RCEP and the Vision of the Maritime Silk Road: New Frontiers for China-ASEAN Cooperation (Part 2)
Chapter 2 - Opportunities: Advancing Regional Economic Integration with an Open Vision
In today’s piece, we are briefing you on the Chapter 2 of our report, “RCEP and the Vision of the Maritime Silk Road: New Frontiers for China-ASEAN Cooperation.” We would love to answer any questions you might have so be sure to drop a like, comment, and subscribe for more!
Over the past decade, China's Maritime Silk Road initiative has delivered a wide range of regional public goods across areas such as policy coordination, infrastructure, finance, technology, social development, and livelihood improvement. The Regional Comprehensive Economic Partnership (RCEP) has further reinforced the rule-based framework and institutional support underpinning China–ASEAN economic and trade cooperation. Promoting synergy between RCEP and the Maritime Silk Road initiative will enable both mechanisms to complement and enhance each other, fully leveraging their respective strengths. Such coordinated development will generate new momentum for shared growth—achieving results greater than the sum of their parts ("1+1>2")—and drive regional economic integration to a higher level.
The theory of regional economic integration holds that regional cooperation can achieve economies of scale and synergistic effects by lowering trade barriers, optimizing resource allocation, and coordinating policies. RCEP, with its focus on tariff reductions and rule harmonization, aligns closely with this economic logic. At the same time, the Maritime Silk Road initiative extends the traditional concept of integration by combining physical connectivity with soft cooperation mechanisms. More importantly, the scope of both RCEP and the Maritime Silk Road goes beyond China and ASEAN, encompassing numerous economies outside the region. In the context of a slowing global economic recovery and rising cumulative risks, China–ASEAN cooperation not only promotes regional socio- economic development but also integrates broader markets, greater production capacity, and a wider range of sectors. Such expanded cooperation will inject greater stability and fresh momentum into the global economy, contributing to developing a more inclusive and equitable form of economic globalization.
I. Strengthening Policy Coordination and Advancing the Integration of Regional Institutional Rules
Over the years, China and ASEAN have established a multi-level, multi-platform, and multi-stakeholder communication framework guided by head-of- state diplomacy. This framework includes mechanisms such as China–ASEAN (10+1) cooperation; twelve ministerial-level meetings covering foreign affairs, trade, transportation, and the fight against transnational crime; and senior officials' meetings such as the Joint Cooperation Committee and the Connectivity Cooperation Committee. These mechanisms have provided effective and pragmatic channels for regional policy coordination, ensuring strong alignment in development strategies, economic and technical policies, management rules, and regulatory standards. Notably, in 2024, when China served as the rotating co-chair (non-ASEAN side) of RCEP, it worked with Indonesia to establish procedures for accessing new members. That same year, the RCEP Support Unit (RSU) officially began operations, further deepening regional institutional cooperation.
Building on existing achievements, China and ASEAN can further deepen regularized policy communication mechanisms, promote policy alignment, explore innovative cooperation models, and advance multilateral collaboration. Efforts can be focused on the following policy areas to open up new spaces for cooperation:
Enhancing Mutual Recognition of Regional Rules and Standards. We must promote "connectivity" in areas such as standards, technical regulations, and conformity assessment procedures and work together to develop internationally influential rules and standards.
Expanding Trade and Investment Facilitation Measures. We must simplify customs procedures and reduce non-tariff barriers to create more cross-border market opportunities—especially for small and medium-sized enterprises—thereby broadening cooperation into more industries and sectors.
Building and Improving a Secure Investment Protection System. We must enhance financial security and project sustainability, support the provision of regional public goods such as infrastructure, and help regional stakeholders enter global markets.
Deepening High-Quality Cooperation in the Digital Domain. We must advance both "hard connectivity" in digital infrastructure and "soft connectivity" in such areas as electronic payments and cross-border data flows, laying a solid foundation for developing digital industry cooperation.
Further Optimizing Rules of Origin. We must simplify certification processes, improve rule transparency, and strengthen cross-border coordination. A unified standard of origin will help reduce corporate compliance costs and minimize potential disputes and trade barriers.
