ASEAN: Shaping China’s Foreign Policy

By Charlie Stephenson

Source: U.S. Embassy in Malaysia

Amid constant US–China trade tensions, ASEAN frequently features in the headlines. In April 2025, the 37th US–ASEAN Dialogue reaffirmed Washington’s commitment to a Comprehensive Strategic Partnership, while a month later ASEAN met with China and the Gulf Cooperation Council to emphasise expanded trade. With US–China economic friction at its peak, ASEAN’s role is crucial: it is China’s largest trading partner, sits astride key global trade routes, and encompasses much of the strategic South China Sea. This raises a central question: how important is ASEAN in shaping China’s foreign policy?

The Malacca Dilemma

The Strait of Malacca, between Malaysia and Indonesia, is a chokepoint in international maritime trade routes, with around 40% of global maritime trade passing through. An important Chinese military education text explains that ‘At present and for a certain period in the future, the main route of China’s maritime transport is from the South China Sea into the Indian Ocean and the Red Sea through the Strait of Malacca.”. Arguably, the most crucial imported resource for China is oil, which is critical to both China’s industrial and military complexes. China ships in around 11.1 million barrels of crude oil per day, making it the largest importer in the world, and is reliant on foreign imports to provide the massive consumption of 16 million barrels per day. Importantly, up to 80% of this critical resource must pass through the Malacca Straits before entering the South China Sea. 

Indeed, this issue has led many strategists and scholars to coin the region the ‘Malacca Dilemma’. South East Asian foreign policy expert Lucas Myers identifies it as a major ‘economic security problem’, particularly due to ‘the threat of a naval blockade of vital Chinese sea lines’. Yet the Strait of Malacca threatens not only imports: around 60% of China’s total maritime trade by value passes through it. These figures have led defence analysts to argue that China’s recent naval build up has largely been aimed at counter-acting this risk. For example, the new ‘near seas defense, far seas protection’ policy may allude to being able project power to secure the Malacca Strait in wartime. 

However, Beijing still faces significant challenges when mitigating the Malacca Dilemma. As Myer explains, China can ‘safely project power throughout the region’ during peacetime, however, in times of war, ‘its lack of reciprocal military alliances, stable, reliable partners and naval forces capable of contesting the Indian Ocean’ presents a significant issue’. China’s relationships in the region are comparatively weaker and less reliable than those of its key rival, the US. For example, the US possesses reciprocal defence treaties with South Korea, Australia, Japan and the Philippines, which enable it  to project a major naval force in the Indian Ocean and the Malacca Strait. Conversely, China has no regional reciprocal allies, relying instead on informal partnerships with different countries, leading to the discussion on its political posturing within ASEAN. 

Beijing’s Political Posturing 

Whilst it is undeniable that China, like the US and EU, has actively sought closer relationships with ASEAN nations, it is debatable to what extent China has developed soft power within the region. China’s official policy towards ASEAN emphasises ‘friendship and non-interference’, evidenced through treaties such as the China - ASEAN Free Trade Agreement, signed in 2002, cementing economic interdependence. Evelyn Goh, Professor of Strategic Policy at ANU, challenges the belief that China’s goals are militarily driven, explaining that ‘China’s strategy is not to create formal allies, but to cultivate dependence and influence through economic, political, and strategic means’.

Yet some scholars disagree with this consensus, arguing that China’s engagement with ASEAN is not just about cooperation but about expanding its sphere of influence. China gains diplomatic leverage through goodwill and development assistance, such as Belt and Road investments in ports, rail, and energy projects across Malaysia, Thailand, Indonesia and Cambodia. These economic ties can create dependency and encourage political alignment without formal alliances. This is particularly noticeable in smaller ASEAN nations; for example, as of 2024, China owned close to 40% of Cambodia’s foreign debt and 48% of Laos’s foreign debt. In exchange, these nations often support China in ASEAN discussions, especially over the South China Sea, and often vote in alignment with China at the UN. 

