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TPP Has Slight Negative Impact on China: US Think Tank

The US-led Trans-Pacific Partnership (TPP), which was signed by 12 countries accounting for 40 percent of the global GDP, will only have a slight negative impact on China, according to an authoritative US think tank.

There is no denying that the multi-national free trade deal can bring hundreds of billions of US dollars in revenues to the signatories every year, said Peterson Institute for International Economics (PIIE), an American nonprofit, nonpartisan research institute.

But the TPP’s negative impact on China is insignificant, which is negligible before 2025 and can cause China to lose between $9 billion and $20 billion a year by 2030, which accounts for less than 0.1 percent of its GDP at the time, the PIIE said.

This may come as a surprise to those who see “the world’s largest” free trade deal as a campaign to “encircle and suppress China” by excluding China, the world’s largest trader.

The PIIE also believes the TPP’s impact on the real income of non-member countries in general is not going to be great and not all the impact is negative.

China, India, South Korea and Thailand are among countries that will suffer from its negative impact as the pact diverts some trade from its non-members to members. South Korea will be hard hit as the deal will severely erode the advantages the country enjoys under its former free trade agreement with the United States.

Meanwhile, some non-members, like the European Union and Hong Kong, will see their real income levels rise due to the TPP, which allows certain trade liberalization with its non-members.

While the TPP is going to benefit its members in varying degrees, Vietnam will benefit most from it by 2030, with its real income expected to increase by $41 billion, or 8.1 percent of its GDP, according to the PIIE’s calculation of the TPP’s real income effects.

By 2030, the TPP will add 131 billion dollars a year to the United States’ real income, the largest net increase, but the figure will account for only 0.5 percent of the country’s GDP.

Japan’s economy will also be significant boosted by the TPP, which is expected to increase the country’s income by 125 billion dollars a year, or 2.5 percent of its GDP. This is remarkable for a country whose growth rate has been long hovering around 0 percent.

Feb. 17, 2016 on XinhuaNet

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