China, ASEAN ink upgraded free trade pact covering digital, green economies, supply chain connectivity

China has been ASEAN’s largest trading partner for 16 consecutive years, according to Chinese customs data. In the first three quarters of 2025, China’s trade with ASEAN totaled 5.57 trillion yuan (US$783.3 billion), up 9.6 per cent year-on-year. 

ASEAN is the fifth-largest economy in the world with a combined gross domestic product (GDP) of US$3.9 trillion and is also China’s largest trading partner, with bilateral trade totaling US$771 billion last year, according to ASEAN statistics.

The deal also comes amid efforts by Beijing to position itself as a champion of free trade and open economy, despite criticisms over its export restrictions on rare earths and other critical minerals.

Negotiations for the deal began in November 2022, and concluded in May of this year. 

ACFTA 3.0 will “promote the deep integration of the production and supply chains of both sides”, China’s commerce ministry had said in a statement in May, when it announced the completion of negotiations.

The upgraded pact will also “inject greater certainty into regional and global trade and play a leading and exemplary role for countries to adhere to openness, inclusiveness and win-win cooperation”, the ministry had said then.

The modernised pact aims to bolster supply chain resilience and empower regional micro, small, and medium enterprises.

Analysts previously told CNA that ACFTA 3.0 is a “much-needed upgrade” that builds long-term resilience and enhances economic integration, though some caution about the need for Southeast Asia to tread carefully in managing concerns over Chinese industrial overcapacity spilling into the region.