China and 14 Asia-Pacific countries sign RCEP free trade agreement
Nov-17-2020 By : fcccadmin
The Regional Comprehensive Economic Partnership (RCEP) was signed online at the 4th RCEP Leaders’ Meeting on November 15. Initiated by the Association of Southeast Asian Nations (ASEAN) in 2012, the RCEP is the largest free trade agreement worldwide, with 15 members covering 47.4% of the world’s population, about one-third of global GDP, 29.1% of world trade and 32.5% of global investment, the Global Times reports. Chinese Premier Li Keqiang hailed the signing as “a victory of multilateralism and free trade”. The agreement involves all 10 member countries of the Association of Southeast Asian Nations (ASEAN) and five of its major trading partners – China, Japan, South Korea, Australia and New Zealand. India withdrew from the negotiations in November 2019 due to domestic opposition to the pact’s market-opening requirements, but the door remains open for it to join. Leaders of the 15 countries witnessed the signing by video link. It took eight years to conclude the treaty negotiations.
Trade between China and other RCEP members amounted to USD1.06 trillion in the first three quarters of this year, accounting for about one-third of China’s total foreign trade, according to the Ministry of Commerce. The RCEP agreement contains 20 chapters covering subjects such as goods trade, investment and e-commerce. Under the deal, members will aim to cut tariffs to zero in the coming decade, according to China’s Ministry of Finance. Zhang Jianping, Director General of the China Center for Regional Economic Cooperation, said the signing of the RCEP deal will build a solid foundation for future negotiations on the China-Japan-South Korea Free Trade Agreement (FTA). Compared with other free-trade agreements, Zhang said RCEP is a new type of agreement covering new issues such as intellectual property, digital trade, finance and telecommunications, the China Daily reports.
The signing of the agreement will give a significant boost to regional economic growth, as the pact is expected to drive the recovery of member countries’ economies as well as Asia-Pacific cooperation in the post-Covid-19 era, Su Ge, Chairman of the Beijing-based China National Committee for Pacific Economic Cooperation said. The removal of tariff and non-tariff barriers alone under the RCEP would increase the Asia-Pacific region’s GDP by 2.1% and world GDP by 1.4%, according to estimates. The pact is estimated to drive up China’s GDP growth by about 0.55% and Japan’s by 0.1%, Zhang Yansheng, Chief Research Fellow at the China Center for International Economic Exchanges, told the Global Times. The RCEP will be the first trade agreement including China and Japan, allowing the latter to cancel tariffs on 56% of the farm products imported from China.
Unlike the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP) and the EU, it does not establish unified standards on labor and the environment or commit countries to open services and other vulnerable areas of their economies. Originally, the U.S. promoted the Trans-Pacific Partnership (TPP), but President Donald Trump withdrew the country from the agreement immediately after his inauguration in January 2017. It is possible that a Biden administration would rejoin the TPP pact, complicating East Asia’s foreign trade and resulting in competition between the TPP and RCEP in some areas, while cooperation and fusion of the two FTZs is also possible, the Global Times reports.
The pact will take effect once enough participating countries ratify the agreement domestically within the next two years. This overview is based on reports by The Global Times, China Daily, Shanghai Daily and The Guardian.
CIIE, the world’s biggest trade fair this year, held in Shanghai
Nov-10-2020 By : fcccadmin
Chinese President Xi Jinping opened the third China International Import Expo (CIIE), said to be the world’s biggest trade fair this year amid the global pandemic, on November 4 with a keynote speech delivered by video link that highlighted China’s unwavering commitment to further opening up its market to global businesses, and helping boost global cooperation. Xi elaborated on China’s new development strategies and priorities, and reassured the global business community of China’s continued openness, despite the focus on boosting the domestic economy and indigenous innovation. “As scheduled and confident in the containment protocols that have been put in place, China is hosting this global trade event. It demonstrates China’s sincere desire to share its market opportunities with the world and contribute to global economic recovery,” Xi said, stressing that China’s new “dual circulation” development strategy is not “a development loop behind closed doors, but more open domestic and international circulation.”