II. Enhancing Industrial Collaboration and Advancing Regional Supply Chain Integration
In recent years, ASEAN countries have leveraged their comparative advantages in labor-intensive industries—such as light industrial goods, electromechanical products, and components—as well as in energy and raw materials to absorb international industrial transfers efficiently. Meanwhile, China, with its mature industrial system, strong manufacturing base, advanced technological capabilities, and competitive advantages in sectors such as textiles, electrical equipment, and optical devices, has provided ASEAN countries with critical intermediate goods and technological support. Through this process, the two sides have gradually formed a mutually beneficial "regional cycle" model: ASEAN exports primary products to China, imports capital- intensive machinery and equipment and technology-intensive intermediate goods from China, and then exports labor-intensive consumer products to both China and third-party markets.
Figure 6: Share of Chinese–ASEAN Imports and Exports in Goods by Major Category in 2023
China and ASEAN, with their geographic proximity and strong economic complementarity, share a solid foundation for further deepening industrial cooperation. In the face of rising global economic uncertainties, the two sides can speed up regional production and supply chain integration and connectivity by adopting diversified cooperation models. This acceleration will support the high-quality restructuring of regional production networks, position industrial cooperation as a long-term growth driver of bilateral economic and trade cooperation, and help both sides enhance their competitiveness in global production and supply chains.
Accelerating the Development of Emerging Manufacturing Sectors. China has significantly increased its manufacturing investments in Southeast Asia in recent years. These investments span not only traditional industries such as electromechanical equipment, chemicals, metal and non-metal products, and textiles and garments but also emerging sectors like photovoltaics and new energy vehicles. As we look ahead, more innovative models of international production capacity cooperation are expected to emerge, including "Two Countries, Twin Parks" and even "Multiple Countries, Multiple Parks."
Expanding Cross-Border E-Commerce Collaboration. Cross-border e-commerce platforms in China and other countries are actively reshaping their procurement and supply chains, with a growing focus on ASEAN markets. Fueled by the anticipated institutional benefits of RCEP and the forthcoming China–ASEAN Free Trade Area 3.0, the rollout of China–ASEAN cross-border e-commerce platforms is expected to accelerate significantly.
Promoting High-Quality Agricultural Cooperation. With the increasing utilization of RCEP's regional cumulation rules of origin and the growth of cross-border e-commerce in agricultural products, agricultural cooperation between China and ASEAN is poised to grow in scale and quality. Future collaboration is expected to extend into new fields such as digital, smart, and green agriculture, thereby enhancing the sustainability of the agricultural professional skills across the region.
Expanding Financial Cooperation with a Focus on Service Industries. First, efforts are being made to improve local currency settlement and cross-border payment systems, thereby facilitating trade and investment. Second, green finance and sustainable development cooperation is deepening, particularly in support of clean energy hubs and low-carbon transition projects. Third, digital finance and technology cooperation is expanding through mechanisms such as the China–ASEAN Digital Ministers' Meeting and their results. These initiatives aim to align standards in areas like artificial intelligence and big data, promote the establishment of joint laboratories, and foster cooperation between fintech applications and financial data security.
III. Focusing on Connectivity to Foster the Rise of Regional Economic Hubs
ASEAN countries have long been constrained by insufficient transportation infrastructure, which has hindered trade flows and economic growth. Infrastructure development now presents a vital opportunity for the region—not only overcoming geographical barriers but also strengthening regional connectivity through economic growth, industrial clustering, and social advancement. This development has created ripple effects, extending from individual nodes to corridors and, ultimately, to broader integrated zones—driving the formation and rise of key regional economic hubs.
Laos Railway Economic Belt. Historically a landlocked country, Laos faced limited economic development due to its lack of external transport links. The opening of the China–Laos Railway has transformed it into a land-linked nation, connecting it with China's Western Land–Sea New Corridor and extending its reach to Thailand, Vietnam and beyond. Since its launch, the railway has significantly improved freight efficiency, cutting logistics costs along the route by 20%–30% and offering a fast track for regional trade. Vientiane has emerged as a regional transportation hub, with goods able to reach inland China directly or be transshipped through Thailand to other ASEAN countries. This hub effect has not only elevated Laos's economic status but also spurred commercial activity in numerous small and medium-sized towns along the route, giving rise to a "railway economic belt." The railway has generated more than 100,000 jobs and stimulated local economies through multiplier effects, increasing both tax revenues and household consumption. As this economic belt continues to grow, further southern extensions of the railway are expected to enhance its role as a pivotal economic node driving development across the region.
