China Positioned to Gain Global Sway After Trump Win — President Obama Gives Up on the Trans-Pacific Partnership

A more protectionist U.S. administration stands to benefit Beijing’s international economic expansion

A man in Beijing reads a newspaper on Nov. 10, 2016, following Donald Trump’s win in the U.S. presidential election.
A man in Beijing reads a newspaper on Nov. 10, 2016, following Donald Trump’s win in the U.S. presidential election. PHOTO: ASSOCIATED

Nov. 11, 2016 6:00 a.m. ET

BEIJING—The prospect of a more protectionist and inwardly focused America under Donald Trump opens room for China to widen its global economic clout.

As the proposed 12-nation Trans-Pacific Partnership trade agreement, which excludes China, looks unlikely to materialize under a Trump administration, China is pushing rival trade pacts. Meanwhile, its state-owned companies are making inroads abroad and multibillion-dollar ambitions to expand investment and trade along the Silk Road have drawn interest from some 100 countries and funding from the Beijing-led Asian Infrastructure Investment Bank.

The Obama administration has warned that failure of the TPP, which had underpinned the U.S. “pivot” to Asia, could result in China winning trade advantages at the expense of the U.S. Australian Foreign Minister Julie Bishop said this week a TPP collapse “would leave a vacuum in trade deals which most certainly will be filled by others,” and that Australia will seek deals that will benefit it wherever it can.

Ms. Bishop mentioned in particular the Regional Comprehensive Economic Partnership, which is expected to be concluded in coming months and would lower or eliminate tariffs among Pacific countries that includes China but not the U.S. Separately, China said it would seek support for a Beijing-led free-trade area in the Asia-Pacific during a leaders’ summit in Peru next week.

“Trump’s election is a bit of a dial back on globalization,” said Hong Kong University of Science and Technology professor Li Xi. That could give China “the opportunity to expand its influence,” he said.

In recent weeks, China has forged closer economic and diplomatic ties with the Philippines, a close U.S. ally, and Malaysia, which together produced more than $58 billion in deals.

He Yimin, sales manager with Xin Gang Cheng Stainless Steel Wares Co., an exporter of pots and pans based in the southern city of Yunfu, said she thinks China could benefit from the TPP falling apart. “I think it is a good thing for China,” Ms. He said. “These days, Southeast Asian countries are very friendly to China.”

In the wake of the U.S. election results, British Prime Minister Theresa May underscored that London remains “open for business” with China. On Thursday, the two countries set a plan to deepen ties between their financial-services industries. This week in Latvia, China’s premier announced an $11.1 billion investment fund to finance projects in Central and Eastern Europe.

Vincent W.C. Fung, executive director of Kin Yat Industrial Ltd., a maker of toys and consumer robots in the southern manufacturing hub of Shenzhen, said China was likely to focus more on building ties with other countries in any U.S. trade vacuum. And higher tariffs against Chinese products would push some exporters to more quickly automate and focus on higher-margin products, ultimately making them tougher competitors, he said.

Partly because they have long faced weakening global demand, Chinese exporters are less dependent on the U.S. even as the economy slows at home. Five years ago, Kin Yat exported 100% of its products. Now, 30% are sold in China. “Chinese factories are so flexible, they can adapt quickly to changes,” he said.

In one export sector that has been a particular point of contention, steel, the U.S. accounts for a shrinking share of Chinese exports, just 2.5% compared with about 6.6% a decade ago. Further tariffs under Mr. Trump would accelerate U.S. isolation but have little real impact on China’s steel industry.

The U.S. has already taken “a lot of protectionist measures,” said Chi Jingdong, deputy secretary-general of the China Iron and Steel Association. “What else can they do?”

To be sure, even as China relies less on exports, the U.S. is China’s largest trading partner and the prospect of damaging tensions with Washington if Mr. Trump carries out his repeated threats to sanction China is of concern in Beijing.

Chinese officials have said it is too early to assess the incoming U.S. administration’s policies’ effect on China, but a commentary by state-run Xinhua News Agency the day after Mr. Trump secured his electoral bid warned the U.S. against protectionism, saying that such policies had hastened the country’s crisis during the Great Depression.

Some analysts have pointed out that Mr. Trump’s threats to impose tariffs on Chinese exports in the U.S. could make them more competitive elsewhere because such a move would likely push China’s currency to fall.

Analysts point to questionable logic in Mr. Trump’s allegations that China manipulates its currency in ways that hurt the U.S. China for decades kept its yuan low to benefit exporters, but in recent years, as capital has left China’s slowing economy, the central bank has intervened in the other direction, trying to prevent the yuan from depreciating too rapidly.

“The expectation is that Trump’s ascendancy may create the conditions for more depreciation,” said Zeng Hao, pricing manager for Shanxi Fenwei Energy Consultancy Co., a coal-focused commodities firm.