The President noted that the Chinese market has the world’s biggest potential, with 1.4 billion people and over 400 million middle-income earners. China is estimated to import USD22 trillion in products in the next 10 years. Under the “dual circulation” strategy, China is seeking to drastically boost the domestic consumer market to ensure long-term sustainable growth free from foreign risks, and an innovation-driven strategy that calls for a breakthrough in core technologies. The CIIE closed its doors on November 10.
China’s new focus on the domestic market signifies more room for imports of high-quality foreign products, and opportunities for foreign businesses. The sentiment of confidence in China’s market potential and opening-up policies were echoed by many foreign businesses attending the CIIE, including those from countries that have souring diplomatic ties with China, such as the U.S. and Australia. “If the first two CIIEs were to show the world opportunities in China, this year’s unchanged ‘CIIE promise’ amid the epidemic is to show the world China’s confidence – confidence in beating the epidemic, in high-quality growth of the Chinese economy, and in sticking to the win-win, open path,” Zhang Jun, President of U.S. medical device maker Boston Scientific Greater China, said in a press release. Boston Scientific is among 196 U.S. businesses attending the CIIE this year, slightly up from last year’s 192 – underscoring the growing interests in China’s market despite some U.S. officials’ call for a decoupling. Also defying diplomatic tensions are about 200 Australian companies attending the Expo, some of them promoting wine and beef – another testament to the attractiveness of the Chinese market, the Global Times reports.
More than 2,700 businesses from over 120 countries and regions are attending the event, despite Covid-19. While the number of exhibitors is slightly down from last year’s 3,000, the exhibition area grew by 30,000 square meters, including the area for Fortune Global 500 companies, which increased by 14%.
The Shanghai Daily reports that the third CIIE has attracted many global brands for the growing Chinese consumption market, as about 13,000 imported items were on display during the event, including hundreds of goods, technologies and services making their global debut. U.S. agribusiness firm Cargill is showcasing a plant-based “meat” product with a texture like chicken and beef, but being vegan. It caters to the growing public awareness to eat less meat. According to Xinhua, plant-based “meat” ranks among the top five most popular items with visitors to the Expo. French yeast manufacturer Lesaffre is introducing a product that helps popularize low-salt food. Chinese consumers are increasingly inclined to eat more low-salt food and its new product can reduce salt content by 30% while adding natural flavors. Topping Xinhua’s list of popular items was the extracorporeal membrane oxygenation (ECMO) machine that helps Covid-19 patients breathing. All these examples point to a huge pent-up demand in the Chinese market for health-related products and services, the Shanghai Daily reports.
It was also announced that China plans to set up 10 demonstration zones to promote imports, including the Shanghai Hongqiao Central Business District; Jinpu New Area in Dalian, Liaoning province; Yiwu in Zhejiang province; Tianfu New District in Sichuan province, and Xian International Trade and Logistic Park in Shaanxi province. The demonstration zones are intended to support imports, industry and consumption, as well as to boost innovation in trade policy, services and models. Data from the World Trade Organization (WTO) show that China’s imports accounted for 11.3% of the world’s total in the first seven months, up 0.8 percentage point year-on-year, hitting a record high share in global trade.
Financial services in the limelight at CIIE
By : fcccadmin
At the third China International Import Expo (CIIE), trade in services occupies an area of 30,000 square meters and features more than 250 businesses in the fields of finance, logistics, consulting, inspection and testing, as well as culture and tourism. More than 50 of them are on the list of Fortune Global 500 companies. For the first time, non-bank financial institutions are included in the finance section, with the size of the entire financial sector double that of last year. Professional service providers such as insurers, securities brokers, credit agencies and supply chain financing companies are showcasing their expertise in protection, investment, consulting and financing.
