People in China who don't know anything about economics will mistakenly think that this is an alliance, and that this is an important means of confronting the United States.

We know that the most important thing for RCEP is the reduction of tariffs by countries in the region.

In fact, the circulation of goods in the region reduces friction costs, so will the reduction of friction costs surely lead to economic prosperity? So when the economy is booming, is it even against the United States?

Now 15 countries have signed the RCEP, but it does not mean that it will take effect. Note that it will take effect only after the approval of the Congress of some countries.

So when will it be approved?

We have seen the South China Morning Post quoted some experts as saying that it is expected that it will take effect in 2022.

In other words, it will take more than a year before it will take effect, not immediately.

It is not immediately possible to declare China's victory. It depends on whether these southern countries have such a tendency to protect trade and whether they want to block trade agreements.

There are more problems now. One is in Malaysia, the other is in developing countries like Thailand, and the other is Australia and New Zealand, especially Australia. Will there be strong opposition in Australia?

Another problem is that after it takes effect. Is there a comprehensive, modern, high-quality, and mutually beneficial agreement, as the Chinese Vice Minister of Commerce said?

If it is compared with the TPP agreement that the United States withdrew before, this agreement is relatively backward, and it is not involved in many aspects.

Of course, the United States has withdrawn, and that is now called the CPTPP agreement.  CPTPP is a more advanced and comprehensive trade agreement, because it involves a lot of content that is not covered by this RCEP. 

For example,

1. RCEP did not talk about how to restrict the state's subsidies for some industries and enterprises, resulting in unfair trade competition;
2. Including the wages of local workers, the rights and interests of labour unions, these are not mentioned;
3. There is also how to protect the environment. For example, your factory can destroy the environment, so you can reduce costs and you can dump products...

So, none of these contents are involved. These are disadvantages for RCEP, and CPTPP actually involves the contents I mentioned above. This is why China is excluded, because China cannot meet the requirements of CPTTP. Even if the United States withdraws, China will not be able to enter the CPTTP. It is that simple.

As for the RCEP we saw today, none of these aspects were discussed. And there is a very serious question, that is——will these countries comply with RCEP?

We see that so many countries have signed today. This is a fact. It is supposed to be implemented, but what should be done if disputes arise in the process of implementation?

Even the Australian experts have said that there are political reasons behind the trade friction between Australia and China. When the World Trade Organization can't solve the problem, can you expect RCEP to solve the problem? 

This RCEP has not even established the most basic dispute resolution mechanism, but the most effective mechanism should be the World Trade Organization. The WTO’s dispute resolution mechanism has been established very well. Problems that the World Trade Organization system cannot solve. Do you expect a new RCEP to solve it?

So here is another question——how to approve?

First, it still takes more than one year for approval;

Second, after the approval, if this agreement really comes into effect and China does not comply with it, or some countries do not comply, conflicts will follow and there will be no solution.

This is equivalent to saying that this agreement will eventually be paralyzed.

So in the end, you will find that this agreement is something with symbolic meaning greater than actual meaning.

The reasons:

1. Approval will take a long time
2. Even if approved, the dispute cannot be resolved

It is also unable to solve some countries that continue to have such unfair trade and unfair practices，and other countries can do nothing.

So these countries can only compare with each other, who is more irresponsible, who is more non-compliant with this agreement, who is more willing to take advantage of this agreement, and in the end everyone is scrambling to destroy this agreement.

Because this agreement does not have high standards, there is no mechanism for how to deal with or punishing you if you fail to meet the standards. This is a very serious problem. So today, when you see that many people in China are applauding RCEP, I think it's too early to be happy.

RCEP especially includes China, but no country recognizes that China is a market economy country. South Korea and Japan are both market economies and capitalist countries. Malaysia and Singapore are also capitalist countries. But what about China?

China is not a capitalist country, nor a market economy. Although it claims to be a market economy, no one believes it. It is under the command of the party and the party manages the economy.

Then, if such an economy signs such an agreement with these market economy countries, if it does not comply with it, and there is still national power behind it, it will form an unfair advantage, and this so-called comprehensive The agreement is not capable of solving this problem.

For example, we have seen the conflicts between China and Australia before, we have also seen the conflicts between China and South Korea, and the conflicts between China and Japan.

So, I would like to ask, if another THAAD weapon is installed in South Korea next time, will there be another "Korean ban"? So has the "ban on Korea" destroyed the trade agreement again? China prohibits certain products from entering the Chinese market, what should we do?

China will have many political operations and many political goals behind it.

Therefore, China and Australia signed this RCEP agreement. I saw that Australian officials are very naive: "This shows that our two countries still hope to continue trading..."

But the problem is that we have all seen that China has recently imposed restrictions on these products from Australia. Is this a violation of the RCEP agreement?

There are also such trade disputes between Japan and South Korea, and a large part of these trade disputes have political reasons.

So, again, your trade relationship continues to strengthen, and it cannot resolve your differences and disputes in politics, security, values, and ideology. Finally, due to these differences, your trade will also Can't go on.

This is a fundamental problem, and trade agreements alone cannot solve it.

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There is another very interesting phenomenon that many Chinese people have not noticed.

In other words, many of the countries that have signed the agreement have trade surpluses with each other. This is interesting.

When you have a trading system to work well, it must have a trade balance. Only when a certain balance is reached can trade go on.