Kuantan Port and Surrounding Industrial Zone. Located on the east coast of Malaysia, Kuantan Port is a flagship China-Malaysia collaboration under the Maritime Silk Road initiative. Operational since 2018 and upgraded in 2023, the port has seen a significant boost in throughput capacity and can now accommodate large container vessels. Through the "twin parks" model—linking the China-Malaysia Qinzhou Industrial Park with the Kuantan Industrial Park—the port forms a dynamic maritime connection with China's Beibu Gulf Port in Guangxi. The adjacent Malaysia–China Kuantan Industrial Park has attracted significant investment from heavy industries such as steel and chemicals. The port's upgrade has reduced shipping time between China and Malaysia's east coast, lowering overall logistics costs by approximately 15% . Looking ahead, integration with Malaysia's East Coast Rail Link (ECRL) will create a seamless sea-land transport network, further solidifying Kuantan's role as a key maritime economic hub in southern ASEAN and positioning it as an emerging regional manufacturing base.
China–Thailand Railway Economic Corridor. As Thailand's capital and economic center, Bangkok is already a vital transportation and trade hub in Southeast Asia. The first phase of the China–Thailand Railway, linking Bangkok to Nakhon Ratchasima, is currently under construction, while the second phase—extending from Nakhon Ratchasima to Nong Khai in the border region with Laos—is planned to connect directly with the China–Laos Railway. Once operational, the first phase will reduce travel time between Bangkok and Nakhon Ratchasima from four hours to just one and a half, dramatically improving logistics efficiency and stimulating economic growth in northeastern Thailand. This corridor is expected to foster new industrial clusters and integrate more deeply into the RCEP regional supply chain. Nakhon Ratchasima will emerge as a logistics and industrial node for the region, supporting agricultural processing (e.g., rice, bananas), manufacturing, and enhanced connectivity between Bangkok's port economy and the inland markets of Laos and China. Once the China–Thailand Railway is fully linked with the China–Laos Railway, it will serve as a strategic corridor connecting southwestern China, Laos and the Gulf of Thailand. In addition, the "hinterland manufacturing + Sihanoukville Port" economic belt formed along Cambodia's Phnom Penh–Sihanoukville Expressway, as well as the spillover effects of the Jakarta–Bandung High-Speed Railway and its potential future extension eastward, are expected to strengthen the economic foundations of their respective regions further.
IV. Strengthening Collaborative Resolve to Jointly Address External Risks and Challenges
Opportunities and challenges often go hand in hand. While embracing the opportunities, it is also essential to acknowledge the risks and challenges facing China – ASEAN cooperation. These include mounting global instability, ongoing impact of natural disasters, increased pressure on the multilateral trading system, growing volatility in international financial and monetary systems, rising difficulties in international investment, financing, and industrial and supply chain cooperation, the heightened barriers to cross-border investment and financing, the fragmentation of industrial chains and rising risks to regional supply chain resilience and the splintering of digital governance rules and technical standards. Of particular concern is the behavior of certain countries moving against the tide of globalization, abusing tariff measures and erecting excessive trade barriers. These actions have severely undermined the stability of the global trading system and dealt a significant blow to global economic confidence.
Times of historic transformation often create opportunities to strengthen cooperation. At such pivotal moments, it is all the more important for China and ASEAN to stay historically grounded, strengthen unity, and pursue mutual benefit. Both sides have long made cooperation and development a central pillar of their bilateral relationship— this shared commitment has been the driving force behind their ability to weather risks and challenges, lead regional cooperation, and become a model for Asia-Pacific collaboration. In November 2024, at the 19th G20 Leaders' Summit, President Xi Jinping announced eight major actions China would take to support global development. That same year, the ASEAN Summit proposed nine priority areas for regional cooperation focused on strengthening connectivity, enhancing recovery capacity, and boosting growth resilience. Together, these initiatives have helped chart a clearer path forward for deepening China–ASEAN cooperation in pursuit of shared development.
For years, China has regarded ASEAN as a priority in its neighborhood diplomacy and a key region for high-quality BRI cooperation. At the same time, ASEAN countries have consistently viewed China as a trustworthy and close partner. The two sides have accommodated each other's major concerns, respected their respective development paths, and seen their political mutual trust grow ever stronger. In the years to come, China and ASEAN will continue to stand firmly together in close collaboration. They will uphold the principles of openness and inclusiveness in global governance, adhere to the spirit of genuine multilateralism featuring extensive consultation, joint contribution, and shared benefits—and promote an economic globalization that is both inclusive and beneficial to all. Together, they will work toward building an even closer China–ASEAN community with a shared future.
Chapter 3: To be Continued…