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China | What is the implication of RCEP to Chinese and regional economy?

Published on Monday, November 23, 2020

China | What is the implication of RCEP to Chinese and regional economy?

The RCEP is indeed a milestone for regional economic integration and post-pandemic economic recovery for member countries. In addition, it will strengthen the supply chain synchronization among the regional members that has been disrupted by the recent COVID-19 pandemic and China-US decoupling.

Key points

  • Key points:
  • On November 15th, Asia Pacific nations including China, Japan, South Korea, Australia and New Zealand plus 10 countries of ASEAN signed the world’s largest regional free-trade agreement which is the so-called Regional Comprehensive Economic Partnership or RCEP.
  • By significantly reducing the tariffs and non-tariff barriers, RCEP will enhance the real economic linkages among the member countries and intensify the spill-over effect of China’s high economic growth to other regional economies through international trade, promoting post-Covid regional economic recovery.
  • RCEP will strengthen the supply chain synchronization among the regional members that has been disrupted by the recent COVID-19 pandemic and China-US decoupling; in addition, it will speed up the labor-intensive sector’s supply chain relocation from China to ASEAN countries.
  • RCEP is China’s new strategy of multilateralism to deal with the ongoing China-US decoupling and the US unilateralism.
  • Some caveats are indeed noteworthy for the long-term outlook of the RCEP: First of all, the signing of RCEP does not necessarily mean China could downplay the economic cooperation with the US and the EU. Second, unlike the EU and North American Free Trade Area (NAFTA), economic integration in Asia has much more barriers.

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