After eight years of negotiations, the 10 ASEAN countries, China, Japan, South Korea, Australia and New Zealand 15 countries formally signed the Regional Comprehensive Economic Partnership (RCEP) on November 15.
Within the RCEP framework, there are the world’s first (China), third (Japan) and fifth (South Korea) manufacturing countries, and the combined industrial output value accounts for more than 50% of the world. Therefore, most experts believe that the signing of the agreement has a huge role in promoting China’s manufacturing industry.
So, for Ningbo, which has opened up cities and advanced manufacturing bases on the southeast coast, what opportunities will the signing of RCEP bring to Ningbo’s manufacturing industry?
The two trillion-level cultivation industries ushered in golden opportunities
Ningbo has two trillion-level cultivation industries – green petrochemicals and automobiles and parts. The signing of RCEP will bring golden opportunities to the two major industries.
From the perspective of the petrochemical industry, the first benefit comes from the cost reduction caused by the reduction of import tariffs on raw materials. From the perspective of China’s trade balance with RCEP member countries, the trade deficit of mineral products, base metals, chemical products and plastic products ranks in the top four. In particular, Japan and South Korea have the world’s most advanced chemical industries, Japan has Sumitomo Chemical, Mitsubishi Chemical, Mitsui Chemicals and other giants, and South Korea has world chemical leaders such as LG Chem, SK Group, and Samsung.
The person in charge of the relevant department of Ningbo Municipal Bureau of Economy and Information Technology said that in order to develop Ningbo’s petrochemical industry to the high-end, it needs to produce more new chemical materials with high added value and high functionality. These new materials are inseparable from importing intermediate raw materials and auxiliaries from Japan and South Korea, and learning their advanced technologies.
For example, Ningbo has many optical functional film manufacturers such as Jizhi Technology and Changyang Technology, and the raw materials for manufacturing films, film-grade PET, etc., need to be imported from Japan and South Korea. For example, LG’s investment in Ningbo, LG’s LG Yongxing, Formosa Plastics Group’s investment in Formosa Plastics Industry and other enterprises, made up for the shortcomings of new materials such as ABS for Ningbo. With the gradual production of projects of international giants such as Total in Ningbo, Ningbo’s ABS materials will become output from the place of input.
“However, at present, there are still many shortcomings in the industrial chain of new materials to be broken, such as special polyethylene, metallocene polyethylene, high melting index EVA and some special resins in the ethylene industry chain; Another example is nitrile latex and MMA materials in the polypropylene industry chain; All kinds of special polybutene, special rubber, etc., Ningbo has not yet the ability to achieve completely independent production or vacancy in the industrial chain, so it still needs the export of raw materials or auxiliaries from giant enterprises in Japan and South Korea, as well as technical support. The person in charge said.
The automotive industry is closely related to the materials industry. “At present, one of the areas with the greatest potential in new automotive chemical materials is ‘replacing steel with plastic’.” Dr. Li Baoyin, R&D engineer of Wanhua Chemical (Ningbo) Co., Ltd., said.
Associate Professor Xu Linqiong of the School of Materials Science and Chemical Engineering of Ningbo University introduced that the biggest advantage of applying plastics to automotive materials is to reduce the weight of the car body. Generally, the specific gravity of plastics is 0.9-1.5, and the specific gravity of fiber-reinforced composites will not exceed 2. Among the metal materials, the specific gravity of A3 steel is 7.6, brass is 8.4, and aluminum is 2.7. This makes plastics the material of choice for lightweight automobiles, which require the support of the petrochemical industry.
“In addition to the need for new chemical materials for lightweight, in the era of intelligent networking, anti-interference and low-dielectric materials will also be widely used in communication modules and body bodies of automobiles.” Wu Shouxi, director of LG Chem’s South China Technical Center from South Korea, said that LG is currently discussing further cooperation with Ningbo car companies.
