The Association of Southeast Asian Nations (ASEAN) and China are among the most critical geopolitical actors in the Asia-Pacific region, and their cooperation has a major impact on regional and global balances. In particular, ASEAN’s strategic location, its dominance of sea routes in the Indo-Pacific region and its growing economic power make China’s integration initiatives in this region important.
At the 27th ASEAN-China Summit held on October 10, 2024, Chinese Premier Li Qiang’s emphasis on supporting ASEAN integration and strategic independence can be considered as a harbinger of a new era in ASEAN-China relations. These statements reveal a common vision for the two sides to take their economic and political cooperation to higher levels.[i]
The relationship between ASEAN and China is based on both economic growth and strategic balance. In recent years, China has become ASEAN’s largest trading partner with its growing economy and central position in world trade. ASEAN’s population of over 600 million and China’s huge market of 1.4 billion people make economic cooperation between the parties attractive. Signed in 2002, the ASEAN-China Free Trade Agreement (ACFTA) has played a key role in the economic integration of both sides, with improvements made in 2014 and 2015 to update and expand the ACFTA.[ii]
As Li Qiang emphasized in his statement at the summit, challenges such as slowing global economic recovery and insufficient global demand make ASEAN-China cooperation even more critical. Cooperation between the two sides will not only support regional growth, but also contribute to the sustainability of global supply chains. Moreover, deepening cooperation in emerging sectors such as the digital economy and green development will enhance the potential for future economic growth.
The successful outcome of the ACFTA 3.0 Upgrade Negotiations announced at the 27th ASEAN-China Summit is an important milestone in deepening economic integration between the two sides. ACFTA 3.0 aims to modernize the existing free trade agreement and bring it in line with the new dynamics of global trade. This upgrade promotes cooperation in new areas such as the digital economy, green economy, supply chain connectivity and support for small and medium-sized enterprises (SMEs).
In this regard, economic cooperation between ASEAN and China is not limited to trade and investment, but also extends to strategically important areas such as digital transformation and sustainable development. Together with ASEAN, China aims to be a driving force for regional development and to achieve economic integration in East Asia by creating a hyper-scale market. ASEAN has a critical role in global geopolitical balances due to its strategic location in the Indo-Pacific region. Hosting important maritime trade routes such as the South China Sea, ASEAN is an important actor in China’s global strategies. While increasing its economic influence in the region, China supports strategic independence in the region by deepening its cooperation with ASEAN. As Li Qiang emphasized in his statements, China’s support for ASEAN’s strategic independence strengthens ASEAN’s role as a counterweight to great power competition in the Asia-Pacific. China’s growing influence in the Asia-Pacific is being carefully monitored by the United States and its allies. Regional integration projects increase China’s economic influence and expand ASEAN countries’ strategic room for maneuver. In this context, agreements such as ACFTA 3.0 strengthen regional economies and help ASEAN play a more independent role in global geopolitical balances.
Decisions Taken:[iii]
The history and importance of the ACFTA were particularly emphasized in the resolutions, setting the framework for building a common future of cooperation. In this regard, the signing of the ACFTA in 2002 was a historic step for both ASEAN and China. The fact that it is ASEAN’s first free trade agreement with an external partner and China’s first FTA increases the strategic importance of this agreement. This cooperation has not only strengthened ASEAN-China economic relations but also reinforced the region’s role in global trade. The success of past upgrades (2014-2015) demonstrates the parties’ commitment to continuously enhance this cooperation.
1. Post Covid-19 Economic Recovery and Integration: Leaders see ACFTA 3.0 as a solution to global economic challenges. In this context, it accelerates the consolidation of supply chains and economic recovery. Post-Covid-19 disruptions, especially in supply chains, have negatively affected the global economy. In this context, the parties’ goal of building resilient supply chains aims to increase the economic resilience of the region.
2. Supporting SMEs: Small and medium-sized enterprises (SMEs) play a vital role for both the ASEAN and Chinese economies. ACFTA 3.0 aims to provide sustainable support to SMEs, aiming to integrate them into digital trade and create new opportunities. This is an important step for SMEs to grow and contribute more to the regional economy.
3. New Digital and Green Economy Focused Areas: ACFTA 3.0 focuses on new areas of cooperation such as the digital economy and the green economy. The acceleration of digital transformation requires the digitalization of trade, while the green economy aims to increase environmental sustainability. These two areas will enhance the competitiveness of both ASEAN and China in regional and global trade in the future.
4. Strengthening Supply Chain Linkages: Strengthening supply chain linkages in the region will enable ASEAN and China to be more integrated into the global trading system. Building greater resilience to global economic uncertainties aims to ensure the sustainability of both regional and global trade networks.
5. Standards, Technical Regulations and Conformity Assessment Procedures: Deepening commitments in areas such as standards and technical regulations will lead to improved quality standards in trade between ASEAN and China. Improving conformity assessment procedures will speed up trade processes and reduce operational costs for business.
6. Signature and Implementation of the ACFTA 3.0 Protocol: Early signing and timely implementation of the ACFTA 3.0 Upgrade Protocol is critically emphasized to realize the true benefits of the agreement. This is an expression of the parties’ determination to realize their common economic objectives. The 2025 target shows that this process needs to be accelerated.
Deepening cooperation between ASEAN and China will not only enhance economic relations in the Asia-Pacific region, but also reshape geopolitical balances. The ACFTA 3.0 agreement strengthens trade and investment between the two sides, while the introduction of new areas of cooperation, such as the digital and green economy, are among the key elements that will carry this relationship into the future. This deepening will consolidate economic integration in the region, allowing China to increase its influence in Asia and ASEAN countries to integrate more strongly into the global trading system.
From a geopolitical perspective, further strengthening of ASEAN-China cooperation has the potential to create an alternative power center to counter the influence of the United States and its allies in the Asia-Pacific. China’s commitment to support ASEAN’s strategic independence will give ASEAN countries more room to maneuver in the great power competition in the region. This strategic independence can help ASEAN act as a counterweight in the US-China competition and defend its interests more effectively.
ACFTA 3.0 and the deepening of ASEAN-China relations will enable the acceleration of regional integration projects to strengthen supply chains, provide SMEs in the region with faster access to global markets and achieve sustainable development goals through digital transformation. This new phase of economic cooperation will enhance economic and political stability in the Asia-Pacific region, while enabling ASEAN to position itself as a more independent power in the global arena.
In conclusion, the deepening economic and strategic cooperation between ASEAN and China has the potential to create a new balance of power in the Asia-Pacific. This process will contribute to the stabilization of the region and ASEAN’s role as a stronger actor in the global geopolitical arena. ACFTA 3.0 will not only accelerate regional economic growth, but also allow ASEAN to move beyond great power competition and pursue an independent strategic course.
Author: Zeynep Çağla ERİN
[i] “China ready to work with ASEAN countries to elevate comprehensive strategic partnership to higher level”, Xinhua, https://english.news.cn/20241010/0d0c0d605f0c4411b84c0a4b24521264/c.html, (Date of Access: 11.10.2024).
[ii] Ibid.
[iii] “Joint Statement on The Substantial Conclusion of The ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Negotiations”, ASEAN,https://asean.org/joint-statement-on-the-substantial-conclusion-of-the-asean-china-free-trade-area-acfta-3-0-upgrade-negotiations/, (Date of Access: 11.10.2024).