China has been the main trade partner of emerging and developing Asia for nearly two decades.

During that time, the ASEAN -- association of eleven countries of Southeast Asia -- became the fastest growing segment of the world economy and China’s by far the largest market for its goods and services.

In the first half of this year, their bilateral trade soared 22.5 percent to $626 billion, exceeding China’s trade with the U.S. and the European Union (E.U.) by 117 percent and 40 percent, respectively.

A particularly important aspect of that Asian trade relationship is its remarkably balanced growth: ASEAN’s sales to China increased 22 percent and China’s sales to ASEAN rose 23 percent.

That is a striking difference with zero percent growth of U.S.-China trade, with a 0.2 percent growth of China’s sales to the U.S. and a 1 percent decline in China’s purchases of American exports.

China’s trade with the E.U. is a matter of increasing political tensions, but it showed much better outcomes: a 14 percent growth of bilateral trade, with a 9 percent increase of E.U. sales to China dwarfed by a 17 percent rise of Chinese exports to the European trade bloc.

China’s maritime borders

This brief review of China’s trade shows strong and growing economic ties with its Southeast Asian neighbors, despite contested maritime borders and overlapping territorial claims in the South China Sea.

China’s expansive maritime sovereignty assertions present serious economic and security problems. So far, the Philippines are the only neighbor to have challenged China. Manila sued and won in 2016 at the Permanent Court of Arbitration (PCA), an intergovernmental organization in The Hague (Netherlands) established to facilitate resolutions of disputes between states and state entities.

The PCA ruled that China's border claims ​in the South China Sea had no basis under ​international law. And China was reminded of that by the Joint Statement of 14 countries on July 11, 2026, to commemorate the tenth anniversary of PCA’s landmark decision constituted under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS).

China has never accepted that arbitration award, calling the whole process a “political farce,” alleging that the tribunal ”exceeded its authority” and “abused its jurisdiction.” That, in Beijing’s view, rendered the ruling “illegal, null and void.”

As a result of that, there are permanent skirmishes between the Chinese coast guard and Filipinos around the Scarborough Shoal (Huangyan Dao, for China).

Those skirmishes, however, are part of much more serious confrontations. China’s border claims are clashing with international laws in the South China Sea where an estimated one-third of global shipping is taking place. That is also an area patrolled by the U.S. 7th Fleet to uphold the freedom of navigation and overflight.

What we have here is a permanent standoff between two nuclear armed superpowers.

U.S. – China strategic stability

It is, therefore, illusory to expect that problems of China’s maritime borders could be solved – as Beijing wants – through direct negotiations between Asian neighbors, based on the Code of Conduct of the Parties in the South China Sea, initiated in 2002 and expected to be signed during the ASEAN summit in Manila, Philippines next November.

Apart from the Philippines, a U.S. treaty ally, there is also Japan, another U.S. treaty ally, which administers islands (Senkaku, Diaoyu Dao for China) in the East China Sea claimed by China.

And all that means that the U.S. is party to any conflicts between the Philippines and Japan with China.

There is nothing new there. In spite of that, China continues to build rapidly growing trade relations with its Southeast Asian neighbors. In the first half of this year, 90 percent of that trade was transacted with ASEAN’s five largest economies: Vietnam, Malaysia, Indonesia, Thailand and Singapore, in that order of importance.

Judging by soaring and well-balanced bilateral trade flows all those countries have every incentive to keep trading with China.

Philippines may also reconsider because no other ASEAN country seems interested in supporting its hostility toward China. Manila could take a leaf from Vietnam’s highly lucrative modus vivendi with China by setting aside overlapping territorial claims. In fact, Vietnam is China’s by far the largest Southeast Asian trade partner.

And then there is a good possibility that Washington could find an "art of a deal” to take up China’s standing proposition for a "win-win cooperation." The U.S. State Secretary Marco Rubio spent 90 minutes talking about that with China’s Foreign Minister Wang Yi in Manila last Wednesday, July 22, 2026. After all, their bosses, Trump and Xi, want a productive and successful meeting next September.