The RCEP Affecting China’s Motorcycle Industry
According to China Chamber of Commerce for Motorcycle (CCCM), since January 2, 2023, the Regional Regional Comprehensive Economic Partnership (abbr: The RCEP) taken effect for Indonesia. So far, China has implemented agreements with 13/14 RCEP members. Indonesia will add zero-tariff treatment to more than 700 Chinese products including motorcycles, which means that Chinese motorcycles exported to Indonesia have implemented zero tariffs since January 2nd, and ends the unequal motorcycle trade between China and Indonesia since 2010.
On January 1, 2010, the China-ASEAN Free Trade Area (CAFTA) was formally established, and ASEAN countries implemented zero tariffs on motorcycles exported to China. Except for Singapore and Brunei, ASEAN countries regard motorcycles as sensitive products, which have been maintained at 5%-72% tariff until December 31, 2021.
The RCEP was initiated by the ten ASEAN countries and the invitees included China, Japan, South Korea, Australia, and New Zealand.The RCEP was launched in November 2012, and officially signed on November 5 after 8-years negotiations, come into effect on New Year’s Day in 2022. The first batch of countries taking The RCEP into effect include ten countries such as Singapore, Thailand, Vietnam, China, Japan, New Zealand, Australia. In 2022, it has been effective for South Korea on February 1 and for Malaysia on March 18, effective for Myanmar on May 1, and for Indonesia on February 1 in 2023. So far, the Philippines has yet to take it into effect.
From 2010 to 2021, Japanese, European and American brand motorcycles were produced in ASEAN countries and sold to China by taking advantage of the zero-tariff import policy, which made a great effect on Chinese high-end market of motorcycles and the transformation and upgrading of Chinese motorcycles.
In 2015, on behalf of Chinese motorcycle industry, Dachangjiang Group, Zongshen Group, and Qjmotor Group proposed foreign trade rights protection to the department of foreign trade of China’s Ministry of Commerce, and the leaders the Ministry of Commerce stated that the competitiveness of the motorcycle industry should be strengthened, and the domestic motorcycle culture should be cultivated. In addition, the trade inequality with the ASEAN countries was being negotiated and would be resolved.
Although the RCEP agreement has come into effect for China and Japan, in the tariff commitment table attached to the agreement, China’s tariff commitment table for Japan shows that the tariff on imports of motorcycles below 500 CC is still 45%, and 500-800 CC is 40%, and the above 800CC is 30%. The tax rate of motorcycles more than 800CC reduces gradually year by year, and the tariff was reduced to zero after 21 years.
The motorcycles of Japan’s Honda 1100 series have been cut prices on New Year’s Day this year because the tariffs on motorcycles with a displacement of 800CC or over 800CC are decreasing year by year. Motorcycles less than 800CC are produced in Thailand by Honda. It reflects that Honda produces the small-displacement motorcycles in China because these motorcycles need low tech, and the mid-displacement motorcycles are produced in Thailand because the Southeast Asian countries have no their own motorcycle industry. The large-displacement motorcycles are produced in Japan, which sets the technical threshold for motorcycles of medium and large displacements and are sold to China at the lowest tariff cost. Therefore, Chinese motorcycle brands have to make an extra effort.