In recent years, China, the second largest economy in the world, has made major strides in trade with other countries and in investment abroad. China’s position in Asia has been strengthened by President Trump’s withdrawal from trade negotiations under the Trans-Pacific Partnership (TPP). While the U.S. withdrawal may have slowed the TPP talks, most countries, including Canada and Japan, believe that trade talks will continue, either bilaterally or multilaterally. Australia’s trade minister even went so far as to suggest the remaining 11 countries could ask China to join the deal instead. Moreover, China has offered up its own version of the pact, one that excludes the U.S. and favors China’s more mercantilist approach. Indeed, Canada and China have now agreed to start exploratory trade talks in the fall.
In the Middle East and Africa, China is making major inroads in terms of trade, investment and infrastructure development in several countries. Take the example of Iran where China is currently investing billions in infrastructure improvements such as bridges, rails, ports and energy. As a result of unilateral American sanctions that intimidate global banks, China is the only source of the large amounts of capital that Iran needs to finance critical infrastructure projects. China is also an important market for Iranian oil, even after Western sanctions were lifted in 2016 allowing Iran to again sell oil in European markets. With the completion of rail lines from Urumqi, the capital of China’s western region of Xinjiang, to Tehran, China will have a faster and more direct link to export its goods as far as northern Europe, Poland and Russia — at much less cost than today.
Elsewhere, Chinese President Xi Jinping made a trip through Latin America in November 2016, his third in four years. Bloomberg News reported that he signed more than 40 deals, and committed billions of dollars of investments in that region. In January 2017, President Xi became the first Chinese president to attend the World Economic Forum at Davos. His aim was no doubt to reinforce the message of Chinese global leadership on free trade.
The TPP was all about the U.S. showing leadership in the Asia region. In the end, trade experts believe that with U.S. not there, the void has to be filled. It will be filled by China. Years ago, I read a book entitled “China Inc.” by Ted C. Fishman*. Well worth reading, the book highlighted China’s impressive and unprecedented economic gains while becoming a power house. When it comes to trade and foreign investment, I’m certain that Mr. Fishman would agree today that the Trump administration could be the best thing that’s happened to China in a long time.
* China Inc. (How the Rise of the Next Superpower Challenges America and the World): Ted. C. Fishman (Scribner, New York, N.Y., 2005)
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