Mr Rowan Callick is making some sense today:
Mei Xinyu, senior researcher at China’s Commerce Ministry, said Mr Trump’s planned withdrawal from the TPP meant China’s proposals for free-trade arrangements would gain more traction and provide better possibilities.
“China is hoping Australia will be actively involved” in new regional trade arrangements, especially in providing technical and financial investment, Dr Mei said.
Professor Zhou said promoting “freer” trade comprised China’s core international trade policy.
“If the US does withdraw from the TPP, it means that America’s own policies will become more introverted and isolated, so this will naturally give more say to China in developing the mechanisms of international trade,” he said.
“Becoming a leader in international trade may not be an entirely positive move for China, since the country also has to pay a higher cost to become the leader.”
Professor Yan said Mr Trump seemed intent on destroying regional co-operation, which meant the RECP as well as the TPP was doomed.
To wit:
Chinese officials have warned of retaliation against the US if Washington levies tariffs on the world’s second-largest economy as President-elect Donald Trump has threatened, US Commerce Secretary Penny Pritzker has revealed.
“The Chinese have said they’ll have to retaliate,” Ms Pritzker said in an interview on the sidelines of high-level US-China trade talks in Washington.
That could harm US workers and industries and hurt the US economy, she said.
Mr Trump has said one of his top priorities when he takes office will be to label China a currency manipulator. He has repeatedly threatened to slap Chinese imports with hefty tariffs. Ms Pritzker also criticised Mr Trump’s promise to withdraw the US from the trans-Pacific Partnership trade deal the Obama administration struck with nearly a dozen other nations.
The major cost from leading on trade does not necessarily spring from trade agreements themselves. It is more that it usually also comes with some status as a reserve currency. In that event, everybody begins to chase your currency with pegs and it rises as they export their goods to you then recycle the profits into your capital markets. Martin Wolf has more:
…there are limits to how far China might replace the US, let alone the west, in world trade. If we look at shares of global gross domestic product at market prices, a crude measure of actual purchasing power, China’s share jumped from 4 per cent in 2000 to 15 per cent in 2016. The share of Asia (including Japan) is 31 per cent. Meanwhile, the US and the EU together account for 47 per cent of global GDP. Similarly, despite growing rapidly, China’s share in global imports was only 12 per cent in 2015, while that of Asia was 36 per cent. The US and EU (excluding intra-EU trade) still accounted for 31 per cent of world imports.
Moreover, this understates the role of high-income economies in world trade, in two significant respects. First, much of the world’s final demand still comes from these economies: at market prices, Chinese consumption was roughly a third of that of the US and EU combined in 2015.
Second and far more important, the knowledge driving much of contemporary trade comes from companies of high-income economies. Chinese companies have still no comparable depth of know-how to offer.
That is quite clearly a burden that China is still unable to shoulder given how dodgy its debt markets remain, how wildcat its wider markets remain, how prone to intervention, how replete with trade interests and how immature are its institutions.
In short, for China to lead on trade liberalisation, it would have let everyone else do a China to China. Yet capital is desperately trying to get out of the Middle Kingdom not get in, even as its trade surplus is as fulsome as ever while operating the most oversupplied and protected global dumping industries on earth:
The idea of China leading on free trade really is a bit of a laugh!
