A likely beneficiary of Trump’s tough talk on trade: China

Executive Edge: Is TPP dead?

U.S. President-elect Donald Trump's tough talk on trade could just give China a big boost.

Expectations of the eventual demise of the suspended Trans-Pacific Partnership (TPP) deal have surged since Trump's victory, a development that analysts say will pave the way for China's trade expansion with its own mega-deal.

The U.S. and 11 countries in the Pacific region last year reached an accord on the TPP deal to liberalize trade among the participating countries and set common standards and cut barriers. President Barack Obama's trade office has however suspended its effort to pass the deal before Trump takes office.

China, the world's second-largest economy is the key driver of the Regional Comprehensive Economic Partnership (RCEP), a trade deal between the 10 member states of the Association of Southeast Asian Nations (ASEAN) plus regional trading partners including Australia, China, India, Japan, New Zealand and South Korea.

Beijing is already gearing up to push the RCEP more aggressively as the East Asian giant takes on a growing regional leadership role.

Chinese President Xi Jinping.
Feng Li | Getty Images

"The collapse of the TPP agreement may galvanize momentum for the successful conclusion of the RCEP, with China and ASEAN playing central roles in strengthening the APAC trade architecture," said IHS Global Insight's Asia-Pacific chief economist, Rajiv Biswas.

People's Daily said in an article on Tuesday that president Xi Jinping in his upcoming trip to South America will be promoting a free trade agreement during his visit. The FTA was not specified but China is expected to garner support for the RCEP at this week's 24th Asia-Pacific Economic Cooperation Economic Leaders' Summit in Lima, Peru.

U.S. ally Japan meanwhile has indicated it would be turning toward RCEP, Kyodo News reported.

"There's no doubt that there would be a pivot to the RCEP if the TPP doesn't go forward," prime minister Shinzo Abe said on Tuesday.

Abe will try to save TPP: Expert

"RCEP doesn't include the U.S., leaving China the economy with the largest gross domestic product," he added.

The Japanese leader was scheduled to meet Trump en route to the Lima meeting.

On Tuesday, state-owned newspaper China Daily said in an opinion piece that Beijing was "understandably relieved that the exclusive, economically inefficient, politically antagonizing TPP is looking ever less likely to materialize".

After all, "both the U.S. and China deserve better than the TPP", its headline suggested.

"The anticipated setback offers a precious opportunity for decision-makers in both Beijing and Washington to reevaluate the state of affairs, and recalibrate their respective approaches," the unsigned opinion piece added.

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