ASEAN, China and the Search for Shared Prosperity in a Multipolar World

ASEAN has been built around a common commitment to shared prosperity and high-quality development. That commitment also supports ASEAN centrality, a guiding idea for how the region manages geo-economic and geopolitical pressures. These themes stood out at the ASEAN-China Strategic Relationship forum, held at Sunway University in Malaysia on 17-18 September, which brought together leading academics, policymakers and researchers from across the region.

The push for shared prosperity has produced tangible gains. As a bloc, ASEAN accounts for nearly 7.5% of global GDP and contributed about 8-9% of global growth between 2015 and 2025. Its combined output is close to $4 trillion, making it the world's fifth-largest economy. The ASEAN-5 members-Indonesia, Malaysia, the Philippines, Thailand and Vietnam-have averaged annual growth of roughly 4-5%.

Chinese Ambassador to Malaysia Ouyang Yujing pointed to bilateral trade as a major engine of a deepening win-win partnership. He linked that partnership to shared prosperity and resilience in three areas: strengthening development through openness and integration; advancing green, energy and innovation agendas; and accelerating negotiations on a Code of Conduct in the South China Sea to help secure lasting peace.

Trade and investment links between ASEAN and China have been reinforced by the ASEAN-China Free Trade Agreement and its upgraded form, ACFTA 3.0, launched in Kuala Lumpur during Malaysia's 2025 ASEAN chairmanship. The upgrade emphasizes higher-quality global production networks, especially in the green economy, digital transformation and regional connectivity.

ASEAN has also helped create the Regional Comprehensive Economic Partnership, the world's largest trade bloc, together with five non-ASEAN members: China, South Korea, Japan, Australia and New Zealand. RCEP represents nearly 30% of global GDP, 28% of world trade, 25% of global FDI flows and 30% of the world's population.

Two-way merchandise trade between ASEAN and China reached $772.4 billion in 2024, equal to 20.1% of ASEAN's total trade. By 2025, despite global uncertainty, bilateral trade had risen to $1 trillion. China-Malaysia trade hit a record $133.2 billion in 2025, growing 12% and keeping China Malaysia's largest trading partner for the 17th straight year. Malaysia's trade with ASEAN was about $211.9 billion, with Singapore as its main regional partner. ASEAN and China are both key partners for Malaysia.

Rising Geopolitics and Geo-Economic Fragmentation

Even with that growth, the region faces a more unstable global environment. US-China trade tensions, tariff shocks, the ongoing US-Iran conflict in the Middle East, the Russia-Ukraine war, persistent inflation and disruptions to global value chains are weighing on global and East Asian prosperity.

In a keynote address, Kan Channmeta, Secretary of State at Cambodia's Ministry of Industry, Science, Technology and Innovation, linked emerging technologies to a more multipolar global framework and to 'techno-nationalism,' which he said reinforces geopolitical competition and geo-economic fragmentation.

Those pressures are feeding into broken production networks, sustained oil-price shocks, higher inflation and slower growth. An IMF forecast cited in July 2026 showed global growth easing from 3.5% in 2025 to 3% in 2026, while emerging and developing Asia was expected to slow from 5.6% to 5%. The continuing US-Iran conflict is also making inflation more persistent, raising the risk of cost-push inflation and stagflation, with high inflation and unemployment. That would reduce the effectiveness of fiscal and monetary tools for absorbing shocks at home and in the region.

Forum participants said several issues require urgent recalibration to support sustainable and inclusive growth.

The first is the rise of geo-economic fragmentation, a trend visible even before the pandemic. Trade and openness have had uneven effects within and between countries. More open economies have generally grown faster, but they have also seen widening pay gaps between skilled and unskilled workers and sharper rural-urban divides. The uneven impact is also visible between developed and developing countries, although recent evidence suggests that the global South is catching up and narrowing the development gap with the North.

Economic policy uncertainty in open strategies is becoming more pronounced and is encouraging new strategic alliances. That uncertainty is affecting investment, particularly as multinational firms reconsider global value chain activities through offshoring, nearshoring and friendshoring.

The second issue is the increasing weaponization of trade. Rising geopolitical competition and fragmented geo-economics are creating distortions in trade and investment. Moving away from rule- and market-based frameworks can unbalance both regional and domestic policy, and it is accelerating economic policy uncertainty.

Rules- and market-based frameworks remain essential for efficient global value chains and for managing their backward and forward linkages. Their weakening is promoting strategic alliances and a multipolar governance structure. The consequences could be especially important for Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Policy Recommendations

As economic policy uncertainty grows alongside geo-economic fragmentation, the region needs more resilient value chains and a renewed commitment to rules-based, market-based trade. Keeping trade and investment open, while strengthening regional economic cooperation, should remain a priority. ASEAN has a central role to play in defending the arrangements that have supported long-term growth, even as a new framework for shared prosperity may be needed in a multipolar world.

Policy attention must also expand to new technologies, including AI, robotics, electric transportation, autonomous systems and space technology. Frontier firms in global value chains need agility to move into higher-value manufacturing and services. The next phase of growth will depend on a skilled and flexible workforce able to 'unbundle' and 're-bundle' competencies, a shift that is critical for ASEAN and East Asia.

The discussion also noted that emerging technologies will create social challenges that could deepen geo-economic fragmentation.