General

According to Huacheng Import and Export Data Observation, on June 2, the Regional Comprehensive Economic Partnership (RCEP) officially entered into force for the Philippines, marking the full entry into force of RCEP for the 10 ASEAN countries and the 15 signatories of Australia, China, Japan, South Korea and New Zealand. The head of the International Department of the Ministry of Commerce stated that the total population, GDP, and trade in goods of the RCEP region all account for about 30% of the global total. The full entry into force of the agreement for 15 parties marks a new stage in the comprehensive implementation of the world's most populous, largest economic and trade scale, and most promising free trade zone.

The initial effectiveness of RCEP implementation is evident

Experts generally indicate that since the implementation of RCEP, the initial results have been evident, promoting wider, higher level, and deeper level of open cooperation among member countries, and assisting long-term stable development of the regional and global economy.

Xu Ningning, Chairman of the RCEP Industrial Cooperation Committee and Executive Chairman of the China ASEAN Business Council, stated in an interview with reporters that RCEP is an important tool for expanding and deepening regional cooperation, reflecting the development needs and trends of multilateral cooperation and free trade in the global economy. In the current situation of sluggish global economic growth, economic globalization, and severe challenges faced by free trade, the opening up and development of the RCEP region has injected vitality into the regional and even global economy, and has become a support for global economic recovery and growth. It also has a strong attraction for multinational corporations outside the region and is attracting more and more global foreign investment in the RCEP region.

"Since the implementation of RCEP, relying on the two major markets of China and ASEAN, RCEP has released huge potential." Zhang Xiaotao, Dean of the School of International Economics and Trade of Central University of Finance and Economics and Director of the International Investment Research Center, said that with the gradual reduction of tariffs, for consumers, market choices have become more abundant, cross-border consumption needs have been met, which is conducive to promoting the overall consumption upgrade. For enterprises, the cost of goods trade within the region has significantly decreased, creating new trade and investment opportunities, and boosting confidence in regional and global economic recovery. According to the estimation of the Peterson Institute for International Economics, by 2030, RCEP will drive the global GDP to increase by 186 billion dollars annually.

The implementation of RCEP has played an important role in stabilizing China's foreign trade and foreign investment. Xu Ningning introduced that in 2022, China's imports and exports to 14 other RCEP countries, including ASEAN, amounted to RMB 12.95 trillion, an increase of 7.5%, accounting for 30.8% of China's total foreign trade import and export value. Eight of China's import and export growth rates to other RCEP member countries exceeded double digits, with China's import and export growth rates to Indonesia, Singapore, Myanmar, Cambodia, and Laos all exceeding 20%. According to Huacheng Import and Export Data Observation, from January to April this year, China's trade with the other 14 member countries of RCEP increased by over 7% year-on-year, faster than the average growth rate of China's total foreign trade value during the same period.

From the perspective of two-way investment, in 2022, China's non-financial direct investment in other members of RCEP reached 17.96 billion US dollars, an increase of 18.9%, while it absorbed 23.53 billion US dollars from other members of RCEP, an increase of 23.1%. The growth rate of two-way investment is higher than the overall level. South Korea and Japan's direct investment in China increased by 64.2% and 16.1% respectively. RCEP has established free trade relations among China, Japan, and South Korea for the first time, which is beneficial for Japanese and South Korean enterprises to expand investment in China. Huacheng Import and Export Data Observation Report.

Promote high-quality implementation of RCEP in multiple aspects

Currently, the implementation of RCEP is facing a global economy that is not optimistic. In Xu Ningning's view, the factors that affect the implementation of RCEP mainly include internal, external, and intertwined effects. The key lies in internal factors, mainly including the following aspects: the determination and confidence of signatory countries to implement the RCEP agreement out of internal needs; The strength and degree of implementation of the agreement by the signatory countries; Improve and enhance the regional business environment; The business measures taken by enterprises to seize new business opportunities brought about by market opening; Cooperation between signatory countries; Promote the effectiveness of RCEP in achieving the expected goals. The contracting countries should focus on building their own RCEP to achieve the expected goals of signing RCEP

The external factors that affect the implementation of RCEP, analyzed by Xu Ningning, on the one hand, the global economic growth situation is severe, and the implementation of RCEP is facing international financial instability. The instability of the international political situation is damaging the industrial and supply chains. On the other hand, under the influence of economic and industrial laws, the business community of signatory countries is generally optimistic about RCEP business opportunities, and multinational enterprises outside the region have also increased their investment in the RCEP region.

