China’s Policy Responses to the Economic Impact of CPTPP and their Effectiveness

Abstract

The paper uses 2018 data to construct a numerical general equilibrium model containing 26 economies, and adds global value chain and added-value trade into the structure, and systematically simulates the economic effects of China’s response to three scenarios of nine categories of CPTPP policy selection. In line with the simulation results, under the four scenarios in which China takes unilateral measures to deal with the impact of CPTPP, the policy effectiveness from high to low separately includes: the construction of China–Japan–Korea free-trade agreement, the entry into force of RCEP and the further opening-up. In the two scenarios in which China joins the CPTPP, the effect of joining the agreement with the first batch of expansion countries is better, while the effect of joining the CPTPP later is slightly worse. After the United States returned to CPTPP, China chose three scenarios in which the economic effects, from high to low, were to optimize the business environment, take no measures and join CPTPP with the United States. Among the three different options, the economic benefit of China’s active choice to join CPTPP is the best. Second is the effect of China’s unilateral measures on CPTPP. However, once the United States returns to CPTPP, it will bring adverse impact on China. The effective measure to deal with it is to optimize the business environment to reduce the cost of the trade.