RCEP, ACFTA key to unlocking Asean-China trade potential

New Straits Times

05-06-2025

HUANGSHAN: Stronger grassroots implementation, simplified processes for businesses, and closer public–private partnerships are key to unlocking the full potential of regional trade pacts, according to Asean secretary-general Dr Kao Kim Hourn.
Kao was referring to the Regional Comprehensive Economic Partnership (RCEP) and the Asean-China Free Trade Area (ACFTA).
He said the frameworks of both are complementary and critical in expanding market access, fostering resilient supply chains and enhancing regional competitiveness.
"Strong public–private partnerships are essential not only to help businesses integrate into regional value chains but also to support them in scaling up operations and contributing to more responsive policymaking," he said at the 2025 RCEP Local Governments and Friendship Cities Cooperation (Huangshan) Forum held here today.
Kao also noted that micro, small and medium enterprises (MSMEs), the backbone of the Asean economy, often face barriers in accessing financing and navigating complex regulations.
In this regard, he encouraged local authorities to support MSMEs through targeted outreach, advisory services and simplified administrative processes.
He commended the proactive efforts of cities and local governments in facilitating trade adoption through policy dialogues, capacity building and incentive schemes that are essential for helping businesses navigate technical trade rules and realise the benefits of both RCEP and ACFTA.
RCEP covers 15 countries, including all 10 Asean members and five of its key partners, namely China, Japan, South Korea, Australia and New Zealand.
Kao pointed out that RCEP economies contributed US$29.4 trillion, or nearly 28 per cent of global gross domestic product in 2023, while their combined trade was valued at US$13.5 trillion in 2024, accounting for over 28 per cent of global trade.
The bloc also represents a consumer base of 2.3 billion people, or nearly one-third of the global population.
In China alone, RCEP usage jumped 38 per cent last year, with most firms leveraging RCEP to boost exports and diversify supplier networks.
Asean's total trade with RCEP partners totalled US$1.3 trillion in 2024, making up 34.5 per cent of Asean's overall trade.
Kao also highlighted the growing importance of the ACFTA, established in 2003, which has already eliminated more than 90 per cent of tariffs between Asean and China.
"The ACFTA 3.0 will modernise the agreement and open new doors in the digital economy, green economy, and supply chain connectivity.
"It will redefine Asean-China economic relations through innovation and competitiveness," he said.
On May 25, Asean Economic Ministers concluded negotiations for the ACFTA 3.0 upgrade alongside the completion of the upgraded Asean Trade in Goods Agreement (ATIGA).
Both upgraded agreements are scheduled to be signed on the sidelines of the upcoming 47th Asean Leaders' Summit in Kuala Lumpur in October 2025.
Kao further said ACFTA and RCEP form "mutually reinforcing frameworks" that allow Asean and Chinese businesses to expand their global supply chain footprints, with both agreements contributing to long-term economic resilience and integration.
"By further harnessing the benefits of RCEP, Asean and China will build resilient and interconnected economies that are capable of withstanding uncertainties and challenges while capitalising on emerging opportunities," he added.