ASEAN’s Increasing China Ties Threaten Economic Sovereignty of Member States: Experts
Udumbara
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Members of the Association of Southeast Asian Nations (ASEAN) have signed an upgraded free trade pact with Beijing, a significant move amid intensifying U.S.–China rivalry that experts warn could expose the bloc to “origin washing” penalties, industrial hollowing-out, and eroded economic sovereignty.
The pact, officially titled the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Protocol, was formalized in Kuala Lumpur on Oct. 28, at a ceremony on the final day of the annual ASEAN summit witnessed by Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim.
The move is widely seen as part of Beijing’s push to expand its dominance over the 11-member bloc.
A ‘Backdoor’ for Beijing
This extensive trade relationship, however, is also frequently viewed as a “backdoor” for China-made products to evade U.S. tariffs, according to the Lowy Institute.Although U.S. President Donald Trump signed trade pacts at the ASEAN summit granting zero tariffs on selected goods from Malaysia, Cambodia, and Thailand, Washington has continued to impose penalties of up to 40 percent on ASEAN countries for the transshipment of China-made goods—a practice of fraudulently certifying a good’s origin to avoid penalties.
Pavida Pananond, a professor at Thammasat University’s Business School in Thailand, said ASEAN countries seeking to leverage the upgraded pact for greater access to the China market should proceed with caution, as the deal could also turn the bloc into a major hub for Chinese “origin washing,” also known as transshipment.
“ASEAN should not be just blindly going into this China-ASEAN FTA without an awareness of the risk of relying too much on Chinese supplies in their products, because this could allow transshipment of Chinese products to take place through ASEAN countries,” Pananond told The Epoch Times.
Teuku Rezasyah, an associate professor of International Relations at Padjadjaran University and President University in Indonesia, called it “a very difficult situation for ASEAN,” warning that the deal may worsen the issue, as many member states cover vast areas and lack strong enforcement mechanisms to stop China-made products from being relabeled.
Looming Peril
Beyond the 40 percent U.S. tariff risk facing those who “origin wash” China-made goods for export, Pananond emphasized that a potential influx of cheap China-made goods under the pact introduces a separate negative impact by eroding local manufacturers’ competitiveness, even as they remain reliant on low-cost supplies from China—a situation which she terms as a “sandwich dilemma.”“Southeast Asian manufacturers depend a lot on Chinese imports, but the regulators [in ASEAN countries] don’t want to see that happening. This is the ’sandwich dilemma' that these countries would be facing if they allow China more free market access as well as easier Chinese imports into their market,” Pananond explained.
“[China-made] goods are often sold below production costs, threatening to overwhelm ASEAN manufacturers, particularly small and medium sized enterprises (SMEs),” they wrote. “Whilst the upgraded FTA includes commitments against anti-competitive practices, enforcement mechanisms remain unclear.”
Teuku Rezasyah has witnessed this transformation firsthand. Bandung—his home city and the heart of Indonesia’s textile industry—has seen local factories steadily disappearing, displaced by cheap China-made products.
Rezasyah said ASEAN members must change their approach with China or its overcapacity will continue to hollow out the region’s industrial base.
“ASEAN needs a plan of action. Yes, China has the technology, management capacity, and the network, but we don’t want to position ourselves as competitors.
ASEAN Sovereignty Could Erode
Ahead of the signing of the upgraded pact, Philippine President Ferdinand Marcos Jr. on Oct. 27 condemned China’s assertive actions in the South China Sea, where tensions between the two nations have escalated through repeated standoffs.China’s foreign ministry reiterated its position, blaming the Philippines for the confrontations in its exclusive economic zones.
Julio S. Amador III, chief executive officer of Manila-based geopolitical consultancy Amador Research Services, warned that as the upgraded trade pact allows Beijing to continue to grow its influence in ASEAN, it could undermine regional backing for the Philippines’ sovereignty claims.
“If member states are working closely with China through ASEAN, it will dilute potential support to the Philippines,” Amador told The Epoch Times. He was a former fellow at the East-West Center in Washington, D.C.
Given the ASEAN’s repeated failure to risk offending China by backing Manila in South China Sea disputes, Amador expects Beijing’s conduct will remain unchanged—or worsen if regional economic integration with China deepens.
“That’s why Manila is trying to expand its defense relationships with other countries. For example, we [Manila] will be signing a visiting forces agreement with Canada on Nov. 2, and other European nations also want visiting forces agreements with the Philippines,” Amador said.
The Philippines is not the only vulnerable state with sovereignty disputes against Beijing, as fellow ASEAN members Vietnam, Malaysia, and Brunei also face Chinese encroachment on their territorial claims in the South China Sea.
If ASEAN members prioritize economic partnerships with communist China over security cooperation with Washington, the region’s ability to counter Beijing’s maritime expansion will be significantly weakened, Amador warned.
“The more Beijing feels confident it can assert dominance over these territorial disputes without effective pushback, the more these countries will realize they need to act. So the pact can weaken and potentially reduce internal cohesion,” Amador said.
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