China’s CPTPP trade aspirations still hinge on bloc’s support as external pressures mount

Deputy trade minister and international negotiator Wang Shouwen says China has ‘the capability to fulfil relevant obligations’ required to join high-quality trade group
Chinese analysts see accession to the CPTPP as a means to undergo further economic restructuring that would help clear growth hurdles

China trade

Frank Tangin Beijing

Published: 6:59pm, 24 Apr 2023

Why you can trust SCMP

Beijing is ramping up its call for admission into the world’s highest-standard trade bloc at a time when US-initiated decoupling efforts are increasingly damaging bilateral trade and threatening the latter’s industrial chains.

“China is willing to join the CPTPP … and has the capability to fulfil relevant obligations,” vowed Wang Shouwen, a vice-commerce minister and China’s international trade negotiator, at a media briefing on Sunday. “We hope that all 11 member countries can support our joining.”

The comments by Wang, who participated in the years-long trade talks with the United States, come as its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) appears to have fallen behind the curve.

The United Kingdom filed its application in June 2021 and reached an agreement last month to join the 11-member trade pact. But China, which applied three months later, has seen little progress in its bid to join.

Is CPTPP bid behind China’s move to resolve Australia barley dispute?

The trade bloc, which came into force in December 2018 and now includes three Group of 7 countries such as Japan and Canada, is a large market that Beijing is eager to tap into, especially as Washington has pressed ahead with efforts to “reshore” or “friend-shore” supply chains amid its unprecedented emphasis on security and economic dominance.

The US was originally a key proposer of the Trans-Pacific Partnership (TPP) agreement, the predecessor to the CPTPP, but withdrew from the agreement in the early days of Donald Trump’s presidency.

Instead, the US has been pushing ahead with its Indo-Pacific strategy and “democratic” trade partnerships, which would diminish China’s role in international supply chains.

Chinese authorities have shown unease over the falling overseas orders, and they appear increasingly concerned about being isolated in international trade, with more factories moving to Southeast Asia to save money and bypass US trade barriers.

China’s US-bound merchandise shipments have seen year-on-year declines for eight straight months, resulting in the US becoming China’s third-largest export destination, after the Association of Southeast Asian Nations (Asean) bloc and the European Union.

CPTPP membership is seen as a key step in reversing the unfavourable external environment, breaking through US containment efforts, and reinvigorating China’s economic growth with more overseas orders.

In addition to meeting high-threshold criteria such as ownership and labour standards, China’s official accession to the CPTPP would require approval from all member countries.

Beijing keeps saying that the government is laying the groundwork for this accession, and has had exchanges with member countries at various levels. However, no official accession procedures nor timetable have been released.

Both China and the UK want in, so why is the US reluctant to join the CPTPP?

As the world’s largest merchandise exporter – accounting for more than 15 per cent – China has for years been pushing to create a Pacific Rim free-trade zone, known as the Free Trade Area of the Asia-Pacific. Ideally, this would be supported by “two wheels” – the CPTPP and the 15-member Regional Comprehensive Economic Partnership (RCEP).

“If China joins the CPTPP, it would help these two wheels to move forward,” Wang said, pointing to the country’s massive consumer market and consumption potential. “It would be beneficial to regional economic integration and is crucial in maintaining the stability, safety and reliability of the region’s industrial and supply chains.”

Domestically, many Chinese analysts compare the country’s CPTPP aspirations to its World Trade Organization accession in 2001. They paint a rosy picture of China not only tapping into the vast overseas market, but also getting the chance to undergo further economic restructuring that would help clear growth barriers.

11:11

CPTPP could become game changer and supplant 'out-of-date' WTO, after mainland China, Taiwan apply

There is already some low-hanging fruit under the RCEP framework, which is composed of 10 Southeast Asian countries, China, Japan, South Korea, Australia and New Zealand.

China’s trade with those 14 RCEP members accounts for about one-third of its total, and that trade value rose by 7.3 per cent in the first quarter, year on year.

Meanwhile, China’s membership application for the Digital Economy Partnership Agreement, which now includes Chile, Singapore and New Zealand, is progressing, as a working group convened its first negotiations in March to exchange views over paperless trade, an e-commerce framework, logistics, tax invoices and electronic payments.

Speaking ahead of the United Nation World Data Forum on Monday, Mao Shengyong, deputy director of the National Bureau of Statistics, said China has worked with many international agencies on data gathering, and it is also studying how to improve the calculations and assessment of the digital economy.