The Regional Comprehensive Economic Partnership (RCEP) is set to enter into force for Malaysia on March 18, following its entry into force for six ASEAN and four non-ASEAN countries on January 1 and for The Republic of Korea on February 1. It is widely believed that with the RCEP coming into force, the economic and trade cooperation between China and Malaysia will be closer and mutually beneficial.
The epidemic has bucked the trend of growth
Despite the impact of COVID-19, china-Malaysia economic and trade cooperation has continued to grow, demonstrating the close ties of interests and complementarity of our cooperation.

Bilateral trade is expanding. In particular, with the continuous progress of the China-Asean Free Trade Area, China has been Malaysia’s largest trading partner for the 13th consecutive year. Malaysia is China’s second largest trading partner in ASEAN and the tenth largest trading partner in the world.

Investment continued to grow. Statistics previously released by China’s Ministry of Commerce showed that From January to June 2021, Chinese enterprises invested 800 million US dollars in non-financial direct investment in Malaysia, up 76.3 percent year on year. The value of new project contracts signed by Chinese enterprises in Malaysia reached US $5.16 billion, up 46.7% year on year. The turnover reached us $2.19 billion, up 0.1% year on year. During the same period, Malaysia’s paid-in investment in China reached 39.87 million US dollars, up 23.4% year on year.

It is reported that the east Coast Railway of Malaysia, with a design length of more than 600 kilometers, will drive the economic development of the east coast of Malaysia and greatly improve connectivity along the route. During a visit to the project’s Genting tunnel construction site in January, Malaysian Transport Minister Wee Ka Siong said the Rich experience and expertise of Chinese builders have benefited Malaysia’s east Coast railway project.

It is worth mentioning that since the outbreak of the epidemic, China and Malaysia have stood side by side and helped each other. Malaysia is the first country to sign an intergovernmental agreement on COVID-19 vaccine cooperation and reach a reciprocal vaccination arrangement with China. The two sides have carried out all-round cooperation on vaccine production, research and development and procurement, which has become a highlight of the two countries’ joint fight against the epidemic.
New opportunities are at hand
There is great potential for china-Malaysia economic and trade cooperation. It is widely believed that with the RCEP coming into force, bilateral economic and trade cooperation is expected to further deepen.

“The combination of RCEP and china-asean FREE Trade Area will further expand new areas of trade.” Deputy director of the institute of the Ministry of Commerce research institute Asia Yuan Bo, said in an interview with international business newspaper reporter RCEP comes into force, both in China and Malaysia, China – asean free trade area on the basis of a new commitment to open markets, such as the Chinese processing aquatic products, cocoa, cotton yarn and fabrics, chemical fiber, stainless steel, and some industrial machinery and equipment and parts, etc., Export of these products to Malaysia will receive further tariff reduction; On the basis of the China-Asean Free Trade Area, Malaysia’s agricultural products such as canned pineapple, pineapple juice, coconut juice and pepper, as well as some chemical products and paper products, will also receive new tariff reductions, which will further promote the development of bilateral trade.

Earlier, the Tariff Commission of The State Council issued a notice that, starting from March 18, 2022, some imported goods originating in Malaysia will be subject to the first-year tariff rates applicable to RCEP ASEAN member states. In accordance with the provisions of the agreement, the tax rate for subsequent years will be implemented from January 1 of that year.

In addition to tax dividends, Yuan also analyzed the potential of industrial cooperation between China and Malaysia. She said that Malaysia’s competitive manufacturing industries include electronics, petroleum, machinery, steel, chemical and automobile manufacturing industries. The effective implementation of RCEP, especially the introduction of regional cumulative rules of origin, will create better conditions for Chinese and Malaysian enterprises to deepen cooperation in the industrial chain and supply chain in these fields. “In particular, China and Malaysia are advancing the construction of ‘Two Countries and two Parks’. In the future, we can take advantage of the opportunities brought by RCEP to further optimize the institutional design and play a more important role in the formation of a cross-border industrial chain that will bring more influence to China and Malaysia and asean countries.”
Digital economy is an important driving force for global economic growth in the future, and is also regarded as an important direction for economic transformation and upgrading by various countries. Talking about the potential of digital economy cooperation between China and Malaysia, Yuan bo said that although Malaysia’s population is not large in Southeast Asia, its economic development level is second only to That of Singapore and Brunei. Malaysia generally supports the development of digital economy, and its digital infrastructure is relatively perfect. Chinese digital enterprises have laid a good foundation for development in the Malaysian market