Chapter III: Competition and Cooperation between the U.S. and the PRC under the
3.2 From the Aspect of Economy
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Generally speaking, we can tell that regarding the response to the U.S.’ Rebalance to Asia Policy, China still chooses to have a peaceful dialogue while ramping of its military presence at the same time. However, China sees the sovereignty issues as the national core interest, making it difficult to compromise on. For example, President Xi Jinping has repeatedly used the term “Core interest” in speeches and emphasizes it with references to Taiwan, Tibet and Xinjiang — specific sovereignty issues that China has always said are internal matters.14 The development of People’s Liberation Army will not only draw the U.S.’ attention, but make competition more intense and bring new risk to the region.
3.2 From the Aspect of Economy
3.2.1 The Greater Mekong Sub-region Economic Cooperation Program (GMS)
There are three economic cooperation programs in The East Asia region. The Greater Mekong Sub-region Economic Cooperation Program (GMS) is the program that China has been involved in the most. GMS was started in 1992 by six countries, which include China, Myanmar, Laos, Thailand, Cambodia and Vietnam.
14 Edward Wong, “Security Law Suggests a Broadening of China’s ‘Core Interests’,” The New York Times, July 2, 2015. Retrieved 10 January 2016, from
http://www.nytimes.com/2015/07/03/world/asia/security-law-suggests-a-broadening-of-chinas-core-interests.html?_r=0
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Figure 3.1: Area of The Greater Mekong Sub-region Economic Cooperation Program
Source: https://www.chinadialogue.net/article/show/single/en/6208-China-needs-to-change-its-energy-strategy-in-the-Mekong-region
“In 2012 China’s growth in trade and outward investment with the four other Mekong countries of Myanmar, Laos, Thailand, and Cambodia surpassed its trade and investment growth in ASEAN countries,” said Xu Ning-Ning, chairman of the Greater Mekong Subregion (GMS) Business Council. “Greater growth rates will continue with increases in regional cooperation and win-win investment opportunities.” In addition, the Chinese built strategic oil and natural gas pipelines cutting through Asia, particularly the PetroChina pipeline project from Myanmar’s Indian Ocean coastline to Kunming in China’s Yunnan province, as well as a hydropower energy grid extending into Laos and Myanmar.
Less developed countries stand to benefit economically from Chinese-backed infrastructure development projects. However, China’s construction of eight
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hydropower projects on the upper Mekong River in Yunnan province has shown Laos that it can ignore protests from downstream countries about the negative effects of its dams. This isn't the only environmental risk for China’s Mekong neighbors. In China hydropower developers can easily skirt environmental laws and produce misleading environmental impact assessments. China’s importing of hydropower from Southeast Asia is part of a push to reduce its carbon footprint by investing in renewable energy. However, to replace the loss of protein from Mekong fisheries, Laos and Cambodia will be forced to invest in industrial, carbon intense livestock raising; thus China’s carbon footprint will simply have been sent downstream.15 Although China has great influence and reached its political purpose with GMS, at the same time, due to its fast economic growth, China also is seen as a threat from members of GMS, hence there are always doubts towards China during the cooperative process.
3.2.2 Regional Comprehensive Economic Partnership (RCEP)
RCEP negotiations were launched by the Leaders of the 16 participating countries in the margins of the East Asia Summit on 20 November 2012. RCEP is a FTA negotiation that has been developed among 16 countries: the 10 members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam) and the six countries with which ASEAN has existing Free Trade Agreements (FTAs) – Australia, China, India, Japan, Korea, and New Zealand.
In relation to RCEP these six non-ASEAN countries are known as the ASEAN Free Trade Partners (AFPs). The participants in the RCEP FTA negotiations have a total
15 Brian Eyler, “China needs to change its energy strategy in the Mekong region,” Chinadialogue, July 16, 2013. Retrieved 10 January 2016, from
https://www.chinadialogue.net/article/show/single/en/6208-China-needs-to-change-its-energy-strategy-in-the-Mekong-region
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population of over 3 billion people and a trade share estimated to be at around 27 per cent of all global trade (based on 2012 WTO figures), covering a GDP of around $US21 trillion (2013 IMF figures).16
In 2013 the RECP set up a Trade Negotiation Committee (TNC) with sections in goods, trade in services, investment, economic and technical co-operation, intellectual property, competition, dispute settlement and other issues. RCEP started the negotiation process in 2013 and plans to conclude all the negotiations by the end of 2015, by then the economic scale is estimated to reach 29.44% of global trade. So far the RCEP has finished 9 rounds of negotiations and continued in Intellectual Property, Competition, Economic and Technical Cooperation and Legal and Institutional Issues. 17
Both the TPP and RCEP are in the Asia-Pacific region. Moreover, there are 7 countries that are both members of TPP and RCEP, including Japan, Brunei, New Zealand, Australia, Singapore, Vietnam and Malaysia. Members who joined both RCEP and TPP also bring new elements of competition. After five years of talks, the TPP negotiators reached a deal on October 5, 2015 which is ahead of the process of the RCEP negotiations.18
In fact, China had been invited to join the trade groups, but Beijing has been reluctant to comply with many of the required rules, such as opening up of its financial sector as a condition of membership. By not being a founding member, China misses
16 New Zealand Ministry of Foreign Affairs & Trade, “Regional Comprehensive Economic Partnership (RCEP).” August 31, 2015. Retrieved 10 January 2016, from http://www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-Relationships-and-Agreements/RCEP/
17 Ibid.
18 Bill Chappell, “U.S., Other Nations Reach Agreement on Trans-Pacific Partnership,” npr, Oct. 5, 2015.
Retrieved 10 January 2016, from
http://www.npr.org/sections/thetwo- way/2015/10/05/445987857/u-s-other-nations-reportedly-reach-agreement-on-trans-pacific-partnership
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the opportunity to help shape an important pillar of the global trading system.19 China can’t get a favorable position under the U.S. leading TPP, meanwhile, the framework of the TPP also will affect the domestic regulations and government operations of members’ states, which has given China the inspiration to actively promote RCEP.