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Trade & Investment

China strives to set up Asian trade bloc to counter US move

Taeho Bark

China will later this month enter talks to create an Asian free-trade bloc covering 28 percent of world GDP, a reaction to U.S. progress in forming a Trans-Pacific Partnership that excludes China, South Korean Trade Minister Taeho Bark said on Monday.

The RCEP, or Regional Comprehensive Economic Partnership, will be comprised of the 10-nation ASEAN club plus six others: China, India, Japan, South Korea, Australia and New Zealand.

Its launch is to be formally announced at the ASEAN summit in Phnom Penh later this month, with a goal of reaching a deal to lower trade barriers across the region by the end of 2015.

RCEP adds to a growing web of regional and sectoral trade negotiations that has sprung up after a decade of talks failed to conclude a global trade deal, the so-called Doha Round.

The Trans-Pacific Partnership (TPP) championed by President Barack Obama’s administration aims to tear down traditional trade barriers and break ground in new areas, streamlining trade between the United States and 10 other countries.

“We’re organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards,” Obama said in a presidential debate with Governor Mitt Romney two weeks ago.

Bark said RCEP had grown out of a plan to launch trilateral trade talks between China, Japan and South Korea. Some ASEAN countries, worried about the trilateral initiative, pushed for a wider deal.

“China’s position on this economic integration in East Asia was pushed by TPP,” Bark said in a lecture organised by the Centre for Trade and Economic Integration in Geneva.

“In the past, China didn’t want to have ASEAN plus six, they only wanted plus three. Japan preferred ASEAN plus six. China preferred anything without the United States,” he said.

“I don’t know how much they hope to get but they want to do it because of the TPP.”


If both RCEP and the TPP came into existence, they would be similar in economic size to the European Union.

“Those are the three big blocks in the future,” Bark said.

In the long run, the goal of the 21-member Asia-Pacific Economic Cooperation (APEC) group is to merge RCEP and the TPP, he said. That would bring the United States and China into an agreement to deepen trade liberalisation, succeeding where 10 years of talks at the World Trade Organization failed.

But achieving that final goal depends on RCEP achieving a “high quality” deal, not just simplifying an existing tangle of bilateral agreements, which Bark called “the spaghetti bowl”.

“At this moment we are setting very high ambitions. We include all tariff lines,” he said.

But many developing country members might want to water down RCEP by asking for special treatment. South Korea will demand an exemption to protect its rice farmers, while Japan is also likely to want carve-outs for agriculture.

If the signatories’ squeamishness at opening their markets does not devalue RCEP, they might be forced to lower their sights in any case to meet the three-year schedule. If so, RCEP could end up having little influence on regional trade.

The trilateral talks are still expected to go ahead, although the planned launch, originally set for the Phnom Penh summit, is likely to be postponed to later in the year due to a territorial dispute between China and Japan, Bark said.

South Korea is also separately negotiating a bilateral free trade agreement with China, which would enable some 25,000 South Korean firms operating in China to supply the domestic market, rather than exporting their Chinese-produced goods as they are obliged to do now, he said.

China wanted quick negotiations, Bark said, while South Korea hoped for a bilateral deal within two or three years.

Source: Reuters “US-led US-Asian pact spurs China’s Asian trade bloc, S.Korea minister says”

About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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