This year marks the 50th anniversary of the normalization of diplomatic relations between China and Japan and the 30th anniversary of the establishment of diplomatic relations between China and South Korea. At this point in time, the Regional Comprehensive Economic Partnership Agreement (RCEP) came into effect, injecting a source of impetus into the economic and trade cooperation between China, Japan and South Korea. From January to October, China’s exports to South Korea and Japan increased by 16.3% and 8.1% year-on-year, respectively. South Korea's and Japan's actual investment in China increased by 106.2% and 36.8% respectively.
Closer economic and trade cooperation
China, Japan and South Korea are each other's important trading partners. In 2021, the total trade volume between China and Japan will be US$371.4 billion, a year-on-year increase of 17.1%; the total trade volume between China and South Korea will be US$362.4 billion, a year-on-year increase of 26.9%. "The effective implementation of RCEP provides a good institutional framework for China-Japan-Korea economic and trade cooperation, and brings important opportunities for the maintenance and development of economic and trade relations among the three countries." Li Tianguo, an associate researcher at the Institute of Asia-Pacific and Global Strategy of the Chinese Academy of Social Sciences, was accepting a reporter from International Business Daily said in the interview.
According to the agreement, the proportion of China’s final tariff-free products to Japan will increase from the current 8% to 86%, and Japan’s tariff-free proportion to Chinese products will also reach 86%; in Japan-Korea trade, Japan’s duty-free exports to South Korea The proportion will rise from the original 19% to 92%.
"This is a huge change, which has strongly promoted the trade between China, Japan and South Korea, enhanced the economic ties among the three countries, and promoted mutual trade and economic growth." Li Tianguo said. At present, the implementation of RCEP has already shown its role in boosting China's exports to Japan and South Korea. Despite the complex and severe economic situation at home and abroad, China's exports to Japan and South Korea continued to grow against the trend in the first 10 months.
Peng Sen, president of the China Economic System Reform Research Association, said that RCEP is the first free trade arrangement between China and Japan, and it is also the trade arrangement with the highest utilization rate in Japan so far. Among them, the certificates of origin issued are the most for exports to China, which makes Chinese companies have clearly benefited. "In the past, a Chinese company imported a component from Japan and needed to add 35% in value before exporting to South Korea to enjoy zero tariffs. But after RCEP takes effect, Chinese companies only need to add 20% in value, and the other 15% in value from Japan, and then export to South Korea. Enjoy zero tariffs."
In addition to tariff concessions and cumulative rules of origin, RCEP has also given China, Japan and South Korea more opportunities for investment. In the first 10 months, South Korea's and Japan's actual investment in China grew rapidly, increasing by 106.2% and 36.8% respectively, and both ranked among the top four countries investing in China.
In June of this year, LG Magna Electric Drive Systems Co., Ltd., a joint venture between LG Electronics and Canada's Magna Corporation, decided to invest 101.6 billion won in the Nanjing plant in China to expand equipment.
This year, Hyundai Kia Group announced that it will increase the capital of Yueda Kia and Beijing Hyundai by approximately US$900 million and US$471 million, respectively, to further increase the sales of Korean cars in China's new energy vehicle market.
SK hynix quickly established the first production base of the world's top semiconductor industry in Wuxi. According to SK Hynix executives, starting from this year, it will use a period of five years to invest an additional US$3.6 billion in Wuxi, Jiangsu Province, for the sixth phase of the company's technical transformation project in Wuxi factory.
In Li Tianguo's view, under the complex and ever-changing international economic situation, South Korea's continuous increase in investment in China in semiconductor chips, automobiles, batteries and other manufacturing industries is conducive to improving the level of industrial cooperation between the two countries in the above-mentioned manufacturing fields. Maintaining the security of the industrial and supply chains of the two countries plays an important role in the economic stability and growth of both countries.
It is more urgent to strengthen the "double chain"
Affected by factors such as repeated epidemics and geopolitical conflicts, the global industrial and supply chains are being restructured at an accelerated pace, and it is increasingly urgent for China, Japan and South Korea to further strengthen industrial chain cooperation.
Li Tianguo said that the implementation of RCEP will help countries in the region to give full play to their respective advantages, consolidate the industrial chain supply chain in the region, and help build a clear division of labor, effective complementarity, security, stability, and complete industrial chain supply chain in East Asia. Activities will also be more secure and stable. In the future, there will be huge space and potential for industrial cooperation between China, Japan and South Korea.
At the 26th meeting of the China-Korea Joint Economic and Trade Committee held recently, the two sides focused on implementing the important consensus reached by the two heads of state in the field of economics and trade, maintaining a stable and smooth industrial chain and supply chain, expanding trade and investment cooperation, deepening local economic cooperation between the two countries, and strengthening In-depth exchanges of views on issues such as regional and multilateral cooperation have reached broad consensus.
Shinji Fukukawa, former vice minister of the Ministry of International Trade and Industry of Japan, said at the recently held commemorative symposium on economic and knowledge exchange between China and Japan and the 39th annual meeting that Japan and China should work together to play a leading role in promoting innovative development and deepening the digital economy. Integrate and develop with traditional agriculture and cultural industries, strengthen cooperation in the fields of elderly care and medical care, and jointly explore new prospects for cooperation.
