Kuala lumpur: China, as a key dialogue partner of ASEAN, is set to emphasize the importance of supply chain resilience, digital economy collaboration, green transition, and trade facilitation during the upcoming ASEAN Economic Ministers (AEM) 2025 meeting.
According to BERNAMA News Agency, these priorities align with ASEAN’s ongoing agenda to bolster regional competitiveness and foster inclusive growth. Datuk Ng Yih Pyng, president of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), highlighted the need for advancing mutual recognition frameworks and regulatory dialogue to achieve these goals.
The 24th AEM-China’s Ministry of Commerce (MOFCOM) Consultation will take place tomorrow, followed by the 28th AEM-Plus Three Consultation. Mohd Sedek Jantan, director and country economist at IPPFA Sdn Bhd, noted that Beijing is likely to focus on enhancing supply chain resilience amid global trade tensions, particularly following the imposition of tariffs by the United States. A significant move in this direction is the anticipated signing of the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Protocol this year, which would introduce new aspects such as digital economy cooperation, green transition strategies, and improved supply chain connectivity.
Furthermore, China is expected to advocate for deeper integration under the Regional Comprehensive Economic Partnership (RCEP) by completing accession processes for aspiring economies. This would expand trade linkages and mitigate the impact of protectionist policies. Mohd Sedek emphasized that these priorities could shape ASEAN’s economic agenda by embedding a future-ready framework into its post-2025 vision, focusing on sustainable and inclusive growth. Discussions are also expected to address the destabilizing effects of unilateral tariffs and push for reforms to the World Trade Organisation, indicating China’s interest in collective action with ASEAN to uphold rules-based multilateralism.
Mohd Sedek pointed out that China’s contribution to ASEAN integration is anticipated to extend beyond tariff liberalization, addressing structural impediments to trade. Non-tariff measures, regulatory fragmentation, and logistical inefficiencies remain significant challenges to ASEAN’s competitiveness. Small and medium-sized enterprises, in particular, face higher compliance costs due to varying standards and delays at ports and customs, which increase trade costs.
To combat these issues, Beijing may advocate for mechanisms such as mutual recognition agreements, regional databases on non-tariff barriers, and coordinated customs digitalization. These efforts would align with China’s Belt and Road transport corridors to reinforce ASEAN Connectivity 2025 at the AEM 2025. Additionally, China is well-positioned to support ASEAN’s digital and green transition, while ASEAN has developed master plans for both domains, though implementation has been uneven. By contributing capital and technology, China could help operationalize ASEAN’s ambitions in cross-border fintech platforms, digital payment systems, and renewable energy deployment.
Datuk Ng emphasized the significance of shifting towards local currency settlement as a means of reducing dependence on the US dollar, potentially lowering transaction costs and mitigating foreign exchange risk for ASEAN businesses. However, he cautioned that effective risk management is necessary to address currency volatility and the uneven convertibility of ASEAN currencies. Mohd Sedek highlighted that the expanded use of local currencies in ASEAN-China trade signifies a structural recalibration of the region’s financial architecture. The renminbi (RMB) has gained prominence under Beijing’s internationalization agenda, while ASEAN’s approach remains multipolar, with settlements occurring in both RMB and ASEAN currencies.
ASEAN’s payment connectivity initiatives, including the Cross-Border Interbank Payment System (CIPS) and QR-linked systems, provide credible alternatives to dollar-dominated systems, reducing settlement frictions and enhancing liquidity. These platforms support small and medium-sized enterprises and intra-regional trade, which accounts for approximately 23% of ASEAN’s total trade.
Ng stressed that the expansion of local currency use is not intended to displace global partners but to diversify options and strengthen regional resilience. ASEAN and China must balance this development while maintaining open, rules-based trade with global partners like the US and the European Union. Mohd Sedek added that ASEAN’s multipolar currency strategy provides flexibility to engage both China and the US without excessive dependence on either, thereby reinforcing financial stability and positioning the bloc as a pragmatic actor in the evolving multipolar payments landscape.