In auto parts, many in the industry worry that lower tariffs will make competition more intense for local companies. However, some experts pointed out that this requires judging the degree of competition by product category. According to the current media disclosure, only some engine parts for gasoline vehicles exported from Japan to China will be adjusted from 3% of the current tariff rate to immediate reduction after the agreement is passed. Other engine parts with a current tax rate of 2%-8.5% will be reduced in the 11th or 16th year after adoption; As key components such as pure electric vehicle motors that lead the future industry, the current tax rate is as high as 10% to 12%, and it is planned to achieve relief in the 16th to 21st year of the agreement. In addition, lithium-ion battery electrodes and materials for pure electric vehicles, which currently have a tax rate of 6%, will be reduced in the 16th year.
It can be seen that at the same time as RCEP takes effect, most of the auto parts and related products that have been cancelled are varieties with low tariff rates and certain competitiveness of domestic enterprises, and most of the main varieties are taxed between 2% and 6%, and the impact of cancellation is not as big as imagined.
For the new energy auto parts category with great potential for future development, the state usually sets a protection period of 16-21 years, which can fully protect domestic enterprises in the process of technology research and development and catching up with foreign advanced levels, will not suffer the impact of low-price dumping, which is conducive to stabilizing enterprise expectations and ironing out possible fluctuations in industrial growth.
According to Japanese media reports, Japanese entrepreneurs also said that compared with China’s technical advantages, it will not immediately bring export expansion, especially in the insulation materials of battery materials, “price competition is fierce, and the elimination of tariffs alone cannot establish advantages.”
The electronics and equipment industry may have a windfall
Guan Rujing, a researcher at the Donghai Branch of the National Research Institute of Economics, said that in addition to the two trillion-level industries, after the agreement takes effect, it will be beneficial to many industries in Ningbo.
First of all, it is due to the benefits of the tariff reduction. There are many enterprises in Ningbo that open mines in ASEAN countries and operate mineral trade. For example, Ningbo Liqin Mining Co., Ltd. in Indonesia OBI Island laterite nickel ore hydrosmelting project phase 8 is currently close to production, after putting into operation will reach 240,000 tons of nickel sulfate plant, is expected to become the world’s largest nickel sulfate project, its smelting high-pressure acid leaching (HPAL) nickel cobalt products will be mainly used in new energy vehicle battery cathode materials. The reduction of tariffs between member countries will make these products more competitive in the market.
“This is an increase in the cost performance of selling products, and the cost of buying equipment will be reduced.” Guan Rujing said.
When I went to Beilun Daqi High-end Auto Parts Mold Industrial Park this year, Liu Jin, manager of Zhenzhi Mould Management Department, once told such a joke –
“In the past, there were always colleagues from other places who laughed at us, saying that we guarded the workshop and factory all day, made money and did not know how to enjoy, and did not buy high-end villas. I always answer them half-jokingly, we also buy ‘big villas’, and the money is invested in the factory, which is our high-end villa! ”
Why are there high-end villas in the factory? The world’s newest and most expensive mold processing centers are located in Beilun, and most of these equipment are Japanese brands. For example, Makino, Mazak, etc., a five-axis five-link machining center is usually priced at tens of millions of yuan. A tariff float of 1 percentage point is hundreds of thousands of yuan. Therefore, for enterprises that need to purchase a large number of advanced equipment, this is definitely a plus. Not only machining centers, but also industrial robots, stamping machines, die-casting machines and other equipment, which are almost all Japanese companies in the world’s best manufacturers.
For the electronic information manufacturing industry, especially the integrated circuit industry, there may be unexpected gains.
As we all know, in addition to the United States, Japan and South Korea are the dominant countries in the industrial chain, and at the moment when the trade war between China and the United States is gradually escalating, Japan and South Korea’s assistance to China’s chip industry chain is very key.
The content of this tariff commitment is also very clear:
First of all, in terms of silicon materials, the benchmark tax rate for monocrystalline silicon wafers with a diameter between 7.5cm and 15.24cm after doping for the electronics industry is 0. In addition, monocrystalline silicon rods with a diameter of more than 30cm and other monocrystalline silicon rods doped for the electronics industry have a base tax rate of 4%, which will be directly reduced to 0 in the first year. If the agreement is implemented, it will help Ningbo chip manufacturers obtain stable raw materials.
