China’s economy has soared to be world’s second largest, while its peaceful rise has been increasingly constrained by the global economic order. Regionally, directed by the U.S.’s rebalancing policy in Asia, the Trans-Pacific Partnership Agreement (TPP) is changing the direction of economic cooperation in Asia. Internationally, the Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and Europe will transform the pattern of the world economy. These changes to a great extent are measures taken by developed countries against developing countries. They will impact China’s peaceful development.
First, the rapid rise of China and other emerging economies are transforming the global economy. There is a wide diversity of views on what a rapidly growing China and other new economies means. Global Trends 2030 by the U.S. National Intelligence Council, voices the most recent and representative view among Western countries. It predicted that China’s comprehensive power would pass the U.S. by 2030 using the traditional comprehensive national power index system, which includes GDP, population, military expenditure and technology. India will pass the U.S. by 2050. China and India’s share of comprehensive national power would be 4%-5% lower if health, education and governance are also taken into account. Developing countries will pass the developed countries’ share by 2030. This is the first challenge that Western countries have faced to their dominant position. The rise of these emerging economies will change the global economic order.
Among these newly emerging economies, the BRICs and Asian countries are the main forces of change. Among them, China represents both. The U.S. and other Western developed countries have made it their priority to respond to this. The strategy proposed by the U.S.’Atlantic Council is to prioritize strengthening the Atlantic Alliance and cooperation with China to deal with this.
Second, the TPP will change the direction of development in Asian regional economic cooperation. It is a very important component of the U.S.’ Return to Asia and its rebalancing strategy. The U.S. believes that the Asia-Pacific is the world’s most promising economic region. It would challenge the current global economic order if Asia-Pacific had a unified market without the U.S.. Although the TPP seems to be ineffective now and the U.S. has officially denied that its aim is to contain China, the TPP would have a far-reaching impact on economic cooperation and economic development in Asia. In the foreseeable future, China will not join the TPP, but the region will be shaken by the U.S.’s rebalancing strategy.
The TPP may become a dominant force in Asian regional economic cooperation. As the U.S. implements its rebalancing strategy, the TPP, RCEP (Regional Comprehensive Economic Partnership) and China-Japan-South Korea Free Trade Area will be in force. The prospect for the TPP is the most promising in terms of trade and investment liberalized rules, coverage, membership and feasibility.
On the other hand, Japan’s decision to join TPP negotiations will balance Sino-U.S. regional economic cooperation in Asia. Japan is the only country that is participating in TPP, RCEP and the China-Japan-South Korea Free Trade Area negotiations at the same time. The China-Japan Diaoyu Islands dispute has pushed Japan towards a strategic U.S.-Japan alliance. This could attract more Asian countries to join the TPP giving it an advantage over the other partnerships.
Furthermore, Asian regional economic cooperation is dominated by the 10+3, proposed by China, but which has now been shelved because of the TPP. In this sense, the U.S.’s rebalancing strategy has won a major victory. If there is a TPP without China and an RCEP without the U.S. the possibility of an Asian integrated market may decline sharply even if both of them come into effect.
A TPP-dominated or TPP-RECEP Asian economic order would mean that Asia’s new economies would not be able to challenge the current international economic order.
Third, the TTIP will likely become the new platform for setting global economic regulations. Ten years ago, the EU expanded eastwards to balance U.S. monopoly. This exciting era has now gone. In March 2013, the U.S. and the EU declared that they had formally started TTIP negotiations. This symbolic event will greatly influence the future global economic order and regulation-deciding mechanisms. Western countries’ think tanks have called this an economic NATO. In dealing with emerging economies, it has been their top priority to maintain the Western-dominated international economic order rather than solving U.S.-Europe contradictions.
The TTIP will become a new platform for setting global economic rules in the 21st Century. The TTIP will enjoy a wider scale and set a greater level of liberalizing rules than the current free trade area agreement and the WTO. Given the dominant status of the U.S. and European markets in the world, U.S. and European standards in industrial policy, technology, security and health will have a fundamental impact on the direction of global economic rules. The WTO will likely be marginalized once the TTIP is active. More importantly, the U.S. and Europe will be able to continue controlling their right to make global economic rules because of the scale of their economies. The reason is simple: the countries who accept TTIP’s rules will become its members.
The TTIP may evolve into a platform for the major developed countries to jointly formulate international economic rules. Of these, the U.S., Europe and Japan will still be the mainstay of the world economy even if they lose their superior position in overall economic scale. In-depth cooperation between Japan, the U.S and Europe are obstructed by non-tariff barriers and agricultural issues. These hurdles will be overcome once Japan participates in TPP negotiations. This is also why Japan restarted the Japan-Europe Free Trade Area negotiations after it decided to join TPP negotiations. If TPP and Japan-Europe Free Trade Area negotiations go smoothly, the TTIP will naturally become a platform for developed countries to work out new international economic rules together.
The TTIP will pose a major blow to the newly-emerging economies including China. If the U.S., Europe and Japan work together on this, the new economies face two options: one, cooperate in building platforms to formulate global economic rules alongside the TTIP, or divide. The new economies who accept the developed countries’rules will join the TTIP; While those who do not accept the rules will be marginalized by the new global economic order.
Just like the TPP, the TTIP appears to be a regional trade agreement. The truth behind this is a contest between countries who currently dominate the world economic order and the newly-emerging economies for future control. This is also a strategy for maintaining Western values and ideals. As the representative of the rapidly-growing economies, how to respond to changes in the global economic order is not only a concern of China in whether to further open up its economy in this new era, but it is also connected to how the global economic order will develop in the future.
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