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China Implements Three-Child Policy to Cope with the Rapidly Aging Population

In a major shift from the existing two-child policy that has failed to raise the country’s declining birth rates and avert a demographic crisis, China announced on May 31st that they now allow all married couples to have three children.


Chinese parents playing with a baby


In 1979, China introduced its controversial one-child policy to prevent Chinese couples from having multiple children to limit its increasing population growth and boost the economic development. In 2013, realizing the severity of the aging population, the government allowed parents who came from one-child families to have two children. Three years later, in 2016, China ended its decade-old policy and replaced it with a two-child initiative in the attempt to mitigate the risks of the rapidly aging population. Despite a short-lived jump in birth rates, the initiative has yet to show any significant, long-lasting results given the high cost of raising children in the country.

Recently, data from China’s seventh decennial census, released on May 11th, indicated that only 12 million children were born in 2020, a decline of nearly 20% from 2019. Besides, the fertility rate of China stood at 1.3 children per woman in 2020, which is far below the expected level of 2.1 to reach a stable population. The survey also showed that the proportion people of the age 60  and over rose from 8.9% in 2010 to 13.5% in 2020, and the average age of Chinese is predicted to reach 46 by 2050, indicating China’s rapidly aging population.


Graph showing China birth rate 1978-2020

In a major policy revision intended to address the problems of its aging population and shrinking labour force, China recently further relaxed its limits on reproduction and announced that it would allow all married couples to have up to three children. The implementation of this new three-child policy is a part of the renewed attempts of China’s government to improve the imbalance population structure, actively cope with the substantial aging population and preserve the country’s human resource advantages.

The new policy change will also come with a variety of supportive measures. China will reduce the educational costs, expand maternity leave and workplace protection for pregnant women and step-up tax and housing support.

Although there is no certainty about the effectiveness of the new policy, China’s stock market has already responded to the news with an optimistic feeling. According to Reuters reports, stocks related to baby products and services, such as toy makers and diaper manufacturers, surged as soon as the news came out.

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Great Potential Behind Chinese 618 Shopping Festival

In addition to China’s biggest shopping festival, Double Eleven, the upcoming 618 Shopping Festival on June 18th is a great showcase of the world-leading development of the e-commerce industry in China, with trillions of dollars of merchandise sold in a very short time and delivered with extremely short delivery times to the homes of consumers.


China 618 shopping festival


In recent years, with the growing popularity of online shopping and the emergence of many e-commerce platforms, E-Commerce is becoming a dominant form of retail in many categories. As the second largest shopping event in the country, 618 Shopping Festival, which has been held annually in since it was initiated by the E-commerce giant Jingdong ( in June 2010, has been generating huge sales through providing attractive promotions. According to Chinese online payment clearing house – Nets Union Clearing Corporation (NUCC), the total GMV (Gross Merchandise Value) during China’s 618 Shopping Festival in 2020 reached 16.91 trillion yuan (2.52 trillion USD), an increase of 42% comparing to that of 2019.

In the latest 618 Shopping Festival, Tmall and, two major e-commerce platforms in China, both broke their transaction records. experienced a huge GMV growth of over 33% (YoY).

Graph showing 618 festival growth

To prepare for the frenzied shopping during the 618 Shopping Festival, many e-commerce platforms need to restructure their logistics network to fulfill the surging customers’ demand. Third-party logistics enterprises such as YTO Express and BEST Supply Chain have also been investing in automatic sorting equipment. After placing an order on the e-commerce platform, the operation center will get the order information immediately. Through the automated line, the average outbound processing time of each package is only 3 minutes, and the accuracy rate of picking goods can reach nearly 100%.

For some categories, such as electronics and cosmetics, JD has shown the capabilities to optimize for extremely short delivery times, under an hour, by AI-enabled demand prediction and omni-channel models. Another enabler for JD is a working with an open supply chain platform that can enable efficient resource usage, fewer touchpoints and more direct routes from manufacturer to consumer.

In conclusion, China’s e-commerce industry will continue to grow in the coming years and will be a driver for investments in logistics, and open opportunities for more western brands to quickly reach large markets in China.

