China signing up to free trade agreement ‘will boost regional economy’

The entire Asia-Pacific region would receive big economic benefits if China signed up to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATTP), according to business leaders.

Their remarks were prompted by comments from Wang Shouwen, vice-minister of commerce, who said China has “both the willingness and capability to join the CPTPP”, and called on member countries to support its accession. This would result in a tripling of the member countries’ consumer base.

Wang said that such a move would be in the best interests of the country, all CPTPP member countries, and the economic recovery of the Asia-Pacific region.

“As a member of the Regional Comprehensive Economic Partnership (RCEP) agreement, China’s potential accession to the CPTPP could further enhance economic integration and co-operation among member countries, and contribute to the recovery of the global economy,” said Wang Huiyao, president of the Beijing-based think tank Center for China and Globalization.

The value of trade between China and other RCEP countries grew by 7.3% year-on-year to 3.08trn yuan ($446.33bn) in the first quarter of 2023, accounting for 31.2 percent of China’s total foreign trade, according to the General Administration of Customs.

The CPTPP is a free trade agreement involving 11 countries, which came into effect in December 2018. The member nations are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. China applied to join the CPTPP in 2021.

“If the CPTPP is implemented in China, it will not only effectively promote the country’s market-oriented reforms, but also accelerate reform of its State-owned enterprises and widen market access in certain industries for foreign investors,” said the University of International Business and Economics’ Tu Xinquan.

As well as studying the terms, costs and benefits of joining the CPTPP, China has carried out pilot projects adhering to CPTPP rules, standards and management obligations, said the Ministry of Commerce.

Digital currency ‘can contribute to economic growth’

Wider usage of the digital renminbi, or e-CNY, will accelerate the development of the electronic version of the currency issued by the People’s Bank of China, China’s central bank, according to experts.

Uses ranging from daily consumption to cross-enterprise transactions and public services will help unleash the e-CNY’s potential role in facilitating China’s economic upgrades, as well as global trade and investment growth, they said.

Their comments were made following a decision by authorities in Changshu in Jiangsu province to pay civil servants and people working for state-owned enterprises in e-CNY starting in May.

“The moves are not a surprise. Jiangsu as a pilot region has made remarkable progress in the application of the e-CNY, and people there have become quite familiar with e-CNY application scenarios covering many key aspects of their daily life,” Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co, told the China Daily website.

“As the application of the digital renminbi develops to become more mature, wider use of the e-currency will help to increase the safety, stability and convenience of China’s payment system, making the digital renminbi an important part of the country’s new infrastructure for the digital economy,” he added.

China started creating the digital version of the renminbi in 2014 and began piloting the e-CNY in late 2019.

Zhou Maohua, an analyst at China Everbright Bank, said use of the e-CNY has been more widespread among major enterprises and public institution users for large-scale transactions.

It has also been widely used by individual users in small-scale payment scenarios across sectors such as retail, catering and hospitality, he said.

Data from the central bank shows that the value of digital renminbi in circulation reached 13.61bn yuan ($1.97bn) by the end of 2022.

Zhou also said that China’s rapid expansion of cross-border e-commerce, together with the development of the digital renminbi, could provide ample international cooperation opportunities for use of the e-CNY in trade and investment.