Many observers are excited about the prospects of a trading bloc called RCEP. It stands for the Regional Comprehensive Economic Partnership that would create one of the largest trading pacts in the world. It would account for nearly a third of the world’s GDP and a third of the world’s population.
It connects ASEAN nations with China, South Korea and Japan in North Asia, and Australia and New Zealand in the southern hemisphere. The pact has been agreed but it still needs to be ratified by the individual countries.
It would take a huge leap of faith to see that happening, given what has happened.
No sooner had the pact been signed, which has taken nearly a decade to negotiate, when China slapped 200% tariff on Australian wines, and delayed shipments of Australian grain and coal from entering the country. We must wonder which part of “regional”, “economic”, “comprehensive” and “partnership” does China not fully understand.
At the heart of any pact is compromise. But China takes exception to anyone who does not support its views on Taiwan’s independent status, Hong Kong’s autonomy, human rights in Tibet and Xinjiang, freedom of navigation in the South China Sea, and the origin of the coronavirus pandemic that was first identified in Wuhan.
The chip on China’s shoulder is getting ever bigger as many countries are growing reticent about the use of Huawei’s gear in 5G networks, and some are questioning the rationale of its Belt and Road initiative. It could get worse when the inclusion of Chinese companies on US stock markets are called into question unless the accounts of those outfits are properly scrutinised.
China once had the world at its feet. But something has gone badly wrong. Perhaps it is a sign that cracks are appearing with China’s idea of socialism with characteristics. After all, there is communism and there is capitalism. And China will have to decide which path it wants to follow. It can’t have both.
If you’d like to learn more investing concepts, and how to apply them to your investing needs, sign up for our free investing education newsletter, Get Smart! Click HERE to sign up now.
Get more stock updates on our Facebook page. Click here to like and follow us on Facebook.
Disclosure: David Kuo does not own shares in any of the companies mentioned.