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 labour 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 per cent of the world's industrial robots, with usage levels comparable to 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 per cent in 2000 to 8.9 per cent 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 labour. 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 labour 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. But 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 industrialisation prospects. Sustaining economic dynamism and autonomy is now one of the region's most pressing challenges, the analysis concluded.