China and the Association of Southeast Asian Nations (ASEAN) have concluded negotiations on the upgraded China–ASEAN Free Trade Area (CAFTA 3.0).
The new CAFTA 3.0 deepens regional economic integration by expanding digital trade, green development, and cross-border supply chain cooperation commitments.
China’s Commerce Minister Wang Wentao and his ASEAN counterparts announced late Wednesday that they had completed negotiations on the 15-year-old free trade agreement and expect to sign the upgraded deal by the end of 2025, pending ratification.
Free Trade Area 3.0: Digital Economy and Cybersecurity Take Center Stage
The CAFTA 3.0 upgrade introduces nine new chapters covering the digital economy, the green economy, customs procedures, and infrastructure.
Both sides have committed to enhanced free trade area cooperation in cross-border electronic payment systems, cybersecurity, and developing technical standards, particularly for new energy vehicles and electronics.
The upgraded FTA agreement’s new digital economy provisions aim to improve the security and interoperability of logistics and payment systems across borders. These measures are expected to reduce bottlenecks and improve end-to-end supply chain efficiency across the region.
“This will send a strong message in support of free trade and open cooperation,” China’s Ministry of Commerce said in an online statement.
Wang Wentao added that China is ready to work with ASEAN to “ensure the stability of global supply chains, advance shared development and safeguard international fairness and justice.”
Trade Tensions with the U.S. Cast Shadow Over ASEAN Exports
The upgraded CAFTA 3.0 comes amid growing trade tensions. ASEAN countries, including Vietnam, Cambodia, and Laos, could face steep new U.S. tariffs, potentially up to 49%, if no bilateral agreements are reached before a 90-day exemption period expires in July.
In a veiled criticism of Washington’s protectionist measures, Wang warned, “There are no winners in a tariff war or trade war.”
Xu Ningning, chairman of the Regional Comprehensive Economic Partnership (RCEP) Industry Cooperation Committee, said the CAFTA 3.0 deal arrives strategically.
“It not only helps us address the current trade tensions, but also provides a model for promoting global peace and cooperation,” he said, adding that the agreement reflects the shared development goals of all 11 participating economies.
Bilateral trade surged from under US$8 billion in 1991 to nearly US$1 trillion in 2024. According to the General Administration of Customs, trade between China and ASEAN reached $330.85 billion in the first four months of 2025, marking a 9.2% increase year-on-year.
Hong Kong’s Role and the Surge in Chinese Investment
Amid ongoing U.S.–China trade tensions, ASEAN has become the leading destination for Chinese outbound manufacturing investment by deal volume, according to an April report by Rhodium Group.
Over 86% of that investment targeted automotive, electronics, ICT, renewable energy, and consumer goods sectors.
The CAFTA 3.0 negotiations took place over nine rounds during the past two years. During his April visits to Vietnam, Malaysia, and Cambodia, President Xi Jinping called for Asian solidarity in opposing unilateralism and protectionism.
If ratified, the upgraded trade pact will offer greater opportunities to small and medium-sized enterprises across Southeast Asia, particularly those seeking to tap into regional market integration and improved digital infrastructure.
