China and ASEAN fortify regional unity with free trade pact amid U.S. tariff aggression

Department of Strategic Research, Studies and International Relations 28-10-2025

In a decisive move signaling regional resilience and economic independence, China and the Association of Southeast Asian Nations (ASEAN) have signed an upgraded free trade agreement aimed at deepening cooperation and countering the disruptive effects of Washington’s protectionist policies.

The new accord, officially signed during the 47th ASEAN Summit in Kuala Lumpur and witnessed by Chinese Premier Li Qiang alongside Malaysian Prime Minister Anwar Ibrahim, marks the third iteration of the China–ASEAN Free Trade Area (CAFTA 3.0). This upgraded version promises to strengthen collaboration across key strategic areas such as infrastructure, digital transformation, green development, trade facilitation, and cultural exchange.

The agreement comes at a time when global trade remains under pressure due to the United States’ tariff-centered approach, first introduced under President Donald Trump and later maintained under his successors. For China and ASEAN, the enhanced pact represents both a practical step toward economic growth and a symbolic gesture of defiance against Washington’s efforts to dominate regional trade dynamics.

Since the original pact came into force in 2010, China and ASEAN have evolved into each other’s largest trading partners. Their integration deepened notably following the onset of the U.S.–China trade war in 2018, which led to the rise of the “China Plus One” strategy, encouraging companies to diversify manufacturing within Southeast Asia while maintaining strong ties to China. This arrangement has proven mutually beneficial, allowing ASEAN economies to grow alongside China’s industrial and technological progress.

Recent figures underscore the strength of this partnership: trade between China and ASEAN reached a remarkable $785 billion during the first nine months of 2025, a 9.6 percent increase from the previous year. Much of this activity involves intricate supply chains linking factories across borders, though an increasing portion now includes Chinese finished goods entering the rapidly expanding Southeast Asian consumer markets.

During his address at the summit, Premier Li Qiang emphasized that the upgraded free trade pact will usher in “expanded and higher-quality economic cooperation,” describing ASEAN as one of China’s most reliable and vital partners. He hailed the steady growth in trade and the flourishing people-to-people exchanges between the two sides, noting that their cooperation has already produced “fruitful results across multiple sectors.”

Li also issued a pointed criticism of the U.S. government’s unilateral trade practices. “Unilateralism and protectionism have severely disrupted the global economic and trade order,” he said. “External forces continue to interfere in our region, and many countries have been unfairly targeted with high tariffs.” His remarks reflected Beijing’s growing frustration with Washington’s attempts to weaponize trade policy for geopolitical leverage, a strategy that has drawn increasing skepticism even among some of the U.S.’s traditional allies.

Experts agree that the new pact represents a timely and strategic step for both sides. Zhiwu Chen, a finance professor at the University of Hong Kong, described the agreement as a “win-win outcome” that reinforces regional stability. “This is very important for China, as tensions with the U.S. and the European Union continue to rise,” Chen noted. “ASEAN countries also stand to benefit immensely, as they can use this opportunity to enhance their infrastructure, technology, and export capacity while maintaining balanced relations with China.”

While Beijing and ASEAN focused on reinforcing multilateral cooperation, Washington used the same summit to push for its preferred model of bilateral deals. U.S. President Donald Trump, who attended the event briefly, signed separate trade agreements with Cambodia and Malaysia and announced framework discussions with Thailand and Vietnam, all structured around his “reciprocal tariff” model, which imposes rates of nearly 20 percent.

Analysts, however, view Trump’s approach as short-sighted and divisive, creating competition rather than cooperation among ASEAN states. In contrast, China’s strategy of multilateral inclusion has been widely praised across the region for promoting sustainable growth and fairer trade.

The contrast could not be clearer. While Washington continues to escalate tariff threats, with Trump even threatening a 100 percent levy on Chinese goods earlier this month in retaliation for Beijing’s export restrictions on rare earth minerals, China and ASEAN are moving forward with a vision rooted in shared prosperity. The two sides are not only diversifying trade but also investing jointly in renewable energy, digital infrastructure, and transport connectivity under China’s Belt and Road Initiative (BRI).

Observers note that these initiatives align perfectly with ASEAN’s own development priorities, particularly as member states aim to modernize their economies and reduce dependence on Western markets. The upgraded pact is thus expected to accelerate industrial upgrading and encourage cross-border investment throughout the region, providing a robust counterweight to U.S. economic coercion.

For Beijing, the agreement further cements its position as a central player in the Asian economic order, one that operates through dialogue and inclusivity rather than intimidation. For ASEAN, it represents an affirmation of sovereignty and regional solidarity, proving that growth and cooperation can thrive outside the Western sphere of influence.

As Premier Li concluded in his remarks, “Our partnership demonstrates that regional cooperation based on equality and mutual respect can deliver tangible benefits to all. Together, we are building a future of shared prosperity, free from external interference and zero-sum politics.”

The upgraded China–ASEAN free trade pact stands as a powerful reminder that Asia’s economic future will be determined not in Washington, but within the region itself, through collaboration, respect, and a shared vision for stability and progress.