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China’s Thriving Drone Industry

Drone Industry Overview

Lately, the media have been filled with articles and clips of drone shows that have painted Shanghai’s iconic skyline in different shapes and words. A recent event used over 3 000 drones to paint the skyline with their huge company logo, another used it to create a huge, mysterious, scannable QR code advertisement in the night skies of the city, shaping the future of high-tech advertising. These record-breaking publicity stunts are a milestone in the deployment of massed drones.


Drone flying in the sky over Shanghai

Future of Drones: Applications & Uses

The drone industry in China, also known as Unmanned Aerial Vehicle (UAV) industry, has expanded rapidly in the recent years with the emergence of many companies making drones for commercial, industrial, and military use. The leading technology, coupled with the increasing domestic demand in different fields as well as supporting policies of government are driving the growth of China’s UAV industry strongly and making it an attractive market for businesses.

Over the past few years, unmanned aircrafts have become central to the functions of many businesses and governmental organizations and have managed to pierce through areas where certain industries were either stagnant or lagging behind. Individuals, commercial entities, as well as governments have come to realize that drones have multiple useful features that can be applied in various fields and are putting more focus on this technology. Increasing work efficiency and productivity, improving accuracy, refining service and customer relations, and solving security issues are some of the common applications of drones globally.

The Chinese Drone Market Outlook

The Chinese market is currently the second largest drone market in the world and will continue closing the gap with the leading market, the United States, until 2024. In the upcoming years, the market is expected to grow strongly with a CAGR of 40.57% between 2017 and 2024. The volume of drones in China is also predicted to witness an impressive growth of 25.7% in 2022 and amount to 3.08 million pieces by 2025.

Graph showing drone market growth

As the home country of DJI, the world’s largest drone maker, drones are becoming increasingly popular in China. DJI has long been the global leader of drone manufacturing, and holds over 70% of the global drone market share. During 2013 – 2017, its sales revenue almost doubled every year and its industrial output exceeded $3.8 billion in 2019. The success of DJI is mainly driven by its low production cost, skilled labor as well as its responsiveness to the market needs.

Graph showing China drone market share

Opportunities and Challenges

The aggressive growth of the UAV industry in China can be attributed to the policy and regulatory support as well as tremendous investments from the Chinese government. According to the UAV guideline published by the Chinese Ministry of Industry and Information Technology, the ministry has planned to establish and revise more than 200 rules covering the research, production, application, and safety regulation of civilian drones. Also, recently in May 2021, Chengdu Aircraft Industry Group (CAIG) – a subsidiary of the state-owned Aviation Industry Corporation of China signed a deal with the provincial government of Sichuan to jointly invest around 1.55 billion USD to establish an industrial park in the region, dedicated to UAV.

With the great support from government and the accelerating development of technology, China is dominating the global consumer and commercial drone market, and the buzzing center of this industry is Shenzhen. The city is widely regarded as China’s Silicon Valley and is the home to over 600 licensed drone manufacturers, out of a total of around 7,000 in mainland China. The concentration of drone enterprises in Shenzhen is ideal for the industry’s global competitiveness and innovation.

The increasing demand for a next-generation logistics network is also offering significant growth prospects to China’ drone market. With the population of over 1.4 billion and various cities in the world’s top 20 list for highest density, China has an urgent need for greater movement of people, goods, and services. – China’s second largest online platform, has been building a drone-delivery network that covers 100 rural villages leveraging 40 unmanned aircrafts since 2017. SF Express, one of the global leaders in drone delivery, recently became the first company with a Drone Operator License in China; providing a scale of delivery that is unparalleled to anywhere else.

Besides the great opportunities, the drone industry in China is also facing numerous challenges that might affect its aggressive future growth. Drone applications are spreading rapidly, but how to prevent their potential public safety hazards has become a common issue of public safety management around the world. China wants to support its booming drone market, but still needs to regulate it to prevent accidents. Certain commercial drone uses in densely populated areas such as Beijing and Shanghai have been limited and this would pose a challenge to the potential implementation of the emerging drone delivery method.

The drone market in China is also witnessing the emergence of hundreds of new entrants, which will possibly drive down the average selling price of drones significantly in the upcoming years. Investors or industry players seeking opportunities to enter China’s drone industry should be of aware the increasingly fierce competition in this booming market.


