Economist hails RCEP, China’s work
World’s largest free trade pact is comfortable with globalization, Singaporean expert says
With deepened reform and opening-up echoed during the two sessions in Beijing, China is set to play a greater role in the Regional Comprehensive Economic Partnership agreement and set an example for other signatories, a Singapore-based economist said.
“Without China’s participation, RCEP would not be the world’s largest free trade pact,” said Suan Teck Kin, head of research for Global Economics and Markets Research at United Overseas Bank.
Suan said as the largest member in the group, China has increased the scale and efficiency of the agreement. The deal came into force for some signatories on Jan 1 after being signed in November 2020 by China, Japan, South Korea, Australia, New Zealand and members of the Association of Southeast Asian Nations.
Noting there are many objectives to reach to ensure RCEP’s full and effective implementation, Suan said China can contribute to this process. For example, as the agreement aims to promote supply chain integration, he said that as a major trading partner for many countries, China can work with other members on customs clearance to ease the process and reduce cross-border trade times.
“It can be a leading example,” he said, adding that China can encourage other members to follow suit by sharing its roadmap and schedule for promoting implementation of RCEP, especially when the deal has yet to be ratified by all 15 members.
Toward the full implementation of RCEP, and to deepen reform via wider opening-up, China introduced a new guideline on Jan 26 under
which the country will make efforts in a variety of areas, including boosting the role of renminbi settlement in supporting trade and investment and strengthening cooperation in high-end industrial chain and manufacturing projects.
“China has been methodical in its implementation of all these international agreements and in the things it wants to achieve,” Suan said.
In addition, he noted the potential for RMB internationalization in helping increase the efficiency of trade under RCEP if cross-border settlements can be made in RMB, rather than the current common trade currency, the US dollar. “It is still early, but there is a good opportunity for that to develop further,” he said.
Noting the start on March 4 and 5 of this year’s two sessions, Suan wished success to this key event on China’s political calendar. He said he is grateful the region has a powerful neighbor like China while remaining largely at peace.
Further opening-up was expected to be among the main topics discussed at the meetings.
Given China’s tremendous gains since it began the reform and opening-up process in 1978, Suan said he believes it will continue to become more connected to the rest of the world. “From the very beginning, the opening-up of China has been about increasing contact with the outside world,” said Suan, noting that all trade agreements, including RCEP, will boost trade and investment flows to and from China.
Despite the pandemic, China’s foreign trade reached a new high in 2021, exceeding $6 trillion for the first time, up $1.4 trillion year-on-year, according to the General Administration of Customs.
A reconfiguring of the global supply chain is expected under RCEP and Suan said this will allow companies to rethink their strategy and move more freely around the region to find the most cost-effective business models, which is also a part of globalization.
Unlike parts of the world where there is a rising trend against globalization, he said that most Asian countries are still in favor of it and are open to trade.
“So RCEP works for us,” he said.