The largest free trade area in the world came into existence over the weekend — and the U.S. was not even invited.
Why it matters: For the first time in living memory, the hegemon at the center of a major global free trade agreement is not the U.S.
- China has stepped into Uncle Sam’s shoes, and now anchors the Regional Comprehensive Economic Partnership, or RCEP, an area covering 2.2 billion people and 1/3 of all the economic activity on the planet.
The big picture: President-elect Joe Biden is expected to seek a broad multilateral alliance to pressure China on everything from trade to human rights once he becomes president. But China is making broad multilateral alliances of its own.
- RCEP includes rich democracies such as South Korea, Japan, and Australia. Their position in this major free trade area will make it that much harder for Biden to unite them against China.