China Moves to Fill World Leadership Void as Trump Era Dawns

by David Tweed, Toluse Olurunnipa / November 20, 2016 / Bloomberg

China has pounced after Donald Trump’s election win to claim the mantle of the world’s champion for free trade and against climate change, prompting a melancholy warning from President Barack Obama that the U.S. risks getting left behind in Asia.

Obama met in Peru on Sunday with leaders of the 12-nation Trans-Pacific Partnership, a trade deal that Trump vowed to kill along with the Paris Agreement to tackle climate change. Obama said that TPP members told him they want to move forward with the pact, “preferably” with the U.S.

“I believe that TPP is a plus for America’s economy,” Obama told reporters while attending meetings of the Asia Pacific Economic Cooperation, the first major global summit since Trump’s win. “Not moving forward would undermine our position across the region.”

China has wasted no time in seeking to reassure nations wary of a more protectionist U.S., with President Xi Jinping telling APEC leaders that he aimed to boost global trade and provide a level playing field for foreign companies. Last week, China indirectly chided Trump for his views on global warming, which he has called a Chinese hoax to hurt American manufacturing.

TPP Future

At the meeting in Peru over the weekend, leaders of 21 Pacific Rim nations agreed to continue working toward a regional free trade area and resist any shift toward protectionism. The 21-member group said the benefits of trade, investment and open markets required better explanation.

Yet divisions remained on how to move forward. China made its case for the Regional Comprehensive Economic Partnership, a 16-nation trade pact that excludes America. Other countries wanted to preserve the TPP, with Peruvian President Pedro Pablo Kuczynski saying that leaders discussed using it as one possible pathway to the Free Trade Area of Asia Pacific, APEC’s ultimate goal.

“It seems like many Asian leaders want to make one last ditch effort to help TPP and try to get it back on the table, but given the political climate that will be very difficult,” Joseph Incalcaterra, Asia-Pacific economist for HSBC Holdings Plc, told Bloomberg Television.

U.S. allies in Asia who backed the TPP are hedging their bets. Japanese Prime Minister Shinzo Abe, who flew to New York last week to discuss free trade with Trump, told Xi at APEC that he wanted to improve ties.

‘Smooth Transition’

“China will need to continue opening itself up to the world,” Australian Trade Minister Steven Ciobo said in a Bloomberg TV interview from Canberra on Monday. “We’ll be looking at working alongside countries like China, indeed any country, that’s willing to open up the contestability of those services and investment market places.”

Xi used his time in Lima to tout the benefits of the 16-nation RCEP trade deal.

“We should deepen and expand cooperation in our region,” Xi said. “Any attempt to undercut or exclude each other must be rejected.”

Xi also called for “a smooth transition” to a new U.S. administration. Trump has blamed China for taking U.S. jobs and has said he will instruct his treasury secretary to label the country a currency manipulator.

“For years, China free-rode on America and Europe to make global rules and develop free trade,” said Nick Mabey, who used to advise the U.K. government on climate issues and now runs E3G, a policy-research group. “Now China realizes it needs to be more responsible for global rules because it needs that for its own development. They want stability globally so they can invest abroad while they manage the transition of their own economy.” Read more...

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