China’s Perspective of Regionalism In

Asia-Pacific

Xiance WangOct, 2015

Northeastern University

Main Initiatives Of Integration China is

Facing ASEAN+1 RCEP (10+6) TPP China Japan Korea (CJK)FTA—(RTAs/FTAs) FTAAP

Current Configurations of Regional Integration

Initiatives

China’s Priority Order of Integration Paths

Two Parallel Tracks

ASEAN --- ASEAN+3 FTA --- RCEP16 ---FTAAP

P4 --- TPP9 --- TPP12 ---TPP12+ ---FTAAP

China’s Consideration on Pursuing RCEP Track Open regional market with enormous potential for

development Present an immediate market base to counterbalance

the TPP, from which China is excluded. Build hub-and-spoke ecosystem—China sits in the joint

of trade (everyone to every one/every one to China) Use RCEP as a test ground to unify its tracks of bilateral

and multilateral economic cooperation, as well as its regional and sub regional free trade and investment arrangements.

Integration with China’s OBOR initiative

China’s Consideration on Pursuing TPP Track 1 Arguments inside China: conspiracy theory,

pessimism theory, standby theory, spoiler theory, rival theory, the US-dominate theory, the exclusive theory and the “get involved immediately” theory.

It’s not realistic for China to enter TPP negotiations now.

Realistic difficulties for China to participate TPP: 1.lowering tariff and nontariff barriers 2.solving on-the-border issues 3.solving behind-the-border issues

China’s Consideration on Pursuing TPP Track 2 On-The-Border Issues:Trade in Service: Market Access Is the ChallengeIt’s commitment to open up levels of trade in service when entering the WTO is the minimal requirement of the TPP as well, however, that opening process has not been completed. Investment: The Issue of National Treatment Before Market AccessFor the establishment, acquisition, and expansion of foreign direct investment (FDI) enterprises, national treatment before market access and negative list management have not bee committed. (Ps. China’s authority announced in 10/19/2015 that China will take trail implement in certain fields and form exposure draft form the public since 12/1/2015)

China’s Consideration on Pursuing TPP Track 3

Behind-The-Border Issues:1. The Unification of Standards (U.S.-enterprises and industrial

organizations/China- State certificating and lack of third-party certification )

2. Environmental Protection (weak institutional mechanism)3. Labor Standard Protection (freedom of association and collective

bargaining of wages)4. State-owned Enterprises Governance (share of government capital and

preferential treatment)5. Government Procurement (no transparency and third-party monitoring)6. Intellectual Property Protection ( lower standards for IP protection)7. E-commerce and Internet Freedom (China needs to take necessary

restrictive measures on media)

China’s Option –RCEP/TPP

China is not yet qualified to be a party of the TPP negotiations. In the future, China can positively participate and promote the RCEP negotiations, and seek the integration of the RCEP pathway and TPP pathway, which may be a practicable course for China.

China’s worrisome: Losing the right to help formulate the trade and investment rules of the twenty first century if it’s excluded from the TPP negotiations.

A Perspective beyond the Case of China

The existing pathways of integration may have different applicability for developing and developed countries. Radical integration may cause systemic risks.

The establishing of super-sovereignty global values chain management principles may ignore the individual economies’ demands of designing their domestic regulatory system accordingly, and it may also cause systemic risks. (ISDS-Investor-state dispute settlement)

Questions

How do sovereign states prevent the risks brought by the expansion of the cross-border capitals that going beyond the supervision of the sovereignties?

Should the rule-setting principles of integration be common bottom line upgrading focused or it should be optimal path focused?

Thank You~!