Kathmandu— Trade between China and the Association of Southeast Asian Nations (ASEAN) continues to expand rapidly, reaching 248.21 billion yuan (approximately 36.6 billion U.S. dollars) in the first seven months of 2026 – a year-on-year increase of 2.5 percent and a record for that period. This growth is driven by increasingly interconnected industrial and value chains, facilitated by agreements like the Regional Comprehensive Economic Partnership (RCEP) and the China-ASEAN Free Trade Area. Freight transport links are also expanding, with daily rail services connecting southern China to Vietnam carrying both manufactured goods and agricultural products. The trend reflects a broader pattern of strong economic performance in Asia despite global headwinds.

Expanding Trade Volumes

Latest data from Nanning Customs indicates that trade between Guangxi Zhuang Autonomous Region and ASEAN nations reached 248.21 billion yuan during the first seven months of 2026, marking a new high for this period. Notably, trade with Vietnam saw a 3.3 percent increase, reaching 183.71 billion yuan. At the national level, China-ASEAN trade totaled 4.34 trillion yuan in the first half of 2026, an 18.2 percent jump compared to the previous year.

Intermediate Goods Drive Growth

A significant portion of this growth is attributed to a surge in intermediate goods – parts, components, and production inputs – which rose by 24.5 percent to 2.86 trillion yuan, accounting for approximately two-thirds of total bilateral trade. Lyu Daliang, spokesperson for the General Administration of Customs, highlighted that this increase demonstrates the deepening integration and interlinkages between China and ASEAN’s industrial sectors.

RCEP Facilitates Trade Savings

The RCEP agreement, which came into effect in January 2022 and became fully operational for all signatories in June 2023, plays a key role in facilitating this trade. The rules of origin within the pact allow materials sourced from member countries to be treated as originating materials when used in production elsewhere. Anhui Sanley Machinery Co., Ltd., a Chinese auto parts manufacturer, has benefited directly from RCEP, with its exports to ASEAN increasing by over 10 percent in the first five months of 2026 and customers saving over 2 million yuan in tariffs through certificates of origin. Lin Jian, an executive at the company, noted these savings.

Infrastructure Investments Support Connectivity

Supporting this trade expansion are significant infrastructure projects. The China-Laos Railway, operational since December 2021, saw its imports and exports surge by 33.8 percent year-on-year in the first half of 2026, reaching 17.17 billion yuan. Imports of tropical fruits like durian and mangosteen increased by 25.8 percent to 4.22 billion yuan during the same period. Furthermore, the Pinglu Canal in Guangxi is nearing completion, expected to open in September and shorten inland-water routes to the sea by over 560 km.

ASEAN a Preferred Destination for Chinese Investment

A survey conducted by United Overseas Bank (UOB) revealed that ASEAN remains a top destination for Chinese companies seeking overseas expansion. The January 2026 survey of 380 Chinese business leaders found that 80 percent plan to conduct international business over the next three years, with Malaysia, Singapore, and Thailand being particularly favored locations – cited by 56, 54, and 51 percent of respondents respectively. Adaline Zheng, president and CEO of UOB China, noted a growing use of renminbi in cross-border transactions within the region.

The China-ASEAN Free Trade Area 3.0 Upgrade Protocol, signed in October 2025, is currently undergoing domestic approval procedures to further enhance cooperation in areas such as the digital economy and green initiatives. These developments suggest a continued strengthening of economic ties between China and ASEAN.

(With inputs from Xinhua)

Originally published on abcnews.com.np.