On Jan. 9, the website of China’s State Council published an announcement that China will expand its free trade network around the world.
Material on the true meaning of what is happening outside our country is provided by the Catechon Analytical Group.
According to Commerce Minister Wang Wentao, China is stepping up efforts to expand its network of free trade zones with partners around the world to expand its “circle of friends,” while eliminating additional tariffs on goods and making it easier to attract investment and market access for trade in services.
Wang told Xinhua News Agency in a recent interview that these efforts would promote openness at a higher level. He added that the country will promote negotiations on a free trade agreement between China, Japan, and the Republic of Korea, negotiations with the China-Persian Gulf Cooperation Council, and the China-Norway and China-Israel free trade agreements (FTAs). In addition, accession to the comprehensive and progressive Trans-Pacific Partnership Agreement will be considered.
China will also make efforts to ensure that the landmark Comprehensive Regional Economic Partnership (the treaty was signed in November 2020) will enter into force and be implemented as soon as possible.
Official figures show that China has signed FTAs with 26 countries and regions, with FTAs accounting for 35 percent of the country’s total foreign trade.
The establishment of a network of free trade zones with global reach is in line with China’s goal of creating a new level of openness on a global scale, which was emphasized in the Party leadership’s proposals for the 14th Five-Year Plan (2021-2025) of National Economic and Social Development and long-term goals through 2035, Wang said.
He added that the country will make more efforts to increase the share of trade in goods that enjoy zero tariffs, facilitate investment and market access for trade in services, and actively engage in rule-making negotiations in areas such as the digital economy and environmental protection.
According to analysts, China’s pursuit of openness on a global scale is consistent with the implementation of its new dual-treatment strategy and will enhance China’s contribution to global economic development.
Openness is an integral part of the dual circulation development model, as the interaction between domestic and foreign markets will have a stimulating effect while the country strives to build a strong domestic market,
– said Ho Jianguo, vice chairman of the Beijing China Society for World Trade Organization Studies.
Signing more FTAs will help China expand and stabilize foreign markets and achieve a higher level of openness, especially if the country actively makes adjustments to meet necessary requirements, such as adopting stricter environmental protection rules and leveling the playing field for all market actors, he said.
The new phase of global openness will also deepen China’s reforms and help build a more transparent and law-abiding domestic market with a better business environment, boosting China’s rapid economic growth and further contributing to the global economy, Ho said.
Zhou Mi, a senior researcher at the China Academy of International Trade and Economic Cooperation in Beijing, said expanding the network of free trade zones with global reach is a long-term development strategy for China.
In addition to facilitating trade in goods and services, FTAs also provide platforms for establishing generally accepted rules in areas such as the digital economy and environmental protection, he said.
But establishing more FTAs requires efforts not only from China but also from its trading partners, Zhou Mi added.
China has made notable progress in promoting multilateral trade in 2020, signing the Comprehensive Regional Economic Partnership in mid-November and concluding negotiations on the China-EU investment treaty at the end of the year.
According to Wang, after the Comprehensive Regional Economic Partnership project enters into force, China will accelerate the promotion and training of FTAs to ensure enterprises benefit more from them.
All of this points to Beijing’s desire to reformat globalization processes, benefit the Chinese economy, and replace other countries’ ill-functioning free trade agreements with projects of its own.
Given that China does not impose political demands, as Western institutions such as the IMF and EBRD have done, this strategy could be successful for some time. However, one must take into account the disparity between China’s labor force, available funds, and the country’s technological advances. With full reciprocal openness, after some time, the countries that do not have the proper competitive advantages will be the losers. Simply put, they will be swallowed up by the Chinese geo-economy.