China's CPTPP ambitions reshape global trade landscape

[WORLD] The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has recently made headlines with the United Kingdom's accession, marking a significant expansion of this influential free trade pact. As the dust settles on this historic development, attention now turns to an even more consequential question: Will China be the next to join the CPTPP?

China's potential membership in the CPTPP could reshape the landscape of international trade and geopolitics. This article explores the implications, challenges, and potential outcomes of China's bid to join this high-standard trade agreement.

The CPTPP: A Brief Overview

The CPTPP is a free trade agreement involving 11 economies in the Asia-Pacific region, including Australia, Canada, Japan, and Singapore. It's designed to promote economic integration and reduce trade barriers among member countries. The agreement covers a wide range of areas, from tariff reductions to labor standards and environmental protections.

China's Application and Its Significance

In September 2021, China formally applied to join the CPTPP, just days after the announcement of the AUKUS security partnership. This move has sparked intense debate and speculation about its motivations and potential impacts.

Economic Implications

China's inclusion in the CPTPP could lead to substantial economic benefits:

Boosting Global Income: Studies suggest that China's accession could quadruple the CPTPP's impact on global income, increasing it from $147 billion to $632 billion annually.

Trade Creation: As the world's second-largest economy and importer, China's membership could significantly boost exports from CPTPP countries.

Market Access: For CPTPP members, greater access to China's vast market could present lucrative opportunities for exporters and service providers.

Geopolitical Considerations

China's bid for CPTPP membership carries significant geopolitical weight:

Strategic Positioning: Joining the CPTPP could enhance China's influence in shaping regional trade rules and standards.

US-China Dynamics: With the US withdrawal from the original Trans-Pacific Partnership, China's potential entry could alter the balance of economic power in the Asia-Pacific region.

Regional Integration: China's membership could further deepen economic integration in the Asia-Pacific, potentially reducing tensions with some regional partners.

Challenges and Hurdles

Despite the potential benefits, China faces several obstacles in its path to CPTPP membership:

1. Regulatory Alignment

The CPTPP sets high standards for trade liberalization, intellectual property protection, and state-owned enterprise reforms. China would need to align its domestic policies with these requirements, which may necessitate significant changes.

2. Political Opposition

Some CPTPP members, including Japan and Australia, have expressed reservations about China's bid. The UK, the newest member, might also oppose China's entry.

3. Taiwan Factor

Taiwan's separate application to join the CPTPP complicates matters, as China strongly opposes Taiwan's inclusion in international agreements.

4. Concerns Over Compliance

There are doubts about China's willingness and ability to fully implement CPTPP commitments, given past experiences with its WTO membership.

Potential Benefits for CPTPP and China

If China successfully joins the CPTPP, both parties stand to gain:

For CPTPP:

Economic Growth: The addition of China would significantly expand the CPTPP's economic footprint and boost intra-bloc trade.

Enhanced Relevance: China's membership would cement the CPTPP's status as a major player in global trade governance.

For China:

Market Access: Improved access to CPTPP markets could boost Chinese exports and investment opportunities.

Domestic Reform: CPTPP membership could serve as a catalyst for further economic reforms in China.

Geopolitical Influence: Joining would enhance China's role in shaping regional economic rules and standards.

The Path Forward

China's journey to CPTPP membership is likely to be long and complex. Key factors that will influence the process include:

Negotiations: China will need to engage in extensive talks with current CPTPP members to address concerns and negotiate terms.

Domestic Reforms: Demonstrating commitment to economic liberalization and regulatory alignment will be crucial for China's bid.

Geopolitical Developments: Evolving relationships between China and CPTPP members, as well as broader geopolitical shifts, will play a significant role.

Expert Opinions and Perspectives

Experts and policymakers have varying views on China's CPTPP bid:

"China's commitment alone would not be enough. Although Chinese leaders declare their willingness to meet CPTPP conditions, many countries remain sceptical, citing China's behaviour as a WTO member," notes a RUSI commentary.

On the other hand, some see potential benefits: "The CPTPP plus China stands to deliver mutual benefits for its members; expansion to non-CPTPP ASEAN countries further augments the potential economic returns," according to a Fulcrum.sg analysis.

China's bid to join the CPTPP represents a pivotal moment in global trade dynamics. While the potential economic benefits are significant, the path to membership is fraught with political and regulatory challenges. As negotiations unfold, the world will be watching closely to see how this bid reshapes the landscape of international trade and geopolitics in the Asia-Pacific region and beyond.

The coming years will likely see intense negotiations and diplomatic maneuvering as China seeks to navigate the complex requirements of CPTPP membership. Whether successful or not, China's application has already sparked important discussions about the future of global trade agreements and the evolving economic order in the Asia-Pacific region.

As the situation develops, businesses, policymakers, and analysts worldwide will need to closely monitor the progress of China's CPTPP bid and its implications for global trade patterns, supply chains, and economic relationships.