China, a champion of globalization and multilateral trade, needs to continue to take the lead in countering the growing backlash against free trade, according to a top economist.
Manu Bhaskaran, CEO of Centennial Asia Advisors, a research and advisory company in Singapore, said: “China is one of the world’s biggest exporters and importers. This is why it has an important role to play in global trade issues.”
According to the World Trade Organization, China is the world’s biggest exporter and second-biggest importer. In 2017, the country’s exports accounted for nearly 13 percent of global trade, while its imports accounted for more than 10 percent.
“Bolder trade opening by China will contribute greatly to world trade,” Bhaskaran said.
He welcomed the draft law on foreign investment being discussed at the current session of the National People’s Congress, as it will further open up China’s huge domestic market to foreign investors and other exporting countries.
China’s advocacy of multilateral trade is crucial now that some countries are promoting unilateralism and trade protectionism, Bhaskaran said.
“The global backlash against trade opening has been a concern, and I fear that we will see more of this,” he said.
The trade dispute between China and the United States, the world’s two biggest economies, has dampened business confidence, curbed investment and slowed growth, especially in the more export-dependent countries, he added.
But Bhaskaran is optimistic that the future of global trade lies in multilateralism, despite challenges.
For one thing, the negotiations between the US and China will end the dispute and lead to a favorable deal, he said.
“The US and China appear likely to avert a trade war. This will clear up the immense uncertainty all over the world that has hurt business spending and slowed global growth.”
More important, most countries will promote free trade and join international trade agreements, as studies have shown that trade has spurred growth in many developing economies worldwide, he said.
A report issued by the UN Economic and Social Commission for Asia and the Pacific last year showed that more-open trade has boosted the region’s economies and lifted millions out of poverty.
Free trade pacts, such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — which took effect on Dec 30 — “will help contain the worst of the protectionist trend we are seeing”, Bhaskaran said.
The RCEP, which is still being negotiated, is described as a mega free trade agreement that covers a wide range of issues including trade, investment, economic and technical cooperation and intellectual property protection.
It is led by the 10 member states of the Association of Southeast Asian Nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The other RCEP members are ASEAN’s six partners in other free trade agreements — Australia, China, India, Japan, South Korea and New Zealand.
These 16 countries account for about one-third of the world’s GDP as well as almost one-third of trade flows.