China and ASEAN Forge Ahead: Upgraded Free Trade Deal Signals Stronger Economic Ties

The enhanced agreement, focusing on digital and green economies, promises to boost trade and cooperation between China and Southeast Asian nations.

HONG KONG: China and the Association of Southeast Asian Nations (ASEAN) have finalized negotiations to upgrade their free trade area, focusing on the digital and green economies, as well as other emerging industries. This announcement was made by China's commerce ministry.

ASEAN, comprised of ten Southeast Asian nations, currently serves as China's largest trading partner. The total trade volume between the two entities reached US$234 billion in the first quarter of 2025, according to Chinese customs data.

The forthcoming "3.0 version" of the free trade area is anticipated to "inject greater certainty into regional and global trade and play a leading and exemplary role for countries to adhere to openness, inclusiveness and win-win cooperation," the ministry stated.

Negotiations for the upgraded agreement commenced in November 2022. The key areas covered include the digital economy, the green economy, and supply chain connectivity.

The agreement aims to "promote the deep integration of the production and supply chains of both sides."

This move comes as China has been increasing its engagement with ASEAN. This occurred following the announcement of significant import tariffs by US President Donald Trump, targeting various countries, including China. Although some of these levies have since been delayed, and China and the US agreed to pause some tariffs, China has been strengthening its economic ties in the region.

President Xi Jinping conducted a three-nation tour of Southeast Asia in April, aiming to strengthen relationships with neighboring countries. He emphasized the importance of Asian nations uniting against what he characterized as geopolitical confrontation, unilateralism, and protectionism.

The formal signing of the upgraded trade agreement is expected before the end of the year. The original ASEAN-China Free Trade Area was first established in 2002 and came into effect on January 1, 2010.