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Published: 22:58, November 28, 2023 | Updated: 09:55, November 29, 2023
HK’s early accession to RCEP could have game-changing implications
By Andrew KP Leung
Published:22:58, November 28, 2023 Updated:09:55, November 29, 2023 By Andrew KP Leung

In his keynote speech at the Greater Bay Area Conference on Nov 22, Hong Kong Chief Executive John Lee Ka-chiu thanked Association of Southeast Asian Nations (ASEAN) countries for their support of Hong Kong’s bid for accession to the Regional Comprehensive Economic Partnership (RCEP). Nevertheless, barring my brief intervention during a Q&A session, how and why the RCEP would be a game-changer for businesses, economies and wider geopolitics were not discussed at the conference.

It is vital to appreciate that Hong Kong’s accession will help to accelerate momentous opportunities for businesses, people and geopolitics.

Comprising the 10 ASEAN member states, the Chinese mainland, Japan, South Korea, Australia, and New Zealand, the RCEP, as of January 2022, is the world’s largest free trade agreement in history, representing a third of world GDP and a third of the world’s population. Ninety percent of tariffs on imports between its members are expected to be eliminated. Common rules for e-commerce, customs procedures and intellectual property will be established, facilitating trade flow by reducing costs and barriers.

The RCEP will synergize with the Belt and Road Initiative’s (BRI’s) six economic corridors: the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, the China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar, covering Middle-East Europe, Middle-West Asia, South-East Asia and Africa. This will help promote local and regional economic growth among the BRI’s participating countries, facilitating policy, infrastructure, trade, finance, and people-to-people exchanges.

Teething problems notwithstanding, deepened regional connectivity on multiple fronts with nations of different cultures, civilizations and political ideologies will serve to mitigate, if not eliminate, ungrounded rhetoric of “de-risking” from China. This will help to build a more-inclusive world despite differences and disagreements, contrasting with narrow-minded zero-sum divisive camps.

The RCEP hosts the world’s largest middle-class population, including China’s, which is expected to grow to 1.2 billion consumers by 2027. With diverse cultures such as Japan, South Korea, Australia and New Zealand, the RCEP opens up new opportunities for high-quality, innovative and sophisticated products and services, including e-commerce, fintech, wealth management, insurance, healthcare, travel, lifestyle, recreation, hospitality, and a host of professional services.

China has been the world’s largest and fastest-growing producer of renewable energy for more than a decade, widening its lead with accelerating solar and wind power capacity in recent years. Additionally, since partnering with Tesla, China has become the “New Detroit” for electric vehicles (EVs), making and selling 6.8 million EVs in 2022 alone, compared with 800,000 in the United States. The rest of the RCEP countries are also embracing the “green revolution” with alacrity, spawning a new era of green finance, products, services and lifestyle. The revolution is beginning to take root in Hong Kong, the Guangdong-Hong Kong-Macao Greater Bay Area and the RCEP socioeconomic ecosystem, creating many green-business and cross-cultural opportunities.

According to an Asian Development Bank report, between 2010 and 2050, seven dynamic economies — China, India, Indonesia, Japan, South Korea, Thailand, and Malaysia — would account for as much as 91 percent of Asia’s total GDP growth and 53 percent of global GDP growth, creating an “Asian Century”, albeit by no means preordained. Except for India, all these growth dynamos are in the RCEP.

It is vital to appreciate that Hong Kong’s accession will help to accelerate momentous opportunities for businesses, people and geopolitics

Following a historic Beijing-brokered rapprochement between Saudi Arabia and Iran, the Middle East is tilting toward China and the rest of the RCEP economies. Likewise, China’s centrality in the RCEP will synergize with BRICS (Brazil, Russia, India, China, South Africa) and Central Asia’s Shanghai Cooperation Organization (SCO). Over 40 countries, including Iran, Saudi Arabia, the United Arab Emirates, Argentina, Algeria, Bolivia, Indonesia, Egypt, Ethiopia, Cuba, the Democratic Republic of Congo, Comoros, Gabon, and Kazakhstan, have expressed interest in joining BRICS. Similarly, Iran has recently become a full SCO member, while Belarus is set to do so next year. Multiple countries, including Türkiye, Afghanistan, and Mongolia, have expressed interest in becoming full-fledged SCO members, covering more than 40 percent of the world’s population. All this would make the interconnected RCEP cake much larger.

The RCEP’s global connectivity will provide additional impetus to China’s central bank digital currency, the e-CNY, as a convenient, cost-effective means for cross-border bilateral trade settlements and e-commerce with China, including Hong Kong. This is likely to gain traction with the Global South as a hedge against the dollar’s increasing weaponization.

The RCEP’s cooperative dynamics will help accelerate the conclusion of an agreed ASEAN-China code of conduct for the South China Sea, as encouraged under Indonesia’s 2023 ASEAN chairmanship. Not only would the code diffuse one of Asia-Pacific’s hottest regional flashpoints, but it would also serve to delegitimize the US’ overhyped and provocative “freedom of navigation” naval patrols in these waters.

Last but not least, albeit not a member, Taiwan’s trade and investment are closely linked with the RCEP; its export to the group accounting for 55.4 percent of its total export in 2022.

Taiwan’s largest export partners are the Chinese mainland (25.3 percent), ASEAN (16.9 percent), US (15.7 percent), Hong Kong (13.5 percent), Japan (7 percent), and South Korea (4.6 percent).

As many as 2 million Taiwan residents now live and work on the mainland, where Taiwan young people are flocking for jobs or business opportunities. Taiwan residents make about 4 million trips a year to the mainland. More and more mainland TV and cinema films are co-produced with film directors, actors or actresses from Taiwan. The RCEP’s expanded market space and connectivity should augur well for Taiwan’s eventual peaceful reunification with the mainland, present lack of such traction notwithstanding.

My Q&A intervention at the Greater Bay Area Conference raises the question about whether business and other stakeholders are sufficiently prepared for the vast game-changing business and geopolitical implications arising from Hong Kong’s RCEP accession.

The author is an international independent China strategist, and was previously the director-general of social welfare and Hong Kong’s official chief representative for the United Kingdom, Eastern Europe, Russia, Norway, and Switzerland.

The views do not necessarily reflect those of China Daily.

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