China-ASEAN Free Trade Agreement Expansion

China has signed an expanded version of a free trade agreement with the Association of Southeast Asian Nations (ASEAN), amidst rising protectionism from the United States. This agreement, known as the ASEAN-China Free Trade Area 3.0, aims to strengthen economic ties between China and ASEAN nations.

Key Highlights of the Agreement

• The agreement marks the third revision of the original free trade pact first signed in 2002 and implemented in 2010.
• It encompasses a combined market of over 2 billion people, facilitating the reduction of tariffs and boosting the flow of services and investments.
• The trade volume between China and ASEAN surged from USD 235.5 billion in 2010 to nearly USD 1 trillion in recent years.

Potential Benefits

• The upgraded pact aims to enhance supply chains and sustainability.
• It highlights the global trend of non-US countries strengthening trade ties amid ongoing US economic policies.
• The agreement is expected to cover new areas such as digital trade, the green economy, sustainability, and support for small and medium-sized enterprises (SMEs).

Strategic Importance

Chinese Premier Li Qiang emphasized the importance of cooperation for overcoming global economic uncertainties, citing the motto “Unity is strength.” Malaysian Prime Minister Anwar Ibrahim, serving as ASEAN chair, witnessed the signing of the agreement.

ASEAN has been China's largest trading partner for many years, and the trade relationship is now reciprocally significant for China as well.

Global Economic Context

The trade expansion comes amid a potential intensification of the US-China trade conflict, which poses risks to global economic growth. However, there are indications that a US-China trade deal might be approaching, as discussions between President Donald Trump and Chinese leader Xi Jinping are set to continue in South Korea.