Exclusive: ASEAN SG Upbeat on China Ties with FTA 3.0

 Zheng Qingting, 21st Century Business Herald, SFC 

ASEAN and China are working toward a shared future based on long-term peace, economic prosperity, and environmental sustainability. In an exclusive interview with SFC during the just concluded SCO Summit in Tianjin, ASEAN Secretary-General Kao Kim Hourn expressed strong enthusiasm for the China-ASEAN Free Trade Agreement (FTA) 3.0, set for signing at the ASEAN-China Summit in Kuala Lumpur in October 2025. This upgraded agreement strengthens the robust economic partnership between China and ASEAN, boosting bilateral trade, investment, and tourism.

Kao highlighted FTA 3.0 as a pivotal step in deepening economic cooperation and unlocking opportunities in emerging sectors, particularly the digital economy. As ASEAN’s top trading partner, China’s collaboration through this agreement will enhance regional economic vitality and support a rules-based global trade system.

This year's SCO Summit was held in Tianjin from August 31 to September 1, the largest in the organization’s history. Kao praised China’s outstanding leadership as SCO’s rotating chair, noting its significant contributions to regional stability. He expressed optimism about ASEAN-SCO collaboration, seeing it as a catalyst for shared growth.

SFC: This is the 5th time that China has hosted a SCO summit. How do you view China's contribution to the regional cooperation and China's role within the SCO?

Kao Kim Hourn: I think we expect China to play a very important role as a global power and to assume a significant leadership role. This is important because of China’s population, economy, and diplomacy. In that regard, I think China has played a stabilizing role as a force for peace and supports the international law-based multilateral trading system, which is crucial for us. That’s what we in ASEAN have also been supporting. We are a strong proponent of a a rule-based multilateral trading system with the WTO at its core. So we hope in that regard China and ASEAN can work together. What we have been doing together in the context of our comprehensive strategic partnership is key.

SFC: You mentioned that this year’s summit is being held at a critical moment. What are your main expectations for it?

Kao Kim Hourn: We expect that any major outcomes from this SCO summit will make a positive contribution in terms of sending positive signals and important messages for regional and global peace or stability. We also expect to promote greater predictability and certainty. I think we have seen so much uncertainty already, and we don’t want the SCO to add to this layer of uncertainty, but rather to bring greater stability and certainty to the forefront.

SFC: Does the continuous expansion of SCO, to some degree, indicate the rise of the global south? If so, what implications does this have for improving global governance?

Kao Kim Hourn：We’ve seen more platforms and institutions being set up by different interested groups. The SCO has been here for some time and has attracted a lot of interest. For ASEAN, we have been in existence for 58 years. We have made tremendous progress and have attracted significant interest. I think what’s important is that all of this should contribute to a better world, a better humanity, and a more peaceful world, which is in our interest.

And we cannot forget that what we do is for the people. That’s why ASEAN has always advocated for a people-centered, people-oriented ASEAN community. We want to ensure that all the progress and development bring better improvements to the livelihoods of our people. I hope, and I’m sure, the same applies to the SCO—that through collaboration and cooperation, we can bring greater interest at the front. At the same time, this fosters more development for the member states of the SCO and a stronger voice in global affairs.

SFC: Given that expansion, economic cooperation seems to be a natural next step, especially in these uncertain times. In your opinion, what's the potential for ASEAN to strengthen economic cooperation with SCO member countries?

Kao Kim Hourn:  We’ve been doing this already. For us, in this era, with this current development, we are consolidating our economic cooperation by strengthening our FTA. At the same time, we’re working to upgrade our FTA with China, specifically the ASEAN-China FTA 3.0. We are also working to implement the Regional Comprehensive Economic Partnership. Because the more we work together, the more we can benefit together.

On the one hand, we work to consolidate; on the other hand, we work to diversify. It’s important to adopt a diversification strategy, meaning we have to work with new markets and new frontiers, not just stay where we are. I think it’s important that we work together because there’s still a lot of potential between ASEAN and China, despite the fact that we’ve been working together for so long and have been able to trade so much together as the top trading partners of each other.

