Beijing launches the Asia-Pacific as the world’s largest free trade area
China has within days of signing the Regional Comprehensive Economic Partnership Agreement (RCEP), set plans to engage in trade visits to Seoul and Tokyo, and has revisited the possibility of China’s entry into the Trans-Pacific Partnership. This partnership which was once promoted by Obama and then subsequently derided and blocked by Trump. In addition, China’s ventures into Africa brings with it proposals for a new Free Trade Zone in Africa.
These plans show however over the past 20 years, how Beijing's role in global trade has changed completely; in 2001 China joined the World Trade Organization and today it is the economy with the largest export volume (2.5 trillion dollars in 2019) and is the leader in trade for total transactions (4.57 thousand dollars in 2019).
It is from this position as a global leader that China opposes the American Trade War policy, countering it’s effects through the establishment of the largest free trade area in the Asia-Pacific, with 15 acceding countries and 30% of the world's GDP, and opening up discussion of possible membership of TPP.
The RCEP Regional Partnership is the first multilateral agreement which includes China, along with the 10 ASEAN member countries (the Association of South East Asian Countries), the Economies of North-East Asia (Japan and South Korea) and Pacific leaders (Australia and New Zealand).
Free trade agreements have for years been an important part of Beijing's strategy, which already had Free Trade Agreements (FTA) signed or in negotiation with all the countries of the agreement: in 2008 with Wellington, 2010 with ASEAN, in 2015 with Canberra and Seoul and since 2002 it has been negotiating a China-Korea-Japan agreement.
The Trans-Pacific Partnership, which would add the economies of Chile, Peru, Canada, and Mexico, would supplement the free trade agreements China already has with Chile, Costa Rica and Peru and an under-consideration FTAs with Canada and with Panama.
In Africa, China is promoting the creation of a continental Free Trade Zone among African union members. Foreign Minister Wang Yi confirmed Beijing's commitment to funding the project in November 2020, and there has long been talk of using Chinese currency, the Renminbi, on the continent.
In Europe, China has FTAs in place with Switzerland and Iceland and is negotiating new agreements with Norway and Moldova, as well conducting talks on the EU-China Comprehensive Agreement on Investment.
It is in the Asia-Pacific however that China’s future strategies are concentrated: this mega region is the largest in territory, number of countries (60) and with 4.53 billion people, it represents 60% of the world's population. In addition to the 14 countries that join China through RCEP and India which is a member candidate, Beijing already has Free Trade Agreements signed with Georgia, Maldives and Pakistan, is conducting negotiations with the Gulf states, Sri Lanka, Israel, Palestine and Cambodia and has FTAs under evaluation with Fiji, Nepal, Papua New Guinea, Bangladesh and Mongolia.
Prior to the COVID-19 pandemic (IMF 2019 data) China was growing at 6.1%, the Asia-Pacific at 4.5% and the world at 2.9%, and once the global health emergency concludes it is expected to be the Far East again at the center of the worlds economic development.
Each member country of the Regional Comprehensive Economic Partnership Agreement benefits from the project. Australia, South Korea, Japan and Malaysia are economies with a positive trade balance with China, and ASEAN's 10 members are growing through geo-economic influence, which may extend to the two observer countries: East Timor and Papua New Guinea, as candidates to join the South East Asia Association.
Through the policy of dual circulation Beijing is promoting both its domestic market and foreign development; and through free trade agreements, China is countering any tariff war. This new Mega Free Trade Zone of the East shall accelerate China on its path to global leader.