China and the Association of Southeast Asian Nations are a natural fit as trade partners. Not surprisingly, then, the links have strengthened in the last 20 years, thanks to regional trade pacts, the integration of supply chains and rising incomes. Since 1995, trade between China and Asean economies has grown by an average of close to 20 per cent a year, reaching US$358 billion in 2013. China has been Asean's largest trading partner since 2009, with more than 16 per cent of imports coming from China in 2013. But while Asean and China trade links are robust, investment flows between the two are relatively weak. China's foreign direct investment into Asean between 2003 and 2012 was only US$23 billion, and just US$14 billion if Singapore is excluded; that is less than the US$18 billion China invested in Africa during this period (Latin America and Europe received the most funds). It is clear that trade and particularly investment between China and Asean have a lot of room to deepen further as a result of rising domestic demand, their growing importance as global producers of goods and efforts to integrate economically through regional trade pacts. Three major drivers will change this in the years ahead. The first is a series of regional trade pacts. The Regional Comprehensive Economic Partnership will link Asean with six partners with which it has free-trade agreements, including China and Japan. The Trans-Pacific Partnership is a 12-nation pact that, once finalised, could be the world's largest ever free- trade deal. Singapore, Vietnam, Malaysia and Brunei are the only Asean members of the pact. As China is not likely to join in the near future, it will want to enjoy the benefits offered by the Trans-Pacific Partnership through trade relationships with Asean members. Meanwhile, the Asean Economic Community aims to have a single Asean market for goods, services, capital and skilled labour by 2015. The second driver is China's increasing role as an exporter of capital into Asean. This is the result of its high level of savings, the saturation of its domestic sectors (especially property and infrastructure), rising costs of production and domestic deregulation of FDI that will make investing overseas easier for Chinese companies. For example, overseas investment projects valued below US$1 billion are no longer subject to government approval. Thirdly, rising incomes in Asean and China and their different demographic profiles will also be an important part of this process. Tourism is booming as Chinese people get richer - Singapore, Thailand and Vietnam received record numbers of Chinese tourists in 2013. This trend can also accelerate FDI from China as these countries take advantage of rising demand for hotel, restaurant and shopping services. At the same time, ageing populations, while putting pressure on wage costs, represent major opportunities for members of Asean to increase consumption and service exports to China. China's workforce will age more rapidly than Thailand's in the years ahead, pushing up wages. As China moves up the hi-tech, value-added ladder, labour-intensive firms are increasingly moving production from areas such as the Pearl River Delta to Asean countries like Vietnam. We believe Asean and China are only at the beginning of their journey to further strengthen trade and investment links. The relationship may not necessarily travel on a linear path, given ongoing geopolitical complexities. But if recent history is any guide, then pragmatic politicians and business leaders in Asean and China will choose what is best for their economies and their citizens. Trinh Nguyen is Asia-Pacific economist at HSBC