Based on data for the first quarter of this year, China’s trade with the 15 countries of Asia’s Regional Comprehensive Economic Partnership (RCEP) rose at an annual rate of 6.9% to a total of $440 billion.

Over the same period, Japan, China’s most vocal Asian competitor, booked only $228.5 billion of merchandise sale transactions with the same free trade area.

For the U.S., Asia is the key geostrategic region. Washington’s trade with RCEP is therefore the principal measure of America’s decade-long attempts to contain China by rebalancing economic and military assets to East Asia.

The numbers for the first three months of this year show that -- with a $349 billion in Asian goods trade – Washington’s “strategic competition” with China remains a tough catch-up job. In fact, China takes half of America’s export and import transactions with Asia.

China, clearly, is way ahead of the U.S. and Japan as a top Asian trader. China is also the largest trade partner to those two countries, accounting currently for 14% and 32% of total American and Japanese foreign trade, respectively.

Trading with the enemy?

The problem is that such important trade ties are inconsistent and untenable with hostilities and bellicose designs among those three countries.

That’s particularly the case with U.S.-China relations.

China’s surplus on U.S. trades shot up at an annual rate of 29% to $101 billion in the first quarter of this year. During that time, Washington kept stepping up pressures on its Asian and European allies to confront China, and set up regional trade and security organizations to contain China’s economic development and global power projections.

None of that will work. But, as an aside, one should note that China’s presently soaring exports to the U.S. at an annual rate of 21% are a powerful anti-inflationary ingredient. Striking down trade tariffs on imports from China would also help the U.S. to control its runaway inflation.

Japan is a much tougher case because its export-driven economy is now on a recession path as a result of a widening trade deficit.

Seriously deteriorating relations with China are a huge risk to Japan’s economic activity in months and years ahead. Think of it: Tokyo’s trade with China is 40% larger than the sum of its trade with the U.S. and the E.U.

The economic stakes are enormous. The Asian trade of U.S., China and Japan, taken together, was running in the first quarter of this year at an annual rate of $4 trillion. That’s 14% of the entire world trade estimated for 2021.

But that’s only part of the global income and welfare that’s at risk in the current confrontation between the U.S.-led liberal economies (essentially, the trans-Atlantic community plus Japan) and Russia and China.

If you can’t beat them, join them

And that confrontation is only in its initial stages, where the war in Europe has already unleashed an intractable global energy and food crisis, with accelerating inflation, crashing asset prices and a looming economic downturn.

Is there any way out of this mayhem?

There could be. The U.S., China and Russia know that there are no winners in this confrontation. Signs are that the U.S. and Russia are coming to some understanding about the war in Ukraine, and that Washington sees the futility of playing the Taiwan card.

It also seems increasingly obvious that Russia will get its way in securing its western borders, and that Washington and Moscow will come to terms about Europe’s peace.

China, for its part, is reassuring its Asian neighbors with a strong support to its economy, which will give a new impetus to vigorously growing intra-Asian trade flows.

And China is going much beyond that. In agreement with its BRICS (Brazil, Russia, India, China, South Africa) partners, Beijing is opening doors to a BRICS Plus membership. During a video meeting last Friday (May 20), the BRICS foreign ministers held consultations with representatives from Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, UAE, Saudi Arabia, Senegal and Thailand.

Those countries are interested in joining BRICS, and so are Iran, Mexico and Turkey.

The project of BRICS Plus will create a powerful political, economic and security platform for world’s leading developing countries. Added to the five BRICS members -- representing 24% of global GDP and 16% of world trade -- those large developing nations will offer possibilities to establish new free trade and currency areas, with global credit, payments and clearance systems operated by their banking and financial institutions.

In time, such a more structured developing world could lead to a long overdue update of 1944 Bretton Woods organizations (IMF and World Bank) to create a fully integrated global economic and financial system.