New Opportunities and Challenges in Geopolitics and the Global Multipolar Order: Shared Prosperity for ASEAN and China

ASEAN rests on a strong commitment to shared prosperity and high-quality development across the region. This idea is central to maintaining the bloc's influence in shaping the region's economic and political landscape. The ASEAN-China Strategic Relationship forum, held at Sunway University in Malaysia on September 17-18, brought together leading academics, policymakers, and researchers to discuss key challenges and opportunities.

This focus on mutual growth has yielded significant results. As a collective, ASEAN accounts for roughly 7.5% of the world's Gross Domestic Product (GDP) and contributed between 8% and 9% of global GDP growth from 2015 to 2025. With a combined GDP nearing $4 trillion, it stands as the fifth-largest economy globally. Meanwhile, the ASEAN-5 nations—Indonesia, Malaysia, the Philippines, Thailand, and Vietnam—typically see annual output growth averaging around 4-5%.

Ouyang Yujing, the Chinese ambassador to Malaysia, described trade as a "powerful driver" and noted the "deepened win-win partnership that goes hand-in-hand with thriving trade" between the two sides.

He emphasized shared prosperity and resilience through three priorities: (a) strengthening development via openness and integration; (b) prioritizing green energy and innovation; and (c) speeding up talks on the Code of Conduct in the South China Sea to secure regional peace.

ASEAN's cooperation with China is vital for regional trade and investment. The bloc has built strong economic ties through the ASEAN-China Free Trade Agreement, including its update to ACFTA 3.0 in Kuala Lumpur during Malaysia's 2025 chairmanship, which emphasized high-quality global supply chains, the green economy, digital transformation, and better regional connectivity.

Additionally, ASEAN helped form the world's largest trading bloc through the Regional Comprehensive Economic Partnership (RCEP), which includes five non-ASEAN members: China, Korea, Japan, Australia, and New Zealand. RCEP represents about 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, representing 20.1% of the bloc's total trade. By 2025, bilateral trade climbed to $1 trillion despite global uncertainty.

China-Malaysia bilateral trade reached a historic high of approximately $133.2 billion in 2025, growing by a double-digit 12.0%. China has been Malaysia's largest trading partner for 17 years running. Malaysia's trade with ASEAN nations totals around $211.9 billion, with Singapore as its primary regional partner. Both ASEAN and China are crucial trading partners for Malaysia.

Rising Geopolitics and Geo-Economic Fragmentation

Despite strong growth, the region faces heightened uncertainty due to US-China trade tensions, US tariff shocks, the ongoing US-Iran conflict, the Russia-Ukraine war, global inflationary pressure, and disruptions to global value chains (GVC). These factors significantly impact prosperity across the global and East Asian economies.

A keynote forum address by Kan Channmeta, Secretary of State at Cambodia's Ministry of Industry, Science, Technology and Innovation, examined how emerging technologies are reshaping the multipolar framework, fostering "techno-nationalism" that deepens political and economic divisions.

These uncertainties manifest as supply chain disruptions, persistent oil price shocks, higher inflation, and slower economic growth. The IMF's July 2026 forecast projects global growth slowing from 3.5% in 2025 to 3% in 2026.

Emerging and developing Asian economies are expected to see growth ease from 5.6% in 2025 to 5% in 2026. Ongoing oil shocks from the US-Iran war fuel persistent cost-push inflation and the threat of stagflation—high inflation paired with unemployment. This environment weakens the fiscal and monetary tools available to manage economic shocks domestically and regionally.

The forum highlighted several critical issues and opportunities requiring urgent action to foster sustainable, inclusive regional growth.

• Geo-economic fragmentation has intensified over time, even before the Covid-19 pandemic struck.
• Trade and openness impact growth unevenly. While open economies grow faster, they often face wider wage gaps between skilled and unskilled workers, as well as deeper rural-urban divides.
• Technological and trade advantages differ between developed and developing nations. However, evidence shows developing ("South") countries are catching up to developed ("North") ones, narrowing the development gap.
• Economic policy uncertainty (EPU) is driving new strategic alliances, creating investment risks as multinationals restructure supply chains through offshoring, nearshoring, and friend-shoring.

The rise of geopolitics and the weaponization of trade is distorting regional investment. Moving away from rules- and market-based frameworks creates imbalances in regional and domestic policy, accelerating economic policy uncertainty.

A rules- and market-based system is essential for efficient global value chains and managing supply chain linkages. Abandoning this approach fosters competing alliances and multipolar governance. These shifts particularly affect major regional economies like Indonesia, Malaysia, the Philippines, Thailand, Singapore, and Vietnam.

Key Policy Recommendations

Amid rising economic policy uncertainty and fragmentation, policymakers must make global value chains more resilient and preserve rules-based, market-driven trade. Maintaining an open investment climate and strengthening regional cooperation is vital. ASEAN will play a key role in upholding these trading arrangements, which form the foundation for long-term sustainable growth. Ultimately, a new framework for shared prosperity may be needed to navigate the multipolar world.

It is also critical to address emerging technologies such as AI, robotics, electric transportation, autonomous systems, and space technology. Firms entering these new value chains must remain agile to compete in high-value manufacturing and services. Future growth will depend on a skilled, adaptable workforce capable of "unbundling" and "re-bundling" their expertise—a necessity for ASEAN and East Asia.

However, these new technologies also risk worsening economic fragmentation and weakening social welfare systems across ASEAN, requiring careful policy attention.