The trend of anti-globalization has been escalating given a series of events in 2016 including Britain’s exit from the Europe Union, opposition by both candidates in US presidential election to the Trans-Pacific Partnership (TPP), a demonstration by 100,000 people in Germany against the Transatlantic Trade and Investment Partnership (TTIP), as well as the rise of populism in France and Italy.
While America’s withdrawal makes the TPP meaningless, the Free Trade Area of the Asia-Pacific (FTAAP) can be a good opportunity for the US. China, the US as well as other countries in the Asia Pacific region should actively promote the FTAAP together.
While over a decade ago people thought about globalization as a negative term and only talked about it on the economic level, everybody is talking about globalization today. China has become the most active defender, supporter and contributor of globalization, although it used to be excluded from the system after the establishment of the Bretton Woods system. This is a great change. However, while China is now playing the biggest and most active role in promoting globalization, the US is dropping out though.
Trump said recently that the US will withdraw its signature from the TPP when he assumes office, which has raised concerns over whether he would go back to a policy of unilateralism. It will be a huge challenge for China if a superpower like the US drops out of global governance and trade agreements.
During the 2016 APEC Summit in Peru, President Xi Jinping officially put forward whether the FTAAP could be jointly led by China and the US as a new guideline for the 21st century’s global trade which includes not only commodity but also service trade.
In China, the number of outbound tourists has reached 100 million, and the amount of travel consumption is over $100 billion, according to the National Tourism Administration. The World Tourism Organization estimates the figure to be as high $200 billion.
It is very important to figure out how to make full use of our advantage to promote the service sector. As commodity, staff, innovation and investment flows incessantly in the 21st century, new rules are necessary.
On one hand, we want to upgrade the World Trade Organization (WTO); on the other, we want to promote the FTAAP in the Asia Pacific region which needs the participation of both America and China. The FTAAP would be imperfect and incomplete without the participation of the US.
President Xi has called for building a community of shared destiny, and taking part in global governance. The FTAAP is a great chance for China and the US as well as other countries in the Asia Pacific region to promote the development of this region.
President Obama used to say that he will never allow China to write the rules of the game. China never said that, and it can join the US and other countries in the Asia Pacific region to create an economic rule.
Although Trump opposes globalization, he will see great challenges next. It is very comforting to see that Trump has built a consulting team of entrepreneurs led by the chairman of The Blackstone Group, Stephen Schwarzman. I think the entrepreneurs will let him know how big the interests between China and the US are.
The economic dividends brought by the FTAAP will be much larger than that by the TPP and the RCEP. The income brought to China by the FTAAP will be 2.7 times of that of the RCEP, and 2.5 times of that of what the TPP brings to the US, according to research by Peterson Institute for International Economics.
In addition, joining the FTAAP is also an opportunity for Trump himself. Although he has denounced the TPP, he can make use of a lot of achievements of the TPP which has been negotiated for five years. If China and the US create a new rule together, it will be Trump’s legacy, not Obama’s. That would be attractive to Trump.
Wang Huiyao is a council member of the Center for China and Globalization (CCG).
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