Improve China's Textile and Apparel Value Chain via the Implementation of the RCEP Agreement


The implementation of the Regional Comprehensive Economic Partnership (RCEP) agreement will have a positive and far-reaching impact on the textile and apparel trade and industrial chain structure between China and Asian countries. Cao Jiachang, chairman of the China Chamber of Commerce for Import and Export of Textile and Apparel, reckoned that the RCEP agreement will further boost the "dual circulation" development pattern. In recent years, as China and neighboring countries, especially ASEAN countries, have deepened production capacity cooperation in the textile and apparel field, RCEP members have formed a regional industrial cooperation model with obvious advantages.

"For one thing, with its strong comprehensive competitiveness and complete industrial chain, China maintained nearly US$ 280 billion worth of direct export of textiles and apparel. For another, taking advantage of low costs and working ability, part of the original production capacity and newly added production capacity were spilled to these countries, contributing to the export of textiles and apparel, employment and economic growth of ASEAN countries, and also driving the export growth of Chinese yarns, fabrics and other intermediate products to ASEAN. The mobility, vigorousness and interdependence of textile and apparel trade in the region have increased significantly, which has led to the rise of China-centric Asian supply chains." Cao said.

Expand the scale of intra-regional trade

RCEP integrates and expands the "10+1" free trade agreement between ASEAN and China, Japan, South Korea, and other members. Measures like tariff cuts, positive and negative listing, etc., have provided the opportunity for Chinese textile and apparel companies to expand the scale of intra-regional trade, optimize resource allocation, integrate the advantages of the supply chain, and promote transformation and upgrading.

The implementation of RCEP will expand the scope of tariff concessions based on the original free trade agreement. Parts of textiles and apparel products, including some apparel and bedding fabrics exported to Indonesia, some chemical fibers and fabrics exported to the Philippines, some cotton yarn, fabrics and chemical fibers exported to Malaysia, will gain more tariff concessions. RCEP is the first free trade agreement between China and Japan, which will directly and significantly affect China's textile and apparel exports to Japan after the implementation of RCEP. Cao Jiachang added, "after the RCEP takes effect, Japan will eventually achieve zero tariffs on most Chinese textiles and apparel within 15 years, laying a positive and predictable policy environment for the long-term development of Sino-Japan textile and apparel trade. The implementation has significant positive meaning for the long-term development and stability of Sino-Japan bilateral textile and apparel trade.

The textile and apparel industry have a long industrial chain, ranging from planting, manufacturing, spinning, weaving, printing, to dyeing and finishing. For a long time, affected by labor cost and supply, preferential trade arrangements, cotton quotas, and procurement strategies, China and ASEAN countries have formed a supply chain layout and trade investment model that are both competitive and cooperative.

Deepen the integration and layout of the industrial chain

The implementation of RCEP will slow down the transfer of China's textile and apparel industry chain and build a China-centered Asian textile and apparel supply chain and a unified market. The unified and transparent investment environment created by RCEP will also help strengthen the trade investment and industrial coordination between China's textile and apparel industry and RECP countries.

With the implementation of RCEP, Chinese textile and garment enterprises will make use of the low-cost advantages of ASEAN countries, combine strength, and build a stable industrial chain and high-efficient supply chain. In addition, RCEP also provides opportunities for Chinese textile and apparel companies to explore regional market potential, and continuously improve the value chain.