From ODA to RCEP: China-Japan Economic and Trade Leapfrog Transformation Moment

▲(Image from Visual China)

According to Japan's "Chinese Herald", in 2021, when the epidemic situation in various countries has risen and fallen one after another, and the global epidemic has experienced several waves of serious impacts, China has handed over a beautiful foreign trade report card.

On January 14, 2022, the Information Office of the State Council held a press conference to introduce China's imports and exports in 2021. According to customs data, the total value of China's import and export of goods trade in 2021 was 39.1 trillion yuan, an increase of 21.4% over 2020. The dollar-denominated scale reached $6.05 trillion, breaking through the $6 trillion mark for the first time. In one year, it has crossed the two major steps of 5 trillion and 6 trillion US dollars, and the increase in foreign trade last year reached 1.4 trillion US dollars.

Looking back at China's foreign trade history, on December 11, 2001, China joined the World Trade Organization (WTO), and the total value of trade in goods that year was 4.22 trillion yuan. In 2005, 2010 and 2018, China broke through the three stages of 10 trillion, 20 trillion and 30 trillion yuan respectively, and by 39.1 trillion yuan in 2021, it has increased by 8.3 times in 20 years, with an average annual growth rate of 12.2%. Since 2017, China's total foreign trade has reached a record high for five consecutive years.

For many years, the Chinese market and manufacturing industry have been the most important links in the global industrial chain. Even under the plague of the epidemic, China's foreign trade has maintained rapid growth for three reasons: one is that China's economic development and epidemic prevention and control are leading the world; second, the gradual recovery of the global economy has driven the sharp increase in China's product exports; and the third is that China has an efficient and complete industrial chain and supply chain system, and its driving advantages in global economic development have further emerged.

In 2021, China's top five trading partners are ASEAN, the European Union, the United States, Japan and South Korea, with the total import and export value of 5.67, 5.35, 4.88, 2.4 and 2.34 trillion yuan respectively, an increase of 19.7%, 19.1%, 20.2%, 9.4% and 18.4% respectively. Among them, the trade growth rate between China and Japan in 2021 is relatively low, which may be the increase in The trade volume between China and Japan in 2020 will not fall. Given that ASEAN and the Eu are both economies, from a country perspective, the United States, Japan, and South Korea are China's top three trading partners, and South Korea's pursuit of Japan cannot be underestimated.

Under the general pattern of China's rising foreign trade, China-Japan trade cooperation has also gone all the way up, showing great resilience to pressure in the two years since the outbreak of the new crown epidemic. China and Japan are each other's important economic partners, and the two sides have close economic and trade cooperation and a long history. At the beginning of the normalization of diplomatic relations between China and Japan 50 years ago, the trade volume between the two countries was less than 2 billion US dollars, and now it has grown to a high level of more than 300 billion US dollars.

In 2020, under the impact of the epidemic, Japan's economy shrank seriously, and Japan's total trade with the United States, ASEAN, and the European Union fell by more than double digits, but Sino-Japanese trade grew against the trend. China's statistics are US$317.53 billion, an increase of 0.8% over 2019, showing strong resilience and great potential. In the first three quarters of 2021, bilateral trade between China and Japan increased by more than 20% compared with the same period in 2020, and from January to November 2021, the total trade between China and Japan was US$339.8 billion, an increase of 18.9% year-on-year, and the whole year will hit a new high in recent years.

At present, although affected by the epidemic, China-Japan economic and trade cooperation is still quite dynamic. Japan is China's second largest trading partner, China is Japan's largest trading partner, and China accounts for more than 22% of Japan's trade share, ranking first. On the other hand, as of October 2021, Japan had invested and set up 54,000 enterprises in China, with an actual use amount of US$121.9 billion, ranking first in the country ranking of China's total utilization of foreign capital.

In 2022, China and Japan will celebrate the 50th anniversary of the normalization of diplomatic relations. Sino-Japanese economic cooperation is an important foundation for bilateral relations and the key to stable development. Japan cannot do without China, and China also needs Japan. Continuing to strengthen economic and trade relations between China and Japan is of great significance to promoting and improving Sino-Japanese relations.

While the bilateral trade volume between China and Japan continues to increase in scale and consolidate the cornerstone, there are two more landmark events in The Economic and Trade Relations between China and Japan in 2022 that deserve attention: one is that the RCEP officially came into effect, and the first free trade relationship between China and Japan was established; second, japan's ODA project with China, which has lasted for more than 40 years, will come to an end in history.

On January 1, 2022, RCEP officially entered into force. According to customs statistics, In 2021, China's imports and exports to the other 14 member countries of RCEP amounted to 12.07 trillion yuan, an increase of 18.1%, accounting for 30.9% of China's total foreign trade, and RCEP is an "integrator" of intraregional economic and trade rules and a new milestone in East Asia's regional economic integration.

According to the analysis, the entry into force of the RCEP is the first bilateral free trade relationship between China and Japan, which has the greatest impact on Sino-Japanese economic and trade cooperation, bringing rare opportunities and ushering in more opportunities. In the first year of the tax reduction, 25% of China's imports from Japan will achieve zero tariffs; of the goods imported by Japan from China, 57% of the tariff lines will be reduced to zero. At the same time, the dislocation of the original free trade agreements and RCEP between China and other countries will also become the growth point of foreign trade, and the regional accumulation rules unique to RCEP will also better connect and optimize the industrial chain and supply chain in East Asia.

By the end of March 2022, Japan's government development assistance (ODA), which has lasted for more than 40 years, will be completely completed. Japan's government development assistance to China began with the visit of then-Prime Minister Masayoshi Ohira to China in December 1979. So far, a total of 3.3165 trillion yen in loans have been provided, and 231 projects, including infrastructure construction, have been implemented. In addition, the Japan International Cooperation Agency (JICA) has provided technical assistance such as dispatching youth overseas teams, totaling 185.6 billion yen.

With China's economic development and rising national strength, Japan began to stop new cases of non-reimbursable financial assistance to China in 2006 and stopped providing new yen loans (paid financial assistance) in 2007. The Japanese government ended the 40-year-old ODA in China with a new project in fiscal 2018, and finally ended in March 2022. In recent years, Japan's ODA to China has been mainly used to prevent air pollution, ensure technical cooperation to ensure food safety, and build facilities such as elementary schools and hospitals for local governments.

The historic end of the ODA between China and Japan and the launch of the RCEP in a broader international context and regional linkage, the seamless connection between these two points in time, although there is an element of chance, does symbolize that after 50 years of Sino-Japanese diplomatic relations, it has transformed from the traditional friendly aid model to a new reciprocal reciprocal system. History has chosen 2022, as the world's second and third largest economies, Sino-Japanese relations will open a new 50 years in a future-oriented manner. (Original title: From ODA to RCEP: China-Japan Economic and Trade Leapfrog Transformation Moment)