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MNI INTERVIEW: China To Push CPTTP Trade Talks In Export Drive
Beijing will accelerate efforts to join the Trans-Pacific trade bloc and a regional digital agreement, as China’s new leadership team seeks to deliver on its ambitious plans to increase high-quality exports, said a former adviser to China's State Council.
China will provide more access to its markets following the 20th National Party Congress, with Beijing to step up efforts to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade bloc at a time when relations with the U.S. have become increasingly hostile, said Henry Huiyao Wang, founder and president of the Center for China and Globalisation.
The Party Congress emphasised greater economic engagement, coupled with a "decisive" role for markets, as increased high quality exports form a vital component of China’s “dual circulation” strategy, which also includes plans to lift domestic consumption.
“Following the Party Congress, China will open its door wider, especially for advanced manufacturing and finance,” Wang said, acknowledging that "more talks need to happen to facilitate China’s joining the CPTPP".
The 11-member CPTPP includes Australia, Canada, New Zealand, Mexico, and Singapore. Australia has opposed China’s entry given ongoing tensions between the two countries.
“China is close to meeting the entry requirements, which are similar to those already met under the CAI [Comprehensive Agreement on Investment] agreement with the EU,” Wang said, referencing Singaporean Prime Minister Lee Hsien Loong who made similar comments last month.
Wang views China’s advanced discussions on joining the Digital Economy Partnership Agreement (DEPA) as evidence China is eager to join regional trading blocs, even in the digital domain where national security is important. "China has launched a working group to manage its DEPA application, this demonstrates it's serious about multilateralism," he said.
Supply chain disruptions and trade tensions with China have raised the attractiveness of southeast Asian nations as alternative manufacturing hubs. But Wang said China does not view the emerging industrial base in the region as unwanted competition, saying “China is confident in its own comparative advantage inside the CPTPP”.
SANCTIONS WILL BACKFIRE
China’s ability to modernise its economy faces challenges after Washington restricted exports of advanced chips, a move Wang believes will backfire on the U.S.
“Regarding the latest US chip restrictions, this is against the principles of free trade,” he said. “This will harm US companies relying on Chinese imported components - the U.S. is actually punishing themselves”. (See MNI: China Must Invest, Innovate To Thwart U.S. Tech Crackdown - Bonds & Currency News | Market News).
The complexity of global supply chains means U.S. export restrictions are a lose-lose situation for the global economy, said Wang, highlighting the crucial role China played in driving global semiconductor industry growth.
"Taiwan TSMC’s success was largely down to its sales and proximity to China, a market it may struggle to access in the future," he said.
Wang is upbeat on the government’s Common Prosperity strategy that will see another 400 million people join the middle class and drive domestic demand growth.
“The next wave will benefit from world class infrastructure, digitalisation and a clean environment. The heavy work has been achieved and people now have more tools to succeed.”
In the short term, Wang sees a growth rebound. “After Covid restrictions are relaxed, GDP can be maintained above 5%. The Chinese economy still has enormous potential”.
Wang said there was pent-up demand from Chinese tourists waiting to travel the world again.
“When the Covid situation is stabilised, people will be cautious to travel at first. But once confidence returns, I expect a surge of Chinese tourists going abroad for several years.”
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