OBELA Analysis

The Regional Comprehensive Economic Partnership (RCEP) reflects the polarisation of world trade that accelerated with the trade war between the United States and China. It reinforces Asian regional integration and offers China the opportunity to increase the influence of the Renminbi (RMB). Since 2009, China has developed a monetary strategy that promotes its currency as a medium of international exchange. 

According to Swift, in October 2020, Chinese money accounted for a meagre 1.66% of transactions as a global currency. We have seen that the opportunity for the influence of the renminbi in Asia and in the world economy has grown, and the open question is why it is not yet a major currency. 

China's participation in global trade and investment builds confidence in the WBN, particularly in parts of Asia and Africa. However, even China uses the dollar in business and holds a high proportion of dollar assets, so it is unlikely to replace the dollar as the world currency in the short term.

The signing of the Regional Comprehensive Economic Partnership (RCEP) indicates a strengthening of regionalism in Asia while in the West it is in decline.

By the end of the last decade, the trade order and multilateralism were already being questioned. Some elements caused the crack in the globalization process in the West. The trade war between China and the United States; the withdrawal of the United Kingdom from the European Union; the emergence of populist and conservative governments in Europe of a nationalist nature, among others.

Latin America is not a region free of similar processes. The Southern Common Market (MERCOSUR), one of the most important integration projects that has been developed in the region, shows slight setbacks in its integration process.

In the midst of the turbulence caused by the COVID-19 crisis, the world's largest free trade agreement (FTA) was signed. The Regional Comprehensive Economic Partnership (RCEP) is made up of 15 countries. The new region represents a third of the world's GDP and population and 29% of world exports. 

Within the treaty, the following issues are addressed: trade, investment, financial and digital services, intellectual property and technological cooperation. Likewise, it is limited to a trade treaty and not an economic integration process, with free circulation of factors.

China wins a huge trade agreement that plants it as the new face of multilateralism, in view of the abandonment of it by the United States. International cooperation has taken a new dynamic with China at the forefront with long term regional planning.