New Beijing-backed RCEP trade treaty offers hope to emerging markets in Asia
Japanese Prime Minister Shinzo Abe has just had a grovelling meeting with President-Elect Donald Trump. My guess is that Abe offered Trump unconditional support in the South China Sea and Pacific. (There are moves to allow Japan to have an army and nuclear weapons which, considering the history of Nanjing and concerns about rising Japanese fascism, is alarming.)
As Europe implodes and the US goes into protectionist lock-down, the strongest potential area of growth is the Asian region (including Australasia) due to powerful demographics. Christine Lagarde of the International Monetary Fund (IMF) forecasts Asia to drive nearly two-thirds of global growth over 4 years. But that was BT (before Trump).
President Barak Obama saw China as an economic rival and tried to strangle it by creating the Tran-Pacific Parternership (TPP) consisting of 12 South American and Pacific nations and the US but EXCLUDING China in its own backyard. Poking the sleeping dragon with a sharp stick, Obama also transferred military from the Middle East to the Pacific Rim and the South China Sea.
Whether you like it or not, China saw what was coming down the pike and asserted its presence by building those islands.
Trump is throwing out TPP but his protectionist policies as trumpeted have already hit emerging markets just as they they were about to bloom (and boom!). EM stocks are falling off a cliff. Peaceful prosperity for nations such as Vietnam, which has suffered horribly, has been snatched away at the very moment of its flowering in 2016. Its markets are sharply down since the US election and bouncing around like an ECG chart.
It’s the same for all of the EM. The stable economic conditions that would have seen the growth and expansion of a new middle-class as great slices of the population were raised out of poverty – and probably would have brought with it more stable, democratic governments – have been torpedoed.
It’s little wonder that China proposes a new trade deal that Australia is supporting in a significant pivot away from the US.
Reuters reports Xinhua News Agency as saying:
China’s Xi is selling an alternate vision for regional trade by promoting the Beijing-backed Regional Comprehensive Economic Partnership (RCEP), which as it stands excludes the Americas.
Chinese state media has warned Trump against isolationism and interventionism, calling instead for the United States to actively work with China to maintain the international status quo.
“The billionaire-turned-politician needs to prove that derailing the global economy has not been one of the reasons why he ran for U.S. president,” Xinhua said.
So a region that was set to be a new area of hope in the world, now that western leaders have screwed our economics, our politics and our principles, could very well find itself a war zone if the new administration follows through. War is, after all, only economics by other means and investments in defence stocks are on the up. I wonder if one of the things Obama is drilling into Trump in his presidential tuition sessions is continuing US ambition in the very, very wealthy Asia.
If the US doesn’t engineer a war, then Trump’s protectionism is the very mechanism that could give China and the region the chance to break out as world economic leaders while the US self-destructs and developed Europe splinters — under hard conditions in the short term but clear winners in the long.
Of course, the alternative would be a world revolution in favour of all humanity but how likely do you think that is given the current circumstances?
My dream is that the Asian region will enjoy the springtime that the West had after World War II, complete with its own equivalent of the 1960s (ours, not theirs when the Allies bombed the hell out of Indo-China). And that they won’t make the same mistakes.
My dread is that the West will spend those decades choking on our own fossil-fuel pollution under the draconian rule of the Trump era and jealously stamp out all sparks of life elsewhere.
I am my brothers’ keeper and I am my sisters’ keeper. Love is the glue that holds us together. Without that we are nothing.
EDIT: More information.
THE DIPLOMAT: Should America Fear China’s Alternative to the TPP? “RCEP is unlikely to include any provisions on issues such as labor, food safety, and the environment, or on sensitive political areas like government procurement. … the U.S. should practice more restraint in framing the TPP as a counterweight to the Chinese-led RCEP. … Finally, the U.S. should pressure its TPP partners which are also negotiating the RCEP (there are seven: Australia, New Zealand, Japan, Vietnam, Malaysia, Myanmar, Brunei) to press for standards and regulations in the RCEP that can be consolidated with the TPP.”
CNBC: A likely beneficiary of Trump’s tough talk on trade: China
CHINA DAILY: Both the US and China deserve better than TPP
THE TELEGRAPH: China will struggle to fill vacuum in Asian trade after US’s ill-judged exit