As a core supporting company, and a designated insurance service provider of the CIIE, China Pacific Insurance (Group) Co (CPIC) is offering one-stop insurance products and services to the exhibitors, builders, logistics suppliers and e-commerce service platforms. CPIC is offering a set of risk management solutions worth CNY884.8 billion for the Expo. For exhibition personnel, CPIC extended its liability for death and disability caused by Covid-19 in the venue. CPIC stationed professionals of different business lines in the Expo to offer dedicated services on site. To cater to the demand of cloud-based online exhibition activities, Shanghai-based China Pacific Property Insurance Co developed the country’s first “online activities transmission insurance” to protect economic losses caused by the cancellation and interruption of online activities due to data transmission failure. It also provides network security liability insurance with a limit of CNY300 million to insure business interruption losses and related expenses caused by network security incidents.
Banks are also presenting their exclusive offerings at the third CIIE. Bank of China (BOC), one of China’s Big Four state-owned banks, is providing a comprehensive and intelligent service package including financing, payments, foreign exchange and guarantees during the event. As one of the organizers of the trade and investment matchmaking meeting, the bank prepared a video-based docking area for domestic customers who can’t be present to negotiate with the participating enterprises. For the past two years, Bank of China has provided “one-on-one” negotiation services to more than 2,500 exhibitors and over 4,500 buyers from more than 100 countries and regions, and facilitated more than 3,400 transactions. The Industrial and Commercial Bank of China (ICBC), China’s largest commercial lender, has launched a “five-in-one” financial product for the fair. Domestic buyers can open a bank account via WeChat, while overseas exhibitors can also enjoy one-stop electronic account services. Its “Quick Remittance” solution is offering more flexible, convenient and lower-cost, cross-border remittance services for individual and enterprise customers. Focusing on the actual financing needs of enterprises, Shanghai Pudong Development Bank (SPDB) has introduced a digital cross-border payment and settlement service. The program covers a total of 20 services and hundreds of financial products customized for buyers and exhibitors, including cross-border payment and settlement, trade financing, global treasury management and cross-border investment. The bank this year also provides special financial services for various medical platforms and pharmaceutical companies. During the expo, Standard Chartered Bank (China) unveiled an upgraded one-stop intelligent payment solution with SUNRATE, a digital cross-border payment platform to help small and medium-sized importers face increased capital pressure and growing foreign exchange risk in the post-pandemic era, the Shanghai Daily reports.
On the sidelines of the Expo, HSBC released its “Navigator: Growing with China” report. Based on a survey of 1,100 companies across 11 key world markets, the report found that many companies have been increasing their presence in China. According to the report, about three-quarters of those surveyed, including 70% of U.S. companies, said they expect to expand their supply chains in China over the next two years. Corroborating the findings of the report, dozens of foreign companies, including Hyundai, Shiseido and Michelin, have signed up with the CIIE Bureau to attend the Expo over the next three years, Xinhua reported.
The value of China’s total services imports is expected to hit USD2.5 trillion in the coming five years, accounting for over 10% of the world’s total, according to Chen Chunjiang, Director General of the Department of Trade in Services and Commercial Services of the Ministry of Commerce (MOFCOM). Outbound travel is projected to exceed USD1 trillion during this period. Imports of digital services that include charges for the use of intellectual property, telecommunications, computers, information, financial and insurance services as well as other businesses are expected to exceed USD1.3 trillion.
Gao Yan, Chairwoman of the Beijing-based China Council for the Promotion of International Trade (CCPIT), said that China will make further efforts to relax market access for the services industry, expand high-quality services imports and benefit the world while meeting demand at home. China to date has trade in services ties with more than 200 countries and regions, and set up collaboration mechanisms for trade in services with 14 countries, including Brazil, Argentina, the United Kingdom, Germany, India, Japan and Singapore. Services imports from these 14 partners added up to USD448.8 billion between 2017 and 2019, with an average annual growth of 8.4%.
