The Regional Comprehensive Economic Partnership Agreement (RCEP), which had been on hold for more than a year, was signed by video on November 15, after the U.S. election was certified by several mainstream U.S. media outlets and congratulated by the government leaders of Germany, Britain and France. The agreement is claimed to be the world’s largest FTA covering the largest number of people (up to 3.5 billion) and the largest in terms of GDP, with 15 countries participating.
The FTA, which was launched at the ASEAN meeting in 2012 and involves ten ASEAN countries and six other countries, including China, Japan, South Korea, Australia, New Zealand and India, was finally signed this year at a time when international politics has taken a dramatic turn, as China had hoped. Commentators believe that the FTA will be led by China.
Beijing emphasizes economic interests, downplays political goals
It has taken eight years from the proposal to the signing of the RCEP agreement, during which time China has been unable to achieve its goal due to the dramatic changes in the international political and economic environment and the uncertainty of national considerations.
At a time when the outcome of the U.S. election, fraught with controversy and tainted by fraud (so far, no conclusive evidence has emerged regarding allegations of fraud in the U.S. election), hangs in the balance, China naturally sees the agreement as an opportunity to establish its leadership before the new U.S. president takes office. After all, the RCEP is the world’s largest free trade agreement covering the largest population, the largest area, the world’s largest economy, and second only to the European Union in terms of trade volume, and once it takes effect in 2021, China will have an opportunity for an economic and political re-emergence – since the U.S.-China trade war began in March 2018. The economy has suffered.
China sees the signing of the agreement as a victory for multilateralism and free trade.
China’s Vice Minister of Commerce Wang Shouwen has calculated that China’s trade with its FTA partners will increase from 27% to 35% of its total foreign trade, which will benefit China’s foreign trade. There are three reasons for this: 1. RCEP15 is a collective upgrade of the existing “10+1” FTAs, which will form a unified system of rules within the region, greatly facilitating the region’s business community and import and export enterprises, helping to reduce operating costs and uncertainty risks; 2. The supply chain and value chain within the region, enterprises can participate in the value accumulation in the country of origin, the cross-border flow of goods, technology, services, capital, and people within the region will have great benefits, forming a “trade creation” effect; 3. This means that the market and space for development grows considerably for countries that enter the entire region, thus helping the region to attract investment from outside the region.
All of China’s propaganda does not mention political goals beyond economic ones.
China’s goal is not just to be an economic locomotive in the Asia-Pacific region.
China, of course, is talking about mutual benefit and win-win solutions. But its main purpose is to integrate the entire industrial chain in East and Southeast Asia, making countries more economically dependent on China and reaching political control.
After the trade war before and after the restructuring of the global industrial chain, Southeast Asia has become China’s transfer of the industrial chain to undertake the land, the United States and Europe even want to move China’s production process to Southeast Asia and India. Now with the RCEP, Southeast Asian raw materials and parts exports to China become cheaper, so that the whole move to India is naturally uneconomical, the industrial chain from China outbound momentum can be suspended.
More importantly, Beijing has always exploited the economic dependence of the world on China for political control. After the restructuring of the world’s industrial chains, Beijing has felt that political control is weakening. Signing the RCEP15 can, on the one hand, take advantage of Southeast Asia’s economic dependence on China to strengthen political control; on the other hand, it can weaken the effect of U.S. divide and rule in Southeast Asia. Under the RCEP framework, once there is no United States to rely on, it will be easy for China to assume political dominance, and even if Vietnam is a little disgruntled, it will be easy for China to fix it.
This RCEP is extremely detrimental to Taiwan. Although the outcome of the US election lawsuit is still pending, Biden has already stated several times that he wants to eliminate China’s tariffs. If this comes to pass, India and Taiwan, the two regions outside the trade zone, will be hit the hardest. India will be easy to deal with, as China has already stated that it is welcome to join at any time, but Taiwan will be in a very awkward position.
