Faced with the prospect that Donald Trump will pull his country out of the Trans-Pacific Partnership, proponents of this landmark trade deal warn that America’s withdrawal will leave a leadership void in the Asia-Pacific region and China will step in to fill it.
One of these proponents is John Key, New Zealand’s Prime Minister.
At the Asia Pacific Economic Cooperation (APEC) summit in Peru last month, New Zealand’s popular leader, who unexpectedly announced his resignation on Dec. 5, after eight years in the job, said: “The TPP was all about the United States showing leadership in the Asia-Pacific region. We like the US being in the region. But if the US is not there that void needs to be filled, and it will be filled by China.”
Though it is brief, Mr. Key’s remark underlines three important points that are generally agreed by international analysts and notably the TPP’s advocates. They also clearly illustrate that until now the US remains in the best position to lead the Asia Pacific region and China can only assume such a mantle if the former cedes it.
A hitherto preference for American leadership
First, the TPP is not merely about increasing trade between its 12 members. It is also about America’s leading role in writing the rules of trade and a wide range of other related issues, e.g. environmental and labor protection, in the Asia Pacific region.
President Barack Obama, its chief champion, has explicitly maintained that the signed agreement would help America, not China, its main geopolitical rival, to lead the way in shaping such rules. In fact, it is believed that the landmark deal, a centerpiece of the outgoing president’s signature ‘Asia pivot’ strategy, would enable the US to cement its economic, diplomatic and security presence and, thereby, promote a rules-based international order in this very dynamic and challenging region.
Second, the TPP’s signatory nations want the US continue to be in the region and carry the mantle of leadership. This is manifested in many ways. One of these is their concerted efforts to revive the deal after Donald Trump’s election victory on Nov. 8.
On Nov. 17, Japanese Prime Minister Shinzo Abe met the President-elect – the first foreign leader to do so – and tried to persuade him to support the TPP.
Despite knowing that Mr. Trump, who called the trans-regional pact a “horrible trade deal” on the campaign trail, would likely abolish it, at the APEC summit in Lima from Nov. 19-20, leaders from the TPP nations still pledged their commitment to it.
“We are committed to see the TPP go on but if the United States decides not to be part of the pact, only then will the 11 countries look at an alternative to the TTP,” Malaysia’s Prime Minister Najib Razak was quoted as saying after a meeting of the 12 TPP members held on the sidelines of the summit.
Mr. Razak’s comment highlighted his government’s staunch support for the US-led trade agreement and this is noteworthy because he has been seen as gravitating toward Beijing recently. Early last month, he made a six-day visit to China during he signed mega deals, including a significant defense agreement, with its giant neighbor.
During the Lima summit, Mr John Key, one of the TPP’s most vocal backers, even suggested that it could be renamed the “Trump Pacific Partnership.” Though he joked, the New Zealand Prime Minister’s suggestion of such “cosmetic changes” to please Mr Trump, prompting him to embrace the deal demonstrated that he and other TPP leaders would be happy to do what is possible to revive it.
Even after Mr Trump’s announcement on Nov. 21 that he would cancel the deal on his first day in the White House, Singapore, another ardent TPP supporter, remains committed to it, vowing to work with other signatories to “find a way forward.”
In a recent visit to Indonesia, Australian Trade Minister Steven Ciobo rejected the assertion that the TPP had collapsed and said his country was continuing to move forward with its “domestic processes” on the deal. He was quoted as saying on Dec. 7 that: “New Zealand is moving forward, Japan is moving forward, so there is still a lot of goodwill among signatories of the TPP so we will just have to see what happens in the fullness of time with respect to that.”
Vietnam has somehow cooled on the sweeping trade deal in the aftermath of Mr Trump’s election. However, this does not mean that it has completely given up on it and no longer wants it to be approved and implemented.
While these countries enthusiastically signed this US-led deal and desperately sought to keep it alive, they did not have such enthusiasm toward the Regional Comprehensive Economic Partnership (RCEP) and the Free Trade Area of the Asia-Pacific (FTAAP) – two China-backed initiatives and seen as rivals to the TPP.
Talks on the RCEP – an endeavor originally initiated by ASEAN and consisting of its 10 member states, plus China, Japan, South Korea, Australia, New Zealand and India – and the FTAPP – a broader proposal involving all 21 APEC members, including China and the US – did not greatly advance during the past few years.
In a piece on Nov. 21, the Global Times, China’s nationalist state-owned newspaper, acknowledged that “China still cannot match the US in terms of comprehensive strength. It has no ability to lead the world in an overall way, plus, neither the world nor China is psychologically ready for it. It’s beyond imagination to think that China could replace the US to lead the world.”
