China’s application to join CPTPP comes to the fore, after the UK’s entry

​With the UK’s addition to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the question of the next applicant, China, joining comes front and centre. Other applicants like Taiwan, Ecuador, Costa Rica and Uruguay are also keen to be part of a grouping that could become the largest free trade area in the world. Academic Min-Hua Chiang outlines the stakes involved.
People walk past the central business district, in Beijing, China, on 21 June 2023. (Tingshu Wang/Reuters)
People walk past the central business district, in Beijing, China, on 21 June 2023. (Tingshu Wang/Reuters)

After the UK signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 16 July, the focus has shifted to China, the next applicant in the queue.

CPTPP, previously known as the Trans-Pacific Partnership (TPP), has been led by Japan after the US withdrawal in 2017. With the UK's entry, it currently incorporates 12 countries across the Asian, American and European continents. The CPTPP could become a larger trade deal as China, Taiwan, Ecuador, Costa Rica and Uruguay have submitted their applications to join. South Korea and Thailand have also expressed their interest in joining the trade bloc.

Among the potential members, China is the most noteworthy one. Not only is it the next one in order of entering the agreement but its population, GDP and global trade are significant and even larger than the current 12 CPTPP countries combined. In addition, China’s joining of the CPTPP will allow the country to become the leading economy in the two giant economic zones — the Regional Comprehensive Economic Partnership (RCEP) and the CPTPP — in the world.

... China’s membership in the RCEP and its bilateral FTAs with several CPTPP members is expected to make its admission to the agreement easier.

The CPTPP’s significance 

The CPTPP’s several specific features highlight its striking geopolitical and economic importance and deserve our attention.

First, the CPTPP stands at the epicentre of global economic integration as it incorporates members from key economic zones in the world, including Mexico and Canada under the United-States-Canada-Mexico agreement, and Japan, Australia, New Zealand, Singapore, Malaysia and Vietnam under the RCEP. Given its diversified coverage of member countries from different continents, the CPTPP is likely to make greater contributions to global economic integration and foster production efficiency between Asia, America and the UK. The integration is particularly notable amid the growing wave of deglobalisation induced by rising geopolitical confrontation between the US and China.

New Zealand Prime Minister Chris Hipkins poses for a picture with Japanese Minister of Economic and Fiscal Policy Shigeyuki Goto, New Zealand's Minister for Trade and Export Growth Damien O’Connor, British Secretary of State for Business and Trade Kemi Badenoch, and Malaysian Minister of Investment, Trade and Industry Tengku Abdul Aziz, as Britain signs the treaty to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, in Auckland, New Zealand, 16 July 2023. (Lucy Craymer/Reuters)
New Zealand Prime Minister Chris Hipkins poses for a picture with Japanese Minister of Economic and Fiscal Policy Shigeyuki Goto, New Zealand's Minister for Trade and Export Growth Damien O’Connor, British Secretary of State for Business and Trade Kemi Badenoch, and Malaysian Minister of Investment, Trade and Industry Tengku Abdul Aziz, as Britain signs the treaty to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, in Auckland, New Zealand, on 16 July 2023. (Lucy Craymer/Reuters)

Second, the 12 CPTPP members, including the recently joined UK, account for 7% of global population, 15% of global GDP and 16% of global trade. These shares are lower than those of other economic zones such as RCEP and the European Union (EU). However, with the potential members added, including current applicants and interested parties, the CPTPP’s importance in the world will rise to 25% of global population, 53% of global GDP and 30% of global trade, making it the largest FTA zone in the world. 

Third, the CPTPP contains major commitments on labour, environment, intellectual property, and state-owned enterprises regulations, which are not covered by another mega FTA-RCEP. Hence, the CPTPP has potential to set a new standard for economic cooperation by aligning regulatory frameworks among member states, which may eventually navigate to other multilateral trade deals.

China’s interests in joining the CPTPP

On 16 September 2021, China formally applied to join the CPTPP. Although it might take longer for China to adjust its domestic economy and rules to meet with the agreement’s “high-standard requirements”, several factors might facilitate China’s entry.

First, China’s membership in the RCEP and its bilateral FTAs with several CPTPP members is expected to make its admission to the agreement easier. China is connected with nine CPTPP countries through either bilateral FTA or their memberships in RCEP, including Chile, Peru, Singapore, Malaysia, Vietnam, Brunei, Japan, Australia and New Zealand. In comparison, UK has bilateral FTAs with eight CPTPP members

Unlike the UK, China is a much more important trade partner for many CPTPP members.

