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China pledges to lead the way on global trade

Chinese president Xi Jinping vowed on Saturday to open the door even wider to foreign business and play an even greater role in the process of globalisation as Beijing moved to take advantage of Donald Trump’s election and fears that he may herald a new era of US disengagement from Asia.

Speaking to business leaders on the sidelines of a 21-country Asia-Pacific Economic Cooperation summit in Peru, Mr Xi offered a vision of a Chinese-led order marked by openness to trade and the free flow of investment. In a thinly-veiled rebuke of US President Barack Obama’s push to create a Trans-Pacific Partnership with Japan and 10 other economies that excluded China he also vowed to pursue trade agreements open to all.

“China will not shut the door to the outside world but will open it even wider,” Mr Xi said, vowing to “fully involve ourselves in economic globalisation”. 

“Close and exclusive arrangements are not the right choice,” he said. 

Mr Xi’s invocation came as this month’s surprise election of Mr Trump, who has vowed to pull the US out of the TPP and threatened to take a more combative approach to trade with China, Mexico and other major partners, dominated discussions at the annual Pacific Rim summit.

It also reinforced what has become the main theme at this year’s APEC meeting with China moving quickly to take a leadership role that many see being abdicated by the US as the advocate of free trade and open economies in the fast-growing Asia-Pacific.

With the future of the TPP in doubt, China has been pushing a rival Regional Comprehensive Economic Partnership and an even broader Free Trade Area of the Asia-Pacific.

Importantly, the RCEP has been attracting new interest from countries such as Peru who are keen to plug into fast-growing economies in Asia. 

Mr Xi said on Saturday that he expected to conclude the RCEP soon. He also opened the door to Latin American countries joining China’s “One Belt, One Road” initiative, which was launched to revive the ancient Silk Road to Europe but has become a much bigger strategic project. 

“We like the US being in the region. But if the US is not there that void needs to be filled, and it will be filled by China.”

John Key, New Zealand’s prime minister, said he would work to try and convince Mr Trump of the value of the TPP and the importance of US engagement in Asia. But he also warned that his country and others would not wait forever. 

“There needs to be a realisation [in Washington],” he said. “The reason that President Obama pursued the TPP was all about the United States showing leadership in the Asia-Pacific region. We like the US being in the region. But if the US is not there that void needs to be filled, and it will be filled by China.”

Enrique Peña Nieto, Mexico’s president, took a more conciliatory approach to Mr Trump, saying that while he believed in the TPP and would work to try and convince the new US president to back it he was prepared to discuss “modernising” the North American Free Trade Agreement between the US, Canada and Mexico. Mr Trump has promised to begin renegotiating the 23-year-old agreement in his first 100 days in office. 

“Mexico’s position on Nafta is that instead of talking of a renegotiation, let’s talk of a modernisation of Nafta,” Mr Peña Nieto said. “Let’s modernise Nafta, let’s make it a much more potent vehicle, a much more modern vehicle that could allow us to really consolidate this strategic relationship between Mexico, the US and Canada, as a much more productive and competitive region before the world.”

“I want to be emphatic: for Mexico, due to its geopolitical position, without a doubt its central relationship is with the US,” the Mexican leader said. “We are not here to recognise a particular leadership … We are not here to pick between black and white. We believe in openness, we believe in integration, we believe in globalisation.”

Eric Farnsworth, vice-president of the Council of the Americas, said Saturday’s speech by Mr Xi looked like the announcement of a “strategic realignment” in the Pacific Rim. 

“He clearly said we are open for business and we want you to come along … You compare and contrast that with where the United States is heading — and we may be looking more inward — it is a moment where if you are on the fence in terms of what direction you want to go or where your future lies you have to look at China.”

Via FT