It can be said that up till now, not only the world but also the Asia Pacific region, remains reluctant to accept China as its (economic, especially political and security) leader and still wants America to assume that leadership role. There are a number of reasons for this.
The TPP, the most advanced and ambitious regional trade deal ever signed, would open up economies and set high standards for many other key issues. In contrast, the RCEP and the FTAPP are merely traditional trade agreements, which are mainly aimed at reducing or removing tariffs on goods and services. In the region, there are already many such agreements.
On Nov. 23, German Chancellor Angela Merkel said she was “not happy” about the possible demise of the TPP. For her, while “there will be other trade agreements, … they won’t have the standards” that the TPP and the planned Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the European Union have.
For many regional countries, trading with the US is much more beneficial than with China. Last year, ASEAN as a whole had a US$77 billion deficit with China, with Vietnam facing the biggest deficit with the latter. In 2015, the country ran up a US$32.3 billion deficit with its northern neighbor while it enjoyed a US$25.5 billion surplus with the US.
Concerns over China’s willingness to genuinely open up its economy to other countries’ products and companies and the communist country’s lack of transparency, of rule of law were – and remain – a major obstacle in the RCEP negotiations.
Japan, Singapore, Vietnam, Malaysia, Australia and New Zealand participated in the TPP and sought to save it also because they have apprehensions over Beijing’s regional ambitions and actions, notably its increasing assertiveness in the South and East China Seas.
These are some of the main reasons why the US is hitherto preferred to China to lead the Asia Pacific region.
A better chance for China to lead
China can only replace the US as the regional leader if America withdraws from the TPP and the region, leaving a leadership void for the former to fill. This is the third point implied by John Key’s above remark. It also mean if the Asian juggernaut becomes the leader in the region in the years or decades to come, it will first do so by accident or default, rather than by design or choice.
In fact, the view that if America’s Trump gives up its leadership in the region, China will take the role is also by many Chinese officials and analysts.
That Chinese leaders have only intensified their efforts to conclude the RCEP and to promote the FTAAP and that regional countries have only paid a greater attention to these two trade initiatives in the aftermath of Donald Trump’s victory are an evidence to this.
There is no doubt that Trump’s pledge to abandon the TPP and his isolationist and protectionist policies provide the world’s second biggest economy with an excellent opportunity to project itself as a responsible stakeholder and a better chance to overtake the US to lead the Asia Pacific region in the post-TPP era.
Having such an opportunity is one thing, whether and how China will take advantage of that opportunity to assume the mantle of leadership is another matter.
In order to transform itself into the regional leader on its own merit, it seems that the communist country still has a lot of to do, both domestically and internationally.
Despite its remarkable economic achievements, China’s GDP per capita (US$ 14,000) still lags far behind that of the US (US$ 56,000) and regional countries, e.g. Singapore (US$ 85,000), Japan (US$ 37,000) and South Korea (US$ 36,000).
In a piece published by the Global Times on Dec. 4, Stephen S. Roach, from Yale University points out that, China “is still relatively poor as measured in per capita income terms and is facing the daunting ‘middle-income trap’.”
To avoid such a trap and to deal with many other pressing challenges it is facing, China needs to carry out major economic, political and social reforms.
Besides the RCEP and the FTAAP, China has proactively initiated other big projects, notably “One Belt, One Road”, a multi-billion-dollar plan designed to finance infrastructure projects throughout Asia, and the Asia Infrastructure Investment Bank (AIIB), a multilateral development bank. These grand plans have been aimed at boosting its regional and global role.
If all of these succeed, they will significantly enhance China’s leadership credentials.
Nevertheless, its success in these initiatives will not guarantee that China will become the leader of the region or the world. As Stephen S. Roach argues, even if the RCEP is successfully negotiated and ratified, this “does very little to alter the balance of global power” in China’s favor.
A key reason why many countries in the region and in the world have been reluctant to embrace China as a – or the – leader is their concerns over Beijing’s regional and international behavior in a number of issues, notably security matters.
To gain their acceptance, it needs to act as a responsible stakeholder that respects international norms and as a benign superpower that pays attention to the concerns and legitimate rights of other countries, especially its smaller neighbors.
For instance, as long as they are wary of China’s intention and action in the South and East China Seas, while they may be part of Beijing-backed economic initiatives, regional countries will seek security and military support from the US and the region’s other major powers.
Though it is essential, hard power, i.e. military and economic weight, alone is not enough to be a regional or world leader. China will not become the leader of the Asia Pacific region – let alone the world – if it fails to gain trust, respect and acceptance from India and Japan, its hitherto regional rivals, and its smaller neighbors, e.g. Singapore and Vietnam.