By Karina Imran
KUALA LUMPUR, Sept 23 (Bernama) -- China, one of ASEAN’s dialogue partners, is expected to highlight supply chain resilience, digital economy cooperation, green transition and trade facilitation at the ASEAN Economic Ministers (AEM) 2025.
Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president, Datuk Ng Yih Pyng said these priorities are in line with ASEAN’s agenda to strengthen regional competitiveness and promote inclusive growth.
“AEM 2025 should advance mutual recognition frameworks and regulatory dialogue,” he said in an interview with Bernama recently.
The 24th AEM-China’s Ministry of Commerce (MOFCOM) Consultation will be held tomorrow, followed by the 28th AEM-Plus Three Consultation.
Meanwhile, IPPFA Sdn Bhd’s director and country economist, Mohd Sedek Jantan said that Beijing is expected to prioritise strengthening supply chain resilience amid global trade tensions, particularly following the imposition of the United States’ (US) tariffs.
A major step in that direction, he said, will be the fast-tracking of the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade Protocol, targeted for signing this year.
The new agreement brings new dimensions, including digital economy cooperation, green transition strategies and supply chain connectivity.
He said China is also likely to press for deeper integration under the Regional Comprehensive Economic Partnership (RCEP), including completing accession processes for aspiring economies in order to expand trade linkages and cushion the impact of protectionist policies.
“These priorities will shape ASEAN’s economic agenda by embedding a future-ready framework into its post-2025 vision, centred on sustainable and inclusive growth.
“It is also expected that discussions will address the destabilising effects of unilateral tariffs and advocate for reforms to the World Trade Organisation, signalling that China will seek collective action with ASEAN to defend rules-based multilateralism,” said Mohd Sedek.
Local Currency for Settlement
Mohd Sedek noted that China’s role in complementing ASEAN integration is likely to extend beyond tariff liberalisation, touching on the more complex domain of structural impediments to trade.
He said non-tariff measures, regulatory fragmentation and logistical inefficiencies remain critical barriers to ASEAN’s competitiveness.
Small and medium-sized enterprises, in particular, face higher compliance costs due to differing standards, such as sanitary and phytosanitary rules, while delays at ports and customs continue to push trade costs higher.
“Beijing may therefore promote mechanisms such as mutual recognition agreements, regional databases on non-tariff barriers and coordinated customs digitalisation, aligning with its Belt and Road transport corridors to reinforce ASEAN Connectivity 2025 at AEM 2025,” he said.
China is also well-positioned to advance ASEAN’s digital and green transition, while ASEAN has developed master plans for both domains. However, implementation remains uneven.
“By exporting capital and technology, whether in cross-border fintech platforms, digital payment systems or renewable energy deployment, China could help operationalise ASEAN’s ambitions.
“In practice, this may involve harmonising standards on cybersecurity, carbon accounting and data flows, creating institutional convergence that boosts intra-ASEAN trade while embedding ASEAN more firmly in global value chains,” he said.
ASEAN’s Payment Connectivity
Ng said the shift toward local currency settlement is a significant step in reducing dependence on the US dollar, which could lower transaction costs and reduce foreign exchange risk for ASEAN businesses.
However, he cautioned that this also requires sound risk management to address currency volatility and the uneven convertibility of ASEAN currencies.
Mohd Sedek opined that the expansion of local currency use in ASEAN-China trade marks a structural recalibration of the region’s financial architecture.
“While the renminbi (RMB) has grown in prominence under Beijing’s internationalisation agenda, ASEAN’s approach is deliberately multipolar.
“Settlement increasingly occurs not only in RMB but also in ASEAN currencies, consistent with intra-ASEAN Local Currency Settlement (LCS) frameworks already operational between Malaysia, Indonesia and Thailand,” he said.
He emphasised that ASEAN does not envisage a single settlement currency to dominate trade, as this would replicate the vulnerabilities of the dollar-centric model.
Diversity to Strengthen Regional Resilience
According to Mohd Sedek, systems like the Cross-Border Interbank Payment System (CIPS) or ASEAN’s own payment connectivity projects represent the operational backbone of this broader shift in trade and finance.
CIPS processed over RMB175 trillion in 2024 and linked more than 100 ASEAN banks, facilitating RMB settlement for goods, foreign direct investment (FDI) and remittances.
In parallel, ASEAN’s payment connectivity initiatives, including QR-linked systems and the Local Currency Transactions framework, allow real-time, low-cost cross-border payments in local currencies, directly supporting SMEs and intra-regional trade, which already accounts for around 23 per cent of ASEAN’s total.
“By providing credible alternatives to dollar-dominated systems, it reduces settlement frictions, enhances liquidity and opens new channels for trade and investment flows.
“From a dedollarisation perspective, these platforms embed resilience by reducing reliance on the US dollar and exposure to sanctions or liquidity shocks,” he said.
Balancing Local Currencies with Global Partners
Ng emphasised that expanding local currency use is not about displacing global partners but about diversifying options and strengthening regional resilience.
“ASEAN and China must balance this development with maintaining open, rules-based trade with the US, the European Union and other partners. The emphasis should remain on inclusiveness, transparency and building trust across all economic partners,” he said.
Mohd Sedek added that ASEAN’s multipolar currency strategy gives it flexibility to engage both China and the US without becoming overly dependent on either.
“ASEAN-China currency cooperation does not need to be a zero-sum outcome.
“If managed carefully, it strengthens ASEAN’s agency, reinforces financial stability and positions the bloc as a pragmatic actor shaping the future of a more multipolar payments landscape, while still maintaining constructive relations with the US and other partners,” he said.
-- BERNAMA
BERNAMA provides up-to-date authentic and comprehensive news and information which are disseminated via BERNAMA Wires; www.bernama.com; BERNAMA TV on Astro 502, unifi TV 631 and MYTV 121 channels and BERNAMA Radio on FM93.9 (Klang Valley), FM107.5 (Johor Bahru), FM107.9 (Kota Kinabalu) and FM100.9 (Kuching) frequencies.
Follow us on social media :
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter : @bernama.com, @BernamaTV, @bernamaradio
Instagram : @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TikTok : @bernamaofficial
