Partnership will serve as a platform for investment expansion, scholar says
The Regional Comprehensive Economic Partnership, or RCEP, is expected to serve as a "fertile ground for trade and investment expansion" between China and members of the Association of Southeast Asian Nations, a renowned Indonesian scholar said.
Jusuf Wanandi, co-founder of the Jakarta-based think tank Center for Strategic and International Studies, or CSIS, said the pandemic has "largely immobilized" trade growth from 2020 to 2022. However, he sees ASEAN-China trade "to continue to expand going forward".
"ASEAN and China have not only exhibited a strong trade growth. Both sides have managed to improve (their) position in the complexity ladder according to the Observatory of Economic Complexity," Wanandi said in an interview with China Daily. The OEC is a data visualization site for international trade data.
Wanandi, who is also vice-chairman of the board of trustees of the CSIS Foundation, said all ASEAN countries have improved their respective complexity indices in the last 10 years, except for Singapore, which is already a very complex economy. The rising complexity index is a "necessary ingredient for trade expansion".
As the world's biggest free trade pact, the RCEP aims to establish a unified market by reducing both tariff and non-tariff barriers. The RCEP's signatories are the 10 members of ASEAN plus Australia, China, Japan, New Zealand, and South Korea. Together, these countries account for about a third of the global population and 30 percent of the world's gross domestic product.
Member countries signed the pact in November 2020 and have committed to eliminating tariffs on more than 90 percent of goods traded within the RCEP. These tariffs will be gradually reduced over 20 years.
Even before the signing of the RCEP, Wanandi noted the steady growth in China-ASEAN trade following the free trade agreement between the two sides.
He said China has become the world's number one trader and the nation's share in global exports rose from 4.99 percent in 2000 — just before its entry into the World Trade Organization — to 15.4 percent in 2021.
Likewise, ASEAN has made "impressive trade progress" during the same period, Wanandi said. ASEAN's share of global exports increased from 6.98 percent in 2000 to 8.26 percent in 2021. He cited Vietnam's "stellar progress" and how it has grown to become ASEAN's largest trader.
Apart from its economic strength, Wanandi noted that ASEAN has a key role to play in East Asia's community building.
He said a study of trade and investment flows in Asia would reveal that the "true region in our part of the world is East Asia" and that ASEAN, China, Japan, and South Korea are better seen as subregions.
"Recognizing some of the difficulties involved in bilateral relations in the region, ASEAN has a central role to play as a supplier of ideas on community building and as a focal point of region-wide interactions," he said.
Indonesia, which is this year's rotating chair of ASEAN, "continues to attach a centrality to ASEAN" in its foreign policy. "It is through ASEAN that Indonesia aspires to leverage its middle-power status in advancing good relations with the wider region and the rest of the world," he said.