President Obama talks trade

Why China won’t be joining the TPP… for now

Rob Schmitz Oct 6, 2015
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President Obama talks trade

Why China won’t be joining the TPP… for now

Rob Schmitz Oct 6, 2015
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One glaring absence from the Trans-Pacific Partnership deal? China. The world’s second-largest economy has quietly watched the final negotiations from the sidelines, deciding not to be involved for a variety of reasons, including one that President Obama more than hinted at when announcing the deal: “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy.”

Since China joined the World Trade Organization in 2001, it has eliminated a range of barriers to trade, but it has also stubbornly protected its own domestic industries and state-owned enterprises at the expense of foreign companies. The Trans-Pacific Partnership aims to eliminate this type of protectionism through enforceable rules, and that’s another big reason China won’t be joining the TPP anytime soon. Though President Xi Jinping’s economic reforms aim to level the playing field among state and private sectors, China will move forward at its own pace.

Another important reason China isn’t joining the TPP is that it has been busy enough signing trade pacts with Australia, South Korea and other economies in the region. These pacts, combined with the new China-led Asian Infrastructure Investment Bank, mean that China will continue to have meaningful input on “the rules of the global economy” and have considerable global economic influence for years to come.

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