China and ASEAN Sign Landmark Free Trade Agreement at Kuala Lumpur Summit

On October 28, 2025, during the 47th ASEAN Summit in Kuala Lumpur, Malaysia, China and the Association of Southeast Asian Nations (ASEAN) signed the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Protocol. This agreement marks a significant advancement in regional economic collaboration, introducing cooperation in nine key areas, including digital and green economies, supply chain connectivity, and support for micro, small, and medium-sized enterprises (MSMEs).

The signing ceremony was attended by Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim. Premier Li emphasized the importance of unity with ASEAN, contrasting it with what he described as "economic coercion and bullying" from the United States, referencing President Donald Trump's tariff policies. He stated, "We stand together with ASEAN to promote free trade and oppose protectionism."

The original ACFTA was established in 2010, with a prior upgrade in 2015. Negotiations for the 3.0 upgrade began in November 2022 and concluded in May 2025. The upgraded agreement introduces nine new chapters covering areas such as digital economy, green economy, and supply chain connectivity. These additions aim to facilitate deeper regional economic integration and enhance industrial and supply chain integration between the two major developing economies.

China has been ASEAN's largest trading partner for 16 consecutive years, with bilateral trade reaching $982.3 billion in 2024, a seventeen-fold increase since 2002. The ACFTA 3.0 Upgrade Protocol is expected to further strengthen these economic ties by promoting sustainable development and environmental protection, enhancing the efficiency and resilience of regional supply chains, and providing support and resources to bolster MSMEs.

However, the agreement comes amid heightened U.S.-China trade tensions. Philippine President Ferdinand Marcos Jr. acknowledged the benefits of the trade deal but cautioned against coercive actions in the South China Sea. He stated, "Cooperation must not coexist with coercive actions at sea."

The ACFTA 3.0 Upgrade Protocol signifies a deepening of economic ties between China and ASEAN, with a focus on modernizing trade relations to include digital and green economies. While it offers significant economic opportunities, it also presents challenges related to geopolitical tensions and regional stability.