U.S. and China: Who will win the Battle for Geopolitical Dominance?

  • The Free Trade Area of the Asia-Pacific (FTAAP) deal comprising 21 countries has been in the pipeline since 2004 like the TPP deal which encompasses 12 countries
  • FTAAP wildly considered as China’s attempt to rival U.S. for free trade supremacy in the Asia-Pacific region.
  • Should it become a reality, it would bring about a never-witnessed fall in trade tariffs across one of the world’s fastest-growing economic regions.
  • A two-year study on the feasibility of the deal will be initiated by member countries. The deal is however in its nascent stage as opposed to the TPP which is expected to come into effect soon.

The APEC summit 2014 made it starkly clear that trade is now a tool of geopolitical strategy. Much of the talk at the summit revolved around deals that would reduce the export and import barriers across the globe. The cynosure of the trade deals being pushed is the Asia-Pacific region. It commenced with the Trans-Pacific Partnership (TPP) which spearheaded by the U.S. encompasses 12 countries along the Pacific Ocean. While the U.S. prefers to term this deal as an attempt to make free trade a reality, it is largely acknowledged as the nation’s attempt to counter China’s rising influence in Asia.

In the same vein, China has been working on bringing another trade pact, the FTAAP into existence. One that targeted the Pacific region again. Unlike the TPP it is important to note that U.S. is one of the member countries and that the deal comprises 21 countries. The 21 member states are Australia, Brunei, Canada, Chile, People’s Republic of China, Hong Kong, Indonesia, Japan, Republic of South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Republic of the Philippines, Russia, Singapore, Chinese Taipei (Taiwan), Thailand, the United States, and Vietnam. These 21 members approximately account for 40 percent of the world’s population, 57 percent of economic output and 46 percent of trade. This is largely seen as China’s attempt to temper down the influence U.S. would wield when the TPP deal would come into effect.

The Chinese leader Xi Jinping shot down speculations stating that “Currently, the global economic recovery still faces many unstable and uncertain factors. Facing the new situation, we should further promote regional economic integration and create a pattern of opening up that is conducive to long-term development.”

To elaborate further, America dominated the vast trade network for much of the modern history of Asia. But, America has been losing its clout steadily over the past few years. Only 14 percent of Asia’s merchandise exports reached American shores in 2013, a far cry from the 23.7 percent in 2000 according to the Asian Development Bank. The world’s second largest economy has almost usurped U.S. as the chief trading partner adding to its growing political power in East Asia. While China is working hard towards ensuring that this position is maintained, U.S. has been working towards enhancing its influence in the East-Asia region while countering China’s rising power.

U.S. President Barack Obama also did his bit to clear the misconceptions surrounding these deals stating that “When the US and China are able to work together effectively, the whole world benefits.”

Experts claim that U.S. has the edge right now as the TPP talks have reached an advanced stage while all the FTAAP is just working its way slowly. Currently, the member countries have agreed to launch a two-year study to gauge the feasibility of the deal. Complicating the matter further is that fact that U.S. and China need to work in tandem on the trade front. The U.S. market is crucial for China’s economic growth. Given that it exported $440 billion worth of goods to America the previous year. China’s expanding middle is as important for America. Disregarding the tussle for geopolitical dominance, it is clear that the world’s two biggest economies need to do work with each other.


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