China and ASEAN Ink Strengthened Free Trade Agreement Amid Trump-Era Tariffs

During the 47th ASEAN Summit in Kuala Lumpur, Malaysia, China and the Association of Southeast Asian Nations (ASEAN) signed an upgraded version of their free trade agreement, called the “3.0 version,” amid rising trade tensions caused by US President Donald Trump’s trade war. The signing ceremony was attended by Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim. The upgraded agreement aims to deepen cooperation in multiple areas, including infrastructure, digitalization, green transition, trade facilitation, and people-to-people exchanges, building on the region’s first free trade pact with China that took effect in 2010.

China and ASEAN, comprising 11 member states, have grown into each other’s largest trade partners in recent years. This growth has been supported by the “China Plus One” supply chain strategy, which became prominent after the US-China trade war began in 2018. Trade between China and ASEAN reached $785 billion in the first nine months of 2025, reflecting a 9.6 percent year-on-year increase. Much of this trade involves integrated manufacturing supply chains, but it increasingly includes finished goods from China destined for Southeast Asian consumers.

Chinese Premier Li Qiang highlighted the strengthened economic ties between China and ASEAN, emphasizing the potential for “expanded and higher-quality economic cooperation” under the upgraded pact. He noted that collaboration in various sectors has already produced tangible benefits, trade volumes continue to rise steadily, and ASEAN governments have promoted closer people-to-people interactions. According to Zhiwu Chen, a finance professor at the University of Hong Kong, the 3.0 trade pact comes at a critical time as China seeks to reinforce its relationship with ASEAN amid escalating trade tensions with the US and EU. Chen described the agreement as a “win-win outcome” that benefits both sides by strengthening economic cooperation and mitigating risks from external pressures.

Li also criticized Trump-era tariffs, which disrupted global trade and represented the most protectionist US policies since the 1930s. He stated that unilateralism and protectionism have destabilized the global economic order, with external forces increasingly interfering in the region, and many countries facing unfairly high tariffs. The summit also saw the attendance of US President Donald Trump, who signed bilateral trade deals with Cambodia and Malaysia and framework agreements with Thailand and Vietnam. These agreements formalized reciprocal tariffs for the four nations, set at 19 to 20 percent earlier in 2025.

Trump’s approach highlighted his preference for bilateral trade deals negotiated directly with individual countries rather than multilateral frameworks. The summit discussions came amid ongoing US-China trade tensions, with Trump previously threatening a 100 percent tariff on Chinese goods starting November 1, following China’s strengthened export controls on rare earth minerals. US Treasury Secretary Scott Bessent confirmed that a framework agreement on tariffs had been reached this week, aiming to prevent sudden tariff hikes and provide stability in trade relations.

Overall, the upgraded China-ASEAN trade pact represents a strategic strengthening of economic ties between China and Southeast Asia. By expanding cooperation in key sectors and fostering closer integration, the deal aims to safeguard regional trade and growth amid global uncertainties and protectionist policies. The agreement also reflects ASEAN’s and China’s efforts to capitalize on opportunities arising from US-China trade tensions, creating mutual benefits while navigating the challenges posed by global tariff and trade barriers.