ASEANIsNotaRepackagingCenterforChineseGoods

As the Association of Southeast Asian Nations experiences rapid economic expansion, trade between China and ASEAN has more than doubled over the past decade, officially surpassing the $1 trillion mark in 2025.

Amid the accelerated restructuring of global supply chains, a crucial debate has emerged among global investors and policymakers: Has ASEAN evolved into a genuine global manufacturing hub, or is it merely functioning as a trade conduit to bypass international tariffs?

To answer this, we must look beyond surface-level trade volumes and examine the underlying value-added data. While nations like Vietnam, Thailand and Singapore serve as primary re-export nodes in sectors such as electrical and optical equipment, textiles and chemicals, they are not simply acting as waystations for Chinese goods.

The data reveals that ASEAN countries are actively engaged in authentic production processes rather than mere transshipment. Take Vietnam, for example, which has become China’s largest trading partner within the bloc. In the electrical and optical equipment sector, the domestic value created locally within Vietnam is more than 1.5 times the value of the upstream inputs imported from China. In the labor-intensive textile and leather industries, this ratio is even more striking, with Vietnamese local value added exceeding Chinese inputs by more than a factor of three.

These figures decisively refute the narrative that Southeast Asia is merely a repackaging center for Chinese manufacturers. Under the rules of origin and value-proportion thresholds, countries like Vietnam are effecting substantial transformations on imported materials. The reality is a deeply integrated, vertical division of labor: China supplies upstream components and materials; ASEAN undertakes substantive processing and manufacturing; and the finished products are exported to global markets.

The economic gravity of this relationship is heavily concentrated in the six core ASEAN economies: Indonesia, Singapore, Thailand, the Philippines, Malaysia and Vietnam. Together, these nations account for nearly 97% of the bloc’s gross domestic product in 2025. Vietnam stands out with an impressive 8% growth rate this year, making it the focal point of global supply chain reconfiguration. Meanwhile, traditional hubs like Singapore maintain their distinct roles, pushing forward advanced manufacturing visions while remaining premier global transshipment centers.

The nuances of this cross-border integration vary by country and industry. Cambodia exhibits the highest reliance on upstream Chinese inputs for its processed exports, whereas Indonesia and Malaysia largely absorb Chinese imports for domestic consumption rather than re-export. Yet, the overarching trend is one of deepening structural ties. Over the past decade, the proportion of Vietnam’s imported, processed and exported goods that trace their origins back to China has surged from roughly a quarter to nearly half.

Crucially, this dynamic is being reinforced by shifting investment patterns. Since 2021, China’s direct investment in ASEAN has pivoted decisively toward the manufacturing sector. This capital flow is driving the expansion of intermediate goods trade and upgrading the region’s industrial capacity. In 2024, Chinese investment in ASEAN’s professional, scientific and technical activities saw a massive spike, fueled by the global artificial intelligence boom and a push for advanced manufacturing.

As global trade architectures continue to fragment and realign, the China-ASEAN economic corridor remains a beacon of robust integration. Upstream supply and downstream processing are not competing forces; they are complementary gears in a new industrial engine. Looking ahead, deepening manufacturing investments and technological cooperation will only strengthen this value-chain collaboration, propelling both China and ASEAN up the global economic ladder.

Cheng Shi is the chief economist at ICBC International. Yin Xueyu is an economist at ICBC International.

The views expressed in third-party articles are those of the authors and do not necessarily reflect the positions of Caixin.

Contact editor Lu Zhenhua (zhenhualu@caixin.com)