One consequence of this is that politically friendly ASEAN states provide China with diplomatic cover in territorial disputes, because ASEAN consensus is required for joint statements condemning actions in the region. As a result, by maintaining strong ties, China can reduce the likelihood of a collectively aligned ASEAN position against any regional ambitions. China’s continued engagement with many ASEAN nations in this way has contributed to a growth in strategic popularity towards China in recent years, as demonstrated in the graph displayed. Ultimately, through clever political maneuvering, China’s strategic position in South East Asia seems to be improving. However, the importance of ASEAN does not only rest on strategic factors, with the ongoing trade with the US ensuing, ASEAN plays a crucial economic role for China going forward. 

The Economic Factor 

Beyond strategic or political benefits, China’s relationship with ASEAN is extremely economically important: with bilateral trade exceeding $970 billion in 2022, ASEAN in China’s largest trading partner. As US tariffs disrupt direct China–US trade, ASEAN provides a major alternative market for Chinese goods. With over 700 million consumers and rising demand, the region absorbs large volumes of Chinese manufactured goods, electronics, textiles and other products.

ASEAN’s importance is underscored by China urging ASEAN to sign an upgraded version of the existing FTA by the end of the year, spurred on directly by the impact of American tariffs. This comes as Chinese exports to ASEAN surged 22.5% in July 2025, reaching $57.1 billion, while exports to the U.S. plunged 33.1% to $31.6 billion, making ASEAN China's top export destination. 

Further, the region is deeply integrated into global supply chains, with many multinational firms, such as Apple and Nike, implementing a “China + 1” strategy, shifting production to countries like Vietnam, Thailand, and Malaysia, while maintaining close ties with Chinese manufacturers. By maintaining strong economic connections with ASEAN, China preserves the economic benefits of manufacturers despite many moving out of the country. Ultimately, ASEAN’s economic importance to China cannot be understated: it provides market access, supply-chain security, and a buffer against global trade tensions, reinforcing the bloc’s centrality to China’s long-term economic growth and regional influence.

ASEAN’s Future with China

Within this context, how does ASEAN fit into the next 10 years of Chinese foreign policy? Looking broader, the ongoing trade war has undoubtedly impacted China’s economy. Yang Zhou’s research with Fudan University highlights that since 2018, tariffs on Chinese goods entering the US have increased from just 3.1% to 19.3%, hitting roughly two-thirds of China’s total exports. This has had a measurable impact, with China’s exports to the US dropping by more than $102 billion between 2018 and 2022, equivalent to about 0.57% of GDP, while its share of total exports heading to the US has steadily declined. Zhou suggests that if tariffs were raised further, China’s exports could fall by 6% in a single year, dragging GDP growth down by as much as 2.5 percentage points over 2025–27. 

Subsequently, it is unsurprising China is looking to firm up its strong existing connection with ASEAN. For example, negotiations have concluded for the ACFTA 3.0, an upgrade of the existing FTA, expected to be approved in the upcoming summit in October. This upgrade will expand cooperation in some key sectors including digital economy, the green economy in addition to further improving supply chain connectivity. Similarly, both parties are pushing for further strategic alignment under the ASEAN-China Comprehensive Strategic Partnership (CSP), aiming to include more frequent summits and broader political dialogue. These measures underscore the increasing necessity of ASEAN to Beijing, which has inspired the new ‘Plan of Action for 2026-2030’ to carry forward cooperation under the CSP, with the vision of aligning with ‘ASEAN 2045: Our Shared Future’. The Plan of Action, released by ASEAN, explains that the goal for the next 5 years is to “Continue ASEAN-China consultations and cooperation through annual ASEAN-China Summit, ASEAN Post Ministerial Conference ASEAN-China Senior Officials’ Consultation, ASEAN China Joint Cooperation Committee and other ASEAN-led fora”. 

Conclusion

ASEAN’s role in Asian geopolitics has long been significant. Ever since its establishment in 1967, ASEAN has played an important role to China and the Asian region more broadly. However in the next decade ASEAN may just step into the limelight and emerge as an even more essential global power as it subtly dictates and navigates the developing competition between the two superpowers. Ultimately, time will tell how ASEAN impacts the geopolitical scene in the next 10 years, however it cannot be denied that it will certainly shape the geopolitical future of China, and by extension, the world. 

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