The U.S. President Obama said, if the Trans-Pacific Strategic Economic Partnership Agreement (TPP) failed, the position of U.S.as a global trade referee would be weakened by China. Aiming to promote his ambitious trade plan, Obama used the logic of foreign policies to sell his trade agreement before. The tone does not only sound like noble, but also easy to catch people’s hearts with its vapid and dull agreement details. Ultimately, the trade agreements concern economic benefits. On trade expansion, China and the U.S. adopt totally different ways.
China concerns about the issues of “hardware of trade”. So China provide ample capital support for the developing countries to build port, airport, highway and other infrastructure which is necessary in global trade and usually undertaken by the Chinese enterprises. China’s efforts to establish the Asia Infrastructure Investment Bank is part of the strategic action. So does China’s “Belt and Road” Initiative to build some super projects in Central Asia for promoting landway and waterway trade.
On trade rules (the so-called “trade software”) issues, the U.S. is the incontrovertible winner while China lags far behind. The rules are very important and they can decide many issues concerning when to levy tariffs on commodity, the level of IPR and investment protection level, what kinds of subsidy are permitted and how the government procurement is conducted. Since the World War II, it’s the U.S. that formulated those rules to a large extent, and persuaded other countries and regions to accept them in global trade agreement. Many years passed, with the efforts of the U.S., the trade agreement has covered more problems. The U.S. Government claimed that the new TPP standards (especially standards concerning E-Commerce and State-owned Industry behavior) may influence China’s behavior because the new ones will become new norms. If the TPP negotiations failed, the reputation of the U.S. in Asia will be impaired, which may bring further doubt about the leadership of the U.S. government. The Chinese government may be glad to see it. But it also means that the present rules of trade that were made by the U.S. and accepted by other countries in the past seven decades will continue to function.
