TPP'S Impact On China'S Industry: May There Be Negative Growth In The Textile Industry?

Recently, the p Pacific Partnership Agreement (TPP) has reached a basic agreement.

Although the agreement will be implemented from the conclusion to the landing, it will take some time.

The impact on China's industrial development in the medium and long term is worth paying close attention to.

In this paper, we use GTAP model to simulate the impact of RCEP and TPP on various industries in China.

The simulation results show that if the TPP members finally achieve the liberalization of trade in agricultural products, the most affected sectors in China's agriculture sector are rice, meat and sugar. The most influential sectors in China's manufacturing sector are leather, electronics and

And mineral products, and the growth rate of service industry will be sharply reduced.

The following is a detailed introduction:

Due to the generally higher level of trade protection to the agricultural sector, once the TPP members finally achieve the liberalization of trade in agricultural products and continue to maintain high barriers to trade, the production and export of most agricultural sectors in China will be more impacted. The most affected ones are rice, meat and sugar.

With the accession of various Asian regional FTA programmes (including China, Japan and South Korea FTA, "10+3", "10+5" and RCEP), the export of these sectors will increase significantly and output will also increase significantly.

Other agricultural sectors, such as vegetables and fruits, animal fat, fish products, beverages, tobacco and processed foods, will also be subject to a certain degree of impact without the participation of TPP.

Owing to the comparative advantages of Australia and New Zealand in the export of wheat, animal fat, dairy products and wool fabrics, the output of these sectors in China will decline to some extent under the scheme of "10+5" FTA and RCEP (ASEAN 10 countries + China, Japan, South Korea, Australia and New Zealand + India, or "10+6"), but at the same time, the export of these sectors will grow as a result of trade liberalization.

Under the impact of TPP, the output and export of some manufacturing industries in China declined, and the most affected sectors were leather, electronics, clothing and minerals.

It is worth noting that electronics and clothing belong to the important export sectors in China.

The output level of paper, printing, pportation, storage and communication industry has been increased under the promotion of RCEP and other programmes; in the case of TPP shocks, the output of these sectors has increased, but the growth rate has decreased significantly due to the internal growth of domestic economic growth.

At the same time, textile sector exports will have negative growth.

There are also some sectors that have been excluded from the TPP, and domestic output has increased, while output has been declining under the various regional Asian FTA programmes.

These sectors include chemical, steel, nonferrous metals, metal products and machinery products, but the export movements of these sectors are mixed.

Among them, the export of chemical products, non-ferrous metals and metal products decreased under the impact of TPP, and increased in the case of joining RCEP and other projects. The export of steel and machinery products will still increase under the impact of TPP, but the growth rate is obviously smaller than that of RCEP.

Overall, as the trade barriers of the manufacturing sector are relatively low and the trade base is large, the output and exports of various sectors under the manufacturing sector are not as large as those of the agricultural sector.

In the field of service industry, RCEP and other programs will promote the growth of China's service industry output, while under the impact of TPP, the overall output of service industry will still grow in the context of domestic economic growth, but the growth rate will sharply decrease.

On the export side, due to the weak competitiveness of China's service industry, the export scale of China's service industry will decline to a certain extent when joining all kinds of Asian regional FTA programmes.

The above conclusions are drawn by Zhang Bowei and Peng Zhiwei using GTAP model.

Their simulation results show that, under the premise of consistency of trade and investment openness standards (i.e. potential), East Asian and Southeast Asian economies such as China, Japan, South Korea, Malaysia and Vietnam join various Asian regional FTA, especially RCEP, and get close or even more economic benefits than TPP accession.

This shows that, at the industrial level, the close regional production division system formed by the East Asian and Southeast Asian economies in the manufacturing and producer services sectors is the source of the main income of these economies participating in the Asia Pacific economic integration.

It is noteworthy that this simulation is based on the current pattern of production and trade between countries / regions, which is very important for understanding the above results.

TPP is committed to opening up comprehensive market access among members and establishing external exclusivity rules for trade and investment, trying to create new regional production chains among members.

Once the Asia Pacific Regional Division of labor network has changed under the influence of TPP, the impact of economies will be different from the above picture.

However, the comparative advantage of all countries is the basis for building the economic structure of the Asia Pacific region. The change of trade and investment rules will affect this pattern to a certain extent, but it can not fundamentally change it.

Therefore, we can neither ignore nor exaggerate the possible impact of TPP on China's economy, and we should form a sober and objective understanding.