44 China The Economist October 9th 2021
China’svisionoffreetrade
S
ometimes chinamakes shrewd decisions. At other times it is
capable of grave mistakes, even acts of wickedness. But the Chi
nese government is rarely silly. In particular, officials do not stake
the prestige of their supreme leader, President Xi Jinping, on a
whim. That makes it worth revisiting dismissive foreign reactions
to a move that, though drylooking, is important and revealing.
On September 16th China formally asked to join the Compre
hensive and Progressive Agreement for TransPacific Partnership
(cptpp), an 11nation trading block that is home to 500m consum
ers in Asia and the Americas. Though China’s timing was sudden,
the move was predictable. Months ago Mr Xi said China would
“favourablyconsider” applying. His word is law. But many foreign
analysts (and in private, some foreign government officials) confi
dently predict that China will never be admitted.
Scepticism is understandable. In the name of market opening
and fair competition, the cptpp’s current members—Australia,
Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore and Vietnam—agree to limit subsidies for large
stateowned enterprises (soes), permit most crossborder flows of
data and outlaw forced labour, among many other promises. If
those standards seem hard for China to meet, given its statist, se
curityobsessed turn in recent years, that is no accident. The
cptppis the orphaned offspring of an earlier, Americanled agree
ment, the tpp. That was crafted by the Bush and Obama adminis
trations with the aim of making Asia and the Pacific into a bastion
of rulesbased free trade, leaving China with the choice of reform
ing its model of statedominated capitalism or remaining on the
outside. Then came President Donald Trump, whose scorn for free
trade and indeed rules led him to quit the tppon his first full day
in office. When Japan guided other founding members to forge a
Trumpless alternative, the cptpp, China spotted an opening.
Officials in Beijing have spent two years studying how hard it
will be for China to join. Their conclusion is that China will find
accession arduous, not least because of strained relations with ex
isting members who have a veto, notably Australia, Canada and Ja
pan. But they also reckoned that China would face still harsher
scrutiny were America to be inside the cptpp—a distant prospect
currently, due to Biden administration pledges to put Americanworkers ahead of corporate profits and expanded global trade.
China, in short, is serious. Its ambition is best explained by dif
ferent forms of rising confidence, some more alarming than oth
ers. Start with a benign, cautious optimism among those some
times called reformers. That camp once promoted economic liber
alisation. In a China intently focused on political control, stabili
ty, security and selfreliance, reformers now find it safer to push
for a more efficient state, not a smaller one. These scholars, tech
nocratic officials and business types argue that China is so strong
and technologically advanced that it gains, on balance, from re
moving barriers to trade and upholding common international
rules, for instance to protect Chinese intellectual property. Such
advocates of openness believe that China can compete in a free
trading world, but is not yet ready to write trade regulations on its
own. They welcome a chance to help shape norms during negotia
tions such as the cptpp-accession process, which they expect to
take years. They hope that external pressure will overcome special
interests at home, as happened when China joined the World
Trade Organisation (wto) in 2001. Given the consensus in official
Beijing that America is bent on thwarting China’s rise, pressure
from the cptpp—a pact without America in it—is especially wel
come. Wang Huiyao runs the Centre for China and Globalisation, a
thinktank that champions cptppentry. China’s economy has
grown 11fold since admission to the wto, he notes. It is “an easy
sell” to call cptppa new chance to join a miniwto.
A different sort of confidence moves nationalists, including
government leaders, who embrace the cptpp. They do not just
think China’s stateled system capable of competing in the world.
They think it is manifestly superior. Nationalistminded Chinese
officials and scholars think that market forces bring desirable effi
ciencies, but their priority is stability, which they see as China’s
secret weapon. As exhibit athey point to their strict, collective
handling of the covid19 pandemic, in contrast with grim death
tolls in the freedomobsessed West. Their gamble is that joining
the cptpp will increase foreign trade and impose useful disci
plines, without undermining strong political control of the econ
omy. They sense a historic chance to advance a cherished goal,
namely to make the world respect China’s political system.
Sceptics about China’s chances assert that cptpp rules ban sub
sidies and aid for state firms. In fact there are exemptions for lo
calgovernment soes and those delivering unprofitable domestic
services. In accession talks China may accept regulation of soes
operating abroad in profitmaking commercial sectors, while in
sistingthat state firms at home are needed to supply jobs, manage
critical resources or maintain an orderly financial system. China’s
everstricter rules about crossborder data flows will be harder to
finesse, though publicorder exemptions may help. China simply
denies it has forced labour, daring trade partners to disbelieve it.America vows to work with allies, then doesn’t
The biggest barrier to China’s entry is not this or that rule, but
trust. A senior Japanese official expresses worry about China of
fering to write domestic laws that purport to comply with the
cptpp, but fall short. It would be easier to challenge such moves
with America at the table, he sighs. Fears are justified. China has a
freetrade pact with Australia, but is currently blocking many ex
ports from that country, in an unofficial boycott imposed after
Australian leaders called for a global probe into covid19’sorigins.
Some cptppmembers think China is too big a bully to join.China’s
bet is that, for a decisive number, it is too big to keep out.nChaguan
China’s motives for joining the cptpprange from benign to worrying