Shared Prosperity for ASEAN and China in a Multipolar Era: Geopolitical Challenges and Opportunities

Built on a foundation of shared prosperity, ASEAN has pursued high-quality development as a driver of regional growth, with ASEAN Centrality seen as key to managing both geo-economic and geopolitical dynamics. These themes were central to discussions at the ASEAN-China Strategic Relations Forum held at Sunway University in Malaysia on September 17-18, which brought together academics, policymakers and researchers from across the region.

ASEAN's Economic Weight and Deepening Ties with China

As a bloc, ASEAN accounts for about 7.5% of global gross domestic product and contributed roughly 8% to 9% of worldwide GDP growth between 2015 and 2025. With a combined GDP of close to $4 trillion, it ranks as the world's fifth-largest economy. The five largest ASEAN economies — Indonesia, Malaysia, the Philippines, Thailand and Vietnam — have averaged annual growth of 4% to 5%.

Speaking at the forum, Chinese Ambassador to Malaysia Ouyang Yujing described bilateral trade as a powerful engine of growth and pointed to a deepening win-win partnership between ASEAN and China. He stressed the need for joint resilience and shared prosperity built on three pillars: strengthening development through openness and integration, advancing cooperation on green energy and innovation, and accelerating talks on a Code of Conduct in the South China Sea to secure lasting peace in the region.

Trade and investment links between the two sides have been institutionalized through the ASEAN-China Free Trade Area. Its latest upgrade, ACFTA 3.0, was finalized in Kuala Lumpur under Malaysia's ASEAN chairmanship in 2025, with an emphasis on high-quality value chains, the green economy, digital transformation and better regional connectivity.

ASEAN is also part of the Regional Comprehensive Economic Partnership, the world's largest free trade bloc, which includes five non-ASEAN partners — China, Japan, South Korea, Australia and New Zealand. Together, RCEP members represent about 30% of global GDP, 28% of global trade, 25% of global foreign direct investment flows and 30% of the world's population.

Merchandise trade between ASEAN and China reached $772.4 billion in 2024, equal to 20.1% of ASEAN's total trade. Despite global headwinds, that figure rose to $1 trillion in 2025.

Bilateral trade between China and Malaysia hit a record of about $133.2 billion in 2025, up 12% year-on-year, keeping China as Malaysia's largest trading partner for the 17th year in a row. Malaysia's trade with ASEAN stood at around $211.9 billion, with Singapore as its largest partner within the bloc, underscoring how both ASEAN and China remain central to Malaysia's external trade.

Rising Fragmentation and Global Uncertainty

Despite strong regional growth, the outlook is clouded by heightened uncertainty stemming from US-China trade tensions and tariff shocks, the ongoing conflict involving the US and Iran in the Middle East, the war between Russia and Ukraine, persistent inflationary pressures and disruptions to global value chains. Together, these factors weigh heavily on global and East Asian growth prospects.

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 global order. He argued that competition over technology is fueling techno-nationalism, which in turn deepens geopolitical and geo-economic fragmentation.

Those uncertainties are feeding through into disrupted supply chains, repeated oil shocks, elevated inflation and slower growth. According to the International Monetary Fund's forecast from July 2026, global growth is expected to ease from 3.5% in 2025 to 3% in 2026. Growth in emerging and developing Asia is projected to moderate from 5.6% to 5% over the same period. Prolonged oil price shocks linked to the US-Iran conflict risk entrenching cost-push inflation and stagflation — a combination of high inflation and rising unemployment that limits the effectiveness of fiscal and monetary policy in cushioning shocks at national and regional levels.

Key Challenges Facing the Region

The forum identified several pressing issues that call for a recalibration to ensure more sustainable and inclusive growth:

• Uneven gains and growing policy uncertainty. Geo-economic fragmentation has been building for years, even before the COVID-19 pandemic. While open economies tend to grow faster, openness has also widened gaps — between skilled and unskilled workers and between rural and urban areas. Similar divides exist between developed and developing countries, although evidence shows developing economies in the Global South are gradually narrowing the gap with the Global North. At the same time, economic policy uncertainty surrounding open strategies is encouraging the formation of strategic alliances, creating investment uncertainty as multinationals reconfigure value chains through offshoring, nearshoring and friend-shoring.
• The weaponization of trade and erosion of rules-based systems. Growing geopolitical rivalry and the use of trade as a strategic tool are distorting trade and investment flows. The shift away from rules-based and market-based frameworks is undermining policy coherence at domestic and regional levels and accelerating economic policy uncertainty. A predictable, market-driven system is essential for efficient global value chains and for managing their backward and forward linkages. Its weakening is giving rise to competing strategic blocs and a multipolar governance landscape, with particularly significant implications for the more advanced and emerging ASEAN economies including Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam.

Policy Directions for a Multipolar Framework

Participants outlined several priorities for navigating the emerging multipolar order:

First, global value chains need to be made more resilient to shocks by reinforcing rules-based and market-based trade. Preserving an open environment for trade and investment and deepening regional economic cooperation will be crucial. ASEAN has a central role to play in upholding these arrangements, which have underpinned long-term sustainable development, but a renewed framework for shared prosperity may be needed to reflect multipolar realities.

Second, the region must prepare for transformative technologies — including artificial intelligence, robotics, electric mobility, autonomous systems and space technologies. Firms that lead frontier value chains will need to be agile, moving into higher value-added activities in manufacturing and services. That shift depends on a skilled, adaptable workforce able to unbundle and rebundle capabilities as industries evolve, a challenge that is particularly relevant for ASEAN and East Asia.

The transition also raises social concerns. New technologies risk deepening geo-economic divides if their benefits are unevenly distributed, highlighting the need for inclusive policies that manage disruption while ensuring broad-based gains.