Textile, Clothing And Light Industry Benefit Most From The Largest Free Trade Zone

The signing of RCEP was a big event at the end of last week. On November 15, the regional comprehensive economic partnership agreement (RCEP) was signed, which marks the official launch of the free trade zone with the largest population, the largest economic and trade scale and the most potential for development in the world.

RCEP was initiated by ASEAN in 2012. After eight years and 31 rounds of formal negotiations, the RCEP signed the agreement as scheduled this year. This is the most important achievement of economic integration in East Asia in the past 20 years.

RCEP is the largest free trade zone in the world. In 2019, the total population of 15 RCEP member countries will reach 2.27 billion, GDP will reach 26 trillion US dollars, and total exports will reach 5.2 trillion US dollars, accounting for about 30% of the global total. The establishment of RCEP free trade zone means that about one third of the global economy will form an integrated market. RCEP includes the main countries in East Asia and will inject strong impetus into regional and global economic growth.

What will be the impact of the signing of this agreement? According to the Research Report of CICC, RCEP will promote intra regional trade, improve China's GDP, and benefit most from textile and clothing and light industry.

In terms of tariff reduction, the total number of zero tariff products in RCEP is more than 90%, and new free trade relations between China, Japan and South Korea are added. Wang Shouwen, Vice Minister of Commerce and deputy representative of international trade negotiations, said: "according to the calculation of international think tank, RCEP is expected to drive the export growth of member countries by 10.4% more than the base line in 2025." According to the estimation of Peterson Institute of international economics, assuming that the trade friction between China and the United States continues, China's accession to RCEP will bring an additional 100 billion US dollars to its real national income in 2030, thus offsetting about 30% of the negative impact of trade friction. Liang Yixin (2020), an assistant researcher at the Industrial Economics Research Institute of CCID Research Institute, estimates that RCEP can increase China's export, import, investment and GDP growth rates by 1.95, 1.63, 0.09 and 0.04 percentage points respectively during the 14th Five Year Plan period, and the output growth rates of textile and clothing and light industry will increase by 0.86 and 0.33 percentage points respectively.

The research paper also believes that for China, the signing of RCEP is of greater strategic significance. Although India withdraws, the 15 RCEP countries still account for 30% of the world's population and nearly 30% of GDP, and will become the largest free trade area in the world. Under the RCEP framework, trade tariffs between China and Japan are expected to be significantly reduced, and China and South Korea will further facilitate trade in key areas. Since it is a bipartisan consensus that the United States is trying to cut off the supply chain containing Chinese products, especially technological products, it is increasingly important for China to strengthen commercial ties and deepen scientific and technological cooperation with other Asian countries.

CICC expects that RCEP will effectively increase trade between member countries, enhance regional economic vitality and competitiveness, and reduce the region's dependence on the United States. The signing of RCEP provides a solid foundation for China to participate in more high standard free trade agreements in the future and promote the double cycle.