The idea of shared prosperity sits at the heart of ASEAN's approach to building high-quality growth and development across the region. This principle, often described as ASEAN Centrality, guides how the bloc navigates the geo-economics and geopolitics that shape its neighbourhood. A range of challenges and openings for the region came under the spotlight at the ASEAN-China Strategic Relationship forum, held at Sunway University in Malaysia on 17-18 September, which drew together academics, policymakers and researchers from across the region.

That commitment to shared prosperity has already delivered substantial gains. Taken together, ASEAN accounts for close to 7.5% of global GDP and has contributed roughly 8-9% of global GDP growth between 2015 and 2025. Its combined output stands at nearly $4 trillion, making the grouping the fifth-largest economy in the world. Among the ASEAN-5 economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam, annual output growth has averaged around 4-5%.

Ouyang Yujing, China's ambassador to Malaysia, pointed to bilateral trade as a "powerful driver" and described a "deepened win-win partnership" between ASEAN and China that advances alongside flourishing commerce. He stressed that shared prosperity and resilience between the two sides depend on strengthening development through openness and integration, prioritising 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 secure lasting peace in the region.

Deepening Trade and Investment Ties

Cooperation with China matters enormously for the region's trade and investment. ASEAN has built robust links with China through the ASEAN-China Free Trade Agreement, upgraded to ACFTA 3.0 in Kuala Lumpur during Malaysia's 2025 ASEAN Chairmanship. That upgrade emphasised high-quality global production and value chain integration in areas such as the green economy, digital transformation and regional connectivity.

ASEAN has also helped create the world's largest trading bloc through the Regional Comprehensive Economic Partnership, which brings in five non-ASEAN partners: China, South Korea, Japan, Australia and New Zealand. RCEP represents close to 30% of global GDP, 28% of global trade, 25% of global FDI flows and 30% of the world's population.

Two-way merchandise trade between ASEAN and China hit $772.4 billion in 2024, equal to 20.1% of ASEAN's total trade. In 2025, that figure climbed to $1 trillion despite an uncertain global environment. China-Malaysia trade alone reached a record of about $133.2 billion in 2025, posting double-digit growth of 12.0%, with China remaining Malaysia's top trading partner for the 17th year running. Malaysia's trade with the rest of ASEAN stood at roughly $211.9 billion, with Singapore its leading partner within the bloc. Both ASEAN and China rank among Malaysia's most important trade relationships.

Rising Geopolitics and Geo-Economic Fragmentation

For all its growth, the region now faces heightened global uncertainty. US-China trade tensions, US tariff shocks, the ongoing US-Iran conflict in the Middle East, the Russia-Ukraine war in Europe, worldwide inflationary pressures and disruptions to global value chains (GVCs) are all weighing on 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 and fuelling a form of "techno-nationalism" that reinforces geopolitical and geo-economic fragmentation.

These pressures feed into GVC disruptions, persistent oil shocks, higher inflation and weaker growth both globally and regionally. The IMF's July 2026 forecast pointed to a global slowdown, with growth easing from 3.5% in 2025 to 3% in 2026. Emerging and developing Asian economies are expected to slow from 5.6% in 2025 to 5% in 2026. Lingering oil shocks tied to the US-Iran conflict are keeping inflation elevated, raising the risk of cost-push inflation and stagflation, in which both prices and unemployment rise together. Such conditions blunt the fiscal and monetary tools available to cushion economies against shocks.

The forum flagged several issues and opportunities that call for urgent recalibration to sustain inclusive growth in the region.

• Uneven effects of trade and openness. Geo-economic fragmentation has been intensifying for years, a trend visible even before the Covid-19 pandemic. Open economies tend to grow faster, but they can also widen wage gaps between skilled and unskilled workers and deepen rural-urban divides. The impact of technology and trade differs between developed and developing nations as well, though recent evidence shows developing economies of the South catching up with the developed North and narrowing the gap. Economic policy uncertainty (EPU) around open-economy strategies is also driving new strategic alliances, which in turn create investment uncertainty as multinationals reconsider offshoring, nearshoring and friend-shoring.
• Weaponisation of trade. Growing geopolitical rivalry and the use of trade as a weapon are distorting trade and investment across the region. Moving away from rules- and market-based frameworks unsettles regional and domestic policy and pushes up economic policy uncertainty. A rules- and market-based system is essential for efficient value chains and for managing their backward and forward linkages. Abandoning that system encourages strategic alliances and multipolar governance, with consequences that could be especially significant for economies such as Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam.

Key Policy Recommendations

As economic policy uncertainty grows alongside fragmentation, value chains need to become more resilient to shocks, and the region must strengthen rules-based and market-based trade. Keeping trade and investment open and reinforcing regional economic cooperation will be vital. Here ASEAN has a central part to play in preserving and strengthening rules- and market-based trading arrangements, which have laid the groundwork for long-term sustainable development. A fresh framework for shared prosperity, designed for a multipolar world, may well be needed.

It is also essential to respond to emerging technologies such as AI, robotics, electric transport, autonomous systems and space technology. Firms at the frontier of value chains must stay agile and flexible so they can move into higher value-added activities across both manufacturing and services. The next phase of growth will depend on a skilled and adaptable workforce able to "unbundle" and "re-bundle" its capabilities, an imperative for ASEAN and East Asia alike. At the same time, these new technologies bring social challenges that could deepen geo-economic fragmentation, requiring careful management going forward.