A leading Chinese commentator has suggested the time is right for China, the world’s second largest economy, to join the Trans-Pacific free trade agreement along with New Zealand and 10 other countries.
Isolation is not the solution and China should be open towards high-standard trade pacts such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Caixin Media founder and publisher Hu Shuli told the 2020 China Business Summit in Auckland.
Hu, a former Knight Fellow in journalism at Stanford University, was named one of the world’s greatest leaders by Fortune magazine in 2017. She couldn’t attend the summit because of the Covid-19 crisis.
Speaking by video from Beijing, Hu said China’s experience of joining the World Trade Organisation showed that even when some demands look out of reach “they can actually be met if we really stretch ourselves.
“The significant progress made on its own government reform, trade zone construction, phase one of the United States-China trade agreement, and an array of other trade and investment agreements that have either been signed or are under negotiation, all make the conditions for China’s entry into the CPTPP more mature.
“There are definitely hurdles, ranging from state-owned enterprises to data security. But other countries with similar social systems and at similar developmental stages to China have already made the leap. China should once again open its arms to embrace the world and proceed with confidence,” she said.
Hu said Premier Li Keqiang mentioned at a press conference during the National Congress that China holds a positive and open attitude toward joining the CPTPP. This was the first time a Chinese leader had publicly stated the country’s position on the CPTPP and it made waves in the international community. “It was the right step to make.”
The CPTPP was signed by trade ministers in March 2018 in Chile. The signatories were Japan, Vietnam, Malaysia, Singapore, Brunei Darussalam, Canada, Mexico, Chile, Peru, Australia and New Zealand.
Those economies account for more than 13 per cent of the world gross domestic product worth $16 trillion. They are also the destination for 30 per cent of New Zealand’s goods exports worth nearly $17 billion and 30 per cent services exports worth more than $7b.
Hu said New Zealand has always been a strong free-trader, and China has been the largest beneficiary of the global trade system.
“We both know the challenges posed by globalisation. Now faced with significantly declining fiscal revenues, bleak times for small and mid-sized businesses, and rising unemployment, all governments are dealing with tough trade-offs. It’s tempting to turn inward.
“But isolation is not the solution. Among all the complex policy signals from China, if we focus on how it reforms, how it opens up, how it follows up with interest in trade pacts, you and I can have a better sense of whether the Chinese economy will emerge out of the crisis stronger, more resilient, and whether it can become more integrated with the global economy.”
Hu said the coronavirus remained a global public health crisis, and the consensus in China is that controlling the virus is the dominant priority. This creates tough questions for the country’s economy, and the turbulence in United States-China relations, as well as rising anti-globalisation and protectionism around the world simply add to the concerns.
She said the virus is largely under control in China now, and overall the Chinese economy has proved resilient. Most parts of the country have very few Covid patients, partly thanks to the strict contract tracing policy. The IMF has forecast that the global economy will shrink by 4.9 per cent this year, but China will grow by 1 per cent.
Hu said China’s consumer market is expanding rapidly, with strong demand for New Zealand’s high-quality exports – dairy, meat, seafood and fruit.
Covid has further enhanced the country’s reliance on e-commerce, which has a penetration rate as high as 80 per cent of China’s internet users. “And we can find a whole new chapter on e-commerce in the newly inked free trade agreement with New Zealand.”
She said New Zealand and China have a constructive and friendly relationship. The two countries are vastly different in many, many ways. But there are also similarities.
“We found that how we dealt with Covid was similar – quite strict contact tracing, coupled with testing and swift entry controls. It’s still too early to claim victory in the fight against Covid, but Chinese people have been highly impressed by the successful measures taken by the New Zealand government, the support of the general public, the efficient communication and the high level of trust.”
Hu said the ties with New Zealand are one example that, at a time when globalisation is suffering strong headwinds, now exacerbated by Covid, China should remain open, bilateral, regional and global.
“The pandemic is a tragedy. But some opportunities and positive changes will emerge out of it, like any period of upheaval. These may include faster digitalisation, behavioral changes and a greater focus on public health.
“But we need to be careful about the trade-offs, try to be systematic, and first of all, remain humble towards science,” Hu said.
– Graham Skellern, © NZ INC.