It is undeniable that drones are rapidly growing in popularity at a global scale with its diverse applications in different industries. As the home of the world’s largest drone manufacturer, China’s drone industry has witnessed an impressive growth in the past few years and is opening concrete opportunities for businesses. Driven by the strong governmental support as well as technological advancements and the surging domestic demand, the industry will continue to thrive in the upcoming years despite some of the regulatory and safety management challenges it might encounter.

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SIAL China 2021 Brought Together Global Leaders in the Food and Beverage Industry

SIAL China 2021, one of the world’s biggest food and beverage (F&B) professional showcases and conferences, was held at the Shanghai New International Expo Center (SNIEC) on May 18, 2021. Featuring an exhibition area of 180,000 square meters, the event brought together over 4,500 exhibitors to come and showcase more than 300,000 products.


SIAL China 2021


SIAL China is an integral part of the SIAL Network, a 56-year exhibition company oriented from Paris. Since 2000, the event has been held annually in Shanghai and has brought a great number of opportunities for both international and local F&B companies to gain a deeper understanding of China and Asia’s markets as well as increase their international visibility. At SIAL China, food producers, distributors, wholesalers, and retailers will be able to experience the most innovative and demanding products in the industry.

This year, the exhibition was held across an area of 180,000 m2 and attracted more than 4,500 exhibitors from over 60 countries and regions to come and showcase more than 300,000 products. In conjunction with the exhibition, the three-day event also featured more than 16 forums and activities, collaborating with global leaders in the F&B industry and over 100,000 professionals to analyse the global food trends.

SIAL China also collaborates with XTC World Innovation to hold SIAL Innovation Competition which is a unique international competition that rewards the best innovations in food and non-food related products, such as packaging and containers. Furthermore, unlike the previous 21 exhibitions, SIAL China 2021 has empowered the 700,000 food industry professionals from all over the world by giving them the opportunity to participate in and interact via live streaming platforms of ten concurrent forums. In the future, SIAL China expects to continue strengthening exhibition services through Internet, using live streaming platforms as well as other latest communication methods.

In 2021, the event will take a strategic step forward with the SIAL China South exhibition, which will be held from 28 to 30 October in Shenzen. This marks the evolution of SIAL’s deep dedication to the Chinese market and is also a further expansion of the SIAL Network.

With the existing SIAL Network and a strong edge of its dedication to China for 22 years, SIAL China has brought together around 40,000 global exhibitors and over one million global professionals and remains positive despite the harsh economic situation, making it a trading platform where food and beverage from all over the world converge.

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Cross Border E-commerce is Opening China’s F&B Market for Foreign Exporters

The Chinese government is supporting the growth of CBEC (cross border e-commerce) businesses to promote foreign trade in the country with a range of new initiatives. CBEC is therefore gaining momentum in China and is opening more opportunities for foreign F&B (food and beverage) exporters and enterprises to enter China’s giant consumer market.


Woman shopping online with credit card and phone


CBEC – the activities of trading products through online platforms across national borders is gaining momentum in China and is opening the Chinese F&B market wider to international exporters. Through CBEC platforms, international brands can sell their products to Chinese consumers at preferential duty rates without a license to operate a business in the country.

In the recent years, CBEC is becoming an important channel for import and export activities in China. From 2016 to 2020, the percentage of CBEC from China increased from 2.2% to 11.25%. According to a study of iiMedia Research Group, in the first quarter of 2020, Chinese CBEC users were more likely to buy F&B, toiletries, and healthcare items via CBEC platforms, partly due to the Chinese New Year and the COVID-19 outbreak. In China, there are many online platforms that operate cross-border e-commerce, some of the key players in China are Alibaba’s Tmall with 28% market share, Kaola with 20.5%, and Vipshop Global with 13.5% and 9.8%, respectively.


Chart showing market share of cross border e-commerce companies in China

In 2020, in an attempt to accelerate the growth of CBEC, Chinese government rolled out several policies, including adding more CBEC pilot areas and pilot cities, expanding CBEC retail import list as well as cutting down tax and tariffs. In May 2020, China’s State Council approved the establishment of 46 comprehensive CBEC pilot zones, bringing the total to 105 areas in China. In January 2020, Chinese authorities released the notice to expand the pilot cities for CBEC by adding 50 cities and the island of Hainan into the new pilot scheme of CBEC .