Write to Mark Magnier at and Chuin-Wei Yap at



Obama Administration Gives Up on Pacific Trade Deal

Congressional GOP leaders indicated they wouldn’t consider Trans-Pacific Partnership in lame-duck session

The TPP’s collapse also dents American prestige in the region at a time when China is flexing its economic and military muscle. Above, container ships wait to be unloaded at the Port of Oakland last month.
The TPP’s collapse also dents American prestige in the region at a time when China is flexing its economic and military muscle. Above, container ships wait to be unloaded at the Port of Oakland last month. PHOTO: BEN MARGOT/ASSOCIATED PRESS

A sweeping Pacific trade pact meant to bind the U.S.and Asia effectively died Friday, as Republican and Democratic leaders in Congress told the White House they won’t advance it in the election’s aftermath, and Obama administration officials acknowledged it has no way forward now.

The failure to pass the 12-nation Trans-Pacific Partnership—by far the biggest trade agreement in more than a decade—is a bitter defeat for President Barack Obama, whose belated but fervent support for freer trade divided his party and complicated the campaign of Democratic nominee Hillary Clinton.

The White House had lobbied hard for months in the hope of moving forward on the pact if Mrs. Clinton had won.

The deal’s collapse, which comes amid a rising wave of anti-trade sentiment in the U.S., also dents American prestige in the region at a time when China is flexing its economic and military muscles.

Just over a year ago, Republicans were willing to vote overwhelmingly in support of Mr. Obama’s trade policy. But as the political season approached and voters registered their concerns by supporting Donald J. Trump, the GOP reacted coolly to the deal Mr. Obama’s team reached with Japan and 10 others countries just over a year ago in Atlanta.

Winning a majority of votes for the TPP in the House and Senate would have required both a last-minute deal to address Republican priorities and an election result that didn’t show such broad discontent.

Neither occurred. Since the election, Senate Majority Leader Mitch McConnell (R., Ky.) and Sen. Chuck Schumer (D., N.Y.) have said no to bringing the TPP to a vote in the lame duck session, despite the strong support of many senators in both parties for freer trade.

In the House, Rep. Kevin Brady (R., Texas), the chairman of the committee that oversees trade, said in a statement Wednesday that “this important agreement is not ready to be considered during the lame duck and will remain on hold until President Trump decides the path forward.”

Matthew McAlvanah, a spokesman for U.S. trade representative Mike Froman, said Friday that despite all the work the administration has done with lawmakers on Capitol Hill “ultimately it is a legislative process, and the final step is for Congress to take.”

White House officials preparing for Mr. Obama’s trip to meet Pacific leaders in Peru appeared to acknowledge the defeat on Friday. “In terms of the TPP agreement itself, Leader McConnell has spoken to that, and it’s something that he’s going to work with the president-elect to figure out where they go in terms of trade agreements in the future,” said Wally Adeyemo, deputy national security adviser for international economic affairs.

Chinese officials preparing for the summit of the Asia-Pacific Economic Cooperation summit next week said they had heard the rumblings of protectionism and vowed to push alternative, lower-standard Pacific trade deals that aren’t likely to include the U.S.

President Xi Jinping will seek support for a broad free-trade area in the Asia-Pacific during the APEC summit, a senior Chinese official said.

U.S. officials have long warned that failure to pass the TPP, which doesn’t include China, would help Beijing take the lead with another framework, the Regional Comprehensive Economic Partnership, which could be concluded in coming months and would lower or eliminate tariffs among some Pacific countries but not the U.S.

Neither proposed trade framework would have the TPP’s safeguards for intellectual property, the environment, labor or other U.S. priorities, administration officials say. A tariffs-only trade agreement led by China wouldn’t have the same strategic or economic impact as the TPP.

Recently China has started taking advantage of U.S. hesitation abroad to push its own international financial programs and economic alliances, marking a new phase in the U.S.-led order that has helped provide prosperity and security in the Pacific for decades.

This week’s election is also affecting European ties. The top trade official in Brussels said Friday that Mr. Trump’s election will further delay a big trade deal the Obama administration has been negotiating with the European Union—the Transatlantic Trade and Investment Partnership, or TTIP.

Many American politicians see U.S. trade agreements as complicated and politically fraught deals that can provide a bit of extra economic growth and shore up strategic alliances.

But foreign officials see Washington’s willingness to enter into such deals as a crucial barometer on whether the world’s biggest economy and military power is looking outward toward international engagement and problem-solving or inward toward domestic problems.

The 2016 election season has shown that domestic concerns about globalization, the trade deficit and stagnant wages easily beat out the appetite for international engagement.

The TPP became a symbol of Washington pursuing policies that disproportionately favor wealthier Americans over ordinary workers. Mr. Trump blamed the TPP on special interests trying to “rape” the country.

Some lawmakers and officials say the TPP or a similar deal could reappear in the Pacific in the future, perhaps with different countries in the region or even a single partner.

Write to William Mauldin at


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One Response to “China Positioned to Gain Global Sway After Trump Win — President Obama Gives Up on the Trans-Pacific Partnership”

  1. daveyone1 Says:

    Reblogged this on World Peace Forum.

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