The World Bank chief economist said this is preferable instead of being excluded from any agreement or part of an exclusive trade bloc.
World Bank chief economist, East Asia and Pacific Region Aaditya Mattoo said the US economy is expected to grow at a slower rate this year, while China is expected to grow at a faster rate of 5.1 per cent this year, up from three per cent last year, with the latter’s growth offsetting the negative impact of slower growth in the US.
The World Bank Group reported that the Regional Comprehensive Economic Partnership trade agreement has helped deepen much of the region’s integration with China, while the Comprehensive and Progressive Agreement for Trans-Pacific Partnership was meant to but failed to achieve integration with the United States and the proposed Indo-Pacific Economic Framework is not meant to be a traditional trade agreement.
"However, there are four problems. Firstly, uncertain politics rather than reliable economics and predictable trade routes are now holding trade patterns, and that leads to a less certain policy environment, and that uncertainty can actually inhibit investment. Secondly, a shift from rules-based to more politically motivated trade is less good for long-term growth and investment.
Mattoo emphasised that these types of restrictions could significantly disrupt trade, especially in a region which is deeply integrated with global value chains and but also deeply integrated into global value chains, both with the US and China.
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