Singapore: In recent years, Chinese manufacturers have increasingly Production moved to Southeast AsiaPulled by the increase in labor costs, geopolitical tensions – in particular the American -Chinoise trade war – and efforts to diversify the supply chains (the “China plus one” strategy). This reflects the relocation of the manufacture of Japan in the 1980s to the 1990s, which helped stimulate industrialization in the region.
However, the question remains: will the “great relocation” of China promote the long-term development of Southeast Asia, or will it leave it in the average income trap and unable to go up the technological and productivity scale? The United States now threatening new steep exports from Southeast Asian countries, the benefits of this change can be at risk.
Investment, infusion, innovation
The prospects for industrialization of Southeast Asia will depend on several factors linked to China's economic commitment in the region. These can be analyzed using the Three I of the World Bank: Investment, Perfusion and Innovation.
The impact of China's investment in the region depends on the volume and the type. The average annual value of Chinese investments Greenfield Foreign Direct (IDE) in the manufacture in Anase has doubled from US $ 6.1 billion from 2016 to 2019 to 12.9 billion dollars from 2020 to 2023.
In 2023, a third of manufacturing investments in Southeast Asia came from China alone. Five countries of the Anase – Vietnam, Thailand, Indonesia, Malaysia and Cambodia – classified among the 15 main world beneficiaries of Chinese manufacturing IED from 2016 to 2023.
In countries like Cambodia and Vietnam, the total Chinese manufacturing IDE between 2016 and 2023 were much more important compared to their manufacturing value and their goods exports in 2016 (the basic year). For example, the total Chinese manufacturing IED in Cambodia between 2016 and 2023 was 2 billion US dollars compared to its manufacturing value of $ 3.2 billion and exports of goods of US $ 8.5 billion in 2016.
However, manufacturing operations give various development advantages, depending on the type of investment. Chinese investments that are high capital intensity and resources, such as Indonesia refining and processing industries, mainly provide critical minerals treated in China.
