Chinese businesses need not panic after the US-led Trans-Pacific Partnership was inked earlier this week as China will be able to cope with the potential challenges arising from the TPP, according to economists.
"For China, we have to adapt to this brand new rule of the game for the global trade, whether we are willing or not," said Xu Mingqi, an economist at the Shanghai Academy of Social Sciences. "It will certainly pressure us to change, but we don't have to be in a panic."
The US and 11 Pacific Rim countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — on Monday agreed on the TPP free trade pact, which covers 40 percent of global economic output.
The TPP aims to set a higher standard than the World Trade Organization in a free trade zone comprising major economies throughout Asia-Pacific. The talks were initiated by Singapore, New Zealand, Chile and Brunei in 2005 but were dominated by the US after it joined the talks in 2008.
Shi Liangping, another economist at SASS, said the TPP is weak as China is not included.
"When the pact rules out China, it loses the world's largest trader and the massive market as well as its huge potential," Shi said. "The TPP is hardly a global rule of the game if it is without China, and it hurts members of the TPP in return as well."
Shen Danyang, a Ministry of Commerce spokesman, said earlier that China hopes the TPP can be transparent and open and contribute to free trade and investment along with other arrangements in the region.
"We welcome any new proposals from the US, and we hope to work together to promote trade liberalization in the region and globally as well," Shen said.
Song Guoyou, a professor at the Institute of American Studies of Fudan University, said the TPP is unlikely to make a splash as some member countries, like Singapore, New Zealand, Mexico and Canada, have long been free trade partners of the US.
Besides the Shanghai pilot free trade zone, China also built similar zones on trial in Guangdong and Fujian provinces to meet the challenges posed by TPP, said Zhang Lei, a professor at Shanghai WTO Affairs Consultation Center.
China inked free trade agreements with Australia and South Korea earlier this year.
