ASEAN rests on a firm commitment to shared prosperity and to delivering high-quality development and growth across the region. This idea is embodied in ASEAN Centrality, which helps the bloc steer the geo-economic and geopolitical currents shaping the area. A forum on the ASEAN-China strategic relationship, held at Sunway University in Malaysia on September 17-18, brought together leading academics, policymakers and researchers from around the region to examine the key challenges and opportunities on the horizon.

That focus on shared prosperity has translated into real gains. As a group, ASEAN accounts for roughly 7.5 percent of global gross domestic product and contributed about 8-9 percent of worldwide GDP growth between 2015 and 2025. With a combined output nearing $4 trillion, it ranks as the world's fifth-largest economy. The ASEAN-5 — Indonesia, Malaysia, the Philippines, Thailand and Vietnam — have posted average annual output growth of around 4-5 percent.

Ouyang Yujing, China's ambassador to Malaysia, described bilateral trade as a "powerful driver" and spoke of a "deepened win-win partnership that goes hand-in-hand with thriving trade" between ASEAN and China.

He stressed the importance of shared prosperity and resilience between the two sides in three areas: fortifying development through openness and integration; prioritising green, energy and innovation progress; and speeding up negotiations on the Code of Conduct in the South China Sea so that peace in the region can be firmly secured.

ASEAN's cooperation with China matters greatly for the region's trade and investment. The ASEAN-China Free Trade Agreement, along with its upgrade to ACFTA 3.0 concluded in Kuala Lumpur under Malaysia's 2025 ASEAN chairmanship, has deepened these ties. The updated pact focuses on high-quality links within global production value chains, covering the green economy, digital transformation and improved regional connectivity.

ASEAN has also helped build the world's largest trading bloc through the Regional Comprehensive Economic Partnership, which includes five non-ASEAN partners: China, Korea, Japan, Australia and New Zealand. RCEP represents about 30 percent of global GDP, 28 percent of world trade, 25 percent of foreign direct investment flows and 30 percent of the global population.

Two-way merchandise trade between ASEAN and China hit $772.4 billion in 2024, equal to 20.1 percent of ASEAN's total trade. In 2025, bilateral trade climbed to $1 trillion despite uncertainty worldwide.

China-Malaysia trade reached a record roughly $133.2 billion in 2025, growing 12.0 percent in double-digit terms, with China remaining Malaysia's largest trading partner for the 17th straight year. Malaysia's trade with ASEAN stands at about $211.9 billion, with Singapore as its biggest partner within the bloc. Both ASEAN and China are crucial trading partners for Malaysia.

Rising Geopolitics and Geo-Economic Fragmentation

Despite the region's strong growth, global uncertainty has intensified. The US-China trade war, US tariff shocks, the ongoing US-Iran conflict in the Middle East, the Russia-Ukraine war in Europe, worldwide inflationary pressure and disruptions to global value chains are all weighing on growth and prosperity in the global economy and East Asia.

A keynote at the forum by Kan Channmeta, Secretary of State at Cambodia's Ministry of Industry, Science, Technology and Innovation, examined how emerging technologies are reshaping the global multipolar framework and fueling "techno-nationalism," which in turn reinforces geopolitical and geo-economic fragmentation.

These uncertainties are showing up as global value chain disruptions, persistent oil shocks, higher inflation and slower growth at both global and regional levels. The IMF's July 2026 forecast projects global growth easing from 3.5 percent in 2025 to 3 percent in 2026.

Emerging and developing Asian economies are expected to slow from 5.6 percent growth in 2025 to 5 percent in 2026. Lingering oil shocks from the US-Iran war are also keeping inflation elevated, raising the risk of cost-push inflation and stagflation — a combination of high inflation and unemployment. This would weaken the fiscal and monetary tools available to absorb and manage economic shocks domestically and across the region.

The forum identified several pressing issues and opportunities that call for urgent recalibration if the region is to deepen sustainable and inclusive growth.

• Geo-economic fragmentation has been building for years and was already visible before the Covid-19 shock.
• Trade and openness do not affect all economies equally. Open economies tend to grow faster, but they also see wider wage gaps between skilled and unskilled workers and deeper divides between rural and urban areas.
• The impact of technology and trade also differs between developed and developing nations. Recent evidence, however, shows developing countries in the South catching up with the North, narrowing the development gap.
• Economic policy uncertainty surrounding open-trade strategies is becoming more pronounced and is encouraging the formation of strategic alliances. Uncertainty around those alliances is deterring investment as multinational firms decouple global value chain activities through offshoring, nearshoring and friend-shoring.

Rising geopolitics and the weaponisation of trade are creating major distortions in regional trade and investment. Abandoning rule-based and market-based frameworks is unbalancing both regional and domestic policy. Fragmenting geo-economics combined with escalating geopolitical rivalry is accelerating economic policy uncertainty across the region.

A rules-based, market-based framework is essential to the efficiency of global value chains and to managing their backward and forward linkages. Moving away from such a framework is instead fostering strategic alliances and multipolar governance structures. For more developed and developing economies alike — including Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam — the consequences of this multipolar shift could be especially significant.

Key Policy Recommendations

As economic policy uncertainty grows alongside geo-economic fragmentation, global value chains need to be made more resilient to shocks, while rules-based and market-based trade in the region must be strengthened. Keeping trade and investment open and bolstering regional economic cooperation is vital. ASEAN has a key role to play in maintaining and reinforcing rule- and market-based trading arrangements, which underpin long-term sustainable growth. A new framework for shared prosperity and growth grounded in the multipolar order may be needed.

It is also critical to address emerging technologies such as AI, robotics, electric transport, autonomous systems and space technology. Firms entering these frontier value chains must be agile and adaptable if they are to move into higher value-added activities in both manufacturing and services. The next phase of growth will depend on a skilled, flexible workforce able to "unbundle" and "re-bundle" its capabilities — a priority for ASEAN and East Asia.

At the same time, these new technologies risk deepening geo-economic fragmentation and eroding social welfare systems across ASEAN, raising social challenges that policymakers must confront alongside the economic ones.