Hailed as the largest regional trading bloc in the world, the real significance of the Regional Comprehensive Economic Partnership (RCEP) goes beyond trade. Instead of the often-discussed “wins” for China, Japan could perhaps gain the most from RCEP. It may be a peaceful materialisation, under a vastly different world order, of the notorious Greater East Asia Co-prosperity Sphere once aggressively promoted by Imperial Japan. As the Association of Southeast Asian Nations has free trade agreements with all the other RCEP members, the bloc is arguably the consolidation and rationalisation of all these Asean FTAs. There are also FTAs among most of the other RCEP countries. So what is the big deal about RCEP? Conspicuously absent among existing FTAs in the Asia-Pacific are any between Japan and its two most important neighbours, China and South Korea . The reasons are historic. Unlike Europe, the legacies of the Pacific War and Japan’s colonisation of Korea have not been completely resolved. It took smaller countries, many of which also suffered from Japanese aggression, to help overcome the deep-rooted animosity between Japan and its two key neighbours within the framework of a larger agreement. Unlike the European Union, there are deep political divisions within RCEP. Japan and South Korea are staunch US allies. Soon after RECP was signed, Japan and Australia came to an agreement on a mutual defence pact . Notwithstanding the Korean war, there is far less historical baggage between China and Korea. In fact, China came to Korea’s defence against Japan’s invasion in the Imjin War at the end of the 16th century. China also has an FTA with South Korea. Thus, Sino-Japanese relations are the key impediment for greater Asian economic integration. Such political tension is not lost on China. Foreign Minister Wang Yi visited Japan and South Korea at the end of last month. As much as Japanese Prime Minister Yoshihide Suga admonished China to take “ positive action ” on the Diaoyu/Senkaku Islands, China would see the reassurance he sought from the US as an affront. Perhaps triggered by US President-elect Joe Biden’s support for Japan on the disputed islands, Wang made blunt remarks on the subject in his trip to Japan. The greatest impact of RCEP is not on the trading of finished goods but more seamless cooperation in the global production network within Asia. Many electronics products “made in China” have critical components from Japan and South Korea. RCEP could pave the way for a trilateral FTA among China, Japan and South Korea, negotiations for which have progressed in fits and starts over the years. Greater economic integration in Asia has been blocked by political tension among its three technological powerhouses, and RCEP broke the ice. The rise of East Asia started with outsourcing to Japan in the 1960s which spread to other Asian countries in the ’70s. Over time, such outsourcing was consolidated in China. With China’s rising labour costs and trade disputes with the US, export-oriented manufacturing started spreading in Asia again. What is RCEP and what does an Indo-Pacific free-trade deal offer China? The world’s reliance on China on a wide range of manufactured products was starkly revealed by the pandemic. Thus, some advanced countries have been encouraging manufacturers to return home . With protectionism and automation, manufacturing might become more regionalised. Would this spell the beginning of the end for a half-century of an Asia-centric global production network? RCEP might mitigate such risks and anchor Asia as the centre of world production. The economies in the Asia-Pacific are highly complementary: Australia has resources, Southeast Asia has labour, Northeast Asia has technology and China has the breadth and depth of the value chain. It is perhaps understandable that India, far less integrated to the global production network, is not yet part of RCEP . Drawing power from heterogenous complementarity, Asia is poised to remain as the world’s manufacturing hub. China continues to depend on US technologies. With sustained great power rivalry between the US and China likely in the decades ahead, more than becoming more technologically self-reliant , China must leverage its neighbours’ technologies more effectively. China surpassed the US last year as the top filer for international patents. Although more patents appear to be in force in the US than in China, more than half of those US patents actually belong to foreigners, according to data from 2018. Comparing resident patents in force, owned by the respective nationals, China has more patents than the US. Adding those of Japan and South Korea, Northeast Asia has almost three times the US number. Northeast Asian countries are technological powerhouses. China, Japan and South Korea, together with the US and Germany, have dominated as the global top five in patent applications. Adjusted for GDP, South Korea, China and Japan are the world’s top three. The true power of RCEP can be realised if these three can achieve seamless technological integration as the heart in the global production network. How China’s plan to boost innovation could benefit Greater Bay Area research China faces four key potential flashpoints in Asia: Taiwan, the South China Sea, North Korea and the Diaoyu/Senkaku Islands. Among them, the first two are perhaps the most important in terms of historical, national security and economic significance. China should approach the portfolio with an integrated strategy. For example, a reunited China will have a stronger claim on the Diaoyu/Senkakus. Future cooperation between the world’s second- and third-largest economies, with regional and global economic implications, partly hinges on some barren rocks deep with historical symbolism. This intractable problem was a US creation in the post-war administration of Japan with Cold War considerations and without regard to historical justice. Can Japan and China wisely navigate out of this minefield set up by the US , which successfully suppressed the economic rise of Japan and is now trying to do the same to China? Winston Mok, a private investor, was previously a private equity investor