Further, in December 2019, the “List of Goods under CBEC Retail Import” were also expanded to allow more international F&B products to be sold through CBEC platforms. The products in the list will not be subject to the license approval, registration, or filing requirements for first time importation. A total of 92 items were added to the list, including frozen seafood like frozen oysters, scallops, octopus, and alcohol drinks such as gin and vodka.

In conclusion, it is undeniable that these new initiatives of Chinese government have made it easier for foreign F&B companies to bring their products to China’s market. Selling products through CBEC platforms not only save money but also save time for foreign brands since companies do not need to have warehouse or legal license and legal entity in China. International F&B entrepreneurs can also use CBEC platforms to develop a mechanism to collect customer and sales data from the platforms to build up market expansion strategies as well as discovering the opportunity to develop offline channels in the country.

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China’s International Consumer Product Expo Attracted Worldwide Attention

In May 2021, China’s first International Consumer Expo was held with the aim to accelerate the entry of foreign brands and increase sales under the recently enacted tax-free policies for consumers that is one of many policies in the Hainan Free Trade Port. The Chinese central government has in 2020 released a roadmap for making Hainan a hub of increased opening to the world with policies covering many sectors. Apart from Consumer duty free & tourism, the strategy also includes policies for internationalizing the service sector, healthcare, information technology, transport sector and manufacturing that foreign companies should evaluate in their strategic planning for Asia.


China International Consumer Expo 2021


In the second quarter of 2021, China’s held its first International Consumer Product Expo (CICPE) in Haikou, the capital of Hainan. The exhibition was jointly organized by China’s Ministry of Commerce’s Trade Development Bureau and the Hainan Provincial Bureau of International Economic Development, with the aim to accelerate Hainan’s Free Trade Port’s development and underline China’s commitment to open-up and share business opportunities with the rest of the world. Going forward, the event will be held annually, with a focus on consumer products.

The Expo, which took place from May 7 to May 10, attracted the attention of both international and domestic exhibitors from over 70 countries and regions to come and showcase their products. Over 1,400 companies participated to exhibit nearly 2,500 brands during its 4-day run. In addition, on the last day of the event, the exhibition was opened to consumers and attracted more than 50,000 visitors, bringing the total audience to around 100,000 people.

In the tropical Hainan province, Chinese consumers on vacation or business visits can buy duty-free foreign products, to bring with them when they return to other provinces of China. Hainan recently raised the annual duty-free shopping quota from 30,000 yuan (4,335 USD) to 100,000 yuan (14,450 USD) per each person. Also the number of duty-free product categories has also been expanded from 38 to 45, with products such as cellphones and laptops added to the list.

Graph showing Hainan duty free sales 2021

According to the statistics from China’s Haikou Customs, in the first quarter of 2021, around 17.8 million items were purchased by 1.8 million people in Hainan’s duty-free shops during the three-month period, an increase of 328% and 177% (YoY), respectively. With the strong recovery of consumer activities after the economic downturn 2020Q1 due to Covid, and the major enhancement of duty-free shopping, the total sales at Hainan’s zero-duty zone surged in the first quarter of 2021 and reached 13.6 billion yuan (2.1 billion USD), up 356% (YoY). According to a report by KPMG, it is predicted that Hainan’s free trade port agreement will soon become the world’s largest duty-free market if it continues to grow at the current trajectory.

The gathering of the world’s best quality products in the Consumer Product Expo in Hainan has brought in not only new opportunities for international companies to develop their businesses in China’s giant market, but also for the local players to bring their products to the world. Many foreign brands have launched their new products in this exhibition. For instance, Shiseido – a well-known cosmetic company in Japan has introduced its new skincare brands Ginza and Baum. Other big companies such as L’Oréal, Swatch Group also introduced their new products during the event

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China’s Electrical Vehicle Sales Expected to Rise 40 Percent Next Year

China’s electrical vehicle industry is expected to see rapid growth next year. China Association of Automobile Manufacturers (CAAM) predicts sales topping 1.8 million units next year, compared to an estimated 1.29 million units for the whole of 2020, marking a growth of 40%.


A man charging an electric vehicle


China’s interest for green cars is mounting. With government backed incentives, the industry is expected to keep growing aggressively. NEV (New energy vehicles) buyers in China are eligible to enjoy a 10 percent consumption tax cut. Beijing further offers a cash subsidy of about 22,500 CNY (~3,500 USD) for the purchase of an electric car, as long as the driving range is more than 400 km on a single charge. In Shanghai, the local government gives buyers of NEV’s free license car plates, which otherwise needs to be bought at a cost of around 90,000 CNY (~14,000 USD).

