From 10+1 to 10+5

The signing of the RCEP gives a boost to China-ASEAN cooperation and promotes higher-level and larger-scale regional economic integration

China and the Association of Southeast Asian Nations recently overcame major challenges from the COVID-19 pandemic and the global economic downturn to not only celebrate the 10th anniversary of the establishment of the China-ASEAN Free Trade Area, but also sign the Regional Comprehensive Economic Partnership agreement.

The agreement involves all 10 ASEAN members and five of the bloc's major trading partners-Australia, China, Japan, New Zealand and the Republic of Korea. The ASEAN countries played a leading role in initiating and pushing forward RCEP negotiations based on the five existing "ASEAN+1" FTAs. The successful signing of the RCEP agreement will inject new impetus for China and ASEAN countries to strengthen their cooperation and build a closer China-ASEAN community with a shared future in the post-pandemic era.

The RCEP agreement will create a more open, prosperous regional market for Chinese and ASEAN enterprises. The deal, which has created the world's largest free trade bloc, marks the formation of a mega-sized regional market with a combined population of 2.27 billion, total GDP of more than $26 trillion and total trade value of $10.4 trillion.

By lowering tariffs and non-tariff barriers between the members and expanding market access to services and investment, the deal promotes regional trade and investment growth and boosts the economic growth of each RCEP member, so as to create a more prosperous, vibrant integrated regional market.

The deal demonstrates the signatory countries' strong willingness to expand opening-up and full confidence in this regional market's growth potential. According to the United Nations Conference on Trade and Development, the deal will increase exports of member countries by over 10 percent by 2025 and contribute 0.2 percentage points to regional growth by 2030.In the context of the COVID-19 pandemic and sluggish global economic recovery, the RCEP deal will help Chinese and ASEAN enterprises cope with market turbulence by creating new market demand and new growth avenues.

In particular, China, which has the largest market among RCEP members, will use the deal to open up further at a higher level and promote the "dual circulation" development paradigm, which is centered on the domestic economy and aimed at better integrating the domestic economy with the global economy by breaking obstacles standing in the way of domestic and foreign market integration. This will allow Chinese and ASEAN enterprises to share a more open market.

By virtue of the China-ASEAN Free Trade Area, the two sides have established close trade and investment ties, becoming each other's largest trading partner, with bilateral investment exceeding $240 billion. However, there are no free trade arrangements between China and Japan or between China and the ROK although China, ASEAN, Japan and the ROK are important players in the Asian production network. Other RCEP members have fragmented free trade arrangements, if any.

The newly inked RCEP agreement, based on the integration of existing bilateral free trade agreements, makes further efforts at formulating unified, open and transparent trade and investment rules for the trading bloc and provides Chinese and ASEAN businesses a new option to optimize industrial and supply chain layout within the RCEP trading bloc.

By making the best use of preferential policies stipulated in the RCEP agreement, Chinese and ASEAN businesses can, by following the rule of optimal allocation of resources, more flexibly purchase raw materials and produce and sell final products within the 15-member trading bloc. That will not only lower costs for businesses and increase their global competitiveness, but also promote closer regional cooperative partnership in industrial and supply chains.

Liberalization and facilitation of trade and investment under the deal will not only further enhance connectivity and intensify economic and industry integration between China and ASEAN countries, but also provide both parties a new platform to build a closer, more inclusive community with a shared future.

Sustained trade and investment growth following the deal will further promote people-to-people exchanges, creating room for the deepening of cultural cooperation and the intensifying of dialogue and understanding.

Furthermore, the deal grants special preferential treatment to less developed ASEAN member states such as Cambodia, Laos and Myanmar, helping them adapt to opening their markets at a higher level. The deal also makes special arrangements for small and medium-sized enterprises so that they will benefit. In the years to come, China will fulfill its commitments and obligations to less developed ASEAN member states and SMEs by actively carrying out economic cooperation and providing technical assistance. This will help ASEAN accelerate the transformation toward a digital economy and narrow the development gap brought by the new technological revolution.

China actively participated and supported ASEAN's central role in the RCEP negotiations. It strengthened coordination of the positions between ASEAN and other member parties, and took the lead in resolving remaining differences with actual actions. China will further strengthen cooperation with ASEAN member states to jointly promote the effective implementation of the deal in order to inject new momentum into common development in the region.

Notably, the signing of the deal expands the cooperation space between China and ASEAN from "10+1" to "10+5"-possibly "10+n "following the inclusion of new members to the RCEP-promoting higher-level and larger-scale regional economic integration. This will provide a broader platform for China and ASEAN to once again take the lead in regional economic integration in the new era.

The author is a research fellow and deputy director of the Institute of Asian Studies at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce. The author contributed this article to China Watch, a think tank powered by China Daily.The views do not necessarily reflect those of China Daily.