New measures promote trade, RMB globalization
A recently issued guideline promoting the development of economic cooperation zones in border cities and cross-border zones is expected to help stabilize China's industrial and supply chains, stimulate the growth of trade in both goods and services, globalize the national currency and contribute to the growth of the economy, experts said.
Their comments were made as the Ministry of Commerce, together with 15 other ministerial level organs, issued a circular on March 17 introducing a raft of measures related to the creation of new development patterns in the zones.
The document stated that economic cooperation zones are a critical platform for cooperation with neighboring countries and regions, and in promoting the development of the Belt and Road Initiative. It also said the zones are an important fulcrum underpinning socioeconomic development for border regions and provinces, making them all the more crucial to growth.
The new measures include 15 policies in support of the zones.
Efforts will be made to improve their functions, and studies will be conducted to set up new zones, expand existing ones and enhance synergy between ports and commerce platforms.
International cooperation at the zones will also be prioritized. More incentives will be given to companies to improve cross-border logistics and capital flow.
The document also reiterated measures that support the implementation of the Regional Comprehensive Economic Partnership, including one that offers incentives and encourages border areas to participate in international trade.
In addition, the document called for incentives to support industrial innovation and to improve industrial supply chains and strategic planning for high-end and emerging industries.
By upgrading its industrial structure and aligning with international economic and trade rules, China will improve conditions to put foreign trade on firmer footing this year, said Zhao Ping, deputy head of the Academy of China Council for the Promotion of International Trade.
Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, said China has long placed importance on the development of border trade. However, he noted that the timing of the circular's release means that the country is now making it more of a priority.
"China's trade with bordering countries, particularly with Russia and members of the Association of Southeast Asian Nations, is robust and prosperous, but the central government is emphasizing the importance of border trade now to enhance trade cooperation with these countries to offset the challenges and risks of the evolving external environment," he said.
"Visibly, the importance of border trade has grown in recent years," he added, citing the recent boost to trade and economic ties between China and Russia as an example.
He said that as trade further develops, both physical and nonphysical infrastructure needs to be improved.
Noting that the new document has placed emphasis on improving cross-border logistics and capital flow, and on implementing the RCEP agreement, Tu said that border trade transportation infrastructure was fraught with challenges, particularly railways and gas pipelines, for instance.
"Meanwhile, on the financial front, one thing to note is that border areas are also the main conduits of efforts to globalize the renminbi," he said. "In Southeast Asia, the degree of RMB globalization is already quite high."
He said that with support for border trade in the past, the new circular calls for more strategic moves, with improving capital flow as a particular point of note, and that given ongoing geopolitical tensions, "now is also a good time to promote RMB globalization, taking border trade as a fulcrum".
Tu added that China's relationship with other RCEP members is also a good reason to grow border trade.
"RCEP member countries share a rich history in terms of personnel exchange and trade," he said. "What needs to be improved are institutional arrangements like infrastructure connections. The new circular can help improve these arrangements to better align with the RCEP agreement."
As China shares borders with a number of countries, including Russia, Vietnam, Laos and Kazakhstan, promoting cross-border trade will not only inject vitality into the growth of the BRI, but will also address the imbalance in domestic regional development, said Li Hao, a researcher at the China-ASEAN Collaborative Innovation Center for Regional Development at Guangxi University in Nanning.
"It is also conducive to promoting the globalization of the renminbi, and to driving investment in the development of these border and cross-border economic and trade zones," Li said.
Zhong Nan contributed to this story.