trade
China’s bid to join Pacific trade pact a strategic opportunity for Canberra
Author: Shiro Armstrong, ANU
China has applied to join the 11 member Asia Pacific trade pact that includes Australia, Canada, Japan and Singapore, all of whom have a veto on new membership.
Australia and other members can help lock China into new rules and reforms that entrench the market and constrain behaviour. China’s trade coercion against Australia should be resolved as part of the accession process, not used to stymie the strategic opportunity.
The United States led the negotiations of the Trans-Pacific Partnership (TPP) agreement before President Trump nixed the deal on day one of his presidency. The deal created new rules for international commerce where they were lacking in the WTO and opened new markets for its members. Strategically, it was meant to entrench the United States in Asia and counter China’s economic influence. Now Beijing has made formal its interest in joining while the Biden administration is hamstrung by domestic opposition.
Australia together with Japan, the largest economy in the pact, revived the TPP deal as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018 that keeps the door open for the United States. The United Kingdom is another potential new entrant to the CPTPP.
Beijing likely has two objectives from membership. Strategically, it can opportunistically wedge some of the membership, especially US allies, and take advantage of US absence. Economically China can use the CPTPP as external pressure to push reforms. To some that may sound like an anathema to China under President Xi Jinping where the market appears in retreat and the state in ascendency. The reality is that Chinese prosperity and dynamism already comes from the private sector which accounts for 60 per cent of GDP, 70 per cent of innovation, 80 per cent of urban employment and 90 per cent of exports.
Chinese membership of CPTPP would mean disciplines on state-owned enterprises, the introduction of new labour rights, higher environmental standards, free flow of data and opening up government procurement to foreign competition. Those are high hurdles for membership but are consistent with China’s Common Prosperity economic reform agenda.
Developing country members of CPTPP like Vietnam and Malaysia managed to negotiate exemptions from some commitments but China would not expect any such carve outs. Australia helped water down egregious intellectual property rights protections from the United States that China should be able to sign onto now as a major innovator in its own right.
The industrial subsidies that Chinese state-owned enterprises enjoy distort markets and competition in China. China’s weight in the global economy means those distortions spill over into international markets. State-owned enterprises are a recognised drag on growth and represent powerful vested interests. The Chinese government is aware that CPTPP membership would require significant reform — the state-owned enterprise chapter of the TPP was written precisely with China in mind.
Reformers in China have used external leverage to push reform in the past. This December marks 20 years since China joined the WTO. That was a watershed moment in Chinese opening up and reform, and for the global trading system. It took 15 years for China to join the WTO as it delivered on market opening and negotiated commitments to rules beyond other members as the price for entry. Its rise to becoming the world’s largest trading nation and second largest economy is significantly a consequence of implementing those commitments. Its record of compliance is as good as any other large economy even as it learnt to navigate the system. Many of the problems with China in the WTO stem from the rules being out of date, not mainly compliance issues.
A more powerful and assertive China still needs to align external leverage for its domestic reforms. Its membership of East Asia’s Regional Comprehensive Economic Partnership agreement with Australia, Japan, New Zealand, South Korea and all of Southeast Asia locked China into new rules and discipline. But some higher standard rules in the CPTPP are needed to push deeper reforms in China.
Chinese interest in the CPTPP may help entice the United States back into the pact. The Biden administration has responded with a willingness to consider the ‘opportunity’ to negotiate entry into the CPTPP but will require changes. The existing membership expended significant political capital in making concessions to the United States and changes to the deal will not come easily or…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
- Ukraine war: 10% of Chinese people are willing to boycott Russian goods over invasion – new study
- Australia Can Enhance China’s Credibility in the CPTPP
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
- How a scandal over sanitary pads is shaping feminist activism in China
