The China ASEAN Free Trade Area 3.0 version is an important milestone in regional economic integration (International Forum)

The China ASEAN Free Trade Area 3.0 version is an important milestone in regional economic integration. It not only consolidates the position of ASEAN and China as important engines of global manufacturing and consumption, but also injects new momentum into global southern cooperation with an open, inclusive, green, and digital institutional supply

Against the backdrop of accelerated restructuring of the global industrial chain and rising protectionism, the official signing of the China ASEAN Free Trade Area 3.0 Upgrade Protocol is regarded as the most systematic and influential regional economic and trade upgrade arrangement in recent years. ASEAN and China are committed to building a higher-level and higher quality open regional economic community in areas such as digital economy, green transformation, and supply chain resilience, providing a new paradigm for the common development of the global South.

The 3.0 version of the China ASEAN Free Trade Area demonstrates China's proactive approach to aligning with international high standard economic and trade rules and promoting South South cooperation through institutional openness. It provides ASEAN with a cooperation platform that balances diversity and strategic autonomy, helping it stabilize its development mainline in the turbulent international situation. More importantly, the 3.0 version of the Free Trade Zone has added content such as digital economy and green economy cooperation, providing a regional sample for discussions on relevant issues under multilateral frameworks such as the World Trade Organization and the United Nations Conference on Trade and Development.

Since the comprehensive establishment of the China ASEAN Free Trade Area, the bilateral trade volume between ASEAN and China has increased from less than 300 billion US dollars in 2010 to nearly 1 trillion US dollars in 2024, and regional cooperation has shifted from "convenient customs clearance and factor flow" to "institutional coordination and rule shaping". The direction of Free Trade Zone 3.0 is clear - to promote the modernization of trade and investment systems, consolidate ASEAN's central position in the Asian industrial and supply chains, and enrich the supply of global governance public goods through open, inclusive, and development oriented global South multilateral cooperation. The 3.0 version of the Free Trade Zone promotes deep integration between the ASEAN Community Vision 2045 and China's efforts to develop new quality productive forces, becoming one of the world's largest platforms for market integration in southern countries.

Looking ahead, the 3.0 version of the Free Trade Zone is expected to drive a leap in trade and investment, as well as the accumulation of institutional dividends. The 3.0 version of the Free Trade Zone has upgraded market access and investment protection rules, which will further enhance market confidence and promote the orderly flow of capital and technological factors in both directions. Benefiting from policies such as visa convenience, payment interoperability, and regulatory coordination, the service trade and tourism cooperation between ASEAN and China will also see growth, and emerging fields such as education, healthcare, culture, and digital services may form new growth points. Version 3.0 of the Free Trade Zone will also work with the Regional Comprehensive Economic Partnership Agreement to enhance efficiency, superimpose the "hard connectivity" of infrastructure and the "soft connectivity" of institutional rules formed under the framework of high-quality joint construction of the "the Belt and Road", and will jointly consolidate ASEAN's position as a regional trade hub and a key node of regional cooperation, and improve the stability and competitiveness of the regional industrial chain supply chain.

In response to practical challenges such as structural imbalances, the 3.0 version of the Free Trade Zone has improved the "safety valve" through relevant mechanisms, enhanced resilience in opening up, and stimulated cooperation vitality in competition. To promote the smooth implementation and long-term operation of the Free Trade Zone 3.0, ASEAN and China can make efforts in the following areas: promoting the diversification of import and export market structure and enhancing the level of the value chain; Increase investment in digital economy and capacity building for small and medium-sized enterprises; Accelerate the coordination of rules in green industries, carbon emissions, and other areas; Reasonably utilize trade remedies and industrial synergy tools, and uphold the bottom line of fair competition under the premise of openness.

The Free Trade Zone 3.0 version is an important milestone in regional economic integration. It not only consolidates the position of ASEAN and China as important engines of global manufacturing and consumption, but also injects new momentum into global southern cooperation with an open, inclusive, green, and digital institutional supply. As long as all parties adhere to development as the foundation, rules as the guiding principle, and mutual trust as the basis, the 3.0 version of the free trade zone will steadily promote the regional and even global economy towards a more balanced, green, and inclusive direction.

(The author is Chen Guangyan, an economics professor at Nanyang Technological University in Singapore)