Southeast Asian leaders began a two-day summit in Kuala Lumpur on May 26, 2025, to strengthen economic ties with China and Gulf nations while mitigating the fallout from US President Donald Trump’s tariff hikes.

The 10-member ASEAN is prioritizing trade and economic cooperation during the meeting. Discussions will also cover ongoing conflicts in Myanmar and Gaza.

Leaders from the Gulf Cooperation Council, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, are attending. China’s Premier Li Qiang is also present, while the United States and other Western nations are absent.

The summit follows recent visits by Chinese President Xi Jinping to several ASEAN countries, where he promoted closer economic partnerships.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ ASEAN’s evolving economic integration reflects a decade-long strategic pivot

ASEAN’s current focus on deepening ties with China and Gulf nations builds on economic integration efforts dating back to the ASEAN Economic Community (AEC) establishment in 2015 1.

The China-ASEAN trade relationship has grown dramatically, from historically significant levels to nearly $982 billion in 2023, making China ASEAN’s largest trading partner and accounting for 16% of China’s total foreign trade 2.

This pivot is part of a longer-term strategy, with previous ASEAN summits consistently emphasizing sustainable development and regional cooperation, as seen in the 2019 Bangkok Declaration, which already highlighted concerns about US-China trade tensions 3.

The strategic importance of this evolving integration is highlighted by Southeast Asian nations’ growing participation in China-led initiatives, with Indonesia joining BRICS as a full member and Malaysia, Vietnam, and Thailand receiving partner status this year.

2️⃣ US-China trade tensions create both risks and opportunities for ASEAN economies

Southeast Asian nations face significant economic disruption from escalating US-China tensions, with the IMF warning of a potential 0.5% GDP contraction in emerging markets due to trade disruptions 4.

Malaysia’s hosting of China and Gulf states at this summit reflects a deliberate strategy to diversify economic partnerships as protection against US tariffs, which could reach up to 49% for some Southeast Asian exports 4.

The region faces a complex challenge: benefiting from manufacturing shifts away from China while simultaneously managing the risk of Chinese products being dumped in ASEAN markets, with Indonesia recently proposing a 200% tariff on Chinese goods 5.

The economic stakes are substantial, as US-ASEAN trade reached $476.8 billion in 2024, with $352.3 billion being American imports from the region—making ASEAN countries vulnerable to potential tariff actions.