What connects BYD, Aion, Great Wall Motors, and Neta? In 2025, these Chinese electric vehicle manufacturers made significant strides into Southeast Asia, setting up factories in Thailand, Malaysia, and Indonesia.
These factories are not only aimed at meeting the growing demand for electric vehicles in the region but also at leveraging Southeast Asia as a strategic production hub for exports to other markets. By setting up localized production, these companies can reduce costs, navigate trade barriers, and cater to the preferences of regional consumers.
ASEAN, a region home to 650 million people, is becoming increasingly vital for Beijing as it looks to expand the reach of its technologies and products, especially with the United States and Europe tightening access to their markets. However, some nations within the region are starting to implement measures to shield themselves from the influx of Chinese goods.
Between January and October, Chinese exports to the ten ASEAN (Association of Southeast Asian Nations) countries surged by nearly 11%, reaching $473 billion, a significant rebound from the 5% decline recorded the previous year, according to Chinese customs data. Meanwhile, Chinese investment in the region soared by approximately 35%, surpassing $25 billion in 2023. On the political front, Xi Jinping has strengthened ties with the region through two state visits since the lifting of anti-Covid restrictions: first to Thailand in November 2022, and then to Vietnam in December 2023.
An accelerating momentum
China has maintained a significant economic presence in the region for years, supported by sizable Chinese-speaking diaspora communities. For 15 consecutive years, China has been ASEAN’s largest trading partner, while ASEAN has held the position of Beijing’s top trading partner for the past four years.
China’s influence extends beyond trade, encompassing investments in infrastructure, technology, and energy projects across Southeast Asia. Initiatives such as the Belt and Road Initiative (BRI) have further strengthened economic ties, fostering closer cooperation in areas like transportation networks and digital connectivity. Simultaneously, ASEAN nations have sought to balance this deepening relationship with diversification strategies, engaging with other global powers to ensure economic resilience and strategic autonomy.
The movement is gaining momentum, with American and European markets increasingly closing their doors to Chinese products. In the United States, Donald Trump has threatened to impose tariffs of up to 60% on Chinese imports. To circumvent these barriers, numerous Chinese manufacturers are establishing factories in Southeast Asia. “As Western markets become less accessible, the Chinese are turning their attention more toward Southeast Asia,” said Muhammad Zulfikar Rakhmat of the Center of Economic and Law Studies, a Jakarta-based think tank, as quoted by the South China Morning Post.
Measures to Prevent the Influx of Low-Cost Chinese Products
Chinese products have sparked concerns among local businesses across the SEA region. This stems from the competitive pricing and mass production capabilities of Chinese manufacturers, which frequently put pressure on local industries. Furthermore, issues related to product quality, intellectual property rights, and market saturation have intensified debates among stakeholders in the region.
In response, Thai authorities have implemented stricter inspections on Chinese imports and introduced a 7% value-added tax on goods priced below 1,500 baht ($43.77). This move aims to curb tax evasion, ensure fair competition for local businesses, and boost government revenue. Additionally, authorities are working to streamline customs procedures to enhance compliance and reduce loopholes exploited by importers.
In December 2024, Vietnam temporarily suspended the operations of Temu, the budget goods platform owned by Chinese giant Pinduoduo, just two months after its launch in the country. Meanwhile, following pressure from textile workers, Indonesia imposed tariffs ranging from 100% to 200% on select Chinese products.
China’s expanding economy underscores its bid for regional dominance
China’s expanding economy underscores its bid for regional dominance, as the nation continues to invest heavily in infrastructure, technology, and trade partnerships. This growth not only strengthens its position as a global economic powerhouse but also amplifies its influence across neighboring countries. Through initiatives like the Belt and Road, China is redefining regional dynamics, fostering deeper integration while simultaneously asserting its leadership in shaping the future of Asia’s economic landscape.
China’s economic initiatives are bolstered by vigorous diplomatic and political efforts to “integrate” Southeast Asian countries into its sphere of influence, achieving varying levels of success. This region plays a critical role in the “New Silk Roads,” a flagship diplomatic and economic strategy launched by Xi Jinping in 2013 to strengthen China’s ties with its partners, primarily through large-scale infrastructure projects. A notable example is the railway line completed in late 2021, connecting Kunming, the capital of Yunnan Province in southwestern China, to Vientiane, Laos, spanning over 1,000 kilometers.
The railway not only enhances trade and connectivity between China and Laos but also serves as a strategic link in China’s broader Belt and Road Initiative (BRI). By facilitating the movement of goods, services, and people, it underscores China’s commitment to fostering regional economic integration. However, such projects have also sparked concerns among some Southeast Asian nations regarding potential debt dependency and the long-term implications of Chinese influence on their sovereignty. Despite these challenges, China’s growing economic footprint in the region highlights its ambition to position itself as a dominant player in global trade and geopolitics, leveraging infrastructure as a tool for diplomacy and economic expansion.
