Chinese experts say new US trade alliances to contain China could backfire and Beijing should push ahead with reforms

·5-min read

A push by the US to encircle China economically will likely “collapse in on itself” or ultimately backfire, Chinese experts say, as Washington steps up efforts to build a trade “coalition of democracies” with Europe and Japan to put Beijing under more pressure.

Although the US diplomatic offensive should be viewed seriously, experts say Beijing should accelerate domestic reforms, continue its push to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and double down on efforts to influence more global rule-making on trade.

Trade leaders in the US, Europe and Japan announced on Wednesday that they have agreed to renew their trilateral partnership, advocated by the previous Trump administration, to address global challenges posed by “the non-market policies and practices of third countries”, in an apparent reference to China.

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US President Joe Biden listens while meeting virtually with Xi Jinping, China's president, in the Roosevelt Room of the White House in Washington, D.C. on Monday, Nov. 15, 2021. Photo: Bloomberg
US President Joe Biden listens while meeting virtually with Xi Jinping, China's president, in the Roosevelt Room of the White House in Washington, D.C. on Monday, Nov. 15, 2021. Photo: Bloomberg

A day earlier, the US and Japan announced the formation of a new partnership on trade, which also puts “third country concerns” at the top of its agenda. The two countries said they would establish a Japan-US commercial and industrial partnership (JUCIP) to promote the resiliency of supply chains for semiconductors, 5G and other vital industry segments.

Following that, US Commerce Secretary Gina Raimondo confirmed on Wednesday that the US would not be joining the CPTPP trade pact for now, even though China has applied to do so, and will instead seek a separate “proper economic framework” with its allies.

Trump withdrew the US from the pact’s predecessor, the Trans-Pacific Partnership (TPP), even though this used to be the strongest economic card for the US in its China strategy.

How the CPTPP deal could supplant WTO and a beleaguered global trade system

“[The US] plan is very clear, it needs to improve the economic weak links in its China strategy,” said Zhou Xiaoming, former deputy permanent representative of China’s Permanent Mission to the United Nations Office in Geneva. Zhou said that the White House has already turned its focus to the Asia-Pacific region in military matters, and is now looking for a new mechanism on the economic side to rein in China.

Huo Jianguo, the former head of a think tank under the Chinese Ministry of Commerce, said the US is trying to join forces with its allies to curb China’s rise, rolling out criticism of the country’s alleged unfair trade practices.

“This is a complex and changeable international situation under the big picture of China-US contradictions,” said Huo. “[China] is already developing economically and prosperous, and if you are able to benchmark with high international standards of rules, efforts [at containment] will collapse in on themselves.”

Wang Huiyao, president of the Beijing-based Center for China and Globalisation (CCG), said that the US has built alliances from a geopolitical and military perspective, such as Aukus – a trilateral security pact between Australia, the United Kingdom and the United States announced in September – but this could lead to a backlash in the global community and may not work.

Both US Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai launched economic tours of Asia this month, and US Deputy Secretary of State Wendy Sherman has hosted her Japanese and South Korean counterparts in Washington.

These visits came as US President Joe Biden held a virtual meeting with Chinese President Xi Jinping to defuse bilateral tensions earlier this week.

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“Biden reiterated that the US is not seeking to change China‘s system, the revitalisation of its alliances is not anti-China, and the US has no intention of provoking a conflict with China,” according to a statement after the virtual summit, released by the Chinese foreign ministry on Tuesday.

But according to a US statement released after the meeting, Biden said the US will continue “together with our allies and partners, to ensure the rules of the road for the 21st century advance an international system that is free, open, and fair” and that the US will “align with allies and partners abroad to take on the challenges of our time”.

Zhou added that it was too early to predict the specific impact of current US initiatives. “If the US is too ambitious, it is unlikely to achieve some of its plans … [it depends on] what benefits you can offer to those countries to pull them away from China.”

Zhou pointed out that China is a major trading partner with many Asian countries, while the Biden administration has put helping American workers at the centre of its trade policy, so it would be hard for the US to offer preferential terms to its allies in the region.

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Huo agreed that it would be hard for the US to translate its strategy of containing China into an economic stranglehold in the region.

“The government may want to mobilise all forces to encircle China, but companies go after profits,” said Huo, noting that previous American barriers, including additional tariffs, had failed to break China’s trade ties with the US, Europe and Japan.

But he agreed that China needed to advance a higher level of opening up to the outside world, and leverage the CPTPP rules to push domestic reforms.

However, Joe Mazur, a senior analyst at Trivium China, said US moves to solidify trade partnerships are a serious attempt at countering China’s growing power.

“In the future, I expect that competition for global economic influence will be a major feature of the US-China relationship,” said Mazur. “I also expect that the US and its allies will continue to pressure Beijing over what it views as unfair trade practices and economic coercion.”

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