Economy

China’s FTA Push: Will Divergent Interests Derail Trade Deal with Japan and South Korea?

China pushes for FTA talks with Japan, South Korea, but faces hurdles due to diverging interests and new leadership.

November 3, 2025, 9:21 PM

Large container ship docked at a port in Osaka, Japan, being loaded by massive red and white gantry cranes under a bright sky.

A container ship being serviced by gantry cranes at the Industrial Port in Osaka, Japan. By Torjrtrx / Shutterstock.com.

Executive Summary

China is actively advocating for the resumption of trilateral free-trade agreement (FTA) negotiations with Japan and South Korea, viewing it as a strategic effort to strengthen East Asian economic ties amid tensions with the United States.

Formal negotiations for the trilateral FTA, which began in 2012, have largely stalled in recent years due to factors including the COVID-19 pandemic, though all three nations are members of the broader Regional Comprehensive Economic Partnership (RCEP).

Analysts highlight significant hurdles to the FTA, including new leadership in Japan (with Sanae Takaichi noted as “very accommodating to President Trump”) and diminishing economic benefits for Japan and South Korea as China’s increased domestic production reduces its import needs from these neighbors.

The Story So Far

The trilateral free-trade agreement has a long history, with formal negotiations commencing in 2012 but largely stalling in recent years, setting the stage for China’s current push to restart talks. However, significant obstacles impede progress, including the influence of Washington, exemplified by Japan’s Prime Minister Sanae Takaichi’s alignment with President Donald Trump, and diminishing economic incentives for Japan and South Korea due to China’s increasing domestic production, which reduces their traditional export opportunities. These factors explain the complexity and challenges in achieving deeper regional economic integration despite China’s strategic efforts to strengthen ties amid ongoing tensions with the United States.

Why This Matters

China’s strategic push to revive a trilateral free-trade agreement with Japan and South Korea, aimed at strengthening regional economic ties amid tensions with the United States, faces significant hurdles due to divergent national interests, the influence of Washington (evidenced by Japan’s new leadership being accommodating to President Donald Trump), and diminishing economic incentives for Japan and South Korea as China’s domestic production increases, making deeper integration unlikely in the near term.

Who Thinks What?

China is actively advocating for the resumption of negotiations on a trilateral free-trade agreement (FTA) with Japan and South Korea, aiming to strengthen economic ties within East Asia amid ongoing tensions with the United States.

Analysts, such as Alicia Garcia-Herrero, caution that significant hurdles complicate the path to deeper regional economic integration, including divergent national interests, the influence of Washington, and new political leadership in Japan and South Korea.

According to analysts, Japan and South Korea may be less inclined to pursue the trilateral agreement, partly due to the new Japanese Prime Minister’s alignment with President Donald Trump and the diminishing economic benefits as China’s increasing domestic production reduces its imports from these neighbors.

Beijing is actively advocating for the resumption of negotiations on a trilateral free-trade agreement (FTA) with Japan and South Korea, even as analysts caution that significant hurdles, including divergent national interests and the influence of Washington, complicate the path to deeper regional economic integration. China’s push for enhanced cooperation comes amid ongoing tensions with the United States, highlighting a strategic effort to strengthen economic ties within East Asia.

China’s Diplomatic Push

Chinese Commerce Minister Wang Wentao recently pledged to promote the restart of trilateral FTA negotiations during a meeting with South Korean Minister of Trade, Industry and Energy Kim Jung-kwan. The meeting took place on the sidelines of the Asia-Pacific Economic Cooperation (Apec) forum, according to a statement from China’s Ministry of Commerce. Wang also emphasized the importance of enhancing communication between China and South Korea through existing export-control and supply-chain mechanisms to ensure the smooth operation of their bilateral supply chains.

History of the Trilateral FTA

The concept of a trilateral FTA has been under discussion for over two decades, with formal negotiations officially commencing in 2012. However, these discussions have largely stalled in recent years, partly due to the global COVID-19 pandemic. Despite the lack of progress on a comprehensive trilateral agreement, all three nations are members of the broader Regional Comprehensive Economic Partnership (RCEP), which provides a more limited framework for regional trade.

Obstacles to Agreement

Analysts point to several factors hindering the advancement of the FTA. A key challenge is the recent change in leadership in both Japan and South Korea. Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Natixis, specifically highlighted the newly elected Japanese Prime Minister, Sanae Takaichi, as a potential impediment. Garcia-Herrero noted that Takaichi has been “very accommodating to President Donald Trump,” suggesting this alignment could make her less inclined to pursue the trilateral agreement.

Furthermore, Garcia-Herrero suggests that the economic benefits of such an FTA might be diminishing for Japan and South Korea. She argues that the potential costs could outweigh the gains, as China’s increasing domestic production means it now imports less from its neighbors in categories they traditionally supplied. This shift reduces the incentive for Japan and South Korea to enter into a deeper trade pact with China.

Outlook for Regional Trade

While Beijing continues to champion deeper economic cooperation in East Asia, the path to a comprehensive trilateral FTA with Japan and South Korea remains complex. The interplay of geopolitical dynamics, new political leadership, and evolving economic realities presents significant challenges to the resumption and successful conclusion of negotiations.