RCEP and ACFTA crucial to realising ASEAN–China trade ambitions, says ASEAN Chief

ASEAN Secretary-General Dr Kao Kim Hourn has urged governments across the region to strengthen grassroots implementation and streamline regulatory processes to fully harness the benefits of the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-China Free Trade Area (ACFTA).

Speaking at the 2025 RCEP Local Governments and Friendship Cities Cooperation Forum in Huangshan, China, Dr Kao underscored the critical role that both frameworks play in advancing market integration, building resilient supply chains and driving 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.

Dr Kao highlighted the challenges faced by micro, small and medium enterprises (MSMEs)—which form the backbone of ASEAN’s economy—noting that they often struggle with complex regulatory environments and limited access to financing.

He called on local authorities to do more to support MSMEs by offering advisory services, simplifying administrative procedures, and ensuring targeted outreach to facilitate trade engagement. He also praised proactive city-level initiatives that have enhanced trade adoption through policy dialogues, capacity-building and incentive programmes.

RCEP, the world’s largest free trade pact, comprises all 10 ASEAN member states along with China, Japan, South Korea, Australia and New Zealand. According to Dr Kao, the RCEP bloc generated a combined US\$29.4 trillion in GDP in 2023—nearly 28 per cent of the global total—and accounted for US\$13.5 trillion in trade in 2024, or over 28 per cent of global trade. The agreement spans a consumer base of 2.3 billion people, representing nearly one-third of the world’s population.

“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 said.

In China, RCEP usage surged by 38 per cent last year, driven largely by firms seeking to increase exports and diversify supply networks.

ASEAN’s trade with RCEP partners amounted to US\$1.3 trillion in 2024, representing 34.5 per cent of the bloc’s total trade volume.

Dr Kao also pointed to the deepening significance of the ACFTA, which was launched in 2003 and has already eliminated more than 90 per cent of tariffs between ASEAN and China. He said the forthcoming ACFTA 3.0 upgrade, recently concluded by ASEAN Economic Ministers, will usher in a new era of digital, green, and supply chain-centric cooperation.

“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.

The finalised ACFTA 3.0 and the upgraded ASEAN Trade in Goods Agreement (ATIGA) are expected to be formally signed during the 47th ASEAN Leaders’ Summit, to be held in Kuala Lumpur in October 2025.

Dr Kao concluded by reaffirming that RCEP and ACFTA are “mutually reinforcing frameworks” that provide a robust foundation for ASEAN and Chinese businesses to extend their global supply chain footprints.

“These agreements are not just about lowering tariffs—they are about building long-term resilience, enhancing economic integration, and enabling our businesses to thrive in a rapidly evolving global environment,” he said. - June 5, 2025