China and the 11-nation regional bloc have signed an upgraded version of their free trade agreement to weather the impact of U.S. tariffs.
KUALA LUMPUR, Malaysia – China and the Association of Southeast Asian Nations (ASEAN) have upgraded their free trade agreement as trade between the two regions continues to increase in the shadow of US President Donald Trump’s trade war.
The trade agreement was signed on Tuesday in a ceremony witnessed by Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim on the sidelines of the 47th ASEAN Summit in Kuala Lumpur.
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According to China’s State Council, the “3.0 version” of the agreement will expand cooperation on “infrastructure, digital and green transition, trade facilitation, and people-to-people exchanges.” This is based on the region’s first free trade agreement with China, which entered into force in 2010.
The 11-nation ASEAN and China have become each other’s largest trading partners in recent years, thanks to the China Plus One supply chain that was created after President Trump’s trade war with China in 2018.
The trade volume between China and ASEAN has already reached $785 billion in nine months of 2025, an increase of 9.6% year-on-year. Much of this trade reflects integrated manufacturing supply chains, but increasingly also includes finished goods imported from China for consumers in Southeast Asia.
In his remarks at the ASEAN summit on Tuesday, Li praised the deepening trade ties between China and ASEAN and expressed hope for “expanded and higher-quality economic cooperation” under the upgraded trade agreement.
“Cooperation in various fields has yielded fruitful results, trade volumes continue to steadily increase, and ASEAN governments are promoting closer people-to-people exchanges,” he said.
Chen Chiwu, a professor of finance at the University of Hong Kong, told Al Jazeera that the “3.0” trade agreement was concluded at a time when China is seeking to strengthen ties with ASEAN.
“This is very important for China because trade tensions with the US and the EU are increasing and China needs ASEAN countries. At the same time, it is also time for ASEAN to take advantage of this window of opportunity for the very same reason,” he said, calling the agreement a “win-win outcome for both sides.”
In his remarks, Lee also took aim at President Trump’s tariffs, which have disrupted global trade and are the most protectionist policies pursued by the U.S. government since the 1930s.
“Unilateralism and protectionism are seriously disrupting the world economic and trade order. External forces are increasingly interfering with our country, and many countries are being subjected to unreasonably high tariffs,” Li said.
The US president will also attend an ASEAN summit on Sunday and is scheduled to meet with Chinese President Xi Jinping in South Korea later this week.
While in ASEAN, President Trump signed trade agreements with Cambodia and Malaysia, as well as framework agreements with Thailand and Vietnam, emphasizing his preference for bilateral trade agreements developed through one-on-one discussions.
The agreement is expected to finalize Trump’s “reciprocal tariff” rates for the four countries, which were set at 19% to 20% earlier this year.
Tariffs and trade barriers are also expected to be a highlight of the meeting between Trump and Xi, after US Treasury Secretary Scott Bessent announced this week that the two countries had reached a “framework agreement” on tariffs.
Earlier this month, President Trump threatened to impose 100% tariffs on Chinese goods by November 1 after China tightened export controls on rare earth minerals. Bessent said the framework agreement should help both sides “avoid” tariff increases, according to Reuters.
