RCEP Helps the World Economy Climb

On January 1, 2023, the Regional Comprehensive Economic Partnership Agreement (RCEP) officially entered into force for one year.
Over the past year, under the background of the rise of anti-globalization trend and the sluggish recovery of the world economy, RCEP has fully released the mechanism dividend, effectively deepened the economic links between Asian economies, effectively boosted the confidence in Asian regional trade and investment, further strengthened the resilience of the intra-regional industrial chain and supply chain, and injected new impetus and added new vitality into regional economic cooperation and global economic development.
The coming into force of RCEP allows partners to fully share China's opening opportunities and development dividends. According to the data of the Ministry of Commerce, from January to November 2022, the total import and export volume of China and other members of RCEP reached 11.8 trillion yuan, up 7.9% year on year, accounting for 30.7% of China's total import and export volume. Among them, China's exports to other members of the RCEP increased by 17.7% year-on-year, 5.8 percentage points higher than the overall growth rate of China's exports.
Regional economic and trade ties are also increasingly close due to RCEP. According to the agreement, more than 90% of goods trade in the region will eventually achieve zero tariffs. According to the rules of origin accumulation, as long as the value-added part of the products realized in the processing process belongs to 15 member countries and the accumulated value-added exceeds 40%, they can enjoy the corresponding tariff preference. This will significantly boost the overall economic, trade and investment growth of the region, and bring more confidence to enterprises in the region to carry out cross-border cooperation.
China, Japan and South Korea established free trade relations through RCEP for the first time, and the opening dividend is particularly obvious. According to the data of the Ministry of Commerce, from January to November 2022, the actual investment of South Korea and Japan in China increased by 122.1% and 26.6% respectively year on year. Under the framework of RCEP, China, Japan and South Korea have carried out cooperation in machinery manufacturing, automobile manufacturing, optoelectronic equipment manufacturing and other fields, laying a foundation for the regional value chain cooperation of the three countries in high-end manufacturing industries such as new technology and new energy.
The coming into force of RCEP injects strong growth momentum into emerging markets. RCEP has integrated 27 trade arrangements and 44 investment agreements signed and implemented by 15 member countries, further promoting the deepening of regional economic integration, and become the biggest grab for developing regional economic growth potential. The latest report of the Asian Development Bank raised the expectation of economic growth in Southeast Asia in 2022 from 5.1% to 5.5%, which to some extent reflects the expectation of RCEP to boost the economy of ASEAN countries.
In the face of many uncertainties and downside risks in global trade, RCEP has provided rare stability and certainty for interregional and even the world economy. Peter Dresdale, director of the Institute of East Asian Economics at the Australian National University, said that the first year of the entry into force of the RCEP has shown the importance of filling the gap of the free trade agreement, boosting regional trade and strengthening regional supply chain, and has the potential to project the Asian trade dividend to the world as a platform.
The vitality of RCEP comes from the common will to create development opportunities through mutually beneficial cooperation, as well as from the mechanism guarantee of continuous adjustment and optimization of the agreement itself. With the in-depth implementation of RCEP, more policy dividends will continue to emerge. Indonesia has formally fulfilled its RCEP commitments since January 2, 2023, and Hong Kong, China, is also promoting its application for joining the RCEP. In addition, according to the regulations, most member countries will fulfill more commitments in each new year, including reducing tariffs, expanding market access and reducing barriers. These commitments will reduce the cost and difficulty of allocation of various elements in the region and promote the formation of new trade and investment opportunities.
At present, regional countries have entered a critical stage of economic recovery, and some countries are facing difficulties such as supply chain disorder, food and energy tension, and increased inflationary pressure. Whether dealing with the current downward pressure of the economy or focusing on the long-term development in the future, we need to deepen regional economic cooperation. The key is to make full use of the commitments and rules of RCEP market opening, and release the agreement dividend to a greater extent. China will continue to improve the comprehensive utilization efficiency of free trade agreements, expand the global network of high-standard free trade zones, and further improve the level of trade in goods, trade in services and investment market opening.
It can be predicted that this free trade zone with the largest population, the most diversified member structure and the largest development potential in the world will promote the regional economic integration of higher quality and deeper level, and inject more powerful positive energy into the world economy that is climbing over the hill.