China’s primary export target has shifted from the US and Europe to Southeast Asia.
Monthly exports from China to the Association of Southeast Asian Nations (ASEAN) members have skyrocketed to nearly $600 billion, as indicated by 12-month rolling averages provided by HSBC Holdings Plc. This sets the 10-country group significantly ahead of both the US and European Union, which marked a notable decline in imports from China in 2023.
This transformation has been propelled by the Beijing-initiated Regional Comprehensive Economic Partnership, inaugurated last year, establishing it as the globe’s predominant free-trade area, observed HSBC’s Lead Asia Economist, Frederic Neumann. This change also underscores the evolving dynamics of global supply chains: components from China are progressively being sent to Southeast Asia for final construction before their global distribution, he commented.
The intensifying bond between China and Southeast Asia might contribute to steadying global commerce, especially when the appeal from mature markets fades. Notably, ASEAN’s primary export receiver is also China, absorbing these products for domestic use.
Concisely, Neumann noted, “The focal trade pathway in Asia, and globally, is distinctly between ASEAN and China. Inter-Asian commerce is rising to prominence.”