White Papers China Plus X: A New Logistics Map of Asia

Key Concepts

Concepts of Asian Production Network Restructuring

China Plus One

A strategy of maintaining a primary production base in China while establishing one additional production hub in another country, such as Vietnam or India, to reduce excessive dependence on China alone. It has been the most widely used term for describing how companies diversify their production bases.

China Plus X

A strategy of maintaining China's manufacturing base while adding the comparative advantages of multiple production hubs, such as Vietnam, Malaysia, Thailand, Indonesia, and India, to the production processes where they are most needed. X refers not to a single country but to a combination of production hubs, and the key lies in the 'Plus': connecting additional production locations to China rather than replacing it.

Global Value Chain (GVC)

A production structure in which components and intermediate goods repeatedly cross the borders of multiple countries, adding value along the way, before a single finished product is made. The more production is dispersed across countries, the more densely connected the supply chain becomes, rather than shorter.

Intermediate and Capital Goods

Components, materials, and machinery used in local manufacturing, rather than final consumer goods. More than 75% of goods shipped from China to Southeast Asia are intermediate and capital goods, showing that trade between China and Southeast Asia is built on interconnected production networks.

Multi-hub Network

An air cargo network structure that moves beyond a system centered on a small number of major hub airports, interconnecting established hubs such as Shanghai, Hong Kong, and Shenzhen with airports serving multiple production centers, such as Hanoi, Ho Chi Minh City, Penang, Bangkok, and Jakarta.

Air Cargo Metrics and Transport Concepts

CTK, Cargo Tonne-Kilometres

An air cargo demand metric calculated by multiplying the weight of cargo carried by the distance transported. IATA compiles its regional statistics according to airline nationality rather than route origin or destination.

ACTK / CLF, Available Cargo Tonne-Kilometres / Cargo Load Factor

ACTK refers to the maximum cargo-carrying capacity that an airline can provide, and CLF (Cargo Load Factor) refers to the ratio of cargo actually transported (CTK) to available cargo capacity. Looking at both metrics together helps assess the market's supply-demand balance.

Trade Lane

A unit of major trade routes along which air cargo moves, such as Europe–Asia, Within Asia, and Asia–North America. Growth rates and changes in market share by lane serve as indicators of shifts in the center of gravity of global air cargo.

Time-sensitive Cargo

Cargo such as semiconductors, electronic components, pharmaceuticals, prototypes, and urgently needed parts, whose value is significantly higher than their transportation cost and where the losses caused by even a few hours of halted production may exceed the cost of airfreight. Demand for air transport of such cargo grows as the distances between production stages increase.

Belly Cargo / Sea–Air Multimodal Transport

Belly cargo refers to air cargo carried in the lower holds of passenger aircraft, and sea–air multimodal transport combines ocean and air freight. Both are key tools of a strategy that combines multiple transportation modes according to product value, inventory levels, and delivery deadlines.

Logistics in Asia in the China Plus X Era: Key Questions

• Q1.

  How is China Plus X different from China Plus One?

  China Plus One was a strategy of maintaining a primary production base in China while establishing one additional country as a secondary base. However, after experiencing a series of disruptions, including the COVID-19 pandemic, U.S.–China trade tensions and changes in tariff policies, the Russia–Ukraine war, and transportation disruptions in the Red Sea and the Middle East, companies have adopted increasingly complex responses. BCG does not describe global sourcing strategy as simply replacing Chinese suppliers, but as combining multiple approaches, such as securing a second supplier within China or using an emergency backup supplier outside China alongside a primary supplier in China.

  China Plus X is a concept that reflects these changes. Rather than a binary choice of whether to leave China or remain there, it is a strategy of combining the production capabilities of multiple countries with China's manufacturing base, based on product-specific risks, costs, technology requirements, lead times, and market accessibility.

• Q2.

  Does China's role shrink as production bases expand into Southeast Asia?

  China is not disappearing; its role is changing. According to McKinsey, Chinese companies' foreign direct investment in Southeast Asian manufacturing reached approximately USD 24 billion in 2023, roughly one-third of China's total outward foreign direct investment in manufacturing. In addition, 88% of Southeast Asia's trade flows remain within the Asia-Pacific region, and approximately 30% of its export flows are directed to China.

  China is expanding its role from the 'factory of the world' that assembled and exported finished goods into a manufacturing platform that supplies components, intermediate goods, machinery, and technology to production facilities in neighboring countries and participates directly in local production. Even if some finished goods previously exported from China are replaced by products made in Vietnam or Thailand, new demand for intra-Asian air cargo emerges as greater volumes of electronic components, precision machinery, and urgent production materials are transported from China to these countries.

• Q3.

  What does the data show about the growth of Asia's air cargo market?

