Xi’s Southeast Asia Tour Underscores Regional Trade Ties

President Xi Jinping’s recent state visits to Vietnam, Malaysia, and Cambodia highlight the key role these nations play in China’s regional trade strategy, particularly as the U.S. escalates its tariff war against Chinese exports. These visits reaffirm China’s dedication to strengthening economic ties with its Southeast Asian neighbors amid external uncertainties caused by shifting U.S. trade policies. [para. 1]

Vietnam and Malaysia stand as China’s largest and second-largest ASEAN trading partners, respectively, while Cambodia regards China as its foremost partner and primary source of foreign investment. As Southeast Asia continues to attract Chinese businesses, the region—especially Vietnam, Malaysia, and Cambodia—has emerged as China’s main overseas manufacturing base, particularly for the photovoltaic industry and automobile manufacturing. Many Chinese automakers view Southeast Asia as a strategic production locality as well as a launchpad for circumventing Western tariffs. [para. 2][para. 3][para. 4]

Yet, these intricate trade relationships are now threatened by the U.S.’s latest “reciprocal tariffs,” announced by President Donald Trump this month. The White House revealed that the tariffs would considerably affect China’s trade and investment flows, with Malaysia, Vietnam, and Cambodia facing additional levies of 24%, 46%, and 49%, respectively. These tariffs specifically target sectors to which Chinese companies have relocated production, including all manufacturing in Vietnam, Cambodia’s garment sector, and Malaysia’s electronics and processing industries. [para. 5]

Focusing on Vietnam, China is its top source of imports, with Vietnamese imports from China amounting to $144.3 billion in 2024. The bulk of this trade centers on electromechanical equipment, categorized under HS Codes 84 and 85, which together account for 40% to 55% of bilateral trade. Notably, HS 85 goods—such as electrical equipment and electronics—represented 40% to 65% of China’s total imports from Vietnam and 30% to 40% of China’s exports to Vietnam between February 2022 and February 2025. Agricultural imports are substantial as well: Vietnam supplied 47% of China’s total durian imports of 1.56 million tons in 2024 and recently overtook the Philippines as China’s largest banana supplier. In light of tariff risks, Beijing and Hanoi have signed fresh agreements covering the export of chili peppers, passion fruit, edible bird’s nests, and rice bran from Vietnam to China, while talks for expanded market access for more agricultural goods are ongoing. [para. 6][para. 7][para. 8][para. 9][para. 10][para. 11][para. 12]

China has been Malaysia’s largest trading partner for 16 straight years, with bilateral trade reaching a record $212 billion in 2024, marking an 11.4% year-on-year increase. Electromechanical products dominate Chinese exports to Malaysia, making up 20% to 30% of exports, while mineral fuels and related products form the largest chunk (40% to 50%) of China’s imports from Malaysia. Malaysia is attracting more attention from Chinese carmakers eager to use the country as both a sales market and a production base for exports to Southeast Asia, Europe, and the U.S. While internal combustion engine vehicles currently dominate Malaysia’s automotive market due to cheap gasoline, companies like BYD, Geely, and Chery are scaling up assembly operations with an eye toward electric vehicle expansion, pending supportive infrastructure. [para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20]

Cambodia, China’s largest trading partner, saw an increase in bilateral trade by 23.8% to $15.2 billion in 2024. Exports from Cambodia to China rose to $1.75 billion, while Chinese imports to Cambodia reached $13.4 billion. China’s main exports to Cambodia are electromechanical goods (nearly 20%), cotton (5%), and fabrics (15%). Cambodian exports to China are more diversified, with clothing and accessories making up 18.7%, leather goods 14.6%, and edible fruits and nuts 13.4%. Agricultural trade is growing fast—Chinese imports of Cambodian agricultural products rose 12.2% year-on-year in the first quarter, now accounting for 25.9% of total imports from Cambodia, driven by sharp increases in items like longan, cassava, and cocoa powder. [para. 21][para. 22][para. 23][para. 24][para. 25][para. 26][para. 27]

In summary, China’s trade with Vietnam, Malaysia, and Cambodia is both strategic and dynamic, but faces potential disruption from escalating U.S. tariffs affecting key industries and regional supply chains. [para. 1][para. 2][para. 4][para. 5][para. 6][para. 13][para. 21]