Asia reshapes the global trade landscape: Singapore leads in connectivity, regional restructuring accelerates.

Trade Gravity Shifts East: Asia-Pacific's Changing Share

While the world is still debating tariff barriers and geopolitical rifts, a newly released global connectivity report reveals an underappreciated trend: the Asia-Pacific region is redefining the global business landscape with deeper trade density and broader market coverage. In 2025, East Asia and the Pacific accounted for 32% of global trade, up from just 24% in 2001. Over more than two decades, the center of gravity of global trade has shifted eastward at a visible pace, and this process has not been interrupted by US-China frictions; instead, it has found new growth engines within the region.

Singapore: The Deeper Meaning of Ranking First in Connectivity

Among the 180 economies covered by the DHL Global Connectedness Report, Singapore has consistently maintained its position as the world's most connected economy. This city-state ranks first in both trade depth and trade breadth, and second in capital flows. Even more noteworthy is that its inward foreign direct investment stock accounts for the highest share globally—given Singapore's limited economic size, this ranking reflects its exceptional capacity to absorb and reallocate capital as a global capital hub.

Singapore's leading position is no accident. It is simultaneously a key node in international supply chains, the core of Southeast Asian financial services, and a preferred choice for global corporate headquarters. As multinational enterprises reassess their supply chains amid tariff uncertainty, Singapore's strategic value as a connection point with low risk, high transparency, and strong rule of law has been further amplified.

Trade Resilience: A Year That Exceeded Expectations

In 2025, global trade growth hit a multi-year high, excluding the pandemic-disrupted period. Part of the reason lies in US importers front-loading shipments ahead of tariff increases; this "front-running effect" amplified trade flows in the short term. However, what truly supported the continued expansion of global trade was not this one-off behavior, but the significant growth in China's exports to non-US markets.

Notably, the share of direct US-China trade in global trade fell from 2.7% in 2024 to 2.0% in 2025. This decline does not signify a retreat of globalization, but rather reflects a trend of trade "detours" and diversification. US demand remains substantial, but supply sources and market routes are diversifying. Trade ties among Asia-Pacific economies are growing ever closer; China's exports to the ASEAN market rose 13% to US$79 billion, a figure that serves as a key coordinate for understanding Asia's domestic demand chain.

AI Goods: The New Engine of Trade Growth

In the first three quarters of 2025, AI-related goods contributed 42% of merchandise trade growth. This proportion is striking—it shows that global trade growth is no longer led by traditional consumer goods, but driven by the technology supply chain, particularly high-performance computing, semiconductors, and smart devices.Taiwan, South Korea, Singapore, and Malaysia have become the main beneficiaries of this round of AI trade dividends. These economies not only possess mature semiconductor manufacturing capabilities but also hold important positions in advanced packaging, server assembly, and key components. As AI infrastructure investment expands globally, the added value of Asia-Pacific supply chains is rising significantly.

Regional Divergence and Shared Prosperity

The report shows that several Asia-Pacific economies have jumped significantly in the global connectivity rankings. Malaysia jumped 13 places to 16th, Thailand rose 7 places to 27th, South Korea rose 6 places to 31st, Taiwan rose 4 places to 32nd, and Vietnam rose 3 places to 36th. These changes are not isolated events, but rather a microcosm of the restructuring of Asian supply chains.

Malaysia and Vietnam have benefited from manufacturing relocation, absorbing large amounts of production capacity spilling over from China, especially in the electronics and electrical equipment sectors. Thailand, meanwhile, has gained in economic connectivity through its automotive supply chain and tourism recovery. South Korea and Taiwan, driven by the explosive growth in demand for semiconductors and AI hardware, have deepened their integration with global technology markets.

The strengthening of this regional trade network has kept the overall impact of China-U.S. tensions on global connectivity limited. Most countries still maintain close ties with their traditional trading partners, and there has been no dramatic shock of across-the-board "decoupling." World trade has not fractured; instead, it has reorganized into a more dispersed and more polycentric pattern.

People Flows and Capital Resilience

Beyond trade data, people flows have also reached record highs. Immigration, travel, and cross-border student mobility reached unprecedented levels in 2025, particularly in Asia-Pacific hubs such as Singapore and Hong Kong. This people-to-people connectivity is another dimension of globalization beyond trade and investment, bringing knowledge exchange, services trade, and long-term economic linkages.

In terms of capital flows, despite volatility in the global financing environment, cross-border investment has remained resilient. Singapore ranks second in capital flow rankings, continuing to serve as an important gateway for capital entering and exiting the Asia-Pacific. For multinational corporations, the logic of capital allocation is shifting from simply pursuing cost advantages toward greater emphasis on supply chain stability and the institutional environment.

The Next Five Years: Slow but Steady Growth

Looking ahead, the report forecasts that global merchandise trade will grow at an annual rate of 2.6% through 2029. This rate is lower than the historical average of recent decades, but against the backdrop of rising tariffs and intensifying geopolitical risks, it still shows considerable resilience.

The key point is that not all trade is directly related to the United States. Most trade occurs outside the United States, so the dampening effect of U.S. tariffs on total global trade may be offset by trade growth within Asia and between Asia and Europe. Newly signed trade agreements, such as the India-EU free trade agreement, also provide new institutional channels for market diversification.

The Global Order Under RestructuringOverall, the trade leadership demonstrated by the Asia-Pacific region in 2025 is not merely numerical growth, but a reflection of the structural evolution of the global trading system. From the regionalization of supply chains to emerging trade categories led by AI technology, and to the two-way flows of people and capital, Asia-Pacific is becoming the most densely connected zone in the global economy.

As the world's most connected economy, Singapore is the epitome of this new trade network. It has neither a vast domestic market nor abundant natural resources, yet through open institutions, stable policies, and its pivotal geographical location, it has become a key node in the global reallocation of resources. This in itself shows that in an era of uncertainty in the global economy, connectivity is scarcer than scale, and economies that can harness such connectivity will dominate the narrative of global trade in the next cycle.