China Moves to Fill World Leadership Void as Trump Era Dawnsby and
Obama warns that failure of TPP would undermine U.S. role
APEC still considering TPP as China pushes alternative pact
China has pounced after Donald Trump’s election win to claim the mantle of the world’s champion for free trade and against climate change, prompting a melancholy warning from President Barack Obama that the U.S. risks getting left behind in Asia.
Obama met in Peru on Sunday with leaders of the 12-nation Trans-Pacific Partnership, a trade deal that Trump vowed to kill along with the Paris Agreement to tackle climate change. Obama said that TPP members told him they want to move forward with the pact, “preferably” with the U.S.
“I believe that TPP is a plus for America’s economy,” Obama told reporters while attending meetings of the Asia Pacific Economic Cooperation, the first major global summit since Trump’s win. “Not moving forward would undermine our position across the region.”
China has wasted no time in seeking to reassure nations wary of a more protectionist U.S., with President Xi Jinping telling APEC leaders that he aimed to boost global trade and provide a level playing field for foreign companies. Last week, China indirectly chided Trump for his views on global warming, which he has called a Chinese hoax to hurt American manufacturing.
At the meeting in Peru over the weekend, leaders of 21 Pacific Rim nations agreed to continue working toward a regional free trade area and resist any shift toward protectionism. The 21-member group said the benefits of trade, investment and open markets required better explanation.
Yet divisions remained on how to move forward. China made its case for the Regional Comprehensive Economic Partnership, a 16-nation trade pact that excludes America. Other countries wanted to preserve the TPP, with Peruvian President Pedro Pablo Kuczynski saying that leaders discussed using it as one possible pathway to the Free Trade Area of Asia Pacific, APEC’s ultimate goal.
“It seems like many Asian leaders want to make one last ditch effort to help TPP and try to get it back on the table, but given the political climate that will be very difficult,” Joseph Incalcaterra, Asia-Pacific economist for HSBC Holdings Plc, told Bloomberg Television.
U.S. allies in Asia who backed the TPP are hedging their bets. Japanese Prime Minister Shinzo Abe, who flew to New York last week to discuss free trade with Trump, told Xi at APEC that he wanted to improve ties.
“China will need to continue opening itself up to the world,” Australian Trade Minister Steven Ciobo said in a Bloomberg TV interview from Canberra on Monday. “We’ll be looking at working alongside countries like China, indeed any country, that’s willing to open up the contestability of those services and investment market places.”
Xi used his time in Lima to tout the benefits of the 16-nation RCEP trade deal.
“We should deepen and expand cooperation in our region,” Xi said. “Any attempt to undercut or exclude each other must be rejected.”
Xi also called for “a smooth transition” to a new U.S. administration. Trump has blamed China for taking U.S. jobs and has said he will instruct his treasury secretary to label the country a currency manipulator.
“For years, China free-rode on America and Europe to make global rules and develop free trade,” said Nick Mabey, who used to advise the U.K. government on climate issues and now runs E3G, a policy-research group. “Now China realizes it needs to be more responsible for global rules because it needs that for its own development. They want stability globally so they can invest abroad while they manage the transition of their own economy.”
While China has long pushed for other countries to open up their markets, and has inked trade pacts with countries like Australia, the U.S. has criticized Beijing for not opening up the economy more to foreign companies.
Obama said on Sunday that there were calls for a “less ambitious” trade agreement with fewer protections that the U.S. wouldn’t participate in. The TPP would go further than a traditional trade pact, including provisions on intellectual property, labor rights and state-owned company reform.
Investing in China is very difficult, and RCEP is “low level” compared with the TPP, according to Jean-Pierre Cabestan, a professor in political science at Hong Kong Baptist University.
“China is taking advantage of the statements made by Trump during the presidential campaign to occupy, if not monopolize, the high moral and political ground,” Cabestan said. “We will see on the ground which side will be fairer than the other. I continue to doubt that it will be China, because of the structure of its economy, the lack of transparency, of rule of law and the confusion between political and economic power.”
Still, Trump’s election has effectively changed perceptions of the U.S. and China throughout the world.
Just months ago, it was the U.S. pushing for China to respect the “rules-based” international order, chastising Beijing for ignoring the outcome of an arbitration court in The Hague that found its claims to most of the South China Sea had no legal basis. The ruling determined that China had “aggravated” tensions with other claimants and was seen as a set back for China’s neighborhood diplomacy.
Now, China was in a position to tell the U.S. to be more of a responsible stakeholder, according to Ian Bremmer, president of Eurasia Group, the New York-based political risk consulting firm.
“America’s role in the world is changing in front of our eyes," Bremmer said in a key note address on Saturday. “The good news about being the world’s only superpower is that other countries cannot damage you anywhere near as much as you can damage yourself. That’s also the bad news.”