Navigating Geopolitical Shifts and Multipolar Realities: Prospects for ASEAN-China Cooperation

ASEAN stands on a foundation of shared prosperity, with ASEAN Centrality serving as the anchor for managing the region's complex geo-economic and geopolitical landscape. These themes took center stage at the ASEAN-China Strategic Relationship forum held at Sunway University in Malaysia on September 17–18, which convened leading academics, policymakers, and researchers from across the Asia-Pacific.

The bloc's economic credentials are formidable. ASEAN accounts for roughly 7.5% of global GDP and contributed between 8–9% of worldwide GDP growth from 2015 to 2025. With a combined GDP approaching $4 trillion, the grouping ranks as the world's fifth-largest economy. The five core members — Indonesia, Malaysia, the Philippines, Thailand, and Vietnam — have sustained average annual output growth in the range of 4–5%.

Deepening ASEAN-China Ties

Ouyang Yujing, China's ambassador to Malaysia, pointed to bilateral trade as a "powerful driver" of the relationship, describing a "deepened win-win partnership" that has grown alongside expanding commercial flows between the two sides. He outlined three priorities for advancing shared prosperity and resilience: fortifying development through openness and integration; advancing green energy and innovation; and accelerating the conclusion of a Code of Conduct in the South China Sea to secure lasting peace.

The ASEAN-China Free Trade Agreement, now being upgraded to ACFTA 3.0 under Malaysia's 2025 ASEAN Chairmanship, is deepening high-quality linkages across green economy, digital transformation, and regional connectivity. Together with the Regional Comprehensive Economic Partnership — which brings in China, South Korea, Japan, Australia, and New Zealand — ASEAN has assembled the world's largest trading bloc. RCEP encompasses roughly 30% of global GDP, 28% of world trade, a quarter of global FDI flows, and about 30% of the global population.

Two-way merchandise trade between ASEAN and China hit $772.4 billion in 2024, representing just over 20% of ASEAN's total trade. By 2025, that figure climbed to $1 trillion despite persistent global headwinds. On the bilateral front, China-Malaysia trade reached a record approximately $133.2 billion in 2025, marking double-digit growth of 12% and extending China's 17-year streak as Malaysia's top trading partner. Malaysia's broader trade with ASEAN stood at roughly $211.9 billion, with Singapore as the primary partner within the bloc.

Geopolitical Tensions and Fragmentation

Despite robust growth, the region now faces mounting uncertainty. The US–China trade conflict, sweeping tariff shocks, the ongoing US–Iran confrontation in the Middle East, the Russia–Ukraine war, persistent inflationary pressures, and disruptions to global value chains are all weighing on economic prospects.

Kan Channmeta, Cambodia's Secretary of State at the Ministry of Industry, Science, Technology and Innovation, delivered a keynote warning that emerging technologies are fueling "techno-nationalism," which in turn reinforces geopolitical rivalry and geo-economic fragmentation. These forces are translating into supply-chain disruptions, sustained oil-price shocks, higher inflation, and slower growth. The IMF's July 2026 outlook projects global growth easing from 3.5% in 2025 to 3% in 2026, with emerging and developing Asia slipping from 5.6% to 5%. The lingering oil shock is feeding cost-push inflation and the specter of stagflation — a toxic mix of high prices and rising unemployment that would weaken both fiscal and monetary policy tools across the region.

Key Issues Requiring Urgent Attention

The forum identified several critical challenges demanding a recalibration of regional strategy.

First, geo-economic fragmentation has been intensifying for years, predating even the Covid-19 shock. Open economies have generally enjoyed faster growth, yet the gains have not been evenly distributed. Trade and technological openness have widened wage gaps between skilled and unskilled workers and deepened rural-urban divides. At the same time, developing nations are catching up with advanced economies, narrowing long-standing development gaps. However, rising economic policy uncertainty is encouraging the formation of strategic alliances and prompting multinationals to restructure their global value chains through offshoring, nearshoring, and friend-shoring.

Second, the weaponization of trade and escalating geopolitical competition are distorting investment and commerce across the region. The erosion of rules-based and market-oriented frameworks is forcing countries into competing blocs, generating cascading policy uncertainty. A rules-based trading system remains essential for the efficient functioning of global value chains and the management of complex backward and forward linkages. The implications are especially pronounced for ASEAN's larger and more trade-dependent economies — Indonesia, Malaysia, the Philippines, Thailand, Singapore, and Vietnam.

Policy Priorities for a Multipolar World

Several policy imperatives emerged from the discussion. As economic policy uncertainty deepens through fragmentation, making global value chains more resilient to shocks must become a priority, alongside reinforcing rules-based and market-driven trade. Maintaining an open investment environment and strengthening regional economic cooperation will be vital, with ASEAN positioned to safeguard and expand market-oriented trading arrangements that underpin long-term sustainable growth.

A new framework for shared prosperity within a multipolar order may be necessary. Equally critical is the need to address the rise of artificial intelligence, robotics, electric transportation, autonomous systems, and space technologies. Firms operating at the frontier of global value chains must remain nimble, positioning themselves in higher value-added segments of both manufacturing and services. The next phase of regional growth will depend on a skilled, adaptable workforce capable of unbundling and rebundling competencies — a challenge that cuts to the heart of ASEAN's long-term competitiveness.

Yet emerging technologies also carry social risks. If left unmanaged, they could deepen geo-economic fragmentation and erode social welfare systems across the region, underscoring the need for inclusive policy frameworks that spread the gains of innovation broadly.