China’s largest export market is now much closer to home

China’s largest export market is no longer the US and Europe. They’ve been overtaken by Southeast Asia.

Shipments from China to the members of Association of Southeast Asian Nations have soared to nearly $600 billion a month, based on the 12-month moving averages compiled by HSBC Holdings Plc. That puts the 10-nation bloc well ahead of the US and European Union, which have seen a steep drop in imports from China in 2023.

The shift has been helped by the Beijing-led Regional Comprehensive Economic Partnership, which took effect last year to become the world’s largest free-trade bloc, said HSBC Chief Asia Economist Frederic Neumann. It’s also a testament to the reworking of global supply chains: parts sourced from China are increasingly moving to Southeast Asia for final assembly before being exported to the rest of the world, he said.

The stronger linkage between Southeast Asia and China may even help stabilize global trade at a time when demand from developed markets slump, as Asean’s largest export market is also China, where the goods are consumed domestically.

“In short, one of the key trade corridors in Asia, and, indeed, in the world, is now that between Asean and mainland China,” Neumann said. “Intra-Asian trade is pulling its weight.”