Law adopted to restrict exports of controlled items
Oct-20-2020 By : fcccadmin
The Standing Committee of the National People’s Congress (NPC) passed a law restricting exports of controlled items, allowing the government to act against countries that abuse export controls in a way that harms China’s interests. The new law includes detailed stipulations on export-control lists and measures and will go into effect on December 1. Under the law, China can take “reciprocal measures” toward countries or regions that abuse export controls and threaten its national security. Export controls under the law will apply to civilian, military and nuclear products, as well as goods, technologies and services related to national security. The law also clarifies that technical documentation related to the items covered by the law is also subject to export-control stipulations. It adds that Chinese authorities will publish an export control list in a “timely manner.” Companies and individuals who endanger national security by breaching the new export control law, including those outside of China, could face criminal charges. Violations of the law, such as exporting items without a permit, could result in fines of CNY5 million, or up to 20 times the business value of the illegal transaction.
The new law came after the United States’ recent attempts to block Chinese technology firms such as telecom supplier Huawei, ByteDance’s TikTok app and Tencent’s messaging app WeChat on grounds of posing a national security threat. Washington has also used an “entity list” to make it more difficult for U.S. firms to sell high-tech items to blacklisted companies. Targeted firms include Semiconductor Manufacturing International Corp (SMIC), China’s biggest chipmaker. The latest measure gives China more room to safeguard national security and interests, after the Commerce Ministry issued a revised list of technologies that are banned or restricted for export in August. U.S. President Donald Trump had earlier ordered ByteDance to sell the U.S. operations of TikTok to an American firm or be banned from operating in the U.S.. Technologies TikTok uses, such as voice recognition, text analysis and content recommendation are on the export list, the Shanghai Daily reports.
China’s new export control law could be used to break the U.S.’ “long-arm” jurisdiction against Chinese companies in an increasingly brutal face-off between Beijing and Washington, the Global Times writes. “In particular, analysts said, the new law could pave the way for state-sanctioned export controls on rare-earth metals, in what they described as a “no chips, no rare earths” tactic, with reference to the U.S. government’s cutting off major supplies to Huawei Technologies. The Trump administration has been abusing “national security” protection and using excessive export-control measures to attack Huawei to counter the company’s rapid global rise. The U.S. government has endangered global technology supply chains by coercing technology companies in other countries to comply with its export control measures, pushing Huawei to the brink of losing its smartphone business, with its stockpiles of chips set to run out next year,” the Global Times reports.
Zhou Shijian, Senior Research Fellow at the Center for U.S.-China Relations at Tsinghua University, said the malicious approach adopted by the Trump administration to assault Huawei has made the U.S. vulnerable to reciprocal export control measures by China, as authorized by the newly adopted law. “It makes no sense for the Trump administration to use chips made with rare-earth metals from China to suffocate some of the best Chinese companies,” Zhou said. “It is time for China to respond to such insolent bullying by stopping rare-earth metal exports to the U.S., affecting the chip-making business of a number of U.S. companies such as Qualcomm, Micron and Intel. The U.S. fifth-generation joint strike fighter F-35 uses 500 kilograms of rare-earth metals per plane, that should be stopped, too,” Zhou said, as reported by the Global Times.
The NPC Standing Committee also adopted a new biosecurity law aimed at preventing and managing infectious diseases. The law will come into effect on April 15, 2021. It stipulates that biosecurity is a key component of national security. The law establishes 11 basic systems for biosecurity risk prevention and control, including risk monitoring and early warning, risk investigation and assessment, and information sharing. It also has provisions on biotechnology research, development and application. “Any work unit or individual has the right to report acts that endanger biosecurity,” the regulation said. “When a report is required according to the law, no work unit or individual shall conceal it or hinder others from making a report,” it added on infectious diseases and epidemics. Those who conceal information, omit making reports or prevent others from reporting infectious diseases could be given warnings or be suspended. The law is trying to prevent that outbreaks of infectious diseases such as Covid-19 are kept secret.
