Can the Belt and Road Initiative Alleviate the Negative Impact of TPP on China?

Cui Lianbiao; Hong Xuewen; Song Malin

doi:doi:10.16538/j.cnki.jfe.2018.08.001

Summary

TPP is an important part of Asia-Pacific strategies of Obama Government. However, with the new President Trump taking office in the White House, the progress of TPP has met certain hindrance. Though Trump withdrew the United States from the TPP, it does not mean that TPP is completely aborted and traditional allies still negotiate on the signing of the Comprehensive Progressive Trans-Pacific Partnership （CPTPP）. How will the adjustment of TPP policy by the United States affect China? What economic benefits will the Belt and Road Initiative（BRI）that China put forward to counter potential impacts of TPP bring to the countries along the Belt and Road? Can BRI become an effective measure for China to counter TPP? Further, what kinds of differentiated industrial impacts will TPP and BRI bring to China and what kinds of challenges and opportunities? Analyses and discussions of these questions will be very helpful of enriching China’s strategies to counter TPP as well as accelerating the progress of BRI.　　With a Global Trade Analysis Project（GTAP）and the latest database GTAP 9.0, this paper quantitatively evaluates the economic effects of TPP and BRI in terms of the real GDP, the social welfare and the import and export trade. The study sets six policy scenarios centering on whether the U.S. should be back to TPP and how will China push forward BRI to selectively analyze benefits and losses of China under different macro-economic effects. The main conclusions of the paper are: （1）Judging from real GDP and residents’ welfare, China suffers from such strategy no matter the U.S. returns to TPP or not: in the scenario of GPTPP, the real GDP of China decreases 0.019% and the deterioration of residents’ welfare is USD4.111 billion; （2）Promotion of BRI is able to effectively alleviate the negative impacts of TPP on Chinese economy: when BRI and TPP both exist, the real GDP of China increases 0.055% and the improvement of residents’ welfare is USD11.465 billion; （3）From the perspective of unimpeded trade, promotion of BRI can stimulate outputs of energy-intensive industries of China, especially the textile and clothes industry, the steel and metal industry and the chemical industry, which is helpful to alleviate the problem of excess production capacities in the energy-intensive industries of China; （4）Implementation of BRI has strong negative impacts on South Korea, but if South Korea could participate in BRI, significance improvement can be realized in its economic growth and residents’ welfare. 　　The marginal contributions of this paper can be elaborated from three aspects. First, this paper introduces both TPP and BRI to comparatively analyze international economic effects of different regional economic cooperation modes, which can provide a valuable technical reference for China to promote BRI in the context of TPP. Second, this paper provides a quantitative evaluation of the withdrawal of the U.S. from TPP, and the impact of the CPTPP on China is also discussed, which will be useful for China to adopt reasonable measures to cope with CPTPP. Third, the impacts of TPP on different countries or areas along the Belt and Road are quantitatively evaluated to reveal benefits and losses of these countries or areas under different TPP strategies, which is helpful of promoting those countries to participate in BRI to cope with the negative impacts of TPP.