Reshaping RCEP: China advisers urge trade overhaul to shield bloc from global shocks
Ahead of Trump’s China visit, experts at an RCEP forum discuss a supply-chain overhaul, looking to insulate the world’s biggest trading bloc
As trade wars and deadly conflicts expose Asia’s vulnerability to geopolitical shocks, Chinese policymakers and advisers are warning of an “urgent need” for the world’s biggest trading bloc to reshape regional energy and manufacturing supply chains.
Members of the Beijing-backed Asia-Pacific framework must reduce their reliance on vulnerable shipping routes and use the certainty of collaboration to offset growing geopolitical uncertainty, the experts urged at a forum in China’s southern island province of Hainan.
The calls came as tariff tensions between Washington and Beijing remain unresolved ahead of US President Donald Trump’s planned visit to China from Wednesday to Friday – his first trip to the country since November 2017. Meanwhile, the US-Israel war on Iran continues to keep oil prices elevated and cloud the global economic outlook.
The Regional Comprehensive Economic Partnership (RCEP) – grouping Asia-Pacific economies China, Japan, South Korea, Australia and New Zealand, plus 10 members of the Association of Southeast Asian Nations – is in its fourth year of operation. It accounts for around 30 per cent of the world’s gross domestic product and more than a quarter of global exports.
At the RCEP Media and Think Tank Forum held in Hainan from Friday to Saturday, Chi Fulin, president of the China Institute for Reform and Development (CIRD), called for closer industrial and energy cooperation among member economies, including more localised production and a shift away from vulnerable external shipping routes.
“With political conflicts becoming more frequent and unpredictable, there is an urgent need to strengthen RCEP economic cooperation and use the certainty of regional collaboration to offset growing geopolitical uncertainty,” Chi said.
If the Strait of Hormuz suffers any substantial disruption or breakdown, Asia will be among the first to feel the impact
According to Chi, most RCEP economies remain heavily dependent on Middle Eastern energy, with more than 80 per cent of Asia’s imported energy passing through the Strait of Hormuz – a concentration risk he warned could deliver a “serious shock” to the bloc.
Citing projections from the Asian Development Bank, Chi said that if the Middle Eastern conflict extends into the third quarter of 2026, economic growth across developing Asia-Pacific economies – covering most RCEP members – could slow to 4.7 per cent in 2026, down from an earlier forecast of 5.4 per cent.
Should the conflict persist for 12 months, cumulative growth in 2026 and 2027 could be revised down by 1.3 percentage points, he added, posing “major risks” to industrial and agricultural production as well as the supply security of key raw materials across the region.
The warnings come as RCEP prepares for its first general review in 2027 – a process aimed at evaluating the pact’s implementation and potential upgrades to trade and investment rules.
Le Yucheng, China’s vice-minister of foreign affairs from 2018 to 2022, urged that shipping-route security and supply-chain resilience be included in next year’s review agenda.
“If the Strait of Hormuz suffers any substantial disruption or breakdown, Asia will be among the first to feel the impact,” Le said, referring to the vital shipping channel through which one-fifth of the world’s oil supply travels. “Shipping costs would surge, delivery uncertainty would rise, and hundreds of vessels stuck in the strait would directly disrupt regional manufacturing supply chains.”
“We need to better connect RCEP with the Chiang Mai Initiative, so that currency-swap mechanisms, trade settlement and supply-chain support can work together during extreme disruptions,” he said.
“In the face of security shocks, these mechanisms cannot operate separately,” Le added. “If RCEP can serve as a platform to integrate financial safety nets, emergency energy channels and trade-facilitation arrangements, Asia would – for the first time – have an institutional toolbox capable of responding to combined trade, financial and energy shocks.”
Chi at CIRD also called for broader local-currency settlement and stronger regional financial safety nets under the RCEP framework to bolster regional financial stability.
From 2021 to 2024, RCEP economies recorded average annual GDP growth of 3.6 per cent, above the global average of 3 per cent, with the bloc contributing nearly 40 per cent of global economic growth, according to Chi.