Senior Fellow Jianmin Jin
China’s FTA strategy has implications for political, economic, diplomatic, and security policy. To date, China has signed FTAs with twelve countries and regions and is in negotiations with seven others with the goals of: 1) realizing merit of scale in economic development; 2) securing resources necessary for its own economic growth; 3) dispelling the idea of the “China Threat”; 4) restraining independence movements such as “Taiwan Independence”; and 5) improving international relations, in particular in its own surrounding region. Among these, its FTA with the ASEAN countries was a particularly great success.
China faces the dilemma of being unable to easily swallow the US-led TPP but not wanting to be at a disadvantage by being the odd one out. It is further concerned that the TPP will act as a centrifugal force driving apart any attempt at economically integrating East Asia. For these reasons, China is being even more aggressive in its efforts to economically integrate Asia and ameliorate the effects of the TPP. In particular, China has great hopes for a China-Japan-Korea FTA, but in order to attract Japan, which is leaning heavily toward the TPP, it is prioritizing its FTA with Korea as well as actively supporting the ASEAN-led RCEP. China is even proposing to promote in rank its FTA with ASEAN.
However, changes in China’s stance on the TPP have been apparent since the beginning of Xi Jinping’s term, and the government appears to be considering the partnership. Moreover, China has promised to adopt “Pre-establishment National Treatment” and a “Negative List” in order to cement a “high level” investment agreement with the US, and it has hammered out high level market liberalization policy, such as creating the experimental Shanghai Free Trade Zone. If China continues in this direction, a US-China FTA may not be out of the question.