Excluded from Indo-Pacific deal, China pushes for RCEP
US President Joe Biden, Indian Prime Minister Narendra Modi, and Japanese Prime Minister Fumio Kishida attend the launch ceremony of the Indo-Pacific Economic Framework for Prosperity (IPEF) at the Izumi Garden Fair in Tokyo, Japan, May 23, 2022.
Jonathan Ernst | Reuters
Amid the uproar of US President Joe Biden’s new Indo-Pacific strategy, China has flown under the radar and hosted a high-level discussion on the RCEP, the world’s largest trade pact.
It came days after the Biden administration launched the Indo-Pacific Economic Framework, or IPEF — a partnership of 13 countries, excluding China, as the United States seeks to expand its political and economic leadership in the Indo-Pacific region.
The RCEP meeting on the southern island of Hainan confirmed analysts’ expectations that rather than respond to or confront the IPEF, China is likely to go ahead with agreed trade agreements and benefit from ready and market-ready tariffs. Access.
“China will not take immediate or very targeted actions to respond to the IPEF,” said Li Zerui, a trade researcher at the S Rajaratnam School of International Studies at Nanyang Technological University in Singapore.
At the RCEP Media & Think Tank Forum, held in Haikou, capital of Hainan, the weekend after the IPEF was announced, non-governmental trade experts across the region gathered to discuss more ways to expand trade within the bloc.
The RCEP includes China and the ASEAN bloc of ten, along with Australia, Japan, South Korea and New Zealand.
The meeting, led by the Hainan government, also represents another regional effort to fulfill Beijing’s broader strategy to implement the RCEP since its launch at the beginning of this year.
“In line with its support for multilateralism and globalization, China will likely continue to promote RCEP adoption as this gives member countries massive market access, which the IPEF lacks,” Li told CNBC..
She said China would likely respond to the United States over any of the Its future economic forays into the Asia Pacific region by expanding its economic dominance in the region and growing its trade under RCEP.
Li added that Beijing will also focus on its requests to join other large-scale trade deals including the world’s second largest trade agreement, the Comprehensive and Advanced Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA).
It will be China’s strategy ILee added that it is in line with the way he, other countries and political observers view the IPEF – a non-commercial deal and Biden’s geopolitical inclination rather than a return to the Asia-Pacific region.
In late May, after the launch of the IPEF, former Malaysian Prime Minister Mahathir Mohamad criticized the Indo-Pacific Agreement, saying it was a political move by the United States to isolate China.
Malaysia is one of the 13 countries that joined the IPEF which did not include China.
Trade specialist Heng Wang, who is at the Herbert Smith Freehills China International Center for Trade and Economic Law (CIBEL) at the University of New South Wales, argued that China would continue to use the market access it had under the RCEP as it would allow it. To deepen its presence in the region.
“The RCEP is the only major regional trade agreement to which China is a party, and China is likely to highlight it,” Wang said.
Henry Zhao, associate professor of law at Singapore Management University, said the threat of a competing trade deal by the United States remains a reality.
“In case anyone doubts the US view of the IPEF as the killer of the RCEP, the White House has explicitly stated in [IPEF] The declaration, that: “Together, we represent 40% of global GDP,” Gao said.
“Why [use] This statement when the IPEF is not supposed to be about market access? “
Zhao noted the consistency of comments made by RCEP members, especially China, who were declaring the fact that the RCEP represented 30% of global GDP.”
China’s Greater Plans for RCEP
Meanwhile, China has already made progress in implementing the RCEP since its launch in January, Li said.
He has laid out a blueprint for Chinese companies on how to expand trade and create opportunities through RCEP.
Beijing has set guidelines in six areas including trade and manufacturing, and has promoted the use of the Chinese yuan for the commercial settlement of trade deals. The authorities also required companies to continue using the well-publicized Hainan Free Trade Port that was implementing an independent customs system.
Li, who has been monitoring the implementation of RCEP in China, noted that at least 10 provinces including Fujian and Zhejiang have made extensive plans to use RCEP.
Yunnan, for example, wants to increase exports of agricultural products, while Guangxi is looking to upgrade industrial parts that are jointly operated in Malaysia.
The governments of Guangxi and Fujian also want to build more industrial facilities in Vietnam, Malaysia and Indonesia.
Li said many provinces have pledged to provide a range of RCEP-related support services in intellectual property rights protection and commercial dispute settlement mechanisms.
Regarding signing more trade deals to counter the IPEF, Li said, referring to China’s preference for a “gradualist” or slow-track reform approach to trade deals.