The evolution of China’s regional trade agreements: power dynamics and the future of the Asia-Pacific

Abstract

There is a widespread consensus that China's growing network of regional trade agreements in the Asia-Pacific has crucial strategic and economic implications for states in the region. Yet despite the recognition that China's agreements are initially limited and then expanded substantially over time, few accounts explore the strategic and economic implications of this aspect of China's approach. This article addresses this flaw by drawing attention to the relation between regional power dynamics and China's gradualist approach to negotiating regional trade agreements. It presents a new framework which suggests that due to China's steadily improving economic position visa -vis its regional counterparts and the growing economic dependence of these partners on it, China's negotiating approach increases opportunities to maximize its growing bargaining leverage and influence over time and thereby improve its regional position still further. This article concludes by drawing out the implications of this for the region.

The impact of preferential trade agreements on bilateral trade: A structural gravity model analysis

“…For example, the co-efficient for the EU is significant, while SAFTA, ASEAN, BIMSTEC and NAFTA do not significantly impact bilateral trade. Sampson [ 46 ] studied on the evolution of China’s PTAs and stated that the increasing network of China’s PTAs is important and strategic for the Asian region. Pant and Paul [ 47 ] evaluated PTAs for India and argued that PTAs are good for the intra-regional trade volume and welfare of countries.…”

Trade, Tax, and Development Finance

“…Under phase I of the agreement, Pakistan introduced zero tariffs on 35 percent of China's products, while China has reduced duties to 0 percent on 40 percent of Pakistan's products. Pakistan has requested revision of existing elements of the treaty because it argues that the agreement brings few economic advantages (Sampson 2019). However, given the deepening strategic relationship between the two states and the importance of China's investments, it is difficult to see Pakistan genuinely resisting a deepening of trade integration with China or resisting the BRI more generally.…”

“…China's agreements often do not cover 'substantially all trade' with partner countries, and they incorporate large lists of exemptions and relatively shallow liberalisation (Sampson 2019). 4 At the same time the negotiations are structured in a way that maximizes China's leverage over time and are often linked to security cooperation (the case of Pakistan is a particularly prominent illustration of this).…”

“…This approach also has the effect of increasing China's bargaining power, given its comparatively higher levels of economic growth and growing dependence of its trade partners. See(Sampson 2019)…”

The Downstream Implications of the EU-China Investment Agreement: Lessons from Trade

“…19 They are also notable because the Chinese government has exhibited a clear preference for concluding agreements that do not remain limited but rather anticipate subsequent negotiations as a means of expanding the agreements over time. 20 For example, in China's very shallow trade agreement with Pakistan there are provisions that provide for further extension of the treaty at a later date under phase II of the agreement. This is analogous to the provisions in section VI, article 3 of the CAI.…”