China’s exclusion from the Trans-Pacific Partnership (TPP) trade deal is anything but subtle. The world’s largest population and second largest economy (after the United States) isn’t involved in a trade agreement among nations in its own region that is the largest in history. And, while it’s largely accepted that China’s exclusion is a strategic move by the U.S., it may spur tensions already brewing in East Asia.
China’s absence from the TPP certainly has to do with economic policy. U.S. economic dominance is clearly threatened by China’s growing economic might; establishing trade agreements with its neighbors will, the U.S. hopes, divert commerce away from China and towards American businesses. But when it comes to economics, China may have enough size and strength to remain unfazed by the dealings of its Pacific-Rim neighbors.
“China doesn’t care about the rules we put in this agreement,” said Robert E. Scott, an economist with the Economic Policy Institute, a policy think tank based in Washington D.C. “China is the second largest economy, they’ll do business their way and demand other countries of the world play according to their terms.”
China’s trading power has been on the rise for many years. The fact that its importance in the global economy is such that a dozen other nations, including the U.S., are willing to deliberately navigate their geopolitical negotiations away from China speaks volumes of the country’s power and influence. But, as China closes in on America economically (its gross domestic product is roughly $11 trillion this year, second only to America’s $18 trillion), its military strength is also growing, a fact that could have implications in territorial disputes with its neighbors, and for the U.S., if a TPP deal is ratified.
In recent years, the Chinese government has alienated some of its neighbors in Asia as a result of territorial disputes; in particular, Japan. Since 1895, Japan has laid claim to a small, uninhabited archipelago called the Senkaku Islands, located southwest of Japan and east of mainland China. Following the Sino-Japanese War (1894-1895), Japan claims it assessed the area, found the islands to be unclaimed and took control of them. But in the 1970s it was revealed that the islands likely held large oil and gas reserves, at which point Chinese authorities began questioning the jurisdiction of the islands. China claims it owned the islands, which it calls the Diaoyu Islands, prior to the war, but that they were seized. After Japan’s World War II surrender, the country was ordered to return all seized territories to China, which now says should include the Senkaku Islands too.
It’s unclear exactly how much oil and gas exists below the archipelago, but it’s enough to stir tensions between the two countries. The quarrel has escalated recently, with Chinese military vessels entering Japan’s waters around the islands more than a dozen times this year.
Further complicating matters is Taiwan, which also claims ownership of the islands. Taiwan’s first democratically elected president, Lee Teng-Hui, recently said publically that the islands rightfully belonged to Japan. The statement didn’t sit well with current Taiwanese president Ma Ying-Jeou, and now the two are embroiled in a war of words. This isn’t the only territorial conflict in the region either. Southeast Asian countries, including Vietnam and Brunei (both involved in the TPP), are upset because China has been building artificial islands in the South China Sea in an attempt to claim jurisdiction over the area.
Countries in the region are growing increasingly concerned about China’s activities, and are looking to other nations, like the U.S., for support in the event tensions escalate. China’s aggression in these disputes is being taken seriously by American officials. In April, U.S. Secretary of Defense Ash Carter told a Japanese newspaper he was troubled by the scope of China’s land reclamation activities in the region. “We are especially concerned at the prospect of militarization of these outposts. These activities seriously increase tensions and reduce prospects for diplomatic solutions,” he said. “We urge China to limit its activities and exercise restraint to improve regional trust.”
In the meantime, Japan, Vietnam and Brunei are on the verge of ratifying the TPP deal with the United States and eight other countries. Although the TPP is not a military alliance or directly related to matters of defense, it will undoubtedly influence strategic, military relations between those countries and the United States. President Obama has publically criticized China’s reclamation activities and expressed his support for free navigation in the area and compliance with international laws. He’s also come down on Japan’s side in the Senkaku dispute. “I want to reiterate that our treaty commitment to Japan’s security is absolute, and that Article 5 covers all territories under Japan’s administration, including the Senkaku Islands,” he said during a press conference with Japanese Prime Minister Shinzo Abe in April.
Last week, trade ministers from countries involved in the TPP were on Maui to wrap up negotiations, but the meeting failed to produce a final agreement and so talks will continue. Although the closed-door sessions are meant to debate matters of economics and trade, it is likely that political matters regarding China will be discussed as well.