Realities behind the TransPacific Partnership

By John Ross
0 Comment(s)Print E-mail, November 18, 2011
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Outlying party [By Jiao Haiyang/]

Outlying party [By Jiao Haiyang/] 

Many Chinese analysts noted that the intention of the TransPacific Partnership (TPP), put forward at the recent APEC summit by the US administration, is to attempt to squeeze China out of the main discussions on Asian trade agreements. Western analysts agreed. David Pilling Asia editor of the Financial Times, noted: 'Beijing might be forgiven for thinking that TPP looks like a club to which it has not been invited…. The rules are made in America.' The TPP fits with US administration policy towards China shown in establishing US military bases in Australia and involvement in the South China Sea.

The thinking behind such polices in 'neo-con' circles in the US is dangerous for the world. Fundamentally it attempts to achieve something which is objectively impossible – that in the 21st century the US can continue to be the world's largest and most powerful economy. This illusion dominates Republican presidential candidates and in president Obama's statements that 'leadership' must be by the US.

It does not seem to occur to those with these concepts that other countries wish neither to 'follow' the US nor any other country. China's central concept of a 'win-win' relationship more corresponds to the wishes of the world's majority than US 'leader-follower' views. But given the latter concept the political and economic aspects of a US policy which Hillary Clinton recently termed 'America's Pacific century' must be considered.

That the US will not retain its position as the world's largest economy during the 21st century is dictated by simple arithmetic. The US's population is slightly over 300 million. China's population is 1.3 billion and India's 1.2 billion – both four times as large as the US. The demand that the US maintain a position as the world's largest economy is therefore simply a requirement that China and India should never achieve even one quarter of the US's GDP per capita, that is of its living standard. Clearly neither China nor India will ever accept such a proposition – nor, in the interests of human justice, should they.

This economic fact determines the course of the next decades of 21st century. It is the framework within which specific issues such as the TPP, and the creation of a Pacific market, must be placed. Its reality already determines economic trends in the region.

China's annual economic growth is now more rapid than the US not only in percentage but in dollar terms. In 2010 the US economy expanded by $538 billion and China's by $887 billion. India's percentage growth rate is higher than the US and its annual dollar expansion, $348 billion in 2010, will soon begin to rival the US.

This economic growth translates into trade realities. In annualized terms US imports are still $120 billion below their pre-financial crisis peak while China's imports are $470 billion above. Pacific and other countries therefore have far more to gain from China's economy than the US in market growth and expanding export opportunities. This gap will increase.

The TPP attempts to reorient trade discussion in the Pacific away from the most dynamic market, China, to the less dynamic one of the US by setting terms which exclude China. It therefore formulates policy not in terms of the region's economic needs but of the narrower interests of the US administration. This, together with other political and military moves, is why Chinese and Western analysts had little difficulty in understanding the TPP as an anti-China policy and not one objectively in the interests of all countries.

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