And when we see these countries sign this agreement, the key is that many of their countries are countries with trade surpluses, and they sell their products. So when they join this RCEP, the first thing they think of is how to sell their own products. Instead of buying products from other countries.

Because of buying products from other countries, this will cause the loss of dollars, and every country wants to make more dollars.

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Most of these countries are mainly manufacturing countries. Of course, it is a very wise choice for India not to participate this time,

The question is, who will bear the trade deficit when you are a group of countries with trade surplus? Who's going to buy your stuff? is it?

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There is a simple truth: for China, many people have realized that joining this agreement is mainly an operation in politics, rather than in economic interests.

Why?

With which country does China have a trade surplus?

It is still a country like the United States, or European countries...

A large number of Chinese products are sold to the American market and to the Canadian market. China makes money through this method.

So, what are the benefits of this RCEP for China? It has many disadvantages.

What's the disadvantage? that is,

Even if China sells its products to Southeast Asia, this is not so meaningful, because what China needs is a trade surplus, and the trade surplus comes from the United States, which has long given China dollars.

Therefore, even if these small countries add up to China and these small countries in Southeast Asia, their purchasing power is still limited.

When it comes to purchasing power, Australia and New Zealand may be the biggest ones. Perhaps Australia and New Zealand are willing to increase their deficits and deficits, but in fact, most countries are thinking about how to make money from this. These countries do not want to lose money from it. Then this is a very serious problem.

Therefore, for China, it is of little significance, but it will cause a serious injury, following the regionalized economic integration. Then, after reducing trade barriers and reducing the cost of the supply chain, a large number of companies will migrate from China. Because your transfer costs are reduced, isn't it?

Well, China's labor costs will definitely increase. In this case, China's low-level manufacturing industry will flow out instead. If China want to expand the industry, upgrade, or if China want to have high-tech manufacturing, China still need money. Where does the money come from? Consumer markets like the United States provide China with dollars, funds and technology.

When the American market closes the door to China, or the European market closes the door to China. It is impossible for Europe to pursue a trade deficit. After these countries have closed their doors, China is actually blocked.

Because of this RCEP, China's low-level industries have gone to these Southeast Asian countries, but China's high-tech industries can't keep up, and information is not circulating. China is not an innovation center, and Chinese technology still needs to be imported.

China's technology has always required overseas technical supplements, overseas talents, and overseas funds.

So the consequence of doing this is that you can't get up or down, and get stuck in the middle.

Therefore, although this kind of agreement is theoretically beneficial to some companies to spread the supply chain in the so-called area, and their goods can be sold anywhere in the area, of course this is a good thing, not a bad thing. But the benefits can be said to be trivial, not only for China, but also for all countries that have signed the agreement.

Because most of their countries' markets are still in Europe and the United States, and Europe and the United States are a consumer market. These countries actually rely on manufacturing, and they all have to undertake the low-end manufacturing transferred from China.

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Of course, we also fully understand why some developed countries like South Korea, Japan, Singapore, and Australia are willing to join trade agreements. This trade is good for them to help them sell goods.

But we also know that this agreement does not have a dispute settlement mechanism.

Therefore, these countries will face the pressure of dumping products from other places into their own countries as companies go out, sell products to these places, and spread the industrial chain throughout these places. And this pressure, they must It will be hindered by trade protectionism.

Again, if all countries do that, the agreement itself is meaningless.

The benefits and disadvantages of this agreement to these countries exist, and the benefits are not obviously more than the benefits.

This is my opinion on RCEP, which is the most discussed hot topic now in China.

Well, this actually has no effect on the United States.

For example, can Huawei enter these countries through RCEP?

Of course not.

Therefore, Pompeo's visit to these countries is not to persuade you to refuse to sign RCEP, RCEP is simply not worth mentioning to the United States.

Not too influential,

Because the RCEP protocol itself is full of loopholes,

The RCEP agreement itself may not be able to be implemented smoothly.

What's more, the RCEP standard is also extremely low, which is of little significance, because many countries already have trade agreements with each other.

Therefore, the agreement itself is more symbolic. It symbolizes that China still has friends and that these countries are still willing to sign a cross-regional trade agreement with China. This may be to give the Chinese a sense of honor, that is, they are now very fragile in their hearts, and they are often hurt, so it is hard to come to such a meal to let them improve their national self-confidence.

Moreover, in terms of security, politics, and ideology, they are still on the side of the United States, and they will not follow China.

When they encounter problems, including ZTE and Huawei, some Hong Kong problems, and Xinjiang problems, they still have to talk, especially Australia and Japan, which are countries closer to the United States.

The Chinese government may feel that through this agreement, these countries can be brought to its side, just like becoming an alliance like the Soviet Union.

The Chinese government may believe that after strengthening close cooperation with Southeast Asian countries, they will not violate China’s interests and dare not oppose China. It may have this kind of idea, but in fact this kind of idea will eventually Failed.

Because it is impossible for this trade agreement to suddenly produce output value from zero, it still has to rely on the consumer market in Europe and America.

In addition, this agreement itself was initiated within ASEAN, and ASEAN wanted to increase trade exchanges, especially under the impact of this epidemic, and they urgently needed something to encourage themselves.

So this thing is definitely a good thing for ASEAN, but for China, it seems that face is more important than benefits.