Second time Canton Fair is held online
By : fcccadmin
The 128th China Import and Export Fair, also known as the Canton Fair, is being held from October 15 to 24, and is expected to attract about 26,000 participants from more than 210 countries and regions. It is the second time that the Canton Fair has moved online this year due to the coronavirus outbreak. An employee of the organizing committee told the Global Times that last year the exhibition halls were full of products and people. This year, it’s virtual, and staff have to work day and night to keep up with the schedules of foreign participants. There are more than 60,000 online booths offering 2.358 million products, of which 691,500 are making their debuts. The scale is close to the June session, the first online Canton Fair due to the Covid-19 pandemic, Xu Bing, Spokesperson of the Canton Fair and Deputy Director General of the China Foreign Trade Center, said.
With new technologies, exhibitors and buyers can register in just three minutes, and start negotiations and procurement in 10 minutes. Panorama, 3D, virtual reality and other cutting-edge technologies are used in the virtual exhibition halls and live-streaming will enhance the experience of the buyers, according to a Tencent technician. The company provides technical support for the online Canton Fair. “In addition, robots will answer regular questions, which will reduce the need for human staff by 70%. Electronic business cards have been launched this time, allowing both parties in deals to keep in touch after the event. The Canton Fair has become a huge online trading platform,” said the technician.
Based on the scale of the fair, a barometer of China’s foreign trade, the fourth-quarter trade figures will continue to grow, Hu Qimu, Senior Fellow at the Sinosteel Economic Research Institute, told the Global Times. “With no clear bailout plan in the U.S., UK, or the eurozone in the fourth quarter, major European economies and the U.S. are expected to see a wave of layoffs, making it impossible to organize production effectively. It will on the one hand affect China’s export demand, but on the other hand, some of China’s traditional industries will get more orders, as production in the rest of the world hasn’t truly recovered. Other countries will have to rely on China’s manufacturing,” Hu added.
The Canton Fair is held in Guangzhou, one of the cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), the closest region in China to the Association of Southeast Asian Nations (ASEAN), which is currently China’s largest trading partner. The GBA can use the Canton Fair as a link to China’s largest export market, and get support from manufacturers and traders nationwide, said Hu, as reported by the Global Times.
One of the benefits of having the Canton Fair “in the cloud” is that it saves booth rent of up to CNY300,000 otherwise required in a brick-and-mortar setting. Yi Zhe, Manager at a LED turnkey project service provider based in Shenzhen, CLT LED Display, said the cloud-based Canton Fair still has technical glitches that need to be improved, but his company believes virtual trade shows will become a “new normal” in the coming years.
In the third quarter China posted a record 10.2% increase in exports to CNY5 trillion, as foreign demand increased and domestic manufacturing activity returned back to normal. Imports were up 4.3% to CNY3.88 trillion, the General Administration of Customs (GAC) said. Exports grew for the sixth month in a row, as the third quarter saw record foreign trade volume. The expansion was supercharged by stronger exports of medical equipment, home appliances and consumer electronics. The exports of epidemic control materials such as medical equipment and drugs propped up total exports by 2.2 percentage points, while the increase in consumer electronics commerce pushed up total exports by 1.1 percentage points.
For the first seven months, China’s share in global foreign trade expanded 1 percentage point compared with the same period last year to account for 12.6% of the global total. The share of China’s exports expanded 1.1 percentage points and imports 0.8 percentage points. For the first nine months, China’s total foreign trade expanded 0.7% year-on-year to CNY23.12 trillion, recovering from a 6.4% deficit in the first quarter and continuing a consolidating trend that began in the second quarter. In line with China’s strong foreign trade performance, the IMF raised its forecast of China’s GDP growth for the year to 1.9% from 1.0% in its previous forecast in June. China’s stabilizing imports also contributed to the recovery of global trade. In the first three quarters, China’s imports of integrated circuits increased 16.6% year-on-year while grain imports grew by 20.7%. Looking at the fourth quarter, China’s exporters will still face rising headwinds from the possible worsening of the global pandemic during the coming winter season and slumping world demand, analysts said. ASEAN has remained China’s largest trading partner in the first three quarters, according to the GAC, the Global Times reports.
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