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RCEP beneficial for regional, national and global economic development

Yuan Bo

Editor's note: Yuan Bo is director of the Asia Research Institute, Institute of International Trade and Economic Cooperation, Ministry of Commerce, China. The article reflects the author's opinions and not necessarily the views of CGTN.

January 1, 2024, marks the second anniversary of the initiation of the Regional Comprehensive Economic Partnership (RCEP). 

RCEP's implementation has been beneficial for the development of the regional economy as well as the global economy, playing a pivotal role in fostering resilient supply chains, unleashing the potential of small and medium-sized enterprises, and facilitating collaborative development in cutting-edge industries.

Amidst a challenging environment of global investment downturn, RCEP's regional investment cooperation has steadily advanced, witnessing two consecutive increases in attracting greenfield investments. According to fDi markets, RCEP members attracted 1,819 greenfield investment projects in 2022, amounting to $181.56 billion, showing year-on-year increases of 4.2 percent and 65.7 percent, respectively, from 2021.

For the first ten months of 2023, the greenfield investment projects and amounts attracted by the RCEP region have already surpassed the cumulative figures for 2022, with 1,842 projects and a total investment of $189.69 billion, according to fDi markets.

The collaboration in RCEP's regional industrial and supply chains has deepened continuously. RCEP has facilitated industrial cooperation between China and ASEAN countries like Vietnam, Indonesia, and Malaysia, as well as Japan and South Korea, in sectors like textiles, electronic components, new energy vehicles, and batteries. 

The cumulative rules of origin have also furthered the free flow of economic factors within the region and strengthened the division of labor and cooperation in the manufacturing process among RCEP members. In this way, related industries can more flexibly align with efficiency principles and member countries can make more rational layouts of industrial and supply chains. 

Since the implementation of RCEP, China has maintained its position as the largest intermediate goods trading nation in the region. Meanwhile, the majority of RCEP member countries' intra-area trade in intermediate goods accounts for nearly or over 50 percent of global trade in intermediate goods.

RCEP has brought new opportunities for small and medium-sized enterprises (SMEs). Prioritizing the development and benefits for SMEs, RCEP has dedicated a chapter to them. Tariff reductions on goods have lowered trading costs for SMEs, and streamlined customs procedures and more convenient trade have improved the business environment for SMEs, thus reducing implicit operating costs. 

Simultaneously, RCEP's full implementation has provided a broader consumer market, allowing more SMEs to expand their business internationally. For instance, according to the Council for the Promotion of International Trade Shanghai, in the first half of 2023, the number of small and medium-sized foreign trade enterprises in Shanghai exporting to the RCEP region increased by 34 percent year on year. Meanwhile, the amount received from exports to the RCEP region constituted 19 percent of the total, up by 4 percent year on year.

Collaboration in cutting-edge industries within the region has flourished. RCEP has unleashed the dividends of digital economic cooperation. China and ASEAN have passed the Initiative on Enhancing Cooperation on E-Commerce and established a digital partnership to enhance the construction of digital infrastructure.

Chinese companies have seized the digital economic development opportunities presented by ASEAN and other RCEP partner countries, and explored the potential of online markets. RCEP has also promoted the integration of green economic factors. 

With RCEP member countries such as Indonesia possessing abundant nickel and lithium resources, and China having a mature advantage in the new energy battery and automotive industries, both sides have strengthened cooperation and integration in the clean energy field through RCEP. 

Since RCEP's implementation, trade in intermediate goods, such as lithium batteries, nickel-iron, lithium oxides, and hydroxides, and trade in new energy vehicle products between China and RCEP partners have experienced significant growth.

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