TRADE between China and Asean (Association of Southeast Asian Nations) reached 4.34 trillion yuan in the first half (H1) of 2026, an increase of 18.2 percent from a year earlier. Trade in intermediate goods, namely parts, components and other production inputs, rose 24.5 percent to 2.86 trillion yuan in this period, accounting for roughly two-thirds of the total bilateral trade.
Lyu Daliang, spokesman for the General Administration of Customs, attributed the steady growth in intermediate-goods trade to the deepening integration and interlinkages across industrial and value chains between China and Asean.
One framework supporting regional trade is the Regional Comprehensive Economic Partnership (RCEP), a 15-party trade pact bringing together China, Japan, South Korea, Australia, New Zealand and 10 Asean countries. Under its rules, materials originating in one member country and used in the production process of another are treated as originating materials of the latter.
For enterprises like Anhui Sanley Machinery Co. Ltd., a Chinese maker of auto and motorcycle parts, this rule has translated into measurable savings. The company uses precision hardware from South Korea and rubber components from Thailand to manufacture products that are subsequently exported to markets including Indonesia and Malaysia.
Lin Jian, an executive at the company, said its exports to Asean reached 28 million yuan in the first five months of 2026, up more than 10 percent year on year, while RCEP certificates of origin helped its customers save over 2 million yuan in tariffs.
Xu Yingming, head of the international market research institute at a research academy under China’s Ministry of Commerce, said RCEP and the China-Asean Free Trade Area have reduced transaction costs and created conditions for closer integration of regional industrial chains.
The arrangements allow companies to allocate resources across borders at a lower institutional cost, enabling production stages that were once dispersed across different countries to become more closely connected, Xu explained.
To support the seamless flow of resources, transport links are expanding alongside the booming trade. The China-Laos Railway, which links Kunming province with the Lao capital Vientiane, handled 17.17 billion yuan worth of imports and exports in the first half of 2026, surging 33.8 percent year on year.
Imports of tropical fruits including durian, mangosteen and longan rose 25.8 percent to 4.22 billion yuan in this period. The railway now handles more than 3,900 categories of goods, with its freight services extending to markets in 19 countries and regions.
Southeast Asia remains a preferred destination for Chinese companies looking to expand overseas. A January survey by Singapore’s United Overseas Bank (UOB), of 380 owners, executives and key decision-makers at medium-sized and large Chinese companies, found that 80 percent planned to conduct business overseas over the next three years, with Asean emerging as their preferred region. Malaysia, Singapore and Thailand were cited by 56 percent, 54 percent and 51 percent of respondents, respectively, in this regard.
As these companies solidify their footprint in Asean markets, the demand for efficient cross-border financial services has grown correspondingly. Adaline Zheng, president and CEO of UOB China, said that the renminbi was being used in a growing range of scenarios, including cross-border trade, financing and day-to-day cash management.
In addition to the RCEP, China and Asean began building their free trade area in 2002, and the 1.0 version was fully established in 2010. The China-Asean Free Trade Area 3.0 Upgrade Protocol, signed in October 2025, covers nine areas, including the digital economy, green economy, supply chain connectivity, customs procedures and trade facilitation. This protocol is still undergoing domestic approval procedures and has not yet entered into force. xinhua
