China and the Regional Comprehensive Economic Partnership

Abstract

In the context of a current global economic crisis and an unfinished World Trade Organization (WTO) Doha Round, multilateralism is at its weakest point. The proliferation of bilateral and regional trade agreements seems to be the natural consequence of failed multilateralism. In this difficult context, this article argues that China — one of the three global economic superpowers — has an opportunity to lead the Regional Comprehensive Economic Partnership. For the past decade, China’s position as a strong player in international trade has been remarkable. Structural reforms in China, including trade liberalization, have resulted in annual real GDP growth rates in excess of 10% over the past few years, rising per capita income and poverty reduction. In the process, China has become one of the world’s largest traders.

China attempts to establish itself as a gravity center in Asia by concluding many bilateral free-trade agreements in the region. In this sense, the article argues that China’s trade policy strategy is the creation of a powerful Asian trading bloc, given China’s strong position in Asia. In fact, few regional initiatives are undertaken by other countries without first considering what China thinks or how China might react.

If multilateralism continues to weaken, the likelihood of a Regional Comprehensive Economic Partnership led by China within the next decade is very high as part of China’s strategy of promoting regional identity. Should this crystallize, one could envisage a tripolar global trade regime with a new Asian pole to counteract the already existing power centers in the European Union and the U.S. Furthermore, China’s policy towards regional trade agreements will have a major impact on the international trading system, the debate about regionalism and multilateralism, and the policy of the WTO concerning regional trade agreements.

Keywords: Regional Comprehensive Economic Partnership; free trade agreements; bilateral trade; regional trade; World Trade Organization

JEL Classification: F13, F15, F53, K33