Executive Summary
- Hong Kong is actively pursuing membership in the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc, with support from ASEAN economic ministers.
- The RCEP represents 30 percent of global GDP and 25 percent of global exports, and Hong Kong already conducts 70 percent of its merchandise trade and nearly half of its service trade with RCEP members.
- Joining RCEP would significantly benefit Hong Kong by lowering tariffs, reducing overhead costs for SMEs, increasing high-quality consumer goods inflow, and decreasing manufacturing expenses.
The Story So Far
- Hong Kong is actively pursuing membership in the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc, to further strengthen its already deep economic ties within the region, as 70% of its merchandise trade is with RCEP member countries. The city aims to leverage the bloc’s goal of eliminating 90% of tariffs to reduce trade barriers, lower costs for businesses and consumers, and enhance its role as a regional economic “superconnector,” with this ambition supported by ASEAN economic ministers.
Why This Matters
- Hong Kong’s potential accession to the Regional Comprehensive Economic Partnership (RCEP) would significantly deepen its already strong trade and economic integration with the world’s largest trade bloc, particularly benefiting its small and medium-sized enterprises (SMEs) through reduced tariffs and lower logistical costs. This move is expected to bolster Hong Kong’s role as a regional “superconnector” by facilitating enhanced supply chain alignment and financial services, ultimately leading to lower import costs for businesses and consumers.
Who Thinks What?
- Opinion writer Daryl Ng believes Hong Kong’s membership in RCEP presents a significant opportunity to deepen its trade ties with bloc nations, enhance its role as a regional economic “superconnector,” lower trade barriers, reduce overhead costs for SMEs, and benefit both manufacturers and consumers.
- ASEAN economic ministers unanimously support Hong Kong’s inclusion in RCEP, recognizing its potential to add substantive value to its long-standing economic partners, particularly within Southeast Asia, through enhanced supply chain alignment and financial services.
Hong Kong is actively pursuing membership in the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc, following a joint statement in September from ASEAN economic ministers affirming support for its inclusion. This move is viewed by some, including opinion writer Daryl Ng, as a significant opportunity to deepen Hong Kong’s existing trade ties with RCEP nations and enhance its role as a regional economic “superconnector.”
RCEP’s Global Economic Footprint
The RCEP encompasses all ten economies of the Association of Southeast Asian Nations (ASEAN), mainland China, Australia, Japan, South Korea, and New Zealand. This expansive bloc collectively accounts for 30 percent of global gross domestic product and over 25 percent of global exports, making it a pivotal force in international trade.
Hong Kong already maintains substantial economic links with RCEP members. In 2023, approximately 70 percent of Hong Kong’s total merchandise trade was conducted with countries within the bloc, a figure that underscores the city’s deep commercial integration with the region. Similarly, nearly half of its service trade in 2022 involved RCEP economies.
Potential Economic Advantages for Hong Kong
According to Ng’s analysis, joining the RCEP would bolster the attractiveness of markets across Northeast Asia, Southeast Asia, and Oceania for Hong Kong businesses. The RCEP’s objective to eliminate 90 percent of tariffs on imports over the next two decades is expected to systematically lower trade barriers, thereby deepening commerce between Hong Kong and ASEAN countries.
A primary benefit highlighted is the drastic reduction of overhead costs and logistical obstacles for Hong Kong’s small and medium-sized enterprises (SMEs) operating within RCEP economies. With lower import costs, Hong Kong’s accession could also increase the inflow of high-quality consumer goods and reduce manufacturing expenses for firms importing components. This would benefit both manufacturers and consumers.
Strategic Positioning
As an ASEAN-led initiative, the unanimous support from ASEAN countries for Hong Kong’s inclusion is a notable development. This backing suggests a recognition of Hong Kong’s potential to add substantive value to its long-standing economic partners, particularly within Southeast Asia, through enhanced supply chain alignment and financial services.
