China Unlikely to Join US-led TPP

Despite slowing growth, China will expand its influence on the global trading system, favoring bilateral exchanges and its own international institutions over the Trans-Pacific Partnership and the WTO, according to the report "At a Crossroad: What China’s New Economic Diplomacy Means for Business," conducted by the Economist Intelligence Unit.

...the report is based on interviews with professionals in academia, industry and trade organizations, and examines how China’s global economic influence will shape international trade.

China continues to participate in WTO processes and complies with its rulings. However, the slow pace of reform in Western-dominated multilateral institutions such as the International Monetary Fund (IMF), and the inability of the WTO to reach consensus on the Doha Round, have driven China to set up new institutions.

The One Belt, One Road initiative, which involves accelerating outbound direct investment along westward routes, is one of the clearest indications yet of a new course for the country’s trade and investment strategy.

Whether China’s own approach to global trade will actually supplant the current multilateral system is not clear. Regardless of the outcome, China and other major economies such as the US are not necessarily pursuing classic trade liberalization in which the state limits its role in boosting trade.

“Companies that have an international business need to realize that China, while not rebelling against existing global trade institutions, is keen to keep the role of the state prominent in trade," says Kevin Plumberg, the editor of the report. "Without the structure of a multilateral agency, trade disputes between large economies could pose significant risks.”

This has been excerpted from 4 December 2015 article by CFO Innovation Asia.