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By Salman Rafi Sheikh,: He is a Research Analyst on International Relations and Pakistan’s Foreign and Domestic Policy exclusively for the online magazine New Eastern Outlook.

Although the Biden administration, which has followed in the footsteps of the Trump administration, has sought to build a global anti-China coalition since taking office, its efforts in the Indo-Pacific region continue to lack support for the US-led “war.” ‘ against China. A key reason for this failure is not only the fact that the US has no economic program to back up its military rhetoric, but also that with China’s meteoric rise, the Indo-Pacific region has gained a trading partner it cannot do without be able. China’s centrality in the region – particularly in the region comprising the Regional Comprehensive Economic Partnership (RCEP) – is inevitable for the RCEP’s own economic growth – an undeniable fact that renders Washington’s aggressive anti-China rhetoric meaningless. The numbers speak for themselves: China’s trade with RCEP members increased by 3.5 percent to 10.2 trillion yuan in 2020, according to Chinese customs officials. This trade volume is equivalent to a third of China’s global trade volume.

In other words, China is already much more and more deeply integrated into the RCEP countries than US policy of disengagement would suggest. This integration is not unilateral. The data shows that exports from the rest of Asia to China increased by 260% between 2016 and 2021. This figure is the largest trading expansion in a large market. With the RCEP now fully ratified and in effect since the first day of 2022, multilateralism is likely to continue growing – growth that will proportionately reduce the US ability to manipulate the region to its advantage.

There are already fears in Washington. In November last year, members of the US Senate Treasury Committee wrote a letter to Biden to indicate that the US is losing to China. They argued:

China is quick to take the initiative in trade policy in the East – to the detriment of US interests. Fifteen countries, accounting for 30 percent of global gross domestic product, have signed a China-backed trade deal: the Regional Comprehensive Economic Partnership (RCEP), an agreement that accommodates China’s interests, including weak rules on intellectual property rights and no rules on at all state-owned companies. As the United States continues to denigrate the Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP), the deal it negotiated with, China now wants to join it.

If the deal goes “unanswered,” the letter said, the US would be in a “strategically unfavorable position” given China’s ability “to oust the United States from its pre-eminence in international affairs.”

Given that the US lacks a viable economic and trade framework, it has no tools vis-à-vis China to prevent the senators’ fears from being realized. As some US media reports have pointed out, the Biden administration is even struggling to come up with a plan for economic engagement in Asia.

While the Obama administration was sensitive to the issue because it negotiated the ambitious Trans-Pacific Partnership (TPP), which even included seven RCEP members, the Trump administration with the cancellation of the TPP and its multifaceted “trade wars” with many US Biden administration’s partner countries have been left with minimal opportunities to undo the Trump administration’s phenomenal success in making trade with the US a particularly toxic issue. While most TPP members have decided to recast the compact as the CPTPP without the US, it is the RCEP that has overtaken the region for now. China, realizing the pact’s immense benefits, is keen to see it fully implemented.

Since the RCEP came into force, the China Council for the Promotion of International Trade (CCPIT) has issued 275 RCEP Certificates of Origin to 135 Chinese companies from 18 provinces and municipalities. These certificates were issued to reduce duty payments under the RCEP agreement. Overall, the agreement will eliminate more than 90% of tariffs in trade between the 15 member countries. Reducing tariffs is one of the most important dimensions of the whole RCEP project.

The agreement affects 2.3 billion people. That is more than 30 percent of the entire world population. It is expected to contribute US$25.8 trillion to the global economy, equivalent to about 30 percent of global GDP. They account for more than a quarter ($12.7 trillion) of global trade in goods and services. In terms of foreign direct investment, the RCEP accounts for 31 percent of global FDI inflows. So the RCEP is not just a trade pact, but a new economic geography that throws bilateral conflicts and issues out of the ordinary. Since the RCEP countries have successfully come together in a pact of this magnitude, the potential scope for the US to exploit problems to its advantage is minimal.

China has recognized the success of this strategy of deep and far-reaching economic interdependence and has already applied for membership of the CPTPP. Pending China’s accession, the trend towards economic integration is startling evidence of the magnanimous failure of the US policy of “decoupling” from China. With the RCEP already in place and the CPTPP on the horizon, Beijing is more integrated than it was when the US launched its “trade war” – a failure that should prompt the US to expand its to reconsider the entire strategy of confrontation and discard it in favor of a strategy that emphasizes competitive coexistence.


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