Also, the Regional Comprehensive Economic Partnership (RCEP) proposal is now expected to get greater currency. It was designed as a counterweight to the TPP, from which China is left out.
Donald Trump’s election victory in the US has almost sealed the fate of the TPP. He does not want it. He has also indicated he will take a more protectionist stance.
This is almost certain to accelerate negotiations for the RCEP, which does not include the US.
The RCEP, the first pan-Asian trade deal ever, was launched by Asean in 2012, and has gone through 15 rounds of negotiations. It is heavily promoted by China.
According to a CCTV report, the likely demise of the TPP comes at a time when Malaysia is looking east to drive its trade and investment growth. When Prime Minister Najib Razak visited China recently, Malaysia signed USD35 billion worth of business deals.
Saying China was Malaysia’s largest trading partner, Najib added that it had the capital to invest in Malaysia. So, he said, it was only right that Malaysia looked at the various economic opportunities of working closely with China.
The CCTV report quotes Professor Yeah Kim Leng, an economist at Sunway University, as saying that China would become an even more important partner in terms of driving Malaysia to the next level of growth.
Meanwhile, Bloomberg reports that China’s bid to assert its economic leadership is gaining traction in its push for the Asia-wide RCEP.
The 16 countries involved in RCEP include all 10 members of Asean as well as China, Japan, India, South Korea, Australia and New Zealand. They represent about 30 per cent of global gross domestic product and almost half the world’s population. Some had already signed up for the TPP.
President Xi Jinping is expected to use this week’s Asia-Pacific Economic Cooperation summit in Lima to gain momentum for the RCEP.
Bloomberg says Japanese Prime Minister Shinzo Abe on Tuesday confirmed his nation is turning its attention towards RCEP.
It quotes Song Hong, a senior fellow at the Chinese Academy of Social Sciences, as saying that a China-led pact will be a good option for those countries which rely heavily on free trade, including Australia, Singapore and Japan.
Bloomberg says China is eager to get RCEP agreed to this year, but recognises it is unlikely. Some countries would prefer to wait and see if TPP can somehow regain traction once Trump is in office, it quotes a China official involved in the talks as saying.