China's Shifting Trade Patterns in Southeast Asia

China's exports to Southeast Asia have surpassed those to the United States for the first time, driven by derisking efforts. This shift is primarily a result of China's changing demographics, with a declining working-age population and increasing labor costs. As China's population shrinks, neighboring countries like Mexico and Vietnam are capturing business opportunities and attracting Chinese companies. The trend of Chinese companies moving to Southeast Asia is an interesting development. It could be a response to demographic changes, rising wages, and worker shortages in China. Moreover, Chinese companies are also attempting to circumvent trade barriers by shipping their products to third countries and relabeling them. While these changes in trade patterns may present challenges, they also offer opportunities for developing stronger regional supply chains.