The ASEAN secretary-general and leaders of the 15 RCEP member countries with their trade ministers after the pact was signed on 15 November 2020. (Ministry of Communications and Information)
The ASEAN secretary-general and leaders of the 15 RCEP member countries with their trade ministers after the pact was signed on 15 November 2020. (Ministry of Communications and Information)

Unlike the UK, China is a much more important trade partner for many CPTPP members. Close economic ties have already persuaded some CPTPP members, such as Singapore, Malaysia and Vietnam, to voice their support for China’s entry.

China may want to accelerate domestic economic adjustments to meet the “high-standard requirements" under CPTPP as soon as possible to ease its entry to the agreement. Evidently, membership to the CPTPP is advantageous to China as it could offset its prolonged economic slowdown at home with the greater market for Chinese exports to the members’ market. China’s greater economic liberalisation under CPTPP is also expected to attract more foreign direct investment, thus retaining its importance in the global supply chain network. China’s greater economic integration with the other countries through CPTPP is especially important when the US and Europe are trying to de-risk the potential impact by reducing their economic dependence on China.

Strategically, China’s participation in the CPTPP will bring its economy closer to those of US key allies, including the UK, Canada and Mexico.

Furthermore, China might want to retain its competitive advantage over other developing countries, such as Vietnam, which are already in both the RCEP and CPTPP, in exporting goods to the global market. For example, CPTPP includes textiles and apparel goods not covered by RCEP. Developing countries in CPTPP, such as Vietnam, are expected to gain more competitive advantage over other key textile producers, such as China, in exploring greater market potential in other CPTPP countries.

A street vendor (left) pushes her trolley to sell coffee and soft drinks in Hanoi, Vietnam on 1 June 2023. (Nhac Nguyen/AFP)
A street vendor (left) pushes her trolley to sell coffee and soft drinks in Hanoi, Vietnam on 1 June 2023. (Nhac Nguyen/AFP)

Strategically, China’s participation in the CPTPP will bring its economy closer to those of US key allies, including the UK, Canada and Mexico. In particular, the UK is part of the security partnership (AUKUS) with Australia and the US. AUKUS is considered an essential part of the US Indo-Pacific strategy against China’s power expansion.

A ‘zero-sum game’ through the CPTPP

China’s joining of the CPTPP will not only expand the CPTPP’s weight in the global economy but also increase its global influence, thus challenging the US power presence in the world. 

China’s exertion of its influence will be shown in its blockage of Taiwan’s entry to the CPTPP (if China enters before Taiwan) since a new member will require the consensus of existing signatories. China had previously blocked Taiwan’s entry to the RCEP. China’s foreign ministry also stated clearly its strong opposition to Taiwan’s entry to the agreement. Given Taiwan’s importance in the supply chain network, the island’s exclusion from CPTPP will have significant implications for the restructuring of the global production network.

Without a strong economic alliance, Washington’s direct economic confrontation with Beijing could be restrained by American allies’ strong trade and investment relations with China.

People walk in a shopping district in Beijing, China on 14 July 2023. (Thomas Peter/Reuters)
People walk in a shopping district in Beijing, China on 14 July 2023. (Thomas Peter/Reuters)

The US had successfully established its global hegemonic power through a combination of military and economic policies after WWII. The complexity of military and economic ties had guaranteed national security and economic prosperity among capitalist countries during the Cold War era. While the military alliances remain resilient today, the economic nexus with its allies has been weakening due largely to China’s economic emergence. While the US allowed China’s integration with the global economy, it did not manage China’s involvement in the global economy until it had grown too big to control. 

Without a strong economic alliance, Washington’s direct economic confrontation with Beijing could be restrained by American allies’ strong trade and investment relations with China. To retain its leadership position, the US may want to either intervene to maintain the balance of power within the CPTPP by re-joining the trade bloc or create another trade deal to counterbalance China’s deep involvement in the institutionalised global economic integration. In any case, the CPTPP is not merely a driving force toward greater economic integration but it will also bring the ongoing geopolitical tensions between the US and China to the next stage that involves the setting of new rules of game in the future global economic operation. 

Related: Chinese membership in the CPTPP: Greater benefits than downside risks | CPTPP: How China’s membership could be a win-win | How can China benefit from the CPTPP? | Mainland China and Taiwan: The political hot potato of their CPTPP bids | 'Driving the blade inwards': Why China may join the CPTPP