China would increase the size of its economy by about 2 percent by joining a Pacific trade pact in the view of the central bank’s chief research economist, according to presentation slides seen by Bloomberg News.
The country should join negotiations on the Trans-Pacific Partnership as soon as possible to reap the benefits, Ma Jun of the People’s Bank of China said in an internal presentation in mid-June. South Korea and Vietnam would also add more than 2 percent to their gross domestic product as part of the TPP, the presentation showed.
While joining the talks may help China counter an economic slowdown without resorting to large-scale stimulus, the 12 nations currently negotiating the TPP are expected to wrap up an initial agreement before new members are admitted. The U.S. and Japan said in April that there’s “still much work to be done” on outstanding issues.
The pact would link an area with about $28 trillion in annual economic output, or 39 percent of the world total, and would be the biggest trade deal in U.S. history. In addition to the U.S. and Japan, nations seeking the deal are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Ma, who came to the PBOC earlier this year from Deutsche Bank AG, sees the benefits from joining the TPP talks to China’s GDP accruing over several years to eventually reach 2 percent, the presentation showed. It didn’t give forecasts for China’s actual pace of growth.
Ma declined to comment on the content of the presentation when asked about it after speaking at a forum in Beijing today. He said he would comment at a later time after the planned publication of a magazine article based on his presentation. The PBOC didn’t respond to a faxed request for comment today.
China’s Commerce Minister Gao Hucheng said in March that the nation is paying close attention to the TPP talks and hopes that others can be open and inclusive on the accord.
Ma’s projection is based on the assumption of having 16 countries in the TPP including the additions of China, South Korea, Thailand and Indonesia, according to the presentation.
China, the world’s second-largest economy, is projected to grow 7.3 percent this year, based on the median estimate of analysts in a Bloomberg News survey last month. That would be the slowest pace since 1990, as expansion in fixed-asset investment slows and the property market slumps.
The TPP goes beyond usual deals that focus on tariffs and traditional goods such as agriculture. It would establish rules for digital commerce and include environmental standards and protection for companies that compete against government-backed businesses.
If China joins the TPP, Ma sees industries including textiles, apparel and electronic equipment benefiting the most, while those including petrochemicals, mining and autos would be hurt the most, the presentation showed.
The “best window” to finish the trade pact will be in the first half of 2015, given that the U.S. is unlikely to approve it this year, Australian Trade Minister Andrew Robb told reporters today in Beijing. U.S. Trade Representative Michael Froman said in November, after South Korea expressed interest in joining the TPP, that the “possible entry of any new country would be expected to occur after the negotiations among the current members are concluded.”