Countering China Through IPEF

The Indo-Pacific Economic Framework (IPEF), launched in Tokyo on 23 May 2022, is being touted by the US as a mechanism to counter China’s regional economic influence.
China has raised its apprehensions, calling the Indo-Pacific Economic Framework as an economic NATO.

According to Chinese studies of IPEF, if adopted, the economic deal is unlikely to have an immediate impact on Chinese economic interests.
Chinese policy experts argue that China is more linked with the region than the US, citing current China-led cooperative institutions such as the Regional Comprehensive Economic Programme (RCEP) and the Belt and Road Initiative (BRI).
Many South East Asian companies, for example, rely on China for raw materials that are processed for export to the United States or the European Union (EU).
Furthermore, China’s commercial ties with the region are strengthening. China’s trade with the ASEAN bloc was US$ 212 billion in the first quarter of 2022, in addition to the RCEP countries.
Regarding the likelihood of China’s economic isolation from the regional economic framework, scholars argue that due to its economic clout, China cannot be ignored.
IPEF is doomed to fail, according to Chinese commentators, because it is a “political instrument” aimed at China and devoid of any economic content that will help the Asian region.
Analysts believe China should take advantage of its geographic proximity and market attractiveness to expand collaboration with ASEAN, Japan, and South Korea.

Beijing’s retaliation to Washington’s IPEF strategy is likely to culminate in a geo-economic zero-sum game.
China’s regional economic diplomacy is likely to gain more heft. As a result, we may expect China to increase capital investment, technological transfer, and infrastructure development plans for its neighbours.
It does present an opportunity for smaller regional economies to oppose economic dominance by a single power while also forcing them to deliver public goods customised to their needs.
Furthermore, rivalry between China and US-led institutions may push reforms inside these institutions, resulting in a better regional economic architecture, increased supply chain resilience, and improved intra-regional trade.

Source The Hindu

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