Weekly Geopolitical Report – Here Comes China! (October 25, 2021)

by Thomas Wash | PDF

Following President Donald Trump’s withdrawal from the Transpacific Partnership (TPP) in January 2017, it was believed that the agreement would die a quiet death. However, with the leadership of Japan and Australia, the agreement found new life and the remaining members decided to move forward with the deal. Although the new agreement removed 22 clauses from the original pact, it remains largely intact. Now rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the deal has been in place since December 2018. Following its signing, it has been able to attract new applicants from the United Kingdom, Taiwan, and China. There is also growing interest from South Korea and Thailand

Serving as the current chair of the pact, Japan has openly advocated for the inclusion of Taiwan. If admitted, this would be the first time Taiwan has joined a multilateral trade agreement independent of China. Such a move would be a direct rebuke of the One China Principle, which states that Taiwan is an inalienable part of the People’s Republic of China that will eventually be reunified. In response, China has come out against Taiwan’s inclusion in CPTPP. In this report, we argue that Taiwan may have influenced China’s decision to formally apply to CPTPP, and we discuss what Chinese membership in the group could mean for the global economy. We begin with a discussion on the history of Taiwan and the One China Policy, which holds that there is only one Chinese government, and its capital is Beijing.  Next, we will discuss the motivations for CPTPP and why it is important. Finally, we will discuss Taiwan’s and China’s chances of being admitted into the group. As usual, we will conclude with market ramifications.

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