Economic Ministers from the ten ASEAN member states and China have agreed on an upgrade to the ASEAN China Free Trade Area (ACFTA) – the world's largest in terms of the total population of its signatories.

The move was announced during the 27th Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur. The summit was attended by the Premier of the State Council of the People's Republic of China, HE Li Keqiang, and all heads of states of ASEAN member countries, which comprise Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.

The upgrading of ACFTA aims to "streamline and enhance economic cooperation", in line with the changes in the trade and economic landscape between ASEAN and China, Malaysia's Ministry of International Trade and Industry (MITI) said at the event. It also acknowledges the strong economic relationship between ASEAN and China, the region's largest trading partner.

Two-way trade reached US$366.5bn in 2014, accounting for 14.5% of ASEAN's total trade. ASEAN received $8.9bn in foreign direct investment (FDI) inflows from China, accounting for 7.1% of total inflows to ASEAN in the same year. The upgraded free trade pact is expected to generate two-way trades of $1trn and investments of $150bn by 2020.

Speaking at the event, chairman and Prime Minister of Malaysia, the Honourable Dato' Sri Mohd Najib Tun Abdul Razak, said: "We welcome the successful conclusion of negotiations to upgrade the ASEAN-China Free Trade Agreement (ACFTA) and the signing of the Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation and Certain Agreements between ASEAN and China, and look forward to its early entry into force."

The upgraded protocol is expected to include amendments to the agreement on trade in goods, and the introduction of more flexible rules of origin, as well as amendments in areas such as investment, economy and technical cooperation. 

China has committed to improving services such as construction, engineering and securities, while ASEAN has committed to further opening its service sectors to China such as commerce, construction and finance.

In particular, the meeting reaffirmed a commitment to further strengthen cooperation on the environment and the adoption of the ASEAN-China Strategy on Environmental Cooperation 2016-2020. 

The meeting also underscored the importance of "maintaining peace, security and stability" as well as upholding "freedom of navigation" in and over-flight above the politically vulnerable South China Sea.

Rasak told delegates: "We reaffirmed our commitment to ensure the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea (DOC) in its entirety: to build, maintain and enhance mutual trust and confidence; to exercise self-restraint in the conduct of activities; to not resort to threat or use of force; and for the sovereign states directly concerned to resolve their differences and disputes through peaceful means, including through friendly consultations and negotiations, in accordance with international law including United Nations Convention on the Law of the Sea 1982."

ASEAN leaders also signed a document declaring the formal establishment of an ASEAN Community from 31 December, which Rasak said, is the culmination of a "five-decade long effort of region-building towards a politically cohesive, economically integrated and socially responsible community".

The ASEAN Leaders encouraged China to contribute towards the realisation of the visions and goals outlined in the ASEAN 2025: Forging Ahead Together, which lays out the vision for the next ten years.