The Asean-China Free Trade Area was upgraded. Now what?
ACFTA 3.0 strengthens supply chain links and resilience, but Asean still needs diversification for true risk insurance
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THE Asean-China Free Trade Area (ACFTA) 3.0 was signed on Tuesday (Oct 28), at the 2025 Asean Summit. Praised by Malaysia Prime Minister Anwar Ibrahim as a pivotal milestone to strengthen the region’s collective economic resilience, the upgrade builds on a deeply intertwined relationship that has grown over two decades.
Bilateral trade surged from US$160 billion in 2006 to nearly US$1 trillion in 2024, making Asean China’s largest trading partner. Services trade expanded just as rapidly, from roughly US$19 billion in 2007 to over US$89 billion by 2023, driven by digital and professional services. Investment links also thickened: Chinese foreign direct investment (FDI) into Asean reached US$17.6 billion in 2023 (7.5 per cent of total inflows), cementing China as a top investor.
The upgraded ACFTA 3.0 aims to further bind regional supply chains and enhance resilience. But interdependence alone is not insurance – greater integration can mean overreliance and concentrated risks. To truly safeguard growth, Asean must continue diversifying trade while strengthening resilience with key partners.
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