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In addition to political hurdles, China may have difficulties meeting certain CPTPP provisions on data flows, labor and environmental protection, as well as state-owned enterprises. But according to Senior Research Fellow Stephen Olson, it won't be that difficult for China to meet the pact's requirement. "The agreement has ample exceptions and wide loopholes that would help China comply with the more challenging provisions," says Olson. Regardless of its success, analysts said China’s bid highlighted the country’s expanding economic clout in Asia-Pacific, while the US has largely focused on security issues in the region.
Despite previously speaking favourably about the CPTPP, US President Joe Biden has so far shown no interest in (re)joining due to strong domestic opposition. But with China's application and every chance that it will have a hand in writing the rules in the region, Washington's lack of interest seems inexplicable. As to whether Beijing can meet the terms of the agreement, Senior Research Fellow Stephen Olson remarked: "Exceptions and wide loopholes [in the agreement] would ease China’s compliance with the more challenging provisions...China has already demonstrated its immense skill in bending, evading and otherwise nullifying trade rules in other agreements."
Cheng Wei built a world-class ride-hailing app that not even Uber could keep up with in China. But Didi's risky play for expansion and dominance — culminating in a disastrous IPO this summer — has caused it to run afoul of Beijing. "No Chinese company can openly challenge the Chinese Communist Party and expect leniency," said Research Fellow Alex Capri. "Parts of [Didi] could be nationalized...Beijing will also actively fund smaller competitors to even out the market and more easily exert control over the main players."
China might have handed in its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but politics will bedevil and delay its bid to join the trade pact, trade experts said. Still, the conventional wisdom that China is not yet ready to accede to the terms of what is arguably the highest quality trade agreement ever negotiated is wrong. "China is entirely capable of managing the requirements of the CPTPP," noted Senior Research Fellow Stephen Olson. "Many of its final provisions, although groundbreaking, fell short of lofty initial ambitions."
China’s membership would have significant impact on trade in the Asia-Pacific region at a time of rising geopolitical tensions between Washington and Beijing. It also raises a few eyebrows as many believe that the country is not yet ready to accede to the agreement's terms. Senior Research Fellow Stephen Olson argues that this conventional wisdom may not be accurate: "20 provisions from the original TPP text were suspended after the withdrawal of the US. Ample exceptions and wide loopholes [in the CPTPP] would ease China’s compliance with the more challenging provisions."
Even if China were allowed to join by other members, the country may find some aspects of the agreement challenging, said Research Fellow Alex Capri. He singled out "e-commerce and data standards," though said China may be able to find loopholes. "Keep in mind that when the US pulled out, some 20 provisions dealing with data privacy, IP protection and other digital standards were essentially put on hold," Capri noted.
Until a string of recent high-level visits to Southeast Asia, observers noted that little had been done to match the US's emphasis on the strategic importance of the region. Our recent article by Senior Research Fellow Stephen Olson is quoted extensively in this Asia Times article: "US worker-centric trade policy...and desire to relocate supply chains closer to home presents more of a threat than an economic boon for Southeast Asia." In the shadow of America's “calamitous security pullback” from Afghanistan, "there is ample reason to question whether the US remains willing to provide the implicit or explicit security guarantees it has in the past".
China's crackdown on private enterprise has wiped out more than US$1.2 trillion in market value for many powerful Chinese companies and stoked fears about the future of innovation in the world's second largest economy. "Ultimately, Beijing's crackdown on private business is about control," said Hinrich Foundation Research Fellow Alex Capri. "The main priority is about preventing behavior amongst private companies that could engender more independent and potentially non-conformist activities, which undermines Beijing's state-centric model."
As the US continues to blacklist dozens of Chinese companies, Beijing is increasingly imposing its own sanctions on US organizations and individuals it accuses of meddling in China's internal affairs. US sanctions on Chinese companies are focused on strategic sectors, said Hinrich Foundation Research Fellow Alex Capri. This means any technology that could be considered to have a dual strategic use could be targeted. "The US is looking for any means by which it can put pressure on Beijing," Capri told DW, adding that US sanctions on Chinese companies are accelerating the process of economic decoupling, which also speeds up Beijing's push to become more self-sufficient.
The negotiating team for the European Union (EU) at the ongoing World Trade Organization (WTO) talks on harmful fishery subsidies is insisting that any deal allow for continued tax exemptions for fuel purchases. Quoting an earlier article authored by Hinrich Foundation Senior Research Fellow Stephen Olson, the ongoing failure to reach agreement on fisheries subsidies is a symptom of a broader malaise at a dysfunctional WTO riven between member-states with developed and developing economies. "The result is a gridlock", says Olson in his piece titled "20 years on, still no WTO deal to curb overfishing".
Geopolitics is a long-drawn game. While India stumbled in its responses to the pandemic, it does not mean it is the weakest link in the Quad. For one, firms looking to reduce their dependency on supply chains centered on China might look to relocate to India, where the government have already ramped up initiatives to attract foreign investors. Our report published in March that investigated India's tech manufacturing capabilities are quoted in this Straits Times commentary, as it looks at India's role in countering China's growing influence.
As the US mulls a digital trade agreement to counter China, it faces a key problem: Many countries in Asia don’t want to join any deal seen as challenging Beijing, whose tech giants are deeply entrenched in the region. Still, the US has multiple reasons to take action on data rules. One of which, as explained by Research Fellow Alex Capri, is the clash of values on issues like data privacy, transparency and surveillance. "This could lead to a general splintering of the digital landscape,” said Capri.