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Summary:

China and the 11-member ASEAN bloc have upgraded their free trade agreement (FTA) to version 3.0, amidst rising trade between the two regions and ongoing trade tensions between China and the United States. The upgraded deal, signed during the ASEAN Summit in Kuala Lumpur, aims to broaden cooperation in areas like infrastructure, digital transition, and trade facilitation. Both sides see this agreement as a win-win, with China seeking to strengthen ties with ASEAN as relations with the US and EU face challenges, and ASEAN capitalizing on the opportunity. The agreement comes as trade between China and ASEAN has surged, partly due to the “China Plus One” supply chain strategy adopted following US tariffs. Premier Li Qiang criticized protectionism and unilateralism, while US President Trump also attended the summit, signing separate trade deals and setting reciprocal tariff rates with several ASEAN countries. Tariffs are also expected to be a key topic in an upcoming meeting between Trump and Xi Jinping, with hopes of avoiding further tariff hikes.

News Article:

China, ASEAN Upgrade Trade Pact Amid US Trade Tensions

Kuala Lumpur, Malaysia – China and the Association of Southeast Asian Nations (ASEAN) have signed an upgraded version of their free trade agreement, deepening economic ties as both navigate the complexities of global trade influenced by U.S. tariffs.

The “3.0 version” of the agreement was formalized at the ASEAN Summit in Kuala Lumpur on Tuesday, witnessed by Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim. The upgraded pact builds on the original 2010 agreement and will focus on expanding cooperation in key areas such as infrastructure development, digital transformation, green initiatives, trade facilitation, and strengthened people-to-people exchanges, according to China’s State Council.

The move comes as trade between China and the 11-member ASEAN bloc has surged, reaching $785 billion in the first nine months of 2025, a 9.6% year-on-year increase. Analysts attribute this growth, in part, to the “China Plus One” strategy adopted by many companies to diversify supply chains in response to former U.S. President Donald Trump’s trade war with China.

“This is very important for China, as its trade tensions with the US and EU have been rising, and China needs ASEAN countries,” said Zhiwu Chen, a professor of finance at the University of Hong Kong. “At the same time, this is a time for ASEAN to take advantage of the window of opportunities precisely for the same reason.”

During the summit, Premier Li criticized “unilateralism and protectionism,” suggesting that U.S. tariffs have disrupted the global economic order.

Former US president Trump, who also attended the ASEAN summit, signed separate trade deals with Cambodia and Malaysia, as well as framework agreements with Thailand and Vietnam, finalizing “reciprocal tariff” rates of 19 to 20 percent on the four countries. He is expected to meet with Chinese President Xi Jinping to discuss trade and tariffs, with both sides hoping to avert further escalations, especially following Trump’s earlier threats to impose a 100% tariff on Chinese goods.

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