Sino-Japanese Review

China’s CPTPP Accession Bid: A New Dilemma for Tokyo

Welcome to installment XXXIV (October 2021) of Sino-Japanese Review, a monthly column on the major developments in relations between China and Japan. It provides a running commentary on the evolution of this important relationship and helps put current events in perspective.

When Japan joined the negotiations for the Trans-Pacific Partnership (TPP) in 2013, it did so with a clear vision of the agreement’s geopolitical importance. The pact would make sure the United States remained economically anchored to East Asia and, as Barack Obama had argued, set trade rules for the 21st century before a rising China could do so. Beijing would either have to reform its economy to join the TPP or remain on the outside and see the emergence of a massive trade block that could counterbalance its own efforts to become the center of the Asian economy. 

Fast forward to 2021, and reality has greatly differed from this vision. The United States has withdrawn from the TPP, leaving Japan as the informal leader of a slightly modified pact renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and China has declared its intention to join, despite the fact that its economy has in recent years moved away from the standards of the agreement rather than towards them. Beijing sees in accession to the CPTPP an occasion to further emphasize the argument that, with the United States increasingly looking inward, Japan and the rest of Asia have no choice but to look to China for future sources of economic growth and prosperity. 

While this situation offers many upsides for Beijing, it presents difficult challenges for Tokyo. Even after Donald Trump withdrew from the TPP, the Japanese government has made attempts to convince its ally to reconsider. In fact, some observers have expressed hope that, in a context where competition with China has become an obsession in Washington and a rare object of consensus between Democrats and Republicans, Beijing’s bid will be just what Joe Biden needs to convince skeptics that the United States must re-join the CPTPP. This would show that Washington is serious about strategic competition beyond the military realm (it has yet to advance any serious economic proposal for Asia to replace the partnership) and undermine China’s message about America’s decline. It would also greatly strengthen Japan’s hand in any negotiation with China in terms of accession.

Japan is eager to strengthen Taiwan’s international status in the face of Chinese efforts to undermine it, and CPTPP membership would be a big prize

Yet the United States is not the only country Tokyo would rather see join the CPTPP first. Japanese officials have been very open in their support for Taiwan’s application as well. With the increase in cross-strait tensions, Japan is eager to strengthen Taiwan’s international status in the face of Chinese efforts to undermine it, and CPTPP membership would be a big prize. Although Taipei would find it much easier to meet the pact’s accession criteria, Tokyo was concerned that China would make the first move and be in a position to block any effort from what it considers a “renegade province”. This scenario has since come true. Even though Taipei quickly followed Beijing in officially applying for membership, the latter’s strong opposition and influence over other member states makes Taiwan’s path to accession highly uncertain. 

Tokyo needs strong diplomatic skills to lobby Washington and gather support for Taiwan from fellow CPTPP members, while at the same time negotiating firmly but in good faith with Beijing on its terms of accession. Japan has not dismissed China’s membership bid out of hand. The CPTPP could in theory be an avenue of productive dialogue between the two neighbors – something that has become increasingly rare in recent years – and Japanese companies would be in a strong position to benefit if China were to make genuine efforts to implement reforms in preparation for accession. In fact, Beijing has recently given such signals regarding public procurements. Yet many senior Japanese figures have expressed strong skepticism that Beijing can meet the standards of the pact. This is unsurprising since state-owned enterprises play a more central role than ever in the Chinese economy and the Chinese Communist Party (CCP) has shown great hostility to the idea of free cross-border data flows. Both issues are at the heart of the CPTPP.

Negotiations between Tokyo and Beijing will highlight their different vision for regional economic integration. Japan sees expanding the CPTPP as an important contribution to the preservation of a “rules based international order”. In a way, nothing would advance this mission more than instigating China to join the pact, but only if its standards are not diluted in the process. Beijing also pledges to protect multilateral free trade institutions and advocates for closer economic integration in Asia, but only as long as this does not require changes to its state capitalist system. It sees trade agreements as useful tools to expand access to foreign markets and keep Chinese companies on their toes, but they cannot be allowed to challenge the CCPs control over the economy.  

In essence, China believes that the sheer size of its economy will push potential partners to accept economic integration on its terms, no matter their qualms about its socio-political model. For Japan, on the other hand, the role of trade agreements like the CPTPP is first and foremost to guarantee the stability of international rules and limit the scope for arbitrary exercises of power. This will be difficult to reconcile with the CCP’s reluctance to accept any limit on its ability to act freely at home and inclination to “punish” trade partners that “provoke” it. Tokyo may agree to open negotiations, but an endorsement of China’s membership bid is a long way off.

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