As a part of China’s new 5-year plan (which will be released in its full extent in March 2021), the Government called for a continuous green transformation of production and people’s lifestyles. The clear ambition brings tons of opportunities for companies within the Energy & Environment sector, producers of electrical vehicles being one clear winner. By 2025, deliveries of green cars are expected to account for a fifth of the market, up from less than 5 percent in 2019.

Graph showing electric vehicle sales in China

Many new players are joining the race to grab a share of China’s gigantic car market. The three Chinese NEV brands NIO, Xpeng and Li Auto, listed on the New York Stock Exchange, has seen a rapid interest increase lately. Now, the list of the world’s most valuable automakers has been reshuffled. NIO has a market cap (as of December 2020) of 66 billion USD, while Xpeng and Li Auto are valuated to 34 billion USD and 28 billion USD respectively. Putting this into perspective, we find Ford’s market cap being 36 billion USD and Nissan 22 billion USD. Adding to that, Tesla targets the Chinese market more and more, with the initial production of their newest model, Model Y, already in production at Tesla’s enormous Gigafactory in Shanghai.

To further build the hype around China’s NEV market, it is reported that Baidu is considering making its own NEV’s, and have held discussions with several carmakers about the possibilities of collaborating on this co-development. Baidu, which is commonly referred to as “China’s Google”, are the latest tech-firm to join the race for developing smart cars. Building cars would mark a checkpoint of dramatic development in Baidu’s push to diversify income streams.

However, Chinese carmakers need to overcome a shortage of semiconductors (caused by the COVID pandemic) before being able to rev up the production next year. Lockdowns in Europe has disrupted the production of semiconductors, which is a key component for all carmakers and car parts suppliers, including the Chinese ones. Some assemblers might be forced to reduce, or even halt output completely, unless the bottleneck of semiconductors is being solved.

In conclusion, the sales of Chinese electrical vehicles are expected to rise dramatically next year. Driven by a desire to transform China to a more climate neutral and green nation, the government offers highly lucrative incentives for its citizens. Many companies are now trying to grab a share of China’s huge car market, but they all face a shortage of semiconductors which has to be solved before ramping up the production.

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China’s Logistics Industry Prepares for COVID-19 Vaccine Distribution

China is developing cross-border medical cold chain facilities to prepare for the distribution of COVID-19 vaccines to other countries, with developing nations on the priority list.


Vaccine production line


China is joining the race to develop COVID-19 vaccines with five candidates from four different companies going through phase-3 trials. During the pandemic, China’s logistics industry has already played a significant role in transporting medical supplies globally. However, the transportation of vaccines needs a smooth cold chain logistics system to maintain the required temperature throughout the full supply chain. Compared to some other developed countries, the cold chain industry in China is still in the developing stage. Nevertheless, the cold chain industry in China shows significant growth, increasing from a total market value of 94.4 billion RMB (12.4 billion USD) in 2012 to 310.1 billion RMB (47.5 billion USD) in 2020, a CAGR of 16.3%. It is projected to reach 512.1 billion RMB (78.4 billion USD) in 2026, a projected CAGR of 9.4% between 2020 and 2026.


Graph showing China cold chain logistics market value

Recently, the industry took a step further to enhance its cold-chain capabilities to transport temperature-controlled medicine, including COVID-19 vaccines. Cainiao, a logistics company under the Chinese giant Alibaba, has cooperated with Ethiopian Airlines to open the first regular cold-chain air freight service in China, which will enable the transportation of COVID-19 vaccines to Africa and the Middle East. Besides, Cainiao also partnered with Shenzhen International Airport, a certified unit for pharmaceutical logistics by the International Air Transport Association. The airport has several climate-controlled rooms with real-time temperature monitoring systems, occupying a total area of 350 square meters. From there, vaccines will be shipped to the cargo terminal in Ethiopia which is also equipped with temperature control systems. This end-to-end cold chain route can handle temperatures as low as minus 23 degrees Celsius.

