The Rise of China: US Withdrawal from TPP and the Consequences for the Pacific Rim Economy

The United States’ withdrawal from the Trans-Pacific Partnership (TPP) in 2017 has sparked a significant shift in the economic dynamics of the Pacific Rim. This decision has raised questions about the future of trade in the region and the potential for China to fill the void left by the US. The question that arises is, “Has the US ceded control of the Pacific Rim economy to China by pulling out of the TPP?” To answer this, we need to delve into the implications of the US withdrawal and the subsequent rise of China in the Pacific Rim economy.

The US Withdrawal from TPP: An Overview

The Trans-Pacific Partnership was a trade agreement between 12 countries that border the Pacific Ocean, including the United States. The TPP aimed to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth. However, in 2017, the US, under the Trump administration, withdrew from the TPP, arguing that it would undermine the US economy and sovereignty.

China’s Rise in the Pacific Rim Economy

With the US withdrawal from the TPP, China, the world’s second-largest economy, has found an opportunity to increase its influence in the Pacific Rim. China has been pushing for the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among 15 countries in the Asia-Pacific region. The RCEP, which was signed in 2020, is now the world’s largest free trade agreement, covering nearly a third of the global economy.

Consequences for the Pacific Rim Economy

The US withdrawal from the TPP and the subsequent rise of China have several implications for the Pacific Rim economy. Here are some key consequences:

• Shift in Trade Dynamics: With the US out of the TPP, trade dynamics in the Pacific Rim are likely to shift towards China, potentially leading to a realignment of economic power in the region.

• Increased Chinese Influence: The RCEP allows China to cast itself as the “champion of globalization and multilateral cooperation” and gives it a central role in shaping the region’s trade rules.

• Impact on US Businesses: US businesses may find themselves at a disadvantage as they could face higher tariffs and barriers in the RCEP countries compared to their counterparts within the bloc.

Conclusion

While it’s too early to definitively say that the US has ceded control of the Pacific Rim economy to China, it’s clear that the US withdrawal from the TPP has altered the economic landscape of the region. The rise of China and the signing of the RCEP signal a shift in the balance of economic power in the Pacific Rim, with potential long-term implications for trade and economic growth in the region.