Therefore, the TPP is more of a psychological instrument used by the US to "cry wolf" and in all likelihood it will have little impact on China's foreign trade next year. The TPP will mainly affect China's medium-and long-term domestic economic policy reforms. As a regional FTA, the TPP puts more emphasis on "within border" policies and rules associated with trade, such as labor standards, environmental protection, IPR protection and State-owned enterprises, than "on border" trade barriers.

Many of the rules the TPP covers are part of China's ongoing reform. As such, they may be difficult to achieve in the short term but not in the medium to long run.

Also, TPP members include advanced and less-advanced economies and many of them face the same challenges that China does. Take SOEs for instance. Forty percent of Vietnam's GDP is contributed by its SOEs; the percentage for Singapore and Malaysia is similar. If they can cope with TPP rules on SOEs, China should not have major problems either.

Moreover, many TPP rules represent the current trends in global trade and eventually will be accepted by the world. These new standards may pose a challenge to China's efforts to upgrade its industries, but eventually they could be opportunities for the country to pursue further economic reforms. So, there is no reason for China not to play its due role in making global rules for free trade and investment.

China will not be able to join TPP because the US and Japan are opposed to it, although Washington and Beijing both say they have an open mind on China's membership. China should, therefore, act rationally and take steps to meet the challenge posed by the TPP.

The author is vice-minister of the Overseas Chinese Affairs Office of the State Council, and former vice-minister of the Chinese Ministry of Foreign Affairs.

Courtesy: China & US Focus