Modern trade deals should move to a more sophisticated version 2.0, which includes globalization, center's president says

Wang Huiyao insists that, in light of the impending withdrawal of the US from the Trans-Pacific Partnership, trade treaties need to deal better with the complexities of globalization.

Wang, who is president of the Center for China and Globalization, China's largest independent think tank, says the deals now need to be more version 2.0 than 1.0.

"The old concept of free trade was to have no tariffs, and everything to be free within a group of countries.

"We now need to come up with something more complex than that, which maybe sets a few boundaries and adds some new rules," he says.

"The US could enter into a treaty with China, for example, where there is a condition that China has to invest in manufacturing in the American Rust Belt, which would help Trump provide jobs there."

Wang, who was speaking in his offices in Hanwei Plaza in Beijing's Chaoyang district, sees the likely collapse of TPP due to US non-participation as an opportunity to reshape Asia-Pacific trade.

"There is more hope of this under Trump than with Hillary (Clinton). With her we would still be on 1.0. But now we can go on to 2.0."

Appointed a counsellor on the Chinese State Council, or cabinet, last year by Chinese Premier Li Keqiang, Wang says one of the fault lines of the TPP was that it did not include China and was seen as being part of President Barack Obama's pivot to Asia strategy, of which Clinton was a leading architect as secretary of state.

He believes there is an opportunity for a new trade agreement that includes both the United States and China.

"Why don't they just do another trade deal and write the rules? Here is an opportunity for the clever politicians to demonstrate some capacity for leadership and get a new deal approved," Wang says.

"China and the US are the two largest trading nations in the world, and they have one of the largest bilateral trading relationships as well. So any major trade agreement for the Asia-Pacific without China or the US can't really be complete or workable."

Wang believes the new administration might be open to a strong relationship with China, despite Trump's threatening during his campaign to impose a 45 percent tariff on Chinese imports.

He says a recent article by Trump's national security adviser, James Woolsey, in the South China Morning Post - which argued that Obama's opposition to China's Asia Infrastructure Investment Bank (AIIB) was a mistake - was encouraging.

"I think this alone sends an enormous signal to China that there may be movement on a lot of issues. It might be that China might invite the US to join its Belt and Road Initiative. There might be a lot more flexibility about these things," he says.

Wang, 57, founded the globalization center in 2008. It now has more than 100 staff members, 50 in Beijing and the rest in offices in Guangzhou, Shenzhen, Qingdao and Shanghai. There are also representative offices in Washington, New York and Europe.

The center publishes special reports in a number of areas, including Chinese enterprises expanding overseas, developing talent and global governance.

Wang believes the vehicle for taking trade negotiations forward could be the Free Trade Area of the Asia-Pacific, or FTAAP, which was first discussed at the Asia-Pacific Economic Cooperation (APEC) meeting in Hanoi in 2006.

Chinese President Xi Jinping gave fresh impetus to it in his keynote address at the APEC meeting in Lima, Peru, in November.

Such a free trade agreement would likely involve the 21 Pacific Rim members of APEC, including both China and the US.

"With what has happened to the TPP, it could now succeed. I also think Donald Trump, who is both a businessperson and pragmatist, would also see it as a good way of engaging with China and the Pacific countries," Wang says.

He believes that the TPP is effectively now dead in the water.

"It still exists, but as (Japanese Prime Minister Shinzo) Abe said it is now irrelevant," he says.

Wang, who grew up in Sichuan, had his education interrupted by the "cultural revolution" (1966-76). He was among the generation of Chinese students that returned to university studies in 1978.

He studied English and American literature at Guangzhou University of Foreign Studies before going on to do an MBA at the University of Windsor in Ontario, Canada.

He became chief trade representative to the Quebec government in Hong Kong and China, returning to China in 1993.

Wang, who has a PhD from Manchester Business School, has taught at Peking University's Guanghua School of Management and at Tsinghua University, and is also a visiting fellow at the Brookings Institution and a senior fellow at the Harvard Kennedy School. He has also held a number of key business positions.

He attended the official opening ceremony of a new factory of Chinese auto glass maker Fuyao, which will be the largest in the world, in Moraine, Ohio, in October. The plant currently employs 2,000 but this is expected to grow to as much as 2,500 by the end of next year.

"More than 800 people attended - governors, congressmen, people from the local community and also from the Brookings Institution and other such bodies. I think it is a really good example of how trade and investment between China and the US can be maintained," Wang says.

"If Donald Trump really wants to make America great again this is how he can do it: by encouraging more Chinese investment in the US. It is a way of delivering good jobs and better incomes for people in these areas of the US were people feel their living standards have fallen behind."

He is confident Trump as president will be open to such arrangements and will not impose barriers on imported Chinese goods, which he believes are unworkable.

"He was talking tough during the campaign but we have seen he is a flexible man," Wang said. "He said he was going to jail Hillary and now he is not. He said he was going to build a wall (along the Mexican border) and now its is only a fence. He was going to scrap Obamacare and now he is only going to modify it. What you see is a businessman's flexibility," Wang says.

Wang believes there is a need to move away from the anti-China rhetoric that underpinned the TPP.

Obama said when he wanted congressional backing for the treaty that it was important China did not "write the rules".

"We still have a Bretton Woods system of governance that was established at the end of the World War II," he says. "The US has to accept that China is no longer a follower in the international system but needs to be a participant in the rule-making. The blunt language from Obama was not helpful. We now have an opportunity to reshape world trade."

andrewmoody@chinadaily.com.cn