An historic summit between ASEAN, China, and the GCC has committed to wide ranging cooperation and achieved concrete progress on a series of trade agreements designed to reduce tariffs and enhance trade between the parties.

The summit – the first ever ASEAN summit involving both the GCC and China – took place against the backdrop of potential US tariffs and ongoing global trade disruptions. The series of agreements signed, upgraded and initiated represent a significant step forward in the strategic relationship between China, ASEAN, and the GCC. 

Charlie Humphreys, Asia House Director of Corporate Affairs, was in Kuala Lumpur for the summit.

Key takeaways:

• In an unprecedented move, China was closely involved in trilateral dialogues on trade and wider cooperation with member states from both ASEAN and the GCC regions, indicating a shifting balance in regional geopolitics.
• ASEAN is now driving significant external-facing engagement, leading wider multilateral cooperation beyond its region for the first time amid concerns over US withdrawal from global engagement.
• Malaysia, the 2025 ASEAN Chair, demonstrated leadership within Southeast Asia to ‘fill the gap’ by enhancing regional trade rules and drawing the Gulf and China closer into Southeast Asia’s regional economic framework.
• ASEAN member states confirmed their commitment not to escalate trade tensions with the US through retaliatory measures, instead focusing on enhancing cooperation to mitigate the impact of US tariffs.
• ASEAN and the GCC agreed to start a scoping exercise for a free trade agreement (FTA) between the two blocs, marking significant progress toward reducing tariffs and other trade barriers.
• Separately, Malaysia and the GCC formally opened FTA negotiations.
• Agreements were reached to significantly upgrade both the existing ASEAN free trade area and the ASEAN-China Free Trade Area.
• ASEAN approved Timor-Leste’s membership – the first expansion of the bloc in over a quarter of a century.
• The extensive agreements, expansion and commitment to broader cooperation indicate growing urgency across Asia and the Gulf to establish greater economic alignment, offering significant opportunities for international businesses trading and investing across these regions.

China, for the first time, joined a summit in Kuala Lumpur with leaders from the member states of both the Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC). This marks a new era of cooperation amid concerns about the integrity of the global trade system, following sweeping tariffs imposed by the US on goods imported from nearly all its trade partners. The summit follows visits by Chinese President Xi Jinping to Southeast Asia in April and US President Donald Trump to the Gulf in May. Some of the highest tariffs imposed by the US have targeted Southeast Asian countries, which already have highly integrated regional economic arrangements via the ASEAN free trade area and FTAs with major trading partners, including China and Japan.

To enhance market scale and attractiveness, ASEAN and the GCC have agreed to start a scoping exercise for an FTA between the two blocs. Over two days, leaders agreed on a broad range of cooperative measures.  However, exploring the FTA marks the most tangible development between the groups, building on closer engagement initiated at the inaugural ASEAN-GCC leaders summit in Riyadh in October 2023.

Building on the principle of ASEAN centrality, the bloc already has FTAs in place with Australia, China (including Hong Kong SAR), Japan, South Korea, and New Zealand, forming the basis of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade deal. India also maintains an FTA with ASEAN. While the GCC has had an FTA with Singapore since 2013, an ASEAN-GCC FTA would significantly enhance commercial ties by reducing trade costs between the blocs -  currently totalling US$ 130.7 billion - and create greater alignment between ASEAN and regions outside its immediate neighbourhood. Amid global trade disruptions from US-imposed tariffs, these negotiations also hold significant symbolic value, highlighting the GCC’s increasing focus on Asia, extensively covered in Asia House’s flagship research The Middle East Pivot to Asia. 

Most notable at the talks was China’s participation, represented by Premier Li Qiang, at a dialogue specifically designed to facilitate joint cooperation with ASEAN and the GCC members. Enhanced trilateral cooperation with ASEAN and the GCC advances Beijing’s strategic partnerships following years of expanded economic ties with Southeast Asia and Xi Jinping’s landmark visit to the Gulf in 2022.

Recently, Malaysia and Singapore have warned that maintaining neutrality between China and the US is increasingly challenging for Southeast Asian nations, given China’s status as ASEAN’s largest trading partner - the total ASEAN-China goods trade is nearly double ASEAN-US goods trade.

Ahead of the summit, the ASEAN Economic Community Council (AECC) meeting concluded negotiations to upgrade its internal agreement on trade in goods through further tariff reductions and elimination of non-tariff barriers. Following the AECC, Malaysia’s Minister of Investment, Trade and Industry, Tengku Zafrul Aziz, announced that ASEAN had successfully concluded negotiations with China to upgrade the ASEAN-China FTA to include new measures on digital trade, consumer protection, customs procedures, and supply chain connectivity. Both upgraded agreements will be signed at the 47^th ASEAN Summit in October 2025.

Allan P. Gepty, Undersecretary for Trade and Industry of the Philippines, emphasised the upgraded ASEAN Trade in Goods Agreement (ATIGA), telling Asia House:

“The ASEAN Trade in Goods Agreement (ATIGA) is one of the main free trade agreements among ASEAN countries, and it is vital in the regional integration of ASEAN. The upgrade of the agreement is intended to make it more relevant, responsive, and easier to use, especially in light of recent global and regional trade challenges.

The ATIGA upgrade is designed to make the agreement easier to use, especially for MSMEs, and to support smoother and more resilient trade across the region. For the Philippines, this means better access to ASEAN markets, reduced trade costs, and more opportunities for Philippine products to compete and grow in Southeast Asia.”

Malaysia and the GCC also announced the start of FTA negotiations. Minister Tengku Zafrul Aziz highlighted to Asia House: 

“The start of Malaysia’s FTA negotiations with the GCC marks an important milestone for both economies and aims to significantly reduce friction for annual trade worth US$ 22.3 billion. We aim to establish an agreement covering a wide range of areas, including goods and services trade, investment and trade facilitation. This is also an important step to enhance economic cooperation and increase the opportunities for businesses operating between Malaysia and the GCC.”

In ASEAN’s first expansion for over 25 years, Timor-Leste will join the bloc at the next summit in October. Despite modest economic impacts, Timor-Leste’s accession signals ASEAN's openness to expansion and inclusion, enhancing its regional influence.

At the summit, ASEAN launched its next developmental phase under the Kuala Lumpur Declaration ASEAN 2045, addressing economic connectivity, socio-cultural engagement, and regional cooperation. In a move which hints at increasingly pooled sovereignty for the region, the ASEAN members also agreed to establish an ASEAN Geoeconomics Task Force, an advisory body designed to provide advice and policy recommendations to the members collectively on navigating major global geopolitical and macroeconomic shifts.

The summit's joint communiques outlined commitments to support the WTO, strengthen supply chain resilience, enhance local currency and cross-border payment cooperation, and explore digital economy frameworks – including AI, blockchain, and quantum computing partnerships. In his closing statement, ASEAN Secretary-General Kao Kim Hourn emphasised building trust with partners, including China and the GCC, highlighting responses to US tariffs and the Myanmar crisis as key summit focuses.

The agreements reached indicate the potential for the expansion of the East Asia economic framework, now a major driving force for global economic growth. The increased rate at which ASEAN is further enhancing regional economic integration, and the unprecedented speed at which new trade agreements are being forged, and existing agreements upgraded signals new market opportunities emerging swiftly across the region.

Asia House is working with governments across Asia, the Middle East and the West, as well as multilateral organisations and the private sector, to drive commercial and political engagement around key issues in global trade. For more information on our research and programmes, please contact Charlie Humphreys, Asia House Director of Corporate Affairs at Charlie.Humphreys@asiahouse.co.uk.