China signed an upgraded free trade agreement with the Association of Southeast Asian Nations (ASEAN) on Tuesday, positioning itself as a counterweight to U.S. protectionism and deepening its economic influence in the region.

Premier Li Qiang told the ASEAN-China summit that closer cooperation with Beijing could help the region weather global economic uncertainties. He took a veiled swipe at Washington, saying that “pursuing confrontation instead of solidarity brings no benefit.”

The ASEAN-China Free Trade Area 3.0, signed in Kuala Lumpur, aims to expand trade, investment, and digital cooperation among a market of more than 2 billion people. It updates the original 2002 agreement to include areas such as green energy, e-commerce, and support for small businesses.

Two-way trade between ASEAN and China has grown to nearly $1 trillion, making them each other’s largest trading partners. Li described the nations as “good neighbors and good brothers,” saying mutual reliance could counter “unilateralism and protectionism.”

However, tensions were visible. Philippine President Ferdinand Marcos Jr. welcomed the deal but cautioned that “cooperation cannot exist alongside coercion,” referring to China’s aggressive actions in the South China Sea. He urged Beijing to respect international law and avoid “dangerous harassment” of Philippine vessels.

The summit also reflected ASEAN’s balancing act between Beijing and Washington. Malaysian Prime Minister Anwar Ibrahim, the current ASEAN chair, said the bloc seeks “steady engagement” with all powers. “Yesterday we were with President Donald Trump, and today we are back with China,” he said.

Analysts said the upgraded pact highlights how countries are diversifying trade ties as U.S.-China tensions persist.