We want to see more trade between ASEAN and our partners, more investment, more tourism cooperation, and more connectivity, including economic connectivity. Because, at the end of the day, this is what will bring practical cooperation together. That’s what we want to see, and this is something we need to actively promote and maintain.

SFC: Let's zoom in to China-ASEAN cooperation. How do you see the significance of this year in promoting China-ASEAN ties? It seems like a lot of big things are going on. 

Kao Kim Hourn: That’s right. Between ASEAN and China, this year is a very important year. First, we just concluded our ASEAN-China Plan of Action, a new five-year plan. We have many areas of cooperation, from A to Z basically. Second, we will be signing, at the upcoming ASEAN-China Summit in Kuala Lumpur in October this year, an agreement to upgrade our FTA 3.0. This is very important in that regard. Third, we are working together to build what I call 'other platforms' that can create new synergy, of course, besides ASEAN and SCO cooperation under China’s chairmanship this year. Looking at the recently concluded ASEAN-GCC-China Summit, for example, which we did not have before, there are certain areas where we have a lot of interest in working together between the two sides.

One of these areas is renewable energy. What ASEAN is now moving forward with is the ASEAN power grid, and China has a lot of experience in mega energy projects. So, we warmly welcome partners to work with us. Also, in the areas of the digital sector and digital economy, China is leading this. But for us, we want to move ahead in this sector. That’s why we have been negotiating the ASEAN Digital Economy Framework Agreement, which we expect to reach a substantial conclusion this year. We can maximize our digital economy under this framework, leveraging it to about $2 trillion. 

ASEAN today is the third-largest trading bloc by size. At the same time, we have a market of almost 700 million people, and it’s growing. That’s why it’s so important to work together between China, with 1.4 billion people, and ASEAN in that regard. We can create greater economic synergy together. I hope this is the direction we want to take.

SFC: What are your hopes for the upgrade to the China-ASEAN Free Trade Area (CAFTA) 3.0? How could it ramp up trade and investment between us?

Kao Kim Hourn: We have been trading partners, with China being our top trading partner for the past 16 consecutive years, and ASEAN being China’s top trading partner for the past 6 consecutive years. With the upgrade coming up, we expect trade will continue to increase, and we also hope investment and tourism will grow as well. At the same time, the digital economy is an area where we can work together, and that’s where we can have multiplying effects for the two economies working side by side.

SFC: A question you must have been asked a lot these days. How do the big shifts in global supply chains create both opportunities and challenges for China-ASEAN cooperation? 

Kao Kim Hourn: We should never expect things to remain static. We have to constantly look for greater opportunities, greater potentials, and greater possibilities in the way we do business together. Between ASEAN and China, we believe there’s still a lot of potential, a lot of possibilities, and a lot of opportunities to truly take our economic cooperation to another level, based on the foundation we have built over many years. It is through the FTA arrangement, the Regional Comprehensive Economic Partnership arrangement, and the proximity between the two sides. I believe that every sector, if they link up with liberal synergy, will experience the greatest special effects, meaning multiplying effects. I would say that we stand to benefit from this growing partnership between the two sides.

SFC: How do you see the potential to boost economic cooperation between ASEAN and the Greater Bay Area?

Kao Kim Hourn: I think, on the one hand, we are moving away from the traditional areas where we have been cooperating. There are many new areas now through emerging technologies. Also, we will have greater mobility between the two sides. For example, China has offered the "ASEAN visa" for business people. I think it’s good to promote mobility. I hope we could perhaps expand it to the tourism sector so people can travel, learn from each other’s culture, and appreciate each other’s culture. That will be a big boost to the economies. 

Besides high tech, AI, and machine technology, we can do more in all other sectors as well, from food and agricultural products to all other sectors. That’s where we can leverage the strengths of each side. We have to work from strength to strength. That’s the way we have been doing, and that’s the way we should continue to pursue.