Matthew Moodey, head of trade finance, lending and structured products, Asia-Pacific, at Deutsche Bank

Global trade is being redefined. The long-standing model, in which the West supplied capital and Asia provided low-cost production, is giving way to a new reality. Asia is no longer just a producer of goods but an increasingly critical consumer and capital allocator within its own ecosystem.

Around 50% of trade finance flows within Asia now remain within Asia. Asia was sending its goods out—now it has become the destination.

For decades, Asia’s role in global commerce was characterized by export dependency on Western demand. That relationship has shifted as production, investment, and consumption patterns have become more regionally integrated. “Around 50% of trade finance flows within Asia now remain within Asia. Asia was sending its goods out – now it has become the destination,” says Matthew Moodey, head of trade finance, lending and structured products, Asia-Pacific, at Deutsche Bank.

This transition reflects both macroeconomic and structural changes. The United Nations Conference on Trade and Development’s (UNCTAD) Trade and Development Report 2025 highlights that Asia contributes approximately 60% of global GDP growth, expanding at around 4.5% annually despite global headwinds. The region’s economies – particularly India, Indonesia, and Vietnam – have benefited from sustained domestic investment and stable consumption growth.

Supply chain diversification and frontier market integration

Resilience and diversification are now the defining features of corporate trade strategy. The “China+1” approach – initially adopted to mitigate supply-chain concentration risks – has evolved into a broader transformation of production networks. “Many corporations are no longer just optimizing for cost, but for resilience and sustainability,” Moodey observes.

As China moves into higher-value manufacturing, production activity is increasingly dispersing into frontier and emerging markets. “New flows into Bangladesh, Sri Lanka, parts of Africa, and South Asia are key examples of how supply chains are adapting. These markets are capturing investment in last-mile production and component assembly as firms balance resilience, regulatory risk, and proximity to end markets,” Moodey says.

According to the UNCTAD report, China’s exports to the United States declined by nearly 10% in early 2025, while trade with Asean, Africa, and Central Asia grew by over 7%. The result is a more diffuse and circular trade network across the Global South, with intra-Asian and South-South flows expanding faster than trans-Pacific routes.

For financial institutions, this geographical diversification presents new complexities. Frontier markets often lack established credit frameworks and consistent regulatory processes. “Supporting our clients in these markets requires footprint, credit capacity, and the ability to form sophisticated partnerships. We work with multilaterals such as the World Bank and the Asian Development Bank to de-risk trade flows,” says Moodey.

Infrastructure and regional connectivity

Parallel to supply chain reconfiguration is an infrastructure-led expansion that is reshaping economic connectivity across Asia. Infrastructure development has become one of the most visible forces behind regional growth.

The Middle East is emerging as both a hub for advanced trade logistics and a destination for infrastructure-related goods.

China’s Belt and Road Initiative (BRI) has demonstrated resilience and continued expansion, with record contracts worth US$124 billion signed in the first half of 2025 despite ongoing global economic challenges, according to a report by GlobalData. Activity has increased significantly, with 176 construction contracts and investment deals recorded. The Middle East has emerged as a pivotal region in China’s BRI strategy, with construction engagement reaching US$19.4 billion in the first half of 2025. This positions the region as a key player in the broader BRI framework, particularly in sectors such as digital infrastructure and energy transition.

“There is increased interconnectivity between Asia-Pacific and the Middle East,” Moodey says. The region is emerging as both a hub for advanced trade logistics and a destination for infrastructure-related goods, including renewable energy components from China and precision engineering exports from Japan and Korea.

Deutsche Bank’s integration of its Asia-Pacific and Middle East operations illustrates how financial architecture is evolving alongside trade patterns. “We have combined our Asia-Pacific and Middle East networks because that reflects where we see the greatest opportunities,” Moodey explains. This linkage of trading corridors is creating new value chains that connect Asia’s manufacturing strength with the Middle East’s capital and energy ecosystem, a development that could redefine the geography of global trade interdependence over the next decade.

This surge in infrastructure and logistics investment is also reinforcing intra-regional demand. As infrastructure spending improves connectivity and productivity, consumer bases in emerging Asian economies are expanding faster than those in many developed regions.

Trade digitalization and the imperative of standardization

Amid growing trade flows, the digitization of trade processes remains critical yet underdeveloped. Despite significant technological advancements, global trade continues to rely heavily on paper documentation.

While fintech innovations and blockchain solutions exist, “digitization of trade is not a technology issue; we already have the means to digitize products. It’s a legal and regulatory acceptance problem,” Moodey notes.

The core challenge lies in the fragmented recognition of digital documents, such as bills of lading or letters of credit, across jurisdictions. Questions persist regarding when a sale is legally concluded and which authorities accept electronic trade documents as binding. “We need regulators to accept digital forms of documents, and we need harmonization and standardization across jurisdictions,” he stresses.

Efforts by international organizations are essential in creating a unified framework. Standardized documentation could significantly reduce friction, shorten processing times, and improve transparency across supply chains. Banks have begun building proprietary solutions to enhance digital trade finance capabilities. Deutsche Bank, for example, has developed client portals to streamline data collection and automate parts of the document verification process.

Widespread regulatory alignment would allow digitalization to move from isolated pilots to scalable adoption, reducing operational risk and transaction costs across the trade ecosystem. In this sense, digital trade stands as both a significant efficiency opportunity and a test of multilateral coordination in the global economy.

Navigating complexity and opportunity

The outlook for Asian trade remains robust but complex. The integration of frontier markets, infrastructure-led growth, and digital transformation presents both high potential and structural challenges. Policymakers, corporates, and financial institutions must develop frameworks that balance resilience with efficiency, innovation with regulatory coherence.

The region’s diversity, with distinct rules and growing interconnections between Asia, the Middle East, and Africa, requires sustained institutional adaptability. “Asia is geared up to capitalize on its full potential, but there are headwinds,” Moodey says.