Title: RCEP??????????????????? (The evolution of RCEP: The gaming of all parties involving and Chinese strategic options, 2020)

Author: ??????? (Xiao Wanjun, School of Economics, Nankai University; Xian Guoming Nankai University Multinational Corporation Research Center)

Brief Description

At present, China's "One Belt, One Road" initiative and RCEP have a considerable degree of compatibility and complementarity. Once RCEP is successfully implemented, it will provide strong support for the construction of the "Maritime Silk Road". China has a complete range of manufacturing industries, and there is a certain degree of trade complementarity with other RCEP member states. Therefore, the signing of RCEP as a whole will help promote China's trade and investment liberalization and facilitation process. On the basis of further facilitating foreign investment by Chinese enterprises, China is able to transfer its surplus production capacity and competitive manufacturing industries to other countries in the region, thereby concentrating its limited domestic production resources with higher added value and higher technological content. In the high-end industries, thereby accelerating the optimization and upgrading of domestic industrial structure.

Japan is worried that it will not be able to compete with China for the right to speak under the "10+3" framework, so it insists on inviting the three countries of India, New Zealand and Australia to join the East Asia Free Trade Area to jointly balance China. Japan’s industrial level and service trade level have significant competitive advantages in East Asia. At first Japan prefers to sign an agreement with higher standards in the fields of trade, investment, and intellectual property rights. But in 2017, the Trump government began to implement the "America First" policy, and Japan's political economy is facing unprecedented pressure, especially after the United States withdrew from the TPP. Since 2017, Japan has begun to actively turn to cooperation projects such as the “Belt and Road”, RCEP and China-Japan-Korea FTA, in an attempt to compensate for the strategic losses caused by the failure of the TPP.

South Korea attaches great importance to the use of FTA to expand its export trade scale. As an export-oriented country, South Korea regards FTA as one of the important means of its trade policy. The primary purpose of South Korea's participation in the FTA is to expand overseas markets and introduce new investment and strategic resources to provide continuous impetus for its economic growth. Therefore, South Korea generally supports RCEP. However, in the process of RCEP negotiations, geopolitical issues continued to influence the adjustment of South Korea's national strategy, causing South Korea's negotiating attitude to repeatedly appear repeatedly.

ASEAN was established in 1967 and currently includes 10 member states including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The overall economic development level of the ten ASEAN countries is relatively low; especially the competitiveness of service trade is relatively weak. As the 10 ASEAN countries have large differences in national conditions in terms of national size, population size, and economic development level, ASEAN countries have different positions on RCEP.

India has a huge population, cheap labor costs and huge market space and other geographical advantages, but it is limited by backward infrastructure, lack of energy resources, lack of complete basic education and strong government regulation and, etc. The level of industrial development is still very backward, so India has to import a large number of manufactured products which caused India’s trade deficit with China has been increasing year after year. Once China and India establish a more free trade partnership, China’s cheap industrial products may have a devastating blow to Indian manufacturing. Therefore, India does not want to drastically reduce the import tariff level of its industrial products in the short term. This is contrary to the original intention of signing RCEP to eliminate tariffs and trade quotas among member countries and reduce government administrative intervention.

As the two most important developed countries in Oceania, Australia and New Zealand joined the RCEP mainly for economic considerations and to prevent themselves from being excluded from the Asia-Pacific regional free trade agreement and causing economic losses. However, since New Zealand and Australia have signed bilateral FTAs with most RCEP member states, the signing of RCEP will not have a substantial impact on the trade cooperation between the two countries and East Asian countries.

Conclusion

Among the RCEP member countries, developed countries are at a relatively high level of economic development and science and technology, and they hope to expand trade scale through FTA, thereby improving their economic and trade welfare. Developing countries in the process of industrialization need to use RCEP to further explore foreign markets, while promoting the acceleration of the country’s industrialization process, it is also necessary to ensure that the pressure of industrial competition faced by the country is controlled at a reasonable level. However, for underdeveloped countries with a per capita GDP of only over one thousand U.S. dollars, RCEP needs to take into account the level of FTA liberalization and fairness to countries at different stages of economic development, so as to ensure that member states with different national conditions can obtain reasonable Economic benefits and the right to long-term development.