Yet a new trading bloc - is it necessary, or would a renovated and enlarged ASEAN good enough to serve Asian needs?
 The centrality of China in the intra-Asia trade is obvious. It's market share of the Association of Southeast Asian Nations' (ASEAN) total bilateral trade flows increased from 11.8 per cent in 2010 to 18 per cent in 2019. Conversely, Japan's share of ASEAN trade flows fell to eight per cent in 2019, from 10.9 per cent in 2010.
One might have thought that would have been a satisfactory trajectory for China's market share growth. But no. Now we have a rival and overlapping trading bloc called the Regional Comprehensive Economic Partnership (RCEP), which now includes China, Japan, South Korea as well as Australia and New Zealand.
ASEAN membership includes Cambodia Thailand, Malaysia, Indonesia, Laos, Burma, Singapore, Brunei and Vietnam. For RCEP membership one now adds China, South Korea, Japan, Australia and New Zealand to the list.
The 15-member RCEP creates the world's largest trading area with combined GDP of US$30 trillion.
"The pact will eliminate tariffs on 92 per cent of members’ products," reports IHS Media, though the Wikipedia entry is more equivocal, restating the promise as "it is expected to eliminate about 90 per cent of the tariffs on imports between its signatories within 20 years".
“In the past six/seven months our volumes have grown by more than 30 per cent due to the impact of RCEP,” said Danny Hoffmann, managing director of Zim's Hong Kong regional unit, the Gold Star Line. “Our competitors are also increasing their capacity in the region to cater for the growth in volume."
But with Japan, China and South Korea added to the list of ASEAN players that is hardly surprising.
The advent of the new trading bloc, likely to be dominated by China has had a mixed reception. For hawkish Westerners, it is a move to lock out non-regional powers the way the United States has done from the enactment of the 1823 Monroe Doctrine, the US policy that holds that "any" intervention by external powers in the politics of the Americas is a potentially hostile act against the US.
India is hostile to RECEP as it fears China projecting power not only in the eastern Pacific, but ranging south to New Zealand. India takes little comfort being the regional power of south Asia, as it sees China involving itself in the affairs of Sri Lanka and Pakistan.
Indian External Affairs Minister Subrahmanyam Jaishankar said it is not in India's interest to join the RCEP, as the trade deal would have "fairly immediate negative consequences" for India's economy. Zia Haq, associate editor at the Hindustan Times, agrees, saying India has "rightly shunned" the RCEP because at the moment it cannot take advantage of free-trade agreements.
"India fears the RCEP will also limit its policy-making room in areas such as foreign investment," he said. Mr Haq said that according to some analysts, there will be limited gains from the RCEP without India, which is Asia's third-largest economy.
Yen Huai-shing, deputy director at the Chung-Hua Institution for Economic Research, wrote in the Taipei Times that the RCEP is "not to have a strong impact" on Taiwan. She said that most observers did not expect the RCEP to provide a high degree of openness, and that it provides no dispute settlement mechanism when handling certain trade issues such as meat inspection regulations, adding, "In other words, they are more symbolic than binding".
Khai Tou Chan, Hapag-Lloyd's senior director/trade management, was more optimistic. “We expect RCEP will help drive intra-Asia container volumes in the long term, as manufacturers continue to integrate their supply chains within Asia to take advantage of the lower tariffs and red tape,” he said.
CNBC reported that the economic benefits from RCEP would be modest and could take years to materialise, with analysts from Citi suggesting that RCEP was "a coup for China" non-economically. Citi said that India is one of the biggest losers from RCEP, adding, "exclusion will likely make India less attractive as an alternative production base versus ASEAN."
One might see this as a social insurance policy on the part of Xi Jinping's regime in the face what appears to be a gradual decoupling from the Chinese economy by those economies of North America and Europe.
The whirlwind visit of US House Speaker Nancy Pelosi to Taiwan was an interesting, and most revealing, exercise in American domestic politics, however unwitting. Most think the idea of a visit was harebrained and dangerous. Had it been a mere talking point within the faceless Democratic Party politburo and dismissed as harmless blue sky-ing, all would have been well.
But after the intention to visit was announced, the affair took on a life of its own. An anti-China policy is the one thing both the mutually loathing Republicans and Democrats share. It is a policy not beloved of the vociferous, but relatively small progressive wing, that now dominates the Democratic hierarchy. But it is a policy shared by the vast majority of "blue dog" Democrats as party centrists are called.
Having announced her intention to visit Taiwan, it became downright dangerous not to. It would be viewed a bowing to the plainly obvious scare tactics deployed by Beijing, now enraged that its every sensitivity is not accorded the fullest and most fearful kowtowing.
Had Ms Pelosi been scared off and failed to visit Taiwan, she would have likely lost millions of patriotic blue dog Democrats who would have voted Republican because they really have little sympathy for the childish woke eco-geeks who have taken over the party leadership in the Biden era.
As for RECEP, one might look at this development as China building a world of its own at a time when it is losing friends and business associates in the West. Brilliantly managed, RECEP might well amount to something if there was a real need for it.
In a sense it appears to be a measure of forward thinking on the part of China of how it might thrive in an otherwise friendless world. Thus, the bloc may end up as a feel-good exercise with little practical impact, or loom large as a rule-making body under Beijing's control that might look like a born-again Monroe Doctrine for the Pacific. |
