Stock Groups

Left out of the Indo-Pacific deal, China pushes toward RCEP trade deal

[ad_1]

The launch of the Indo-Pacific Economic Framework for Prosperity, (IPEF), was attended by Joe Biden, Japan’s Prime Minster Fumio Kishhida, and India’s Prime minister Narendra Modi. It took place at Izumi Gallery, Tokyo, Japan on May 23, 2022. 

Reuters| Reuters

The celebration of U.S. president Joe Biden’s inauguration was amidst the chaos new Indo-Pacific strategy, China flew under the radar and hosted a high-level discussion on RCEP, the world’s largest trade pact.

The announcement was made days later. Biden administration launched the Indo-Pacific Economic Framework, or IPEF — a partnership which involves 13 countries, excluding China, as the U.S. seeks to expand its political and economic leadership in the Indo-Pacific region.

It Regional Comprehensive Economic Partnership (RCEP)Analysts expect that China, rather than reacting or countering IPEF’s actions at the island of Hainan, will continue to work with its agreed-upon trade agreements and take advantage of ready-to-go rates and market accesses. 

Li Xirui (a trade scholar at Singapore’s S. Rajaratnam School of International Studies) stated that China will not immediately or specifically respond to the IPEF. 

At the second RCEP Media & Think Tank Forum, held in the Hainan capital of Haikou the weekend after IPEF was announced, non-government trade experts across the region gathered to discuss more ways to expand trade within the bloc.

China may continue to encourage the adoption RCEP because it gives member states enormous market access which IPEF doesn’t have.

Li Xirui

NTU S. Rajaratnam School of International Studies

RCEP covers China, the ASEAN 10-member bloc and Australia. It also includes Japan, South Korea, South Korea, and New Zealand.

The Hainan government led the gathering, which also represented another province effort to address Beijing’s larger strategy for implementing. RCEP since its launch at the start of this year

CNBC’s Li said that China will continue to promote the adoption of RCEP because it supports multilateralism, globalization and gives member states enormous market access. IPEF is not granted this..

She stated that China will likely reply to any U.S. request on any of these issues. By expanding its economic power in Asia-Pacific and increasing trade under the RCEP, it will be able to make future economic forays.

Beijing would also focus on its applications to join other large-scale trade deals including the second-largest global trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), Li added.

China will adopt a strategy in line with how it, and other states and political observers, views the IPEF — a non-trade deal and Biden’s geopolitical rather than economic tilt back into Asia Pacific, Li added.

Following the launch of IPEF in May, former Malaysian Prime Minister Mahathir Mohamad criticized the Indo-Pacific dealIt was claimed by President Trump to be a move political to isolate China.

Malaysia joined the IPEF as one of thirteen countries. China was not included.

China could highlight the fact that RCEP is China’s only regional mega trade agreement.

Heng Wang

Herbert Smith Freehills CIBEL-Centre

Heng Wang is a trade specialist and works at Herbert Smith Freehills China International Business and Economic Law Centre (CIBEL), University of New South Wales. He also believes that China will use the market accesses under RCEP because they will enable it to expand its reach in the region. 

Wang explained that RCEP is China’s only major regional trade agreement. China would be likely to highlight it.

Henry Gao associate professor at Singapore Management University said that the U.S. still poses a threat to trade deals.

“In case anyone doubts the U.S. vision of the IPEF as the RCEP-killer, the White House stated explicitly in the [IPEF]Gao declared that together, they represent 40% of the world’s GDP. 

“Why [use]”This statement comes at a time when IPEF shouldn’t be about market accessibility?”

Gao pointed to the symmetry in comments made by RCEP member countries, particularly China, which have promoted the fact that the RCEP is responsible for 30% of the world’s GDP.”

China’s ambitious plans for RCEP

Li claims that China is making progress with the implementation of the RCEP, even though it was launched in January.

This document provided a guideline for Chinese companies on expanding trade and finding opportunities via RCEP.

Beijing laid out guidelines in six areas including trade and manufacturing, and promoted the use of the Chinese yuan for trading settlement of trading transactions. Businesses were also encouraged to use the heavily promoted Hainan free-trade port, which is implementing an independent customs scheme. 

Li pointed out, after closely following China’s RCEP execution, that at most 10 provinces, such as Fujian or Zhejiang have laid out detailed plans to utilize the RCEP. 

CNBC Pro provides more details about China

Yunnan for instance wants to expand exports agricultural products. Guangxi, on the other hand, is interested in upgrading jointly operated industrial parts of Malaysia. 

Guangxi’s and Fujian’s governments are also keen to expand industrial infrastructure in Vietnam, Malaysia, and Indonesia.   

Li explained that many provinces pledged to offer a variety of RCEP-related services for the protection and resolution of trade disputes. 

As for signing more trade deals to potentially counter the IPEF, China will not likely ink other bilateral or trilateral pacts in the region such as concluding the outstanding China-Japan-Korea free trade pact, Li said, citing China’s preference for “gradualism” or a slow-reform approach to trade deals.

[ad_2]