Asian stock markets rose towards record highs after countries in the region signed the world’s biggest trade deal, which covers nearly a third of the globe’s population and economic output.
The main Asian benchmark was on track to close at its highest ever level. China’s SSE Composite index rose one per cent while Japan’s Nikkei jumped 2.1 per cent.
After almost a decade of negotiations, officials from 15 countries such as China, Japan, Australia and New Zealand signed the Regional Comprehensive Economic Partnership, or RCEP.
The trade deal excludes the US, which left the Trans-Pacific Partnership agreement under President Donald Trump.
RCEP could cement China as the dominant economic partner of some of the fastest-growing nations in the world.
It was signed between the 10-member Association of Southeast Asian Nations (Asean), China, Japan, South Korea, Australia and New Zealand.
The deal is not as comprehensive as the successor to the Trans-Pacific Partnership. But it aims to cut tariffs gradually in many areas over the coming years.
Analysts say RCEP rules of origin are key
It contains “rules of origin” provisions that potentially make trading within the bloc much easier. Under the current system, for example, a product made in Korea that contains Japanese parts may not be eligible in some countries.
RCEP means parts from any member nation are treated equally, meaning products are eligible for all countries.
The deal “should improve trade efficiency,” said analysts at ratings agency Fitch. “It would also solve the problem of Asean being saddled with complicated rules spanning multiple free-trade agreements which stipulate different rules for each country.”
It could add $186bn (£141bn) a year to the global economy by 2030, according to the Peterson Institute for International Economics.
However, the deal still needs to be ratified by six Asean nations and three others.
Markets were also lifted by economic data from China. Industrial output rose 6.9 per cent in October, faster than expected. Retail sales undershot expectations with nonetheless solid 4.3 per cent growth.