The Trans-Pacifc Partnership (TPP) agreement as originally announced in October
2015 was undoubtedly the largest regional trade accord in history and, if approved,
could have set new terms for the nearly US $28 trillion in trade and business investment
between the parties to the deal. But the deal hit a roadblock when the USA
decided to withdraw from the agreement in January 2017. While some of the countries
are interested in taking the TPP forward without the USA, there are others which are
still looking at convincing the USA to reconsider its position on the deal. Thus, while all
the debate and deliberation around the prospect of TPP continues, an important point
to note is that the TPP deal does not include China, world’s largest merchandise trader,
which had combined exports and imports worth US $3963.5 billion in 2015. Against
this backdrop, the present paper seeks to analyze the impact of the TPP agreement on
various trade and other economic variables of China both if the USA continues to be a
part of TPP and if the USA withdraws from TPP using the Global Trade Analysis Project.
The unique contribution of the present study lies in analyzing the trade integration
scenarios among the TPP member countries involving all of tarif and non-tarif liberalization
and improved market access between the countries, without the USA. The
results indicate that China’s trade with TPP region, both exports and imports, will sufer
post-TPP implementation. Exports which are likely to be hit are leather and leather
products, motor vehicles, meat products, processed food, iron and steel. Imports of
oilseeds, paper and paper products, nonmetallic minerals and machinery are also
expected to sufer. More than the loss in trade, China will experience substantial welfare
loss due to all of allocative inefciency, worsening terms of trade and endowment
efect. Of these, worsening terms of trade explain the largest part of welfare loss to the
country. With the withdrawal of the USA from the deal, China’s trade with the region
and its welfare is likely to sufer less.

• Economy‑wide impact of TPP: new challenges to China