MNI INTERVIEW: China-US Face Challenges Despite Thaw - Expert

The inclusion of the U.S. within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could temper its intensifying regional rivalry with China, however, the relationship faces challenges, despite a recent flurry of high-profile visits, a leading Chinese international relations advisor told MNI.

While U.S. Treasury Secretary Janet Yellen’s visit to Beijing this week represents something of a thaw following Secretary of State Antony Blinken’s meeting with President Xi Jinping and foreign minister Qin Gang in June, the upcoming U.S. presidential election could stifle reconciliation as candidates' campaign on anti-China issues, according to Professor Wang Yiwei, director at Renmin University's Institute of International Affairs.

Wang added that the outlook for long-term relations remained negative regardless of who wins the US election, as the difference between President Joe Biden and Donald Trump’s China policies was negligible.

CPTPP OPPORTUNITY

Emphasising the importance of finding a way to coexist, joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) would benefit both countries, Wang maintained. “The CPTPP is a great opportunity to recouple and lay the framework for future cooperation between the two countries,” he said.

CPTPP members reached agreement in March over the UK's application to join the partnership, an Asia-Pacific trade bloc made up of 11 countries which include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The UK will be the first new member since the bloc was established in 2018 and the first European country.

China announced recently it would accelerate its CPTPP application efforts, with policymakers submitting additional documents to illustrate recent reform progress, such as changes made to free trade zones. Existing CPTPP members have called on China also to address rules governing data localisation, state-owned enterprises, subsidies and IP rights and have delayed the country’s admission while the U.K.’s application processed.

Wang said China will meet the CPTPP’s technical standards soon, with progress on reforming SOEs and labour unions underway. He said SOE reform, however, remained China's greatest challenge, while Japan could also make ascension difficult. “Regardless, China needs to implement CPTPP-style reforms – these are good for the country to develop a high-quality economy,” Wang added.

BELT AND ROAD

China’s Belt and Road Initiative (BRI), which turns 10 this year, will focus less on large-scale capital investment in infrastructure and pivot to the green transition, digitalisation and soft connectivity between countries, Wang said. Greater cooperation and synergy will increase with the growing BRI membership, he added.

Wang noted BRI countries will likely increase their use of yuan to settle trade. The U.S. shutting Russia out of the SWIFT banking system in 2022 had led some countries to investigate alternative currencies, he argued. However, CNY would not replace the dollar as a reserve currency anytime soon, as the U.S. maintains a significant trade deficit, he commented.