Shared Prosperity in a Multipolar World: Charting the Future of ASEAN-China Relations

ASEAN's regional strategy rests on the idea of shared prosperity, aimed at delivering high-quality growth and development across member states. This principle, often described as ASEAN Centrality, guides how the bloc navigates 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 drew together prominent academics, policymakers, and researchers from around the region.

The results of this shared prosperity are considerable. Collectively, ASEAN accounts for roughly 7.5% of global Gross Domestic Product and has contributed close to 8-9% of worldwide GDP growth between 2015 and 2025. With a combined economy approaching $4 trillion, the bloc ranks as the world's fifth-largest economy. Among the ASEAN-5 economies of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, annual output growth has averaged around 4-5%.

A Deepening Partnership Between ASEAN and China

Ouyang Yujing, China's ambassador to Malaysia, described bilateral trade as a "powerful driver" of relations and pointed to a "deepened win-win partnership" that grows alongside expanding commerce between ASEAN and China.

He outlined three priorities for building shared prosperity and resilience: strengthening development through openness and integration; advancing progress in green energy and innovation; and speeding up talks on the Code of Conduct in the South China Sea (COC) to reach a swift conclusion and safeguard regional peace.

Trade and investment cooperation between ASEAN and China remains a cornerstone of regional growth. These ties have been reinforced through the ASEAN-China Free Trade Agreement, upgraded to ACFTA 3.0 in Kuala Lumpur under Malaysia's 2025 ASEAN Chairmanship. The revised agreement emphasizes high-quality links across global production value chains, spanning the green economy, digital transformation, and improved regional connectivity.

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

Two-way merchandise trade between ASEAN and China hit $772.4 billion in 2024, representing 20.1% of ASEAN's total trade. Despite global headwinds, that figure climbed to $1 trillion in 2025. Bilateral trade between China and Malaysia reached a record high of about $133.2 billion in 2025, growing 12.0% and cementing China's status as Malaysia's top trading partner for the 17th year running. Malaysia's trade with ASEAN stood at roughly $211.9 billion, with Singapore as its leading partner within the bloc. Both ASEAN and China remain vital trading partners for Malaysia.

Rising Geopolitics and Geo-Economic Fragmentation

Despite the region's strong performance, mounting global uncertainties now cloud the outlook. Trade tensions between the US and China, US tariff shocks, ongoing conflict between the US and Iran in the Middle East, the Russia-Ukraine war in Europe, worldwide inflationary pressures, and disruptions to global value chains (GVCs) all carry serious consequences for growth and prosperity across the global economy and East Asia.

In a keynote address, Kan Channmeta, Secretary of State at Cambodia's Ministry of Industry, Science, Technology and Innovation, examined how emerging technologies are reshaping the multipolar order. He warned of a rising "techno-nationalism" that deepens geopolitical rivalries and accelerates geo-economic fragmentation.

These pressures feed into GVC disruptions, persistent oil shocks, elevated inflation, and weaker growth both globally and regionally. The IMF's July 2026 forecast projected global growth slowing from 3.5% in 2025 to 3% in 2026. Emerging and developing Asian economies are expected to see growth ease from 5.6% in 2025 to 5% in 2026. Continued oil shocks stemming from the US-Iran conflict are entrenching inflation, raising the risk of cost-push inflation and stagflation, a scenario marked by high inflation paired with high unemployment. Such conditions erode the effectiveness of fiscal and monetary tools needed to cushion economies against shocks.

The forum spotlighted several pressing issues and opportunities that demand urgent recalibration to sustain inclusive growth across the region.

Understanding the Roots of Fragmentation

First, geo-economic fragmentation has intensified over time, with signs of the trend already visible before the Covid-19 pandemic. Trade and openness have delivered uneven benefits both within and between nations. Recent evidence shows that open economies tend to grow faster, yet also experience widening wage gaps between skilled and unskilled workers and deepening divides between rural and urban areas.

Technology and trade have likewise affected developed and developing countries unequally. At the same time, evidence points to developing nations of the South gradually catching up with the developed North, narrowing the gap between them. Growing economic policy uncertainty (EPU) tied to open-economy strategies is also fueling the formation of strategic alliances. This uncertainty, in turn, creates investment hesitancy as multinationals reconsider their GVC operations through offshoring, nearshoring, and friend-shoring.

Second, the escalation of geopolitics and the weaponization of trade are distorting regional trade and investment. Moving away from rules- and market-based frameworks is producing imbalances in both regional and domestic policy. As geo-economic fragmentation combines with rising geopolitical tension, economic policy uncertainty across the region continues to grow.

A rules- and market-based framework is essential for the efficient functioning of global value chains and for managing their backward and forward linkages. Abandoning that framework pushes economies toward strategic alliances and multipolar governance arrangements, with especially significant consequences for the more developed and developing economies of Indonesia, Malaysia, the Philippines, Thailand, Singapore, and Vietnam.

Key Policy Recommendations

Several policy priorities emerge for navigating this multipolar landscape:

• As economic policy uncertainty rises through fragmentation, global value chains must become more resilient to shocks, while "rules-based" and "market-based" trade in the region should be strengthened.
• Maintaining an open trade and investment climate and reinforcing regional economic cooperation remain critical. ASEAN has a central role to play in sustaining and strengthening the rules- and market-based trading arrangements that underpin long-term, sustainable growth.
• A fresh framework for shared prosperity and growth, designed for a multipolar world, may be needed.
• Emerging technologies such as artificial intelligence, robotics, electric transportation, autonomous systems, and space technologies must be addressed head-on. Frontier firms in global value chains need to stay agile and flexible so they can move into higher value-added activities in both manufacturing and services.
• The next phase of growth must rest on a skilled and adaptable workforce capable of "unbundling" and "re-bundling" its skills, a priority that is especially important for ASEAN and East Asia.

At the same time, these emerging technologies are likely to introduce new social challenges that could further intensify geo-economic fragmentation, underscoring the need for careful and forward-looking policy responses.