Japan and China Compete for Free Trade Leadership in Southeast Asia: TPP Standards at Stake

This article explains:
Why are Japan and China competing over free trade?
What could happen if China joins the TPP?

Background: Japan and China’s Competition for Free Trade in Southeast Asia

Due to the high-tariff policies imposed by the U.S. (Trump administration), Cambodia, Vietnam, and Thailand are struggling with exports (e.g., Cambodia 49% tariffs, Vietnam 46%, Thailand 36%).

In this situation, Japan and China are strengthening ties with Southeast Asian countries as free trade partners.

Japan’s Prime Minister Ishiba visited Vietnam and the Philippines, advocating the importance of maintaining a rules-based free trade system.
Meanwhile, Chinese President Xi Jinping visited Malaysia and other countries, promoting economic assistance and emphasizing “free trade”.

Different Definitions of “Free Trade”

Japan
Focuses on high standards of liberalization (transparency, fairness, state-owned enterprise reforms, intellectual property protection) and aims to expand high-quality rules across Southeast Asia.

China
Prioritizes market expansion and does not emphasize high standards.
Despite promoting “free trade,” China maintains state-owned enterprise privileges and IPR issues.

What If China Joins the TPP?

Benefits
・The economic scale of the TPP would greatly expand.
・Member countries would gain better access to China’s market.
・China might face more pressure to comply with rules.

Risks
・The high standards of the TPP could be undermined.
・Without addressing state-owned enterprise privileges and IP issues, transparency and fairness may suffer.
・There’s a risk of internal division within the TPP due to China’s political influence.
・It may hinder the U.S.’s potential return to the agreement.

Conclusion

If China joins the TPP, there is a very high risk that “quantity will increase, but quality will decline”.

The Reality in Southeast Asia and Japan’s Challenges

In reality, Southeast Asian countries are rapidly deepening economic ties with China.
China is now the largest trading partner for countries like Vietnam and the Philippines.

China also outpaces Japan in Foreign Direct Investment (FDI).
The “Asian Growth Model” once led by Japan is now being overshadowed by China’s speed and scale.

Japan needs to not only protect the quality of free trade but also better respond to the practical needs and urgency of Southeast Asian countries.

Summary

・Japan and China are competing for free trade leadership in Southeast Asia.
・Japan emphasizes high-quality free trade while China pursues practical benefits.
・If China joins the TPP, the economic scale will expand but standards might weaken.
・Japan must achieve “both rules and practical benefits” to succeed.