Analysts are saying that China could come out a winner from the world’s largest trade deal that was signed over the weekend, which excludes the United States.
The trade deal called The Regional Comprehensive Economic Partnership (RCEP) includes 14 Asia-Pacific countries and China, representing more than 2.2 billion people, or almost 30% of the global population. The mega-deal also covers $26.2 trillion of worldwide output.
Although the economic benefits will take years to materialize, analysts are calling the deal a geopolitical victory for China, as the U.S. currently under President Donald Trump focuses on an “American First” foreign policy, according to CNBC. Analysts also note that it's uncertain if the U.S. will work on any massive trade deals with the Asia-Pacific region, under President-elect Joe Biden.
“The diplomatic messaging of RCEP may be just as important as the economics — a coup for China,” analysts from Citi Research wrote.
The deal just signed now has been negotiated by all 15 countries since 2013. At that time talks headed by the Obama administration regarding another big trade pact Trans-Pacific Partnership (TPP) pact was underway.
While the TPP was signed in February 2016 by 12 nations including the U.S., Trump pulled out when he took office in 2017. After the U.S. exited the TPP, the rest of the 11 countries renegotiated the trade pact and signed the Comprehensive Agreement for Trans-Pacific Partnership a year later.
President-elect Biden, who backed the trade pact as Vice President to Barack Obama, has reportedly said in the past that he would renegotiate the deal if he got into office.
Under a Biden presidency, many experts believe that China and U.S. relations won’t get much better. The two nations have seen tensions significantly escalate on tech, trade human rights since the negotiations began.
As we move into a Biden presidency, you’ll want to keep an eye on some of the big Chinese U.S.-listed tech stocks that have been volatile lately on Beijing unveiling draft rules that aim to crack down on companies that use monopoly practices.
That includes Chinese e-commerce leaders Alibaba (NYSE: BABA; HKEX: 09988) and JD.com, (HKEX: 09618; Nasdaq: JD) as well as the gaming giant Tencent, (HKEX: 00700; OTC: TCEHY) which owns the social media app WeChat Trump has been trying to ban.