Another Chinese logistics company, SF Express, is also working with suppliers to help transport vaccine candidates and semi-finished items for clinical trials between China and other countries. It has prepared over 200 specialized vehicles for transporting cold chain medical products, cold storage in 11 cities across the country, and temperature-controlled boxes for the COVID-19 vaccines.

In conclusion, the effort to build an end-to-end cross-border cold chain solution to support vaccine transportation of Chinese logistics companies is a remarkable achievement of the industry driven by the goodwill to make vaccines accessible and affordable to developing countries. Amidst the current pandemic, China has quickly grasped the opportunity to exponentially grow its cold chain industry while positively contributing to the eradication of the COVID-19.

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China’s Container Shortage Pushes Global Freight Prices Through the Roof

The corona pandemic and its global effects has resulted in a serious container shortage in China. The supply of freight containers, that currently are incapable of meeting the huge demand around the world, are driving logistics and freight costs for European and American companies through the roof.


Forklift truck lifting a cargo container


As the corona pandemic continues to rage around the world, several logistics related issues emerge. In many European countries, ports have been forced to reduce the capacity, resulting in many Chinese containers arriving to the port but getting stuck there. In normal circumstances, the emptied containers get shipped back to China as soon as possible, but not now.

In the US, the capacity reduction in the ports has resulted in warehouses running dry. Companies relying on Chinese imports are facing huge trouble, which has pushed the demand for container freights drastically. As a result, freight costs to the US has surged, shifting the focus of all freight companies to only prioritize the US. In September, a 20-foot container from China to the US cost 3,000 USD, while the same container cost 1,100 USD to Europe, a price that has risen drastically since.

Now, the shortage of containers pushes freight prices through the roof. The price of a 20-foot container to Europe, which usually costs around 1,000 USD this time of the year, are now priced around 2,000 USD – an increase of 100%. On top of that, big freight companies (Maersk, CMA, Cosco, HMM, etc.) are now introducing a PSS (Peak Season Surcharge), meaning an additional 300-500 USD added on top. Companies with a lot of Chinese imports are now forced to look towards other alternatives. Our recommendation is to look into the possibility of moving production closer to the main customer market (at least temporarily), placing orders more in advance and engage in a tight dialogue with your freight carrier to keep updated on the latest news.

Graph showing cost of container shipping from Shanghai 2020

Except rising prices, the container shortage will result in canceled orders and heavy supply chain disruptions, something that all industries might be affected by. Orders that were supposed to be sent in November are instead expected to leave China at the end of December. To secure a container at a freight ship, local connections are almost mandatory at the moment. Asia Perspective’s analysis points towards that the shortage will continue to be an issue to, at least, June next year.

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Asia-Pacific Nations Form World’s Largest Trading Pact

After eight years of negotiation, 15 nations formally signed one of the world’s largest free trade agreements on the 15th of November 2020. The Regional Comprehensive Economic Partnership (RCEP) includes the 10 ASEAN nations as well as their close partners China, Japan, South Korea, New Zealand and Australia. The agreement stands as a symbol of China’s growing economic impact in Southeast Asia, at a time when the US places itself in an uncertain position in the region.


RCEP map


The RCEP shows that the world won’t wait around for the US, but instead engage in aggressive trade negotiations without it. The European Union are currently pursuing several free trade agreements at a high pace. As a result, many American exporters might lose their global market shares.

The RCEP is expected to abolish a range of tariffs on imports over a 20-year period. It also includes regulations on intellectual property, telecommunications, financial services, e-commerce, and professional services. However, as the new trade agreement eliminates tariffs mainly on goods that are already eligible for duty-free treatment, it is expected to formalize, rather than remake, the business among the involved nations. Moreover, the pact introduces so-called “rules of origin”, which will set common standard for how much of a product needs to be produced within the region to qualify for duty-free treatment. As an effect, international enterprises will have an easier task of setting up cross-border supply chains that span several countries.

Due to the ongoing global pandemic, the signing of the free trade agreement was a bit unusual as The whole process was conducted virtually. Each country’s trade minister took turn signing the deal, while his or her head of state or government stood nearby and watched the signing take place.

The agreement is the biggest of its kind in relation to the massive population it affects. The pact covers 2,2 billion people, more than any previous free trade agreement has ever covered. Moreover, the deal could increase global national income by 186 billion USD annually by 2030. It is believed that the pact will benefit China, Japan and South Korea the most.

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