Asia Pacific

No, the RCEP Is Not All About China

The claim that China is affirming its influence in East Asia through the Regional Comprehensive Economic Partnership should be taken with a pinch of salt.
Lee Chee Long, Anbound think tank Malaysia, China RCEP, Regional Comprehensive Economic Partnership news, ASEAN RCEP, will China gain from RCEP, China US economic rivalry, Asia economy news, RCEP analysis, China portrayal in the media

© Avigator Fortuner / Shutterstock

January 25, 2021 07:45 EDT

Following the signing of the Regional Comprehensive Economic Partnership (RCEP) on November 15, 2020, media reporting around the world has entered into fanfare mode. Western and Chinese media in particular are reporting on the free trade deal through the narrow lens of US-China competition, overlooking the international agency of the Association of Southeast Asian Nations (ASEAN) in the formation of this mega trade bloc.

Global media outlets like CNN and Reuters have placed emphasis on the RCEP as a China-backed initiative that excludes the US, driving the narrative that Beijing is affirming itself as the pivotal economic partner for Southeast Asia, Japan, South Korea, Australia and New Zealand. Likewise, The New York Times has opined that a regional free trade deal in which China is a major actor stands as a counterweight to Washington’s economic influence in East Asia.

In Asia, a New Kid on the Trade Bloc


Meanwhile, China’s official mouthpiece, the Global Times, also joined in the fray. Supplanted with the views of Chinese economists emphasizing the active role Beijing played in bringing the RCEP to the table, the deal has been branded as a success on China’s path to trade liberalization and multilateralism, as opposed to American protectionism and unilateralism. Such discourse is unsurprising considering the economic, technological and ideological competition Beijing currently finds itself in vis-à-vis Washington. The framing of the RCEP within this context has led to the prevalence of the popular myth that the RCEP is a China-centered free trade bloc that affirms Beijing’s economic influence in the East Asian region. But is this really the case?

The Reality

First and foremost, the RCEP is an ASEAN-led free trade agreement (FTA). This means not only that ASEAN is leading the charge by bringing the two major regional economies, China and Japan, onto one platform for the FTA, but that it is also harmonizing the existing bilateral FTAs the bloc has signed with each external partner into a standardized regional version that is now the RCEP. Comparable to the bilateral agreements ASEAN has signed with five external partners — China, Japan, South Korea, Australia and New Zealand — the RCEP is agreed upon the principle that such FTAs start out with lower standards for trade and services liberalizations but progress over time (10 years or more) into a new version with higher standards of liberalizations. It is such progressive liberalization that forms the core component in defining ASEAN’s centrality for its free trade quests around the world.

As far as the claim of the RCEP being a China-backed trade deal is concerned, it is indeed true that Beijing has actively supported ASEAN in bringing about the agreement. That said, an over-emphasis on China’s role without greater recognition of ASEAN’s initiative gives the misleading perception that the remaining 14 signatories simply jumped on Beijing’s bandwagon. As Brookings Institution rightly pointed out, if ASEAN were not in charge of the agreement back in 2012, the RCEP would have never gone beyond its starting point as both China and Japan were not politically accepted as the chief negotiators at the time. Therefore, emphasizing the RCEP as a China-backed deal is doing a disservice to ASEAN, which spent 10 years bringing about the trade deal with its six external partners (India pulled out from the trade pact last year).

When it comes to the assertion that China is affirming its economic influence in the region through the RCEP, while this is true to a certain extent, it is again far from the overall reality. The RCEP is an FTA with lower standards of liberalizations, meaning that sensitive trade and service industries are protected from any free trade commitments. For instance, tariffs for trading products such as pork and tiles remained high in both Japan and Vietnam, making it hard for other RCEP partners, including China, to export their goods to these countries.

As for the trade in services, the schedules of reservations and non-conforming measures for services and investment among states are even more overwhelming. Not only did China exclude its automobile, rare earth and communication equipment industries from the RCEP’s liberalization commitments, the other 14 countries also presented their own lengthy schedules of reservations and non-conforming measures, with the exception of Singapore, which continued to open its economy within the regional trade pact.

Big Winners

Considering such realities within the RCEP, it is not hard to understand why the experts are projecting marginal gains for China from the trade deal. The Peterson Institute of International Economics is predicting an additional 0.4% to China’s real income by 2030, while a joint study by the University of Queensland and the Ministry of Finance of Indonesia put that number down to 0.08% in the same time frame. Japan, on the other hand, stands to gain a lot from the RCEP. With tariffs on 86% of Japanese industrial goods exported to China eliminated under the agreement, Japanese auto parts suppliers are the big winners, so much so that domestic Chinese players would face strong competition from their neighbor once trade liberalization measures kick off in the coming years.

With all these realities in the offing, the claim that China is affirming its influence in East Asia through the RCEP should be taken with a pinch of salt. With the conclusion of lower-standard liberalizations, China is not looking to be the big winner form the deal. Furthermore, China already was the largest trading partner for all RCEP countries even before the deal was signed, so any claim that Beijing will gain even more economic influence through the trade pact is harder to substantiate given that sensitive industries remained protected by other participating countries.

Given all the realities that challenge the myths propagated by the media, the RCEP is best described as a mixed success for Beijing. The more accurate approach is to view the RCEP as a win for ASEAN, which has been the center of economic courtship from major powers in both East and West — the new kid on the block. Notwithstanding the limitations of the RCEP over the next decade, the fact that ASEAN managed to assemble all major regional economies on its platform is a boost to its capability as a dealmaker in East Asia. With this new dynamic in the global trade order, it is time for the media to move on from the conventional fixation on China.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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