Unlocking the next chapter in ASEAN-China cooperation: Smart and connected

Ensuring the ASEAN-China corridor reaches its potential will have positive effects for businesses around the globe.

18 August 2025

7 mins

Corporate & investment bankingCorporate strategyTrade corridors

This article is produced in partnership with Reuters Plus, leveraging insights from Standard Chartered’s annual flagship China Summit on 5th June 2025.

Amidst turbulent times, marked by rising protectionism and escalating trade tensions, the strengthening of ties between the Association of Southeast Asian Nations (ASEAN) and China offers a note of optimism. Already each other’s largest trading partner, this relationship is only likely to strengthen with the signing of the ASEAN-China Free Trade Area (ACFTA) 3.0, slated for October 2025.

The pace of trade growth between the two blocs is astounding. ASEAN overtook the United States and the EU to become China’s largest export market in 2023: increasing by a further 10 per cent in 2024. Building on its predecessor, signed in 2015, the upgraded ACFTA 3.0 emphasises the digital and green economies, as well as supply chain cooperation—three overarching themes that are likely to shape our collective futures.

“The China-ASEAN corridor is a strategic growth engine anchored in resilient supply chains, accelerated digitalisation and a shared commitment to sustainable development,” said Chow Wan Thonh, Head of Banking and Coverage for Singapore and ASEAN at Standard Chartered, during the bank’s annual flagship China Summit in early June.

ASEAN the super-connector

ASEAN is a pivotal trade super-connector, with almost a third of the world’s seaborne trade passing through its waters, linking businesses from East to West. Together, ASEAN and China form the core of the world’s manufacturing ecosystem, dominating the production of semiconductors; electronics, consumer goods; automotive parts and garments. As companies globally move to reduce over-reliance on single-country sourcing, prompted by disruptions such as natural disasters, ASEAN is playing a growing role in the supply chain ecosystem, especially in midstream and final assembly.

Standard Chartered’s Chow stresses the importance of flexible, diversified and well-capitalised ecosystems to ensure resilient supply chains. “Supply chains need to be treated as part of a company’s overall strategy,” she says. “Whether it’s new suppliers, upgraded logistics or expanded warehousing, these moves require reliable capital support — and that’s where financial partners come in.”

The next EV manufacturing powerhouse

One of the most compelling examples of ASEAN-China trade complementarity is electric vehicle (EV) manufacturing. “In the early years, Chinese companies’ investments in ASEAN were concentrated in textile and machinery manufacturing. More recently, we have observed a significant shift in investments flowing into emerging technological industries, such as EVs, batteries, and renewables like solar,” says Chow.

By combining Southeast Asia’s massive mineral riches and manufacturing capability with China’s technological expertise, the region is well-placed to become an EV manufacturing powerhouse. Indonesia, which holds the world’s largest nickel reserves—a key component of EV battery components—accounts for 50 per cent of the world’s nickel production, attracting significant investments from Chinese firms. 

Wu Yan Jun is Executive Director and Board Secretary at lithium-ion battery producer Rept Battero Energy Co. Ltd, whose parent is the world’s largest stainless steel and nickel producer Tsingshan Group. Indonesia offers a “very complete industrial chain,” he notes. “We have good infrastructure there, including electricity, docks, support facilities, machinery and equipment as well as personnel. So, when we considered internationalisation, Indonesia offered the lowest risk with the highest return.”

“Southeast Asia is definitely a key opportunity market for China’s overseas expansion,” agrees Tang Liming, Chief Product Strategy Officer at Geely Auto Group. Geely bought 49.9 per cent of Malaysian automotive company Proton in 2017 and is now in discussions with the Malaysian government to develop a high-tech automotive industrial park. “A win-win situation for all is imperative for overseas developments to succeed,” Tang added. “This means not only Geely succeeding but ensuring our partners; customers; dealers and the entire system local ecosystems also benefit.”

Relationships are also key, says Wang Lei, Head of Capital Markets at Horizon Robotics, whose chips and software are in one in three EVs in China. While Horizon negotiates directly with car companies in China, in overseas markets their introductions are usually through Tier 1 suppliers. The strategy is “to develop strong relations with our Tier 1 suppliers to enter overseas markets together,” said Wang.

AI: The next-gen connector

While physical supply chains remain crucial, digital infrastructure and AI are increasingly the connective tissue of modern economies. ASEAN and China are already deepening cooperation in smart manufacturing, cloud computing and intelligent logistics, laying the foundation for an AI-enabled growth model.

“In China, AI and digitalisation have already improved productivity and reduced costs,” said Sunil Kaushal, Global Co-Head of Corporate and Investment Banking and CEO of ASEAN and South Asia at Standard Chartered. “As these technologies spread across ASEAN, the productivity uplift will be significant.” Alibaba recently opened its second data center in Thailand, following its first in 2022, in response to rising demand particularly to support generative AI applications. Selina Yuan, Vice President of Alibaba Group and President of Alibaba Cloud Intelligence International Business, shared how the company will invest over $30 billion globally in cloud computing and AI infrastructure. “Whether it’s in sales, solutions, or service support, much of our talent is local,” she says.

Linda Sheng, General Manager of International Business at AI start-up MiniMax highlighted how AI has to be trained with a balanced and global view. “Training AI models is like recruiting from many different universities, each with distinct cultures and values that influence the model’s intelligence. Which is why no single country should dominate this process.”

Still, Sheng believes that with shared of technology, as encouraged under ACFTA 3.0, ASEAN can leapfrog legacy barriers, thanks to the levelling effect of digital infrastructure.

Prioritising sustainability

The transition to more sustainable business practices is a shared priority for ASEAN and China. With an alignment of standards under ACFTA 3.0, this has the potential to unlock Southeast Asia’s so called ‘green economy’, which is expected to reach USD300 billion by 2030.

China is already a major investor in Southeast Asia, particularly in renewables and EVs. Around 30 per cent of China’s global solar plant investments are in Southeast Asia.

In 2024, clean energy sectors accounted for a record 10 per cent of China’s GDP, showing that sustainability is a genuine growth driver. This same opportunity exists for ASEAN as the two blocs leverage each others’ resources and strengths to support shared sustainable ambitions.

According to Southeast Asia’s Green Economy 2025 report, there is great potential to accelerate the use of AI-driven solutions across key sectors like power, transportation and agriculture, for example modernising the SEA grid through co-investment and local manufacturing.

Not just a regional story

ASEAN and China have always shared deep historical, cultural and economic ties and current geopolitical realignments are drawing them even closer. “Considering the complexity of today’s global economy, the foundation for success lie in cooperation, stability and shared responsibility,” said Berlianto Situngkir, Consul-General of the Republic of Indonesia.

Trade between the two is expected to achieve a compound annual growth rate (CAGR) of 6.6 per cent, outpacing the global CAGR average of 5 per cent, according to Standard Chartered’s Future of Trade report. “As our clients deepen trade and investment across the China–ASEAN corridor, we offer an integrated platform to help them manage risk, access capital, and boost productivity,” said Standard Chartered’s Kaushal.

Maintaining the dynamism and resilience of the ASEAN and China corridor has resonances far beyond the region itself. As a significant enabler of global trade and a connector between East and West, ensuring the corridor reaches its potential will have positive effects for people and businesses around the globe.

All speakers were part of Standard Chartered’s annual flagship China Summit in Shanghai on 5^th June 2025.