Currently, RCEP has entered a new stage of comprehensive implementation, and we need to better grasp the opportunities and challenges brought by RCEP. Zhou Mi, a researcher at the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, stated that in order to make good use of the benefits of the agreement and achieve the goal of signing the agreement, whether it is member state governments, enterprises, industry institutions, or financial institutions, they should accelerate their own opening-up process in accordance with the agreement's commitments and consensus, align with the agreement's rules, and enhance the stability and predictability of the macro environment. While accurately grasping rules and standards, fully mobilizing market enthusiasm, effectively enhancing collaborative innovation and sustainable development capabilities, and enhancing the global competitiveness of RCEP member countries' markets and enterprises through market competition.

The severe international situation tests the firmness and cooperation ability of RCEP countries' cooperation, and the business connections between RCEP countries require political peace. Xu Ningning stated that the development of economic and trade cooperation among countries is closely related to the consolidation of friendly relations between them. All relevant parties should fully realize that if RCEP countries want to reap tangible economic benefits from the implementation of the RCEP agreement, they need to enhance mutual trust and develop friendly relations. At the same time, the business communities of RCEP countries should actively cooperate to promote the new development of political and cultural relations between countries, and create favorable conditions for economic cooperation and development.

To promote the high-quality implementation of RCEP in China, Xu Ningning suggests that industry is the foundation of economic growth, and industrial cooperation is the top priority in seizing the opportunities of RCEP opening up. Firstly, the government regulatory authorities should actively promote the docking, coordination, and cooperation with other RCEP countries' industrial planning and policies; Secondly, we need to strengthen and accelerate cooperation in digital economy, green economy, and connectivity, and jointly promote the development of small and medium-sized enterprises in the region; Thirdly, we should attach importance to developing cooperation in service trade with other RCEP countries. Taking advantage of the favorable conditions of mutually open service markets in RCEP, seizing the opportunity of increased demand for service industry development brought about by RCEP countries' increased trade and investment, and increasing cooperation in cross-border e-commerce, financial institutions, law firms, accounting firms, technical design and research institutions, vocational training schools, and other service industries, can promote the international development of the service industry on the one hand, and help promote greater development of trade and investment with RCEP countries on the other hand, Huacheng Import and Export Data Observation Report.

In addition, various provinces and cities in China should also seize the opportunity of RCEP opening up. Zhang Xiaotao suggests that to promote the high-quality implementation of RCEP by local governments, it is possible to explore the establishment of several high-level demonstration zones for RCEP implementation, that is, select several cities with close economic and trade exchanges with RCEP members, endow them with the function of high-level implementation of RCEP demonstration zones, and make them a model for local governments to use RCEP rules to serve enterprises. And make full use of member tariff concessions and the "rules of origin accumulation" to quickly form industrial clusters within the demonstration zone, where the vast majority of links in the industrial chain are within RCEP members and tariff concessions have a significant impact on cost reduction. Huacheng Import and Export Data Observation Report.

Xu Ningning stated that local government authorities should list the business opportunities for the products of the pillar industries in the region according to the country schedule for the implementation of free trade in the RCEP system, which can be divided into three categories: immediate tariff reduction, tariff reduction within five years, and tariff reduction within ten years. This is beneficial for guiding enterprises to grasp the progress of opening up the market, improving the utilization rate and pertinence of the RCEP agreement in their operations Enthusiasm is conducive to foreign trade and investment cooperation in the pillar industries of this province and city.