China would lose 2.2 percent of its gross domestic product if 15 other countries joined the Trans-Pacific Partnership without China, according to the central bank's chief economist.
That view is part of an academic paper published by the Shanghai Securities Journal on Friday, a few days after 12 Pacific Rim countries wrapped up negotiations over their trade agreement on Monday. China is not among the 12 nations.
The figure of 2.2 percent of GDP was arrived at based on the gap between the net effects of two different scenarios: one that assumes 16 nations, including China, joined the partnership, the other that assumes 15 nations, including the current 12 nations plus South Korea, Indonesia and Thailand, joined the group.
Ma Jun, chief economist with the People's Bank of China, and Xiao Mingzhi, another economist, examined the "opportunity costs" of excluding China from the TPP, not only for China but also others. They found the opportunity costs for South Korea and Japan－the two countries export heavily to China－is 1.5 percent and 0.6 percent of their GDP, respectively. However, the European Union, Singapore and Vietnam would benefit from China's absence.
The paper is the culmination of research that started long before Monday's conclusion of the TPP negotiations.
Details of the complex agreement on new rules are not yet released. The agreement still awaits approvals by each member's national parliament. The new rules promise to eliminate current import tariffs on up to 18,000 products, which could exert far-reaching impact on dairy farmers in Australia, auto parts workers in the United States, pharmaceutical companies in Canada and beef producers in Japan.
Ma and Xiao found that textiles, clothing and electronics industries in China, as well as in Indonesia and Thailand, will miss out by being excluded from the deal. But, if China joins the TPP, these industries will be major beneficiaries while the country's mining, petrochemical and auto sector would get hurt.
Overall, any membership of the TPP would improve competitiveness and boost China's growth potential by lowering the bar for private capital and helping improve standards of intellectual property rights protection, Ma said. That will translate into an extra 0.5 percentage point annual GDP growth over four years, and an extra 2.3 percentage points for exports.