Taiwan has become increasingly assertive toward the mainland in recent years with the support of the Trump administration, and if Biden comes to power, Taiwan’s situation will change dramatically. Even if the Tsai Ing-wen government kowtows to the Biden administration, it will not get support because China is definitely the dominant player in the U.S.-China relationship.
Japan, Australia have complex mindset toward RCEP
China’s Ministry of Finance said that the first bilateral tariff reduction agreement between China and Japan is a historic breakthrough. The agreement covers 20 areas such as tariff reduction, principle of origin, cross-border electronic transactions, intellectual property protection and movement of people. In terms of tariffs on goods, 91% of tariffs on goods will be eliminated, 86% of tariffs on goods traded between China and Japan, and 83% of tariffs on goods traded between Japan and South Korea will eventually be eliminated. The proportion of goods for which tariffs will be withdrawn among other countries will also reach 86% to 100%.
I have written several articles on the economic dependence of Southeast Asian countries on China with developed countries such as the EU and Japan, including their ambivalence regarding their economic dependence on China and their political control. This is still the case, except that most of the ten ASEAN countries have given up the struggle in the wake of the U.S. election results. But Japan, Australia, and others are still reluctant.
Australia’s Prime Minister Morrison and Japan’s new Prime Minister Kan met face-to-face on November 17 and agreed on a Reciprocal Access Agreement (RAA) on bilateral defense and security issues. The agreement will allow the two countries’ forces to work more closely together and strengthen ties between the two U.S. allies to counter China’s growing ambitions in the Asia-Pacific region.
The relationship between Japan and China has been neither friend nor foe for many years, and both sides of the political spectrum in Japan are wary enough of China to be able to penetrate it.
In the last two decades, Australia has been the hardest hit by China’s Red penetration. As U.S.-China relations have deteriorated under Trump, Australia has adjusted its relations with China, has effectively blocked Huawei from supplying the country with 5G telecommunications equipment for its domestic network, and has become increasingly outspoken in its criticism of China’s domestic politics. It also recently issued a joint statement last week with the United States, the United Kingdom, New Zealand, and Canada (the so-called “Five Eyes nations”) calling on Beijing to reverse its recent disqualification of Hong Kong’s pro-democracy legislators.
But Australia’s economic dependence on China is much greater than its dependence on the United States. China buys almost 38 percent of Australia’s exports, while the United States buys only 4 percent. Because China is Australia’s primary export market, it is not destined to simply reject China. China also saw this as Australia’s weakness and retaliated to Australia’s political criticism by, for example, banning imports of coal and other products from Australia after the Australian government called for an investigation into the source of the new crown virus. The embarrassing results of the U.S. election led to a possible change in direction in U.S.-China relations. Australia had to prepare for how to find its way in the new China-led world order by signing the RCEP along with 14 Asian countries.
But this gesture of goodwill was not reciprocated by a friendly China. Just one day after the agreement was signed, Chinese embassy officials in Australia sent a summary of China’s 14 grievances with Australia to three news organizations, including Australia’s anti-foreign interference law, which was seen as targeting China, a ban on the purchase of Huawei equipment and other Chinese investments, and a diplomatic “crusade” against Australia’s policy toward China’s Taiwan, Hong Kong and Xinjiang. “. “China is angry,” an embassy official explained to the Sydney Morning Herald, “and if you think of China as your enemy, China must be your enemy.”
But the dust is not settling on the U.S. election now. While the mainstream media are busy declaring Biden the winner, with numerous election fraud and scandals surfacing, more than half of Americans believe the election was rigorously fraudulent (47%), including 20-30% of Democrats who believe Biden stole votes from Trump (Rasmussen survey, Nov. 17-18), and lawsuits between various private organizations and the Trump team are steadily progressing (nearly (30 lawsuits have already been dismissed or withdrawn), one might wait for a different outcome than the one preempted by the U.S. mainstream media, and it is not too late for Australia to make substantive adjustments.
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