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     BEIJING (MNI) - Chinese government advisors told MNI that the establishment
of a US-EU-Japan trade pact is a likely scenario, which could undermine China's
trade strength, making it even more important for the Asian country to cultivate
allies and pursue a more flexible approach.
     "Now we are in a disadvantaged position," said Wang Huiyao, president of
the Center for China and Globalization (CCG), an independent think tank that
advises the government on globalization and international trade.
     "The U.S., the EU and Japan will sooner or later negotiate a free-trade
agreement," he commented, citing the apparent U.S.-EU trade truce reached last
week and the EU-Japan free-trade deal signed earlier this month.
     "The U.S.-China competition is expanding into the global market, where both
sides are trying to compete for allies," Wang noted. This is illustrated by
Chinese officials' recent visits to Japan and various BRICS and EU countries, as
well as the Trump administration's recent efforts to improve relations with the
EU and Russia.
     --WTO IRREPLACEABLE
     Most advisors interviewed by MNI predicted that the U.S., EU and Japan will
not abandon the WTO, as doing so would not be in their interests.
     "Developed countries are the major beneficiaries of the current WTO
system," said Wang Haifeng, director of international trade and investment at
the Institute for International Economic Research, which is affiliated with the
National Development and Reform Commission.
     Wang Haifeng added that the U.S. is well aware of the benefits of WTO
membership and the dollar-dominated global trade system, thus won't easily give
up on the current structure.
     Liu Hong, a director of the Ministry of Commerce's China Association of
International Trade, echoed Wang's comments in a separate interview.
     "The WTO system is irreplaceable," Liu told MNI. "If the U.S. wants to
reach its goal of 'America first,' it only needs to use the WTO system because
it's the least costly way." He said that the WTO's role in gathering 164
economies into a single trade framework helps developed countries better take
advantage of other countries' resources.
     However, more bilateral and multilateral free-trade zones could be
established to complement WTO, Liu added.
     --'DANGER' FOR CHINA
     A possible U.S.-EU-Japan trade pact would mean "danger" for China,
increasing the stakes in future trade talks with the U.S., a commerce ministry
official told MNI.
     Noting that a potential U.S.-EU-Japan trade pact could lead to job losses
and other worse situations, Wang Huiyao suggested that Beijing speeds up
collaboration with other trading partners.
     "The U.S. now is trying to win support and allies everywhere, such as
mending fences with Japan and the EU; China should initiate some strategies, as
we can't sit and wait passively," he stated.
     Wang said China should continue to nurture relations with Japan, such as by
signing up to the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership.
     --STRENGTHEN TIES
     China should also strengthen ties with the EU and accelerate the
establishment of a free trade agreement with India, he said.
     "At the same time, we need to find opportunities to negotiate with the
U.S.," he said, adding that Washington may even initiate talks if China succeeds
in reaching deals with Japan and the EU.
     "The U.S. may have a thousand strategies, but we have our own way of
dealing," which is to wait and see, MOFCOM advisor Liu Hong told MNI, adding
that Beijing continues to welcome talks should Washington be willing to come to
the table.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MGQ$$$]

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