In April 2025, China’s export sector defied expectations, growing by 8.1% year-on-year in USD terms — far exceeding the 1.9% increase forecast by economists. While exports to the U.S. fell sharply by 21.3%, exports to ASEAN countries surged by 21%. At first glance, this shift might suggest a healthy diversification in China’s trade partners. But dig deeper, and the reality is far more complex — and strategic.
Two prevailing views help unpack what’s really driving this ASEAN surge:
- ASEAN as a Re-Routing Hub, Not the End Market
Many trade analysts argue that the recent spike in Chinese exports to ASEAN is not fueled by rising consumer demand in Southeast Asia. Quite the opposite. ASEAN nations simply cannot absorb such large volumes of goods — especially in categories that closely mirror what Chinese companies used to sell directly to the U.S. Instead, these shipments are being rerouted through Vietnam, Thailand, or Malaysia and then exported onward to the U.S., often relabeled or modified slightly to avoid tariffs.
This practice, known as transshipment, highlights a key loophole in America’s tariff strategy. If the U.S. does not address indirect exports, Chinese goods will continue to reach American consumers, albeit via longer and costlier routes. As one observer put it: “If the loophole isn’t closed, no amount of tariffs will really matter.”
- Real Supply Chain Shifts: Equipment and Raw Material Exports
However, there’s more than just creative customs work at play. Exporters based in southern China — especially Shenzhen — report a genuine boom in outbound shipments to ASEAN due to factory relocations. As labor costs rise and geopolitical risks grow, manufacturers are moving assembly lines to countries like Vietnam and Thailand. But these moves don’t happen overnight. The early stages involve shipping vast quantities of machinery, production equipment, and raw materials to set up new facilities.
This represents a real transformation in supply chain architecture, and it’s moving faster than many expected. One exporter shared: “It’s not just finished goods — we’re sending factory machines, moldings, copper wire, even management software. Supply chains are moving, and they’re moving fast.”
The Bigger Picture: Strategy or Survival?
Both phenomena — transshipment and supply chain relocation — are responses to the same issue: the rising cost and complexity of exporting directly to the United States. Whether Chinese firms are finding legal workarounds or physically uprooting factories, the goal remains the same: retain access to the U.S. market.
This also helps explain why Beijing has taken a more cautious tone in recent trade discussions. If exports to the U.S. can continue indirectly — even at higher costs — the urgency to negotiate or make concessions is significantly reduced.
Conclusion
China’s export growth to ASEAN is not merely a sign of stronger ties with its regional neighbors. It reflects a deep strategic recalibration of trade routes, logistics, and manufacturing. The U.S., meanwhile, faces a difficult question: how do you enforce tariffs in a globalized supply chain where the lines of origin are increasingly blurred?
Whether it’s workaround or evolution, one thing is clear: global trade is adapting — fast.