  According to IATA, global air cargo demand (CTK) increased by 3.4% year-on-year in 2025, reaching an all-time high. During the same period, cargo demand among Asia-Pacific airlines grew by 8.4%, the highest growth rate of any region, and these airlines accounted for 35.9% of global CTK. By route, the Europe–Asia route grew by 10.3% and intra-Asian routes by 10.0%, while the Asia–North America route declined by 0.8% due to factors such as higher tariffs and the reduction of the de minimis exemption.

  In June 2026, global air cargo demand increased by 8.5% year-on-year, and the Asia–North America route rebounded by 14.7%. Intra-Asian routes extended their growth streak to 32 consecutive months, while the Europe–Asia route recorded growth for the 40th consecutive month. In contrast, the Europe–Middle East route plunged by 41.1% due to geopolitical conflicts. As air cargo flows are rapidly realigned in response to tariffs and geopolitical risks, the diversification of air cargo networks across multiple axes is serving as a buffer that prevents disruptions along any single axis from undermining overall growth.

• Q4.

  Will Asia's air cargo demand weaken as e-commerce growth slows?

  No. In June 2026, global merchandise trade increased by 5.2% year-on-year, while air cargo CTK grew by 8.5%. IATA explained that recent growth in air cargo demand has been driven by high-value technology products and urgent shipments.

  High-value, time-sensitive cargo such as semiconductors and electronic components, equipment required for data centers and advanced technology industries, and biopharmaceuticals depends heavily on air transportation because the production processes for these industries are distributed across multiple countries. Even if growth in small e-commerce parcels slows, technology products and industrial goods generated by supply chain restructuring could fill much of the gap, and the air cargo industry therefore needs to redesign its cargo portfolio.

• Q5.

  What role does each of the five countries that make up China Plus X play?

  Each country plays a different role depending on its industrial base, technological capabilities, natural resources, and domestic market. Vietnam is establishing itself in electronics assembly, Malaysia in semiconductor assembly and testing, Thailand in the transition from automobiles to electric vehicles, Indonesia in nickel-based battery materials, and India as both a production hub for electronics and pharmaceuticals and a vast consumer market. ACI forecasts that South Asian air cargo will grow at an average annual rate of 5.5% and Southeast Asia at 5.2% through 2028.

  The dispersion of production creates new air cargo connections. Foreign direct investment (FDI) inflows into ASEAN increased by 8% year-on-year to USD 226 billion in 2024, and manufacturing FDI rose by approximately 150% to USD 44 billion. While minerals and raw materials are primarily transported by sea, time-sensitive cargo required to operate production lines, such as automotive electronics, prototypes, precision components, and maintenance parts, translates into demand for air transport.

• Q6.

  How is competition among Asia's air cargo hubs changing?

  Despite Southeast Asia's strong growth, China's air cargo market is also projected to expand at an average annual rate of 4.4% through 2028. The rise of Southeast Asia does not necessarily mean a weakening of Chinese hubs, and logistics flows between China's major cargo hubs, including Shanghai, Shenzhen, Guangzhou, Zhengzhou, and Hong Kong, and Southeast Asian production hubs may actually increase.

  Accordingly, Asia's air cargo network is expected to evolve beyond a structure centered on a small number of major hub airports toward a multi-hub network in which established hubs are interconnected with airports serving multiple production centers. Airport competitiveness will also extend beyond cargo-handling volume to include facilities capable of safely handling semiconductors and electronic components, cold-chain infrastructure, automated sorting systems, and digital platforms that connect customs authorities, airlines, and freight forwarders in real time.

• Q7.

  What opportunities does China Plus X offer Korean air logistics companies?

  In 2024, transfer cargo accounted for 1.18 million tonnes, or approximately 40%, of the 2.95 million tonnes of international air cargo handled at Incheon International Airport, reinforcing its position as a logistics hub in Northeast Asia. Beyond its traditional role as an intermediate transfer point for China–North America cargo, Incheon can expand its role into a hub connecting Korea's semiconductor, battery, and automotive parts industries, China's supply chains, and production hubs in Southeast Asia and India, then linking them onward to markets in North America and Europe. In 2025, dedicated freighter cargo volume at Incheon Airport fell by 0.7%, but increased belly cargo offset the decline, lifting total cargo throughput by 0.3% to 2,954,684 tonnes and demonstrating the effectiveness of a strategy that combines multiple transportation modes.

  Going forward, the competitiveness of logistics companies will no longer be determined solely by their ability to transport cargo quickly. Key competitive advantages will include supply chain visibility to manage production facilities and inventories dispersed across multiple countries in real time, customs and rules-of-origin data management to track value added, rules of origin, and applicable tariffs across multi-stage production processes, inventory optimization and risk forecasting to identify risks in advance, and the rapid provision of alternative transportation routes by immediately switching among air, ocean, and multimodal transportation when supply chain disruptions occur.