The positions of countries within trade and investment networks are crucial for identifying key players, understanding overarching trends in supply chains, and assessing regional integration. Our latest ACI study examines the evolution of these networks within the RCEP, providing insights into the dynamic landscape of regional trade and investment. Using network analysis, the research pinpointed key players in the RCEP trade bloc, focusing on intra-RCEP trade and investment flows. This method illuminates how relationships within the bloc have developed and evolved over time.

The network analysis reveals a significant shift in the center of the intra-RCEP trade network, transitioning from Japan to China. In 1995, Japan was the central trade hub within the RCEP, facilitating the most bilateral trade within the bloc. Singapore also played a prominent role in intra-RCEP trade connections during this time. The pivotal shift occurred in 2007 when China surpassed Japan to become the primary trade center. By 2009, China had fully established itself as a trade hub within the RCEP, a position it maintained through 2021. This transition aligns with China’s rise as ASEAN’s largest trading partner starting in 2009, a role it continues to hold. Additionally, despite the challenges posed by the COVID-19 pandemic in 2020, China managed to sustain its export growth to ASEAN from 2010 to 2021. Together, the integrated supply chains among China, Japan, and Korea underpin the trade network within RCEP.

The analysis of the RCEP’s internal investment flows presents a contrasting scenario. In 2013, as China solidified its role as an intra-RCEP trade hub, Japan emerged as the leading member in the RCEP’s FDI flow network, showcasing its strength in regional investment relationships. Japan facilitated the highest volume of bilateral FDI flows and played a crucial role as an intermediary within the network, maintaining this dominance until 2019 with China in second place. However, the landscape shifted dramatically by 2022. Notably, South Korea surpassed Japan’s position, while Vietnam’s significance in the FDI network also increased. South Korea’s journey to the forefront began in 2021, marked by rising FDI flows between South Korea and other RCEP members, especially Vietnam and other ASEAN economies. This escalation in economic ties propelled South Korea to a prominent position in the intra-RCEP FDI network by 2022.

In conclusion, the evolution of the intra-RCEP FDI landscape demonstrates that the economic integration within the RCEP involves more than just the two largest countries of the trade bloc—China and Japan. Over time, the positions of RCEP members in both trade and FDI flows have shifted, although changes at the top ranks have been minor. Japan continues to play a pivotal role in both arenas despite China’s ascendance as the dominant trade hub and the emerging prominence of South Korea and Vietnam in the FDI network. The rapid ascent of ASEAN economies in 2022 underscores the importance of continuously monitoring their performance in both trade and FDI.

By XU, Ni Scarlet      

Researchers: TAN, Faith, BANH, Thi Hang, XIE, Taojun