The Future of ASEAN-China Dialogue Partnership

Since its founding in 1967, ASEAN has navigated an ever-evolving international order and firmly established itself as a central actor in the region’s security and economic architecture, extending beyond Southeast Asia to the wider Asia-Pacific region. China’s endorsement of ASEAN centrality as a guiding principle for its engagement with ASEAN speaks volumes about the long-term diplomatic value it places on engaging ASEAN as an institution.

The international order in 2026 is not the same as that of the late 1960s or the decades in between. From a Chinese perspective, international order – as a combination of laws, rules, norms – is evolutionary by nature, with China and ASEAN adjusting themselves to fit in. To turn aspirations for regional order into a reality, China and ASEAN share several foundational principles in their engagement, including respect for sovereignty, non-intervention in domestic affairs and future-oriented dialogues centred on functional cooperation. Both ASEAN and China have solid reasons to celebrate accomplishments in their dialogue partnership, dating back to China’s first formal engagement with ASEAN as a special guest of Malaysia in July 1991.

Today and in the future, China faces a salient question concerning how ASEAN positions itself amid the strategic competition between Beijing and Washington. Indeed, the very notion of “strategic competition” can suggest a binary choice with one side seeking to prevail over the other. From a Chinese perspective, it was perhaps not a coincidence that ASEAN established Comprehensive Strategic Partnerships with China and the United States (US) consecutively in 2021 and 2022. The message is clear: ASEAN seeks to maintain productive relations with both major powers rather than choose sides.

For China, ASEAN’s pursuit of neutrality amid US-China competition is grounded in the fundamentals of the evolution of economic and political dynamics across the Asia-Pacific region. For example, the US is ASEAN’s largest external source of cumulative foreign direct investment. Coupled with the US consumer market continuing to function as a major export destination for many ASEAN economies, ASEAN cannot afford to see its access to US markets – for capital, technology and exports – adversely affected by a strategic or diplomatic tilt toward China. At the same time, China remains ASEAN’s largest trading partner, reflecting the region’s substantial economic interests in maintaining close relations with both powers. If anything, against the background of the US working to realign its trade partnerships, China needs ASEAN markets both as an important part of regional production networks serving international markets, including the US as a final destination. Furthermore, the “hub and spoke” military arrangements the US has established in the Asia-Pacific are both a legacy of history and a reality for China (and other countries as well) to live with.

The future of the dialogue partnership between China and ASEAN will continue to place ‘partnership’ at its core. In contemporary Chinese foreign policy, a partnership reflects a willingness to engage a country or a group of countries in the pursuit of mutual interests, however temporary such convergence may be in practice. In Chinese diplomacy, the strategic element in a partnership is therefore less about military alignment and more about a long-term political commitment to managing differences, even when disagreements arise over specific issues.

Geographical proximity and economic complementarities have and will continue to undergird interactions between China and ASEAN as a regional grouping, as well as Beijing and the bloc’s member states and societies. Indeed, post-WWII Southeast Asian practices of economic development through internationalisation and openness served as a source of inspiration for China as it pursued economic reforms and greater integration with the global economy. Along the way, ASEAN and Chinese economies found their respective niche markets in each other and in the wider world.

Today, the web of industry ties between the economies of China and Southeast Asia has flourished to encompass entire production and supply chains, from raw and semi-processed materials to intermediate products and technological innovation. For example, in recent years, China has developed the “Two Countries, Twin Parks” arrangements with Malaysia and Indonesia, building on a longer history of bilateral industrial cooperation, including the Singapore-China Suzhou Industrial Park. In other words, both China and ASEAN member states see value in establishing venues for their respective businesses to invest, collaborate and gain access to each other’s markets, rather than viewing economic integration simply in terms of one-sided trade flows.

Along with the signing of the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Protocol in October 2025, the two sides are committed to deepening trade and investment relationships. The opening of the Pinglu Canal in September 2026 offers a new transport corridor for southwestern China to strengthen trade and connectivity with ASEAN economies. The canal, which is the first river-to-sea canal constructed by China since 1949, connects inland waterways near Nanning City in China’s Guangxi Autonomous Region to the Beibu Gulf.

But it would be a serious omission not to note concerns over economic asymmetries, market access, industrial competition and supply chain resilience. For interested observers in ASEAN, it is useful to note that some of these concerns are also relevant to China. On the one hand, China in recent years has joined the ranks of economies that find it necessary to relocate industrial activities to ASEAN economies to benefit from lower production costs, access to markets and other competitive advantages. On the other hand, China is entering a stage of its domestic economic development where the relocation of manufacturing activities abroad, if left unregulated, may create undue pressures on domestic industries and employment. Similar challenges have been experienced by other industralised economies, including the US, Japan, and European countries. As such, regulatory policy measures China takes to protect or strengthen its domestic industries may end up being perceived as serving China’s own interests at the expense of its ASEAN partners.

Seen in this light, future ASEAN-China dialogues should give greater attention to industrial policy issues affecting both sides. Gone is the era of viewing economic cooperation primarily through the conventional notion of comparative advantage, where economies at different stages of development specialise in different sectors. As ASEAN and China become more economically integrated, their industrial policies will increasingly affect each other’s businesses, workers and supply chains. As is true of any international dialogue exercise, the benefits of cooperation may not always be distributed evenly, and both sides may have different expectations about the outcomes. This makes sustained consultation and dialogue all the more important in finding mutually acceptable solutions, even where differences cannot be fully resolved.

The South China Sea (SCS) remains prominent on the regional security governance agenda. Commercial access to the SCS has been unaffected and is unlikely to be, as there is no material interest for a country in or outside the region to make it an issue. Military access to the SCS, particularly to disputed waters therein, has become a facet of major power competition: countries from North America, Oceania and Europe have conducted naval and air force actions to demonstrate their respective positions of resolve. For the past two decades, ASEAN has been the platform for negotiations toward an eventual conclusion of a code of conduct. In the future, maintaining a diplomacy-driven approach to dispute management continues to be essential. For each party, the security dilemma seems to be perpetual. Still, the recent past can be read as an indicator of the future; conflict avoidance can and should be the rule of thumb. After all, the dictate of geography is such that all countries benefit from keeping the waters open for all littoral and user states.

In the final analysis, after nearly six decades of regional diplomacy, ASEAN has firmly established its unique institutional role in regional security and economic governance. It has a proven record in convening dialogue and sustaining an open and inclusive regional order based on multilateralism and ASEAN Centrality. For China, and indeed other dialogue partners, ASEAN is indispensable, especially in preventing the Asia-Pacific region from being divided into competing or exclusive blocs. Looking ahead, the continued significance of the ASEAN-China partnership will depend not only on the degree of harmonisation over rules of interaction in economic affairs but also on security-related regional issues. The partnership needs to be one of mutual assurance of prosperity and security.

Editor’s Note:
ASEANFocus+ articles are timely and critical insight pieces published by the ASEAN Studies Centre. The ASEAN@60 Special Edition series marks the organisation’s 60th anniversary in 2027 and highlights the key issues that will shape ASEAN and Southeast Asia as the organisation enters its seventh decade.