RCEP helps Shandong forge stronger links with booming East Asian economies

China Daily2022-01-23 11:23

　　Coastal Shandong province is poised to play a larger role in economic integration with Japan and South Korea by utilizing opportunities offered by the Regional Comprehensive Economic Partnership agreement, which now encompasses China and the two big East Asian economies in the same free trade framework for the first time.

　　Both importers and exporters in the province are benefitting from preferential RCEP rules that came into force on Jan 1.

　　Yantai Tayho Advanced Materials Co Ltd, located in Yantai, on the province's coast, submitted an RCEP certificate of origin issued by the Japan Chamber of Commerce and Industry to Yantai Customs officials on Jan 7. It was used to apply for tariff concessions for shipment of a chemical used in textile spinning from Japan, said Li Xiaohui, the company's business manager.

　　The certificate is expected to save around 10,000 yuan ($1,577) in tariffs on the shipment now that the corresponding tariff has been lowered from 10 percent to 9.1 percent under the RCEP agreement, Li said.

　　"This year, RCEP certificates will save 400,000 yuan on tariffs for our company," he said.

　　The RCEP agreement was signed on Nov 15, 2020 by 15 Asia-Pacific countries－the 10 member states of the Association of Southeast Asian Nations and China, Japan, South Korea, Australia and New Zealand－after eight years of negotiations.

　　RCEP markets are regarded as the world's largest economic bloc, covering about a third of the global economy. The agreement is expected to eventually eliminate tariffs on more than 90 percent of the goods traded among the member countries.

　　Within RCEP, the three East Asian economies together represent 82 percent of the bloc's economic weight in 2020.

　　"With the RCEP agreement taking effect, free trade rules are applied to China and Japan for the first time, providing good opportunities to businesses in Shandong, a province geographically close to Japan," said Li Guangjie, director of the Institute of World Economics and Politics at the Shandong Academy of Social Sciences.

　　The RCEP pact represents the first free trade agreement between China and Japan. The trade pact has brought 25 percent of Japanese exports and 57 percent of Chinese ones to the zero-tariff list, and the figures will be expanded ultimately to 86 percent and 88 percent, respectively.

　　Based on 2020 trade data, the RCEP agreement is expected to reduce tariffs on goods heading to Japan from Shandong by 380 million yuan this year. When the tariff reduction process is completed, tariffs on imports from Japan to the province will be cut by 900 million yuan annually.

　　"Shandong's foreign trade businesses are very excited about the preferential rules to expand trade with RCEP members," said Yao Yong, a senior director at the Customs office in Qingdao.

　　A worker checks train seats to be exported to South Korea at a train seat manufacturing factory in Qingdao, Shandong province, in November. [Photo by Liang Xiaopeng/For China Daily]

　　Reduced-tariff imports shipped through Shandong from RCEP members are mainly parts and materials used in equipment manufacturing and new materials businesses, while such exports shipped through Shandong to RCEP members are mostly chemicals, textiles, plastics and agricultural products, Yao said.

　　Huangchao Mahan, a foreign trade service provider in Rongcheng, Weihai, recently applied for 13 RCEP certificates of origin for frozen vegetables sold to Japan.

　　The company sells some 480 million yuan of frozen vegetables to Japan annually. The certificates are expected to save 4 million yuan in tariffs this year, said Wang Xiaobo, company manager.

　　"Shandong has advantages in agriculture, while Japan and South Korea have a huge demand for agricultural products, indicating that Shandong can play a significant role in RCEP," Zhang Yiying, deputy head of the province's commerce department, said at a news conference about Shandong's advances in opening-up.

　　Tariffs on many agricultural goods have been eliminated, and trade procedures have been streamlined among RCEP members to facilitate cross-border logistics, Zhang said.

　　The RCEP agreement requires all members to ensure fresh items such as seafood, fruits, vegetables, meat, eggs and milk pass through Customs within six hours.

　　Gao Xindong, general manager of Wantong Food Co Ltd in Weifang, said the company has benefitted from work that started in 2021 to prepare for the RCEP measures. Keeping exports of fresh vegetables like onions and scallions fresh is crucial for the company.

　　"Fresh vegetables go rotten easily, so it matters if our products are approved upon arrival. If they aren't, they are sent back, which increases our costs," Gao said. "Now with the RCEP agreement, our fresh vegetables pass through Customs within six hours, two hours less than that in 2020. This is definitely favorable for us," he said.

　　Boosted by tariff concessions that cut costs and enhance competitiveness, businesses expect their trade volumes to increase this year.

　　Liu Kun, business manager at Qingdao Haiwan Group, a chemical company in Qingdao, predicts the company's exports to Japan will grow by 10 percent this year.

　　"Our annual exports to Japan are around 45 million yuan. The tariff concession will help us save 1 million yuan this year, making our products more competitive in price," Liu said.

　　Increasing foreign trade will boost the development of logistics. The volume of cargo handled by the Port of Qingdao, operated by Shandong Port Group (SPG), is expected to see double-digit growth this year, said Sun Mengmeng, planning director of the operations department of Qingdao Qianwan United Container Terminal at the port.

　　SPG, the world's largest port conglomerate in cargo capacity, will expand its network to improve logistics linking China and other RCEP members, said Li Fengli, the group's general manager.

　　Over 80 ports in RCEP member countries had 113 shipment routes linked with ports run by SPG last year. SPG was forecast in 2021 to handle 4.6 million of the shipment yardstick called twenty-foot equivalent units of full containers from RCEP routes, up 11.6 percent year-on-year, the company said.

　　SPG will also promote the sale of goods imported from other RCEP members to China by building distribution centers.

　　"We will focus on imported consumer goods such as cold chain products and build a premium shipping route cluster for imported consumer goods that covers RCEP members," Li said. The premium cluster means that SPG will improve its routes connecting other RCEP members with its ports, such as adding more routes to import consumer goods.

　　Chinese consumers are likely to reach more quality imported fruits and vegetables at good prices, he said.