Thursday, February 20, 2025 – Asia Society Policy Institute (ASPI) has published “ASEAN Caught Between China’s Export Surge and Global De-Risking,” written by Brendan Kelly, Fellow on Chinese Economy and Technology at ASPI’s Center for China Analysis, and Shay Wester, ASPI’s Director of Asian Economic Affairs. The paper examines how China’s industrial overcapacity is impacting ASEAN economies across key sectors, analyzes responses by ASEAN countries and China, and offers policy recommendations to Washington and ASEAN governments.

“ASEAN overtook the United States and the European Union as China's largest export market in 2023, with Chinese exports to the region increasing by an additional 12% in 2024, while ASEAN exports to China rose by only 2%,” write Kelly and Wester. “This influx of Chinese goods, including intermediate goods for re-export and consumer goods for ASEAN markets, has widened trade deficits and intensified pressures on local industries.”

Alongside surging imports from China, Wester and Kelly identify three other trends impacting ASEAN economies:

1. China’s industrial overcapacity is displacing ASEAN exports to third markets.
2. ASEAN is increasingly becoming the key offshore manufacturing base for Chinese companies, particularly in the clean energy sector.
3. The U.S., EU, and other economies like Japan and India are intensifying their scrutiny of exports from Chinese companies operating in or processed through third countries.

“ASEAN governments now face a double balancing act: managing growing economic integration with China while contending with mounting pressures from advanced economies to reduce reliance on Chinese supply chains,” write Kelly and Wester. “These pressures ASEAN faces are already building and are likely to be shaped and accelerated under the new Trump administration and China’s decoupling efforts.”

To address these mounting challenges, the authors suggest that ASEAN must strengthen trade tools, enhance regional coordination to manage import surges, invest in their own competitiveness, and diversify supply chains away from China. The paper also provides recommendations for U.S. engagement with ASEAN.

Read the paper here. Members of the media interested in interviewing Kelly and Wester should email [email protected].