China and ASEAN Sign Upgraded Free Trade Pact for ‘Digital, Green Era’
China took a decisive step to deepen its economic integration with Southeast Asia this week, formally signing a major upgrade to its free trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN) following the regional summit in Kuala Lumpur, Malaysia.
The new pact, known as the ASEAN-China Free Trade Area (ACFTA) 3.0, is designed to enhance economic resilience and collaboration in high-growth sectors, cementing Beijing’s role as a leading advocate for open regional trade amidst rising global protectionism.
Chinese Premier Li Qiang and ASEAN leaders witnessed the signing, using the platform to position expanded regional cooperation as a bulwark against global economic uncertainties.
Trade Pact Expands into New Economies
The upgraded protocol significantly broadens the scope of the original 2010 agreement, integrating new economic areas critical for future trade and development.
Focus on Next-Generation Trade
The ACFTA 3.0 introduces new chapters dedicated to modern economic challenges and opportunities. Key areas of focus include:
• Digital Economy: Aiming to streamline e-commerce, promote cross-border data flows, and facilitate digital trade among member states.
• Green Economy: Fostering cooperation on renewable energy, sustainable development, and environmental standards.
• Supply Chain Connectivity: Working to enhance the resilience and stability of regional industrial and supply chains.
• MSME Support: Providing greater support and market access for Micro, Small, and Medium Enterprises, which form the backbone of many ASEAN economies.
Economic Milestone and Counter-Tariff Stance
The signing of the 3.0 Upgrade Protocol is a major strategic achievement for China, which is seeking to deepen engagement with the 11-member bloc (including the newly admitted Timor-Leste).
• Near-Trillion Dollar Trade: Bilateral trade between China and ASEAN, already each other’s largest trading partners, is expected to approach $1 trillion this year. The expanded pact is forecast to push this figure even higher.
Call to Oppose Protectionism:
Premier Li Qiang used his address at the summit to call on his counterparts to “uphold free trade and the multilateral trading system, [and] oppose all forms of protectionism.”
This rhetoric is widely viewed as a direct counter-narrative to the rising import tariffs and protectionist policies championed by the US under President Donald Trump’s administration, whose visit to the summit concluded just one day prior.
Geopolitical Undercurrents in Regional Strategy
The deal unfolds against a backdrop of increasing geopolitical competition, prompting ASEAN to navigate a complex path between global powers.
ASEAN Centrality and Balanced Diplomacy
Malaysian Prime Minister Anwar Ibrahim, the current ASEAN Chair, highlighted the bloc’s commitment to maintaining balanced relations, noting the attendance of both US and Chinese leaders. He described the upgraded trade deal as a “milestone” that would strengthen the region’s collective economic resilience.
The Chinese push for deeper economic ties is also seen as a proactive move to secure Beijing’s influence across the Indo-Pacific, leveraging trade liberalization as a tool to cement its status as the region’s most important economic partner.
Reinforcing RCEP
The new ACFTA 3.0 builds upon the wider framework of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade area, which links the ten ASEAN nations with China, Japan, South Korea, Australia, and New Zealand.
The commitment to upgrade the China-ASEAN agreement signifies a desire to continuously advance regional integration, ensuring the East Asian trading hub remains strong and rules-based.
