SE Asia's 'