Bob Savic

Are China’s export control law and the RCEP pulling in different directions? Not quite

Even as the world’s largest free-trade deal was being negotiated, China was drafting its export control law. This indicates that while Beijing is emphasising economic integration within Asia, its position is more defensive towards countries further afield

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Staff from China National Nuclear Corporation Southwestern Institute of Physics work in the vacuum chamber of the HL-2M Tokamak, China’s new-generation “artificial sun” in Chengdu, Sichuan province, on May 27, 2019. Nuclear technology is one of the areas covered by China’s new export control law. Photo: CNNC Southwestern Institute of Physics/Xinhua

Bob Savic

Published: 10:15am, 7 Dec 2020Updated: 10:32am, 7 Dec 2020

For China’s policymakers, the Regional Comprehensive Economic Partnership marks a new milestone in Asian regional economic integration. In 2019, China’s total trade with RCEP member states accounted for about one-third of its total foreign trade, while investment from other RCEP economies made up more than 10 per cent of China’s total foreign investment.

After the agreement takes effect, which could be as early as mid-2021 depending on it being ratified by several countries, more than 90 per cent of the goods trade in the region will eventually achieve zero tariffs. According to estimates by international think tanks, by 2030, the RCEP is expected to drive a regional net increase of US$519 billion in exports and US$186 billion in national income each year.

As this unfolds, China’s policymakers are stepping up a more combative approach towards the US and other international players outside East and Southeast Asia.

Around the time the RCEP was in the final stages of negotiation, China was finalising its export control law, which took effect on December 1. It is the country’s first comprehensive law on export control, aiming to advance its interests and national security.

Importantly, the law has an extraterritorial ambit. It requires Chinese exporters and their overseas-based clients, whether businesses, organisations or individuals, to comply with the law or be subject to financial and other penalties in cases of endangering China’s security or interests. It also applies to countries or regions which pose a risk to these interests.

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Although the law does not target any specific overseas individuals, countries or regions, it is more likely to apply to places where similar rules have been enacted and employed against China, especially the United States and European Union.