In addition, China’s tariffs on Japan are zero for machines and devices dedicated to or mainly used in the manufacture of semiconductor single crystal columns or wafers, semiconductor devices, integrated circuits or flat panel displays, such as grinding, cutting, CMP, oxidation, diffusion, annealing, CVD, PVD, lithography machines, ion implantation, etching and stripping. In addition, in equipment mainly used or dedicated to assembling and packaging semiconductor devices or basic circuits, the base tax rate of plastic packaging machines is 5%, which will be reduced to 4.5% in the first year, and then decreased year by year until it drops to 0 in the 11th year; The base tax rate for wire bonding equipment is 8%, which will be reduced to 7.3% in the first year, and then decreased every year until it drops to 0 in the 11th year. These policies are objectively good news for Ningbo’s Kangqiang Electronics, Yongsi Electronics, Anji Microelectronics and other enterprises. In particular, PVD, lithography machine, ion implantation, etching and stripping equipment are currently difficult for Ningbo enterprises to obtain.
Langkejian of chip industry media Xinzhixun said that it can be said that with the landing of RCEP, China’s wafer fabs and packaging and testing factories will benefit from the reduction of import tariffs on semiconductor materials and equipment in Japan and South Korea. Of course, for domestic semiconductor materials and equipment manufacturers, this will be a challenge, because there will be greater competition from Japanese and Korean factories. However, for domestic semiconductor materials, chips and equipment manufacturers with competitive advantages, this is also an opportunity to enter the Japanese and Korean markets. Correspondingly, import tariffs on semiconductor materials and equipment from Japan and South Korea to China are also being reduced across the board.
For domestic downstream smart terminal manufacturers, the tariffs on imported Japanese and South Korean semiconductor chips were basically 0 before, so there was no change in this piece. However, with the reduction of the tax rate of Chinese terminal equipment in Japan and South Korea, it is conducive to domestic terminal equipment manufacturers to further develop the Japanese and Korean markets.
It is conducive to attracting foreign investment and talents in Ningbo
Ningbo is an open city, and its introduction has always been a highlight of Ningbo’s economic development. The signing of RCEP has promoted Ningbo’s attraction of foreign investment.
The person in charge of the management committee of Ningbo Bio-industrial Park introduced that this year, due to the continuous intensification of the epidemic in Europe and the United States, the investment promotion target of the park began to shift to Japan and South Korea. “South Korea is unique in the research and development of innovative drugs, while Japan is second to none in biopharmaceuticals and proprietary Chinese medicines, and the signing of RCEP should help us attract investment and attract large projects.”
In addition, a number of entrepreneurs and heads of relevant government departments also said that the parties to the RCEP agreement promise that for investors, intra-company migrants, contract service providers, accompanying spouses and family members and other business personnel from countries in the region, under the conditions of eligibility, they can obtain a certain period of stay, enjoy visa facilitation, and carry out various trade and investment activities. This will help Ningbo and other industries to cooperate and exchange talents, and facilitate the investment of enterprises and capital in the region.
In addition to the introduction, Ningbo enterprises can also take this opportunity to go out.
Guan Rujing believes that the signing of the agreement has three advantages for Ningbo enterprises to go global.
First, in addition to Singapore, Brunei and other countries with relatively high per capita GDP, Laos, Vietnam and Indonesia have relatively backward per capita GDP, low levels of economic development, and low labor costs, which still have a large demographic dividend; Second, from the perspective of the proportion of urban population, Laos and Vietnam have a low degree of urbanization, and the cost of land and resources will be relatively low; Thirdly, to the “borrow ?? With upgraded regulations in Asia and fewer transshipment operations, they will have to face the option of direct transfer. From the perspective of the industry, due to the formation of industrial agglomeration effect, electrical equipment, computer optical supplies, chemical and chemical industries also have the motivation to transfer to Southeast Asia.
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(Contributed by Ningbo Municipal Commission of Commerce)