China Should Not Be Afraid Of TPP.

12 countries, led by the United States, attempt to use TPP (Trans Pacific Partnership) to "humiliate" and "impede" China's comprehensive internationalization.

On the other hand, Obama expressed his enthusiasm when he visited Xi Jinping with us. On the other hand, he did not hesitate to join hands with Japan in facilitating the cooperation framework of TPP. At the same time, he claimed that the main purpose of the organization was to exclude China from participating in the formulation of rules on international trade and cooperation.

Excluding China from TPP, it has made great repercussions and discussions at home and abroad.

Some people think that TPP will be a great disaster for China, adding more trouble to economic uphill and pformation under the "new normal".

Some domestic scholars even believe that the negative impact of TPP on China's GDP growth is as high as 0.5 to 1 percentage points a year.

However, some scholars disagree.

Ma Guangyuan, a domestic scholar, said that it is absurd for TPP to destroy China.

My old friend, Professor Lu Ding, a famous Chinese economist and professor at the University of Fraser Valley University, Canada recently issued a very convincing article entitled "China is not a big loser of TPP" (see Annex).

It has been argued in international economics that when a number of countries form a customs union or a trade agreement, there will be two types of trade effects on countries other than the Treaty: one is "trade creation" and the other is "trade diversion".

The term "trade creation" refers to the new trade opportunities created by the reduction of trade barriers between the member states of the agreement.

The resulting trade activities, from scratch, will certainly have no negative effects on other countries outside the compact.

What other countries are concerned about is "trade diversion".

Before the establishment of the trade agreement, trade barriers were treated equally to all countries, and merchants always imported products from the lowest price areas.

After the establishment of the trade agreement, trade barriers have been reduced among member countries, and the other members of the non member countries are still building up. Import trade may shift from non member countries with lower price and more competitive competitiveness to the weaker competitive member countries, thus causing damage to the trade interests of the countries outside the treaty.

So, how much trade will TPP cause?

What's more, according to the information already published, this agreement is not as important as the official's rendering to eliminate or reduce trade barriers among Member States.

The US government claims that the agreement will eventually eliminate 18000 tariffs.

In fact, under the framework of WTO and the existing FTA, more than eighty percent of the products exported from the TPP signatories to the United States are exempt from tax.

As for China's exports to the United States, because most of them are the most favored products, the tax exemption ratio is even higher.

TPP's tariff relief mainly affects agricultural trade between developed countries such as the United States, Japan, Australia and Australia, and has little impact on China's exports.

For example, in the automotive industry, TPP stipulates that more than forty-five percent of the components of each vehicle need to be generated from member countries, which means that regional concessions can be enjoyed.

However, the North American Free Trade Area Agreement composed of the three countries of the United States, Canada and Mexico stipulates that a car with a cost of more than fifty-three percent will be counted as a regional product.

Therefore, once the TPP comes into effect and covers the North American Free Trade Area, the rules of origin of these three markets will become more relaxed, which is in fact conducive to the export of auto products by the countries outside the country.

This shows that the trade diversion effect of TPP is very slight, and even in some industries, there may be a reverse trade pfer, which is beneficial for the third country to export to member countries.

More importantly, according to the Nobel Laureate in economics, Gao Teague Liz, chief economist of the former world bank, TPP does not mean "free trade". In essence, it is an agreement to control trade and investment among Member States.

His views are valid:

It stipulates the minimum years for the protection of pharmaceutical patents among Member States. All countries must commit themselves to coordinate macroeconomic policies to avoid competing for depreciation of the exchange rate.

Professor Lu, from the theory and the current bilateral and multilateral trade relations, demonstrates that TPP's impact on China's foreign trade is not as serious as some people are afraid of.

Moreover, China can overcome the negative impact of national trade liberalization on China's foreign trade in the TPP range by taking various measures to crack down on TPP members.

What I am particularly emphasizing here is that the trade difficulties China faces today and the difficulties of the United States are far less serious than before the accession to WTO.

Secondly, China is the world's largest trading nation, and the status of the largest exporter will not change.

In addition to Japan and Australia, other countries within the TPP are Chinese.

A large deficit shows that it is difficult for them to get rid of China's export advantage.

Finally, when China's economic growth slowed sharply in other countries, it maintained relatively high and stable economic growth, fully reflecting the power of China's huge internal market and the great potential of China's endogenous growth.

Under the "new normal", China is ready, even if the growth of foreign trade is slow, China can still maintain stable economic growth.

Once the world economy recovers fully, China will quickly occupy a larger share of the world market by virtue of its super manufacturing capability and its new industrial foundation that has been cultivated over the past 30 years.

The high speed rail landing in the United States, defeating Japan in Indonesia, making breakthroughs in Russia and Pakistan is a good example.

Xi Jinping will visit Britain from 19 to 22 this month. Before that, Britain had reached an agreement with China Nuclear Power Group to invest 24 billion 600 million pounds in the construction of a nuclear reactor in the United Kingdom. After Xi Jinping's visit to Britain, there will be more cooperation.

Recently, Pakistan is going to spend $3 billion to buy 8 conventional submarines in China.

All this proves that China is actually not satisfied with small business and is not satisfied with making exports on the low end. Instead, it wants to make use of 5 to 10 years to make China's manufacturing industry enter the "middle and high end" level of the world industrial chain.

There are various reasons that TPP can make China feel unhappy for a while. However, the loss of the US and Japan has limited impact on China's internationalization and modernization. There is nothing to be afraid of.