China and ASEAN Upgrade Free Trade Agreement to Counter Global Trade Tensions

China and ASEAN finalized an upgraded version of their free trade agreement on Tuesday, incorporating new provisions for digital commerce, green economy initiatives, and emerging industries.

The Association of Southeast Asian Nations, comprising 11 members, represents China's most significant trading partner, with bilateral trade reaching $771 billion in the previous year according to ASEAN data.

China is actively strengthening its economic ties with ASEAN, a region boasting a combined GDP of $3.8 trillion, as a strategic response to substantial import tariffs implemented globally by US President Donald Trump's administration.

Despite facing criticism from major powers regarding its expanding export restrictions on rare earths and other critical minerals, Beijing is attempting to present itself as an advocate for more open economic policies.

The upgraded "3.0 version" of the free trade agreement was officially signed during an ASEAN leadership summit in Malaysia, which President Trump attended at the beginning of his Asian tour.

Discussions for the enhanced ASEAN-China agreement commenced in November 2022 and were completed in May this year, shortly after Trump's tariff measures gained momentum. The initial free trade agreement between the parties was established in 2010.

China has previously indicated that this new agreement would enhance market access across various sectors including agriculture, digital economy, and pharmaceuticals between China and ASEAN nations.

Both China and ASEAN are participants in the Regional Comprehensive Economic Partnership, the world's largest trading bloc encompassing nearly one-third of the global population and approximately 30% of global GDP. Malaysia hosted an RCEP summit in Kuala Lumpur on Monday, marking the first such gathering in five years.

Some analysts view this trading bloc as a potential shield against US-imposed tariffs, though its provisions are generally considered less robust than other regional trade agreements due to the diverse economic interests of its member states.