China Wants India To Be Part Of The New Asian Free Trade Deal

Asian Free Trade
ASEAN leaders shake hands on stage during the opening ceremony of the 34th ASEAN Summit at the Athenee Hotel in Bangkok (Photo: Reuters / Athit Perawongmetha)

While the world has been fixated on the ongoing trade dispute between the United States and China, several deals are now being made on the sidelines that could warrant more global attention. China has recently been making moves to strengthen its economic relationship with other Asian countries. The most recent one being China's plans to include India and other Asian countries in its Asian free-trade pact.

China plans to make Asia an even stronger economic superpower with the implementation of the Regional Comprehensive Economic Partnership (RCEP) agreement. If the plan becomes successful, the economies of 13 Asian countries, plus Australia and New Zealand, will essentially be linked together.

The new free-trade agreement is similar to the US' Trans-Pacific Partnership (TPP), which was the US' way of pushing for more partnerships in Asia under the Obama administration. Unfortunately, the TPP wasn't able to make much headway as Trump chose a different path to acquire more bilateral deals with Asian countries.

While hopes are now more positive of a trade-war truce given the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping in Japan this week, China likely sees the free-trade agreement as a backup plan in case things go south.

The grouping of various Asian industries such as manufacturing and agriculture will ensure that the region will no longer be dependent on the whims of the United States and other western nations.

The RCEP agreement will include 10 ASEAN members as well as other major Asian economies such as Japan, South Korea, India, and China. The partnership will result in a collective economy with a combined gross domestic product of more than $21 trillion. The pact will create a partnership that will account for more than 40 percent of global trade.

China currently sees the RCEP as a vital arsenal in its bid to strike a trade deal with the United States. However, the country is still fighting to bring India onboard. From China's point of view, India is an important member to have in the RCEP. Getting India on board will likely result in a number of compromises on China's part given both countries' conflicting industries.

India is fearful that China could wipe out its manufacturing sector, while China is fearful of the flood of Indian IT software products and engineering.

Despite the clash of their respective industries, China will have to find a way to get India on board if it wishes to secure a stable trading relationship with all of Asia.

Most of the signatories on the RCEP also want India to be onboard as the country's inclusion would ensure that China isn't the dominating force within the pact. Having all of the largest Asian economies on board is the only way for the pact to become a real Asia trade deal.

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