The tangible growth of the one-year-old Regional Comprehensive Economic Partnership agreement will attract foreign companies to expand their presence in China and other signatory economies, creating favorable conditions for the integration of regional industrial and supply chains, said the country’s top foreign trade and investment promotion agency on Monday.
As China is committed to building an open economy and ensuring the security and smooth flow of global supply chains, the RCEP will assist its companies in better participating in regional industrial and supply chain cooperation, said Zhang Shaogang, vice-chairman of the Beijing-based China Council for the Promotion of International Trade, or the CCPIT.
Commenting after a news conference in Beijing, Zhang said the RCEP’s cumulative rules of origin will help lower businesses’ expenditures on tariffs, and expand the production and trade of intermediate goods in the region while pushing more multinational corporations to strengthen their industrial layout in the Asia-Pacific region.
The RCEP comprises 10 member states of the Association of Southeast Asian Nations plus China, Japan, South Korea, Australia and New Zealand. With the agreement entering into force for Indonesia on Jan 2 of this year, only the Philippines remains to have not yet ratified and implemented the pact.
Zhang said that the other RCEP member countries are important sources of raw materials and components for many Chinese companies. They are also key overseas markets for intermediate and manufactured goods produced by exporters in China.
China’s foreign trade with other RCEP economies grew by 7.5 percent on a yearly basis to 12.95 trillion yuan ($1.93 trillion) in 2022, accounting for 30.8 percent of the country’s total exports and imports last year, statistics from the General Administration of Customs (GAC) showed.
Chinese exporters applied for a total of 608,000 certificates of origin and issued declarations of origin under the RCEP in the first 11 months of 2022, corresponding to an export value of 213.4 billion yuan. They are able to enjoy an estimated 1.37 billion yuan in tariff concessions from importing countries, according to the GAC and CCPIT.
Relying on such advantages for complete industrial support and their “going global” demand, many Chinese companies in the automotive, electronics, machinery and textile industries have undertaken regional industrial and supply chain cooperation in other RCEP markets to optimize regional industrial layouts and cultivate diversified global supply chain networks, Zhang said.
The CCPIT said that the RCEP also sets out rules relating to investment liberalization, protection, promotion and facilitation measures, with a significantly higher level of openness than the bilateral free trade agreements signed between member countries previously.
The openness dividend is particularly evident in the free trade relations established for the first time among China, Japan and South Korea through the RCEP.For instance, China saw investment from Japan and South Korea jump 122.1 percent and 26.1 percent, respectively, during the January-November period of 2022, according to the latest data released by the Ministry of Commerce.
Accelerating the liberalization of intra-regional goods trade and tariff cuts are important benefits of the RCEP. Tariff reductions have directly reduced companies’ operating costs and improved their competitiveness in global markets, said Gao Ming, vice-president of the overseas business unit at Beiqi Foton Motor Co Ltd, a commercial vehicle manufacturer owned by State-owned carmaker BAIC Group.
“The RCEP’s preferential policies have attracted more global companies to add investment in China and created new consumers. Our sales in RCEP member countries surged more than 10 percent year-on-year in 2022,” he said.
China saw its foreign trade with eight RCEP member countries grow double digits year-on-year in 2022, while its trade with Indonesia, Singapore, Myanmar, Cambodia and Laos grew by over 20 percent on a yearly basis, said the GAC.
Lian Ping, chief economist at the Shanghai-based Zhixin Investment Research Institute, said that multiple highlights are expected this year in terms of China’s trade structure.
“Exports of integrated circuits and auto parts, among other goods, could rise with low-tariff arrangements under the RCEP. New energy products are also expected to see boosted exports amid global carbon-neutrality commitments,” he said.