China's manufacturing strength limits ASEAN's global market share, highlighting the need for strategic shifts in the region's economic approach.
China's sustained dominance in manufacturing is limiting Southeast Asia's ability to expand its share of global markets, according to analysis published by Canberra's East Asia Forum.
Despite rising labor costs, China still accounts for about one-third of global apparel and footwear exports and remains a leading exporter of electrical equipment and consumer electronics. Industrial policies such as Made in China 2025, supply chain integration, and automation have preserved competitiveness in low-value manufacturing.
Subsidies and supportive policies have expanded China's tertiary-educated workforce, while automation and robotics have lowered costs. China now produces 43 percent of the world's industrial robots, with usage levels comparable to those of richer economies. Artificial intelligence is spreading into textiles and garments, further reducing costs.
China's share of global exports has surged since 2000, while ASEAN's share rose only modestly from 6.7 percent in 2000 to 8.9 percent in 2024. UN trade data show China's market share gains in textiles, machinery, and automobiles, while ASEAN countries such as Cambodia, Indonesia, and Thailand saw declines or minimal increases.
ASEAN industries face constraints in adopting automation due to high costs and limited skilled labor. Robot densities remain low compared to China and OECD countries. Governments are urged to focus on infrastructure, education, and trade facilitation rather than local content policies.
Analysts warn that ASEAN's reliance on cheap labor is becoming less decisive as technology advances. Export-oriented manufacturing may no longer serve as the primary path to development, with some suggesting a shift toward green energy and productivity gains in non-traded services. However, these sectors may not deliver sustained high growth.
Beijing's dual circulation strategy creates a dilemma for ASEAN, which cannot delink from China but faces curtailed industrialization prospects. Sustaining economic dynamism and autonomy is now one of the region's most pressing challenges, the analysis concluded.
