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China's Silk Road Strategy

1) China is promoting its "New Silk Road strategy" of infrastructure development and trade as a counter to the US-led Trans-Pacific Partnership (TPP) agreement. The Silk Road strategy aims to deepen economic linkages between China and neighboring countries through projects in areas like roads, railways, ports and energy. 2) The Silk Road strategy better aligns with China's goals compared to the TPP, which promotes high standards for labor, environment and limiting state-owned enterprises that China does not want to adhere to. 3) Some Chinese scholars see the TPP as a way for the US to contain China's power and influence by changing institutions in Asia. In contrast, the Silk Road strategy allows

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RAJESH GANESAN
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70 views1 page

China's Silk Road Strategy

1) China is promoting its "New Silk Road strategy" of infrastructure development and trade as a counter to the US-led Trans-Pacific Partnership (TPP) agreement. The Silk Road strategy aims to deepen economic linkages between China and neighboring countries through projects in areas like roads, railways, ports and energy. 2) The Silk Road strategy better aligns with China's goals compared to the TPP, which promotes high standards for labor, environment and limiting state-owned enterprises that China does not want to adhere to. 3) Some Chinese scholars see the TPP as a way for the US to contain China's power and influence by changing institutions in Asia. In contrast, the Silk Road strategy allows

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RAJESH GANESAN
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China's Silk Road Strategy

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http://www.foreignpolicy.com/articles/2014/11/10/TPP_APEC_China_U...

China's Silk Road Strategy


Xi Jinping's real answer to the Trans-Pacic Partnership.
B Y M IN YE

s Beijing hosts this year's Asia-Pacic Economic Cooperation (APEC) forum slated to run through Nov. 11, the United States and China are locked in
behind-the-scenes competition over free trade agreements. The United States is promoting the Trans-Pacic Partnership (TPP), a massive free trade

agreement including 12 nations but excluding China. Beijing, in a move many see as a push against the U.S. rebalance to Asia, hopes to garner support for the
Free Trade Area of the Asia-Pacic (FTAAP), a less sweeping agreement that would include China.
But the modest FTAAP isn't China's real answer to the immense TTP and its candid support of market liberalization and minimal government interference.
Instead, it's the "New Silk Road strategy," a sprawling set of trade and infrastructure agreements proposed by Chinese President Xi Jinping, which aims to
foster free trade -- and bolster Chinese soft power -- with China's neighbors to the west and southeast. The plan, a reference to the trade route connecting
China to Europe via Central Asia in the seventh to tenth centuries, aspires to deepen linkages between China and its neighbors via trade, investment,
energy, infrastructure, and internationalization of China's currency, the renminbi. On Nov. 8, Chinese President Xi Jinping announced the establishment of
a $40 billion Silk Road infrastructure fund, focusing on building "roads, railways, ports and airports across Central Asia and South Asia," according to
Reuters.

The Silk Road strategy's ambitious


vision aligns with Beijing's goals
much more closely than the TPP,
which is a reection of the U.S.
international trade model writ large.

The Silk Road strategy's ambitious vision aligns with Beijing's goals much more closely than the
TPP, which is a reection of the U.S. international trade model writ large. The TPP's proponents see
it as a new vision for free trade and market liberalization around the world. It would integrate the
U.S. economy with Asia to a degree heretofore unseen, providing a backbone for the oft-criticized
U.S. rebalance to Asia. In doing so, it would set higher standards for doing business, with clauses
intended to protect both the rights of workers and the environment. It may even become more
inclusive and authoritative than the World Trade Organization (WTO), a U.S.-shaped body that

currently sets the norms for international trade. The WTO is silent on certain hot-button issues like subsidies to the agricultural sector, manufacturing of
parts and components, trade in services, and intellectual property rights protections. The TPP would cover all of these.
Washington insiders had believed the TPP would lead to one of two responses from China, both advantageous to U.S. interests: the TPP's stringent labor and
environmental standards would repel China, freezing itself out of a massive and advantageous trading block in its own backyard. Or, China would clamor to
join, and in the process -- like in the years leading up to its 2001 ascension into the WTO -- become a more economically open nation. Meanwhile, in Asian
capitals outside Beijing, there is widespread hope that the TPP would make China more supportive of other regional negotiations, and thus more likely to
show restraint in its many territorial disputes with its neighbors.
But there is little evidence that China would adhere to any of these expectations. And why should it? The Silk Road strategy is a far better t for Beijing than
the TPP. With the TPP, the United States emphasizes high standards in market liberalization and openness. China's Silk Road strategy has no "standards,"

China's Silk Road strategy has no


"standards," except for a vague idea
of mutual interest and mutual
respect.

except for a vague idea of mutual interest and mutual respect. The TPP seeks to reduce the roles of
governments in market operations and to restrict the importance of state-owned enterprises (SOEs)
in the economies of its members. The Silk Road plan, in contrast, relies on top-level government
coordination, and would enhance the power of large SOEs and governments. The TPP focuses on
services, intellectual property rights, and domestic regulations. The Silk Road strategy aims to
facilitate large-scale infrastructure construction, energy sale and transport, and relocation of

manufacturing industries.
It's not only that the Silk Road plan is a better t for China. Leading Chinese political thinkers also see the TPP as an enterprise with the potential to weaken
China economically and politically -- a strategy "to contain China" and to "change or overturn existing institutions in Asia-Pacic and the world," observed
Chinese economics scholar Gu Guoda at Zhejiang University in a recent article in the party journal Probe. And the chairman of the APEC-aliated China
National Committee for Pacic Economic Cooperation Council Tang Guoqiang wrote in an early 2014 article in the Chinese journal International Studies
that the United States acted as "a selsh hegemon" in the TPP. Some also believe that the changes required by the TPP negotiations -- terms on SOEs, labor,
environment, digital economy, and supply chain manufacturing -- are a potential threat to China's current political and social systems.
As China embraces its role as an expanding world power, under Xi's leadership it increasingly seeks to establish itself as an economic and institutional equal
to the United States. The FTAAP cannot fulll this vision. This year's APEC may seem to present a dramatic push-and-pull between Obama's TPP and Xi's
FTAAP, but for the real battle for inuence over global trade, look to China's new Silk Road strategy.
Pool/Getty Images

11/16/2014 1:25 PM

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