Agreement will spur tech innovations, promote regional trade integration
China is expected to better unleash the potential of the Regional Comprehensive Economic Partnership agreement to upgrade its manufacturing sector as well as support exports, according to experts and business leaders.
As the Chinese economy currently faces mounting uncertainties, it has become more important for the nation to pursue high-quality development, they said.
Officially taking effect on Jan 1, the agreement grouped 15 Asia-Pacific economies, including all 10 member states of the Association of Southeast Asian Nations, to create the world’s largest free-trade bloc, promoting regional economic integration through tariff concessions and other trade and investment liberalization and facilitation measures.
For China, its economic and trade cooperation with the other RCEP countries has embarked on a fast growth track in recent years, with close collaboration seen across upstream and downstream manufacturing industrial chains.
Chinese Customs data showed imports and exports between China and the other 14 RCEP countries have increased by 3.9 percent year-on-year to 3.84 trillion yuan ($603 billion) during the first four months.
“As Chinese importers face multiple pressures, the RCEP is expected to provide more growth room for the nation’s exports through creating new market demand with tariff concessions,” said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing.
“The integration of regional industrial and supply chains brought about by the agreement will also create new growth space for the Chinese economy,” Zhou said, adding that it is particularly important for China to upgrade its manufacturing sector.
The RCEP will spur technological innovations and upgrades among Chinese manufacturers to meet market demand. It will also promote the establishment of new standards, rules and regulations among the member states, creating a more favorable external environment for the Chinese manufacturing sector to upgrade, he added.
According to a recent report by the PHBS Think Tank, affiliated with Peking University HSBC Business School, trade between China and other RCEP economies surged 11.2 fold from $166.7 billion in 2000 to $1.87 trillion in 2021, while Chinese exports to these countries surged by 11.8 fold over the period from $74.1 billion to $873.4 billion.
Moreover, manufactured goods accounted for around 90 percent of Chinese exports to the other RCEP economies in 2020, and for imports, the figure was around 74 percent, the report said.
According to analysts and business executives, Chinese enterprises should accelerate moving toward high-value-added sectors through innovation-driven product research and development and services optimization, and actively use the RCEP agreement to seek better development.
Xu Ningning, executive president of the China-ASEAN Business Council and chairman of the RCEP Industry Cooperation Committee, said the RCEP has created favorable development conditions for enterprises, and it is important for Chinese enterprises to take more actions to better utilize RCEP rules.
For that, enterprises are expected to make innovations in corporate management, product development and market exploration to improve their level of international cooperation, he said.
Cheng Shi, chief economist at ICBC International, said as the trade pact will advance regional industrial and supply chain integration, Chinese enterprises, especially those small and medium-sized ones, should further explore the growth space for the production of intermediate products and related opportunities for expanding imports and exports, to better participate in the regional industrial and supply chains.
That will unleash the vitality of small and medium-sized enterprises, enhance their expertise and promote their upgrades, as well as add resilience to China’s industrial chain, he said.
He also said the RCEP will facilitate China to expand foreign trade due to its stimulus for regional trade activities with tariff concessions and other measures.
Wu Dazhi, chairman of Guangdong Zhida-Walking New Material Technology Co Ltd, said at a recent forum held by the RCEP Industry Cooperation Committee that the trade agreement is set to promote the upgrade and transformation of China’s footwear industry toward a high-quality growth pathway because it can further unleash Chinese enterprises’ ability to utilize market resources in the region leveraging on the nation’s complete industrial chains.
Wu, who is also president of the Guangzhou Leather & Footwear Association, said the agreement will further reduce trade barriers for Chinese products to export and gain more recognition for Chinese brands in global markets, as Chinese products have good quality and affordable prices.
Having established a research and development center and factory in Vietnam, the company plans to increase investment and build facilities in other RCEP countries, he said.