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China's President Xi Jinping recently called on Asia-Pacific countries to build the larger Free Trade Area of the Asia-Pacific pushed by Beijing/AFP

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Trump’s TPP withdrawal gives China chance to redraw trade map

 China's President Xi Jinping recently called on Asia-Pacific countries to build the larger Free Trade Area of the Asia-Pacific pushed by Beijing/AFP

China’s President Xi Jinping recently called on Asia-Pacific countries to build the larger Free Trade Area of the Asia-Pacific pushed by Beijing/AFP

BEIJING, China, Nov 24 – China will be handed the opportunity to reshape the rules for global trade and profit from a more isolated US if President-elect Donald Trump carries out his pledge to abandon the landmark TPP pact, observers say.

The likely demise of the Trans-Pacific Partnership has been welcomed by state media in China, where the deal had been criticised as a naked attempt to boost US influence in the region and contain the Asian giant.

The TPP’s goal, the Communist Party mouthpiece People’s Daily said in a Thursday commentary, had been “to establish America’s economic dominance by excluding and suppressing China with economic containment”.

Trump’s new course will “see China benefiting most from increased US protectionism”, the often nationalist Global Times newspaper said, adding the world’s second-largest economy could “pick up the slack” and “lead free trade”.

The real estate mogul’s insurgent presidential bid was built in part on a pledge to overturn trade deals that he says have drained American jobs and destroyed its industrial heartlands.

He duly promised this week to declare a withdrawal from the TPP a vast, arduously negotiated agreement between 12 countries that does not include China on his first day in office.

US allies, who spent years selling the TPP to some reluctant electorates in the hope of yoking America closer to several like-minded Pacific democracies, are clearly disappointed.

The pact is the economic plank of Barack Obama’s strategic rebalance to Asia, and a US departure would render it “meaningless”, said Japanese Prime Minister Shinzo Abe.

Superpower tussle

China and the US have jockeyed for influence on the global diplomatic stage in recent years, as Beijing seeks a diplomatic heft to match its growing economic might.

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It regularly refers to its relationship with Washington as a “new model of major power relations”, implicitly putting itself on an equal footing with the US.

“If the United States walks away from the TPP, it could open the door for China to develop its own Asian free-trade area,” analysts with IHS Global Insight said in a note.

Several countries including Australia have already expressed interest in alternative trade deals such as the Beijing-backed Regional Comprehensive Economic Partnership (RCEP).

RCEP brings together the 10 members of the Southeast Asian grouping ASEAN plus China, India, Japan, South Korea, Australia and New Zealand, but notably excludes the US.

China’s President Xi Jinping touted deepening trade links on his recent visit to South America.

In the Peruvian capital Lima he called on Asia-Pacific countries to build the larger Free Trade Area of the Asia-Pacific (FTAAP) pushed by Beijing and “continue our involvement in economic globalisation”.

Trade as a weapon

But China’s putative position as a champion of free trade contrasts with domestic restrictions that prevent foreign companies from competing in a variety of sectors, often forcing them to partner with local competitors and share vital technology.

Authorities have also frequently shown their willingness to use trade as a cudgel to punish countries who run afoul of Beijing, de facto banning banana imports from the Philippines during a dispute over the Scarborough Shoal in the South China Sea.

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The TPP is the product of years of tough negotiations, and the high environmental and labour standards it imposes on members unlike RCEP meant that many of the governments that signed up had to wage political battles to do so.

There is the clear potential for fallout if the deal fails because of a change of heart by its prime instigator.

Instead, Washington’s Asian allies may seek to build a more stable and long-lasting partnership with China, whose governing party has not changed since 1949.

That could give Beijing more sway in both economic and strategic disputes, such as over the resource-rich South China Sea.

Beijing will “press ahead with the economic integration process” in the Asia-Pacific region, foreign ministry spokesman Geng Shuang told reporters Wednesday.

But he denied any ulterior motives. “We should prevent politicising of free trade arrangements, and we hope that all countries can stop reading too much into the free trade arrangements through a geopolitical perspective,” he added.

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