China is actively promoting the optimization and upgrading of the regional economic landscape

As the most dynamic engine of the global economy, the Asia-Pacific region has, over decades of development, formed a closely interconnected system of regional division of labor. However, with Donald Trump returning to the White House in 2025, the United States’ increasingly escalating unilateral trade policies have delivered a severe shock to the Asia-Pacific economic order, pushing the region’s division of labor into a period of profound adjustment. Against this backdrop, China’s strategies to expand domestic demand, advance high-level opening-up and deepen regional cooperation not only anchor its own development, but also provide strong leadership for the economic rebalancing of the Asia-Pacific region.

After the Trump administration launched a trade war against China in 2018, the Asia-Pacific regional division of labor entered a phase of adaptive adjustment. US imports of goods from China fell from $539.5 billion in 2018 to around $400 billion in 2025. In response, China accelerated the building of a dual circulation development paradigm, while its economic and trade ties with the Association of Southeast Asian Nations continued to deepen. Since 2020, ASEAN has been China’s largest trading partner.

Amid shifts in the regional division of labor, Southeast Asia has risen rapidly as a new manufacturing hub, buoyed by large inflows of foreign investment. China has moved up the value chain through industrial upgrading and continues to play the role of a hub in regional industry chains. Yet despite the changes in the production layout, Asia-Pacific economies’ dependence on exports to the US has not fundamentally changed. In 2024, the US’ trade deficit with Asia-Pacific economies exceeded $700 billion, underscoring the persistence of a regional pattern characterized by strong production but weak consumption, with economic growth remaining highly dependent on external markets.

Under mounting external pressure brought about by the US’ unilateral policies, Asia-Pacific economies are increasingly aware that a growth model driven solely by exports is no longer sustainable. Expanding intraregional trade and consumption to build a more balanced and sustainable division of labor has become imperative. In fact, the region’s consumer market holds enormous potential. In 2024, consumer spending in Asia reached $16 trillion, accounting for 27 percent of the global total. It is estimated that personal consumption in the Asia-Pacific region will grow by another $7 trillion by 2033.

However, regional cooperation mechanisms remain relatively loose. Although more than 200 free trade agreements exist in the Asia-Pacific region and the Regional Comprehensive Economic Partnership entered into force in 2022, most agreements remain focused on tariff reductions, with insufficient rules in emerging areas such as the digital economy, environment and labor, which pose constraints to deeper and expanded regional cooperation. Deficits in political trust have also become an obstacle to deeper cooperation. As geopolitics become increasingly intense, some Asia-Pacific countries have been drawn into taking sides, a situation further complicated by historical legacies and territorial disputes, significantly weakening regional political trust and economic integration.

As regional division of labor undergoes adjustment, China — drawing on its own strengths, vast market potential and the guidance from the Recommendations of the 20th Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan (2026-30) for National Economic and Social Development — has emerged as both a stabilizer and a leader of the Asia-Pacific economy.

First, China serves as a stabilizing hub for regional supply chains and an active promoter of high-level opening-up. In the first 10 months of 2025, China’s total trade in goods reached 37.3 trillion yuan ($5.3 trillion), up 3.6 percent year-on-year, making it a top-three trading partner for 157 countries and regions worldwide. According to the recommendations for formulating the 15th Five-Year Plan, China will steadily expand institutional opening-up, align with high-standard international economic and trade rules, actively conclude more bilateral and regional trade agreements, and pursue high-quality Belt and Road cooperation — offering stable expectations and a clear pathway for deeper Asia-Pacific trade and investment ties. President of the Republic of Korea Lee Jae-myung’s recent visit to China, during which both sides reached multiple consensuses on deepening supply chain cooperation and strengthening dialogue in emerging fields, exemplifies China’s commitment to openness and neighborhood cooperation.

Second, China’s technological spillovers and industrial synergies in digital and green transformation continue to grow. For example, BYD’s electric vehicle plant in Thailand has begun operations with an annual capacity of 150,000 units. A $12.6 billion agreement signed with Indonesia focuses on battery and clean energy projects. These initiatives align closely with the emphasis on developing new quality productive forces and promoting green, low-carbon transformation in the recommendations for formulating the 15th Five-Year Plan, providing strong momentum for the region’s digital and green transition.

Third, China is becoming an increasingly important consumer market for the Asia-Pacific region. In recent years, China’s domestic demand potential has continued to be unleashed, with household consumption accounting for a steadily rising share of GDP and consumer confidence indexes significantly higher than those of the US, Japan and the European Union. For several Asia-Pacific economies — including the ROK, Singapore and Australia — China has become the top destination for final consumer goods exports. As the recommendations for formulating the 15th Five-Year Plan place expanding domestic demand at the core of development and deepen the dual circulation development paradigm, China is poised to further leverage its supersized market to offer broader import and growth opportunities for the region.

Finally, China is emerging as an active contributor to global and regional governance. China advocates an equal and orderly multipolar world and inclusive economic globalization, firmly upholding the United Nations-centered international system and the multilateral trading system with the World Trade Organization at its core. By proposing and advancing public goods including a series of global initiatives, China is actively participating in the reform of global governance, addressing the challenges of unilateralism and protectionism, and promoting an open world economy — contributing Chinese wisdom and solutions to the stability, inclusiveness and sustainability of the Asia-Pacific and global economy.

Looking ahead, China’s domestic market will continue to expand with regional cooperation deepening. China will use its own high-quality development as an engine to create broader market space and more diverse cooperation opportunities for Asia-Pacific economies, work with all parties to build a more resilient, fair, inclusive and shared Asia-Pacific community, and inject sustained momentum into global economic stability and sustainable growth.

The author is a professor at the Shanghai Academy of Global Governance and Area Studies at Shanghai International Studies University.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.