Liu Zongyi

Opinion | Why Joe Biden’s Indo-Pacific economic plan won’t stop China’s rise

The US hopes to reshuffle the rules in Asia in its favour but few are interested in an exclusionary, self-serving framework with doubtful longevity that lacks market access facilities

As the world’s second-largest economy and centre of Asia’s industrial and supply chains, China is confident it can deal with any US strategic containment efforts

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Liu Zongyi

Published: 3:30am, 27 May 2022Updated: 4:47am, 27 May 2022

US President Joe Biden launched the Indo-Pacific Economic Framework (IPEF) this week in Tokyo, with Japanese Prime Minister Fumio Kishida and Indian Prime Minister Narendra Modi in attendance in person. The IPEF was the most important part of Biden’s agenda during his visit to East Asia.

It consists of four pillars. The first is so-called fairer, binding rules of a high standard in fields such as digital trade, labour and the environment. The second, resilience and security of supply chains in key industries such as chips, high-capacity batteries, medical products and critical minerals. Third, high standards of infrastructure, decarbonisation and green technology. And fourth, taxation and anti-corruption commitments.

The United States has not imposed stringent conditions for joining the IPEF, primarily to attract as many countries as possible. It is clear that the framework focuses on the formulation of standards and rules. With the rapid rise of Asian emerging economies such as China, Asia has now become the centre of gravity for the world economy.

Intra-Asian trade is eclipsing trade with the US; Asians are not only producers and exporters, but also consumers and importers. They are capital providers, including to one another, and not just recipients. The establishment of Asian economic integration mechanisms, such as the Regional Comprehensive Economic Partnership (RCEP), is making the Asia-Pacific more “Asian” and less “Pacific”. The situation is causing the US concern about being sidelined in Asia.

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Unlike the Trans-Pacific Partnership, the IPEF does not facilitate market access by removing tariff and non-tariff barriers to trade. Given the prevalence in the US of an anti-global mindset and populism, it is politically unacceptable for Democrats and Republicans to give Asian countries more market access.