HONG KONG (MarketWatch) — The Trans-Pacific Partnership (TPP) trade deal may be controversial in the U.S., but in China it appears to be the object of great worry and, in some respects, seems to be driving policy in Beijing.

The TPP agreement, strongly supported by President Barack Obama, would create the world’s largest free-trade zone, stretching across half the globe. The treaty itself, as well as the “fast-track” negotiating authority sought by the Obama Administration, has come under criticism by some U.S. lawmakers, as well as various labor and business groups concerned about everything from wages to national security.

But in Beijing, the TPP is frequently seen as an “anyone but China” trade club that threatens the Chinese economy as a whole and even the country’s very future.

“The development of the TPP has profound impact on China’s economic reforms,” Partners Capital International Ltd. Chief Executive Ronald Wan told MarketWatch.

“In a way, it is directed at China, and China needs to take the initiative and deal with it,” he said.

Clearly, China’s leadership is concerned, all the more so as the economy suffers through a slowdown. The government’s newly released master plan for future manufacturing strategy — dubbed “Made in China 2025” — specifically cites the threat posed by the TPP to the country’s trade, still the prime driver of the Chinese economy.

The U.S. “has been vigorously promoting and building” the treaty, setting high bars for service trade, intellectual property, labor rules and environmental protection, the State Council (China’s cabinet) said.

Implementation of the TPP will “further impair China’s price advantage in the exports of industrial products and affect Chinese companies’ expansion” abroad, it said.

Given the perceived threat of the TPP, not to mention a proposed free-trade deal between the U.S. and the European Union known as the Transatlantic Trade and Investment Partnership, China has been taking various measures to safeguard its trade position.

Domestically, the country has expanded its creation of new free-trade zones after seeing some initial success in Shanghai, using the program as a way to lure foreign investment on a wider scale. Abroad, it has started its own series of trade initiatives, described as the “New Silk Road.”

Likewise, China has also created a new multinational lending organization — the Asian Infrastructure Investment Bank (AIIB) — along the lines of the World Bank and Asian Development Bank, often seen in China as under the effective control of the U.S. and Japan, respectively.

In spite of all this, Partners Capital’s Wan says China would see fierce trade competition and a rise in related disputes if the TPP forms with it excluded.

New Cold War?

Chinese leaders’ reaction to the TPP is very much tied to their belief that the planned trade deal is aimed directly at China.

This isn’t much of a stretch: In an April interview with the The Wall Street Journal, President Obama warned that if the U.S. doesn’t enact a free-trade deal with Asia, then China will write the rules for the region.

Obama’s remarks were apparently meant to counter opposition among some of his fellow Democrats, but Portland State University political science professor Mel Gurtov notes that China is also listening closely.

The selling of the TPP in Washington “requires hyping the China threat,” which in turn reinforces China’s suspicions, Gurtov wrote this week in his column for Asian Perspective.

“A clearer ‘us versus them’ worldview could not have been written,” said Gurtov, who is also wary of the agreement for what he sees as its favoring business interests over those of workers.

For its own part, China’s leadership also apparently believes Washington is out to get them, employing the same containment policy used against the Soviet Union during the Cold War.

An editorial this week in the state-run Xinhua News Agency argued against sliding into such a confrontation. “Compared with the Cold War era, countries are more closely related with each other, and their economic interests are more inseparable,” it said. “The old containment policies will no doubt eventually hurt oneself.”

But as Chinese Renmin University professor Shi Yinhong said in a separate comments to state media, a warming between Washington and Beijing will prove difficult, with the two sides clashing on a range of issues, from cyber attacks and territorial disputes in the South China Sea to longstanding difficulties over intellectual property.

“The relationship between the two countries is more tense than ever before,” Shi said.