China applies to join Pacific Rim trade pact
China has formally applied to join a major Pacific Rim trade agreement that was once pushed by the US as a way to extend its influence in the region at Beijing's expense.
China made an official application to join the Comprehensive and Progressive Agreement for the Transpacific Partnership (CPTPP) yesterday, the commerce ministry said.
The 11-nation pact has so far been ratified by eight members, most recently Peru. The other members comprise Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore and Vietnam, while the UK has also applied to join.
The CPTPP is the successor to the 12-nation Trans-Pacific Partnership (TPP), which was initially proposed by the US under then President Barack Obama as a way to unite some of the region's biggest economies — notably excluding China — under a single free-trade agreement.
The US withdrew from the TPP in the early days of President Donald Trump's administration, leaving the 11 other members to forge ahead with a revised version. President Joe Biden has indicated he will not attempt to rejoin the agreement.
The CPTPP allows for inputs from member countries to be treated as local content, encouraging trade within the bloc. Several of the members — including Australia, Canada, Chile, Malaysia and Peru — are major exporters of minerals and other commodities, while petrochemical producers such as Singapore and Vietnam will benefit from selling finished products to other CPTPP members.
China's entry to the CPTPP, which would have to be approved by all other members, could tip the balance of trade in its favour given the sheer size of its economy. China dominates a rival Asia-Pacific trade deal, the Regional Economic Comprehensive Partnership, which was signed late last year.
Petrochemical producers elsewhere in Asia-Pacific are already expressing concerns about the prospect of oversupply given huge new capacity additions in China this year. The expansions have prompted Chinese polypropylene producers to seek export opportunities, a trend that is expected to continue despite current shortages of containers.
China has been lobbying other CPTPP members to support its application to join the pact, including Australia, a move that raised the prospect of an end to political tensions between Beijing and Canberra that have hit trade in coal and other commodities. But a potential detente is looking less likely after Australia, the UK and US announced a new military pact yesterday that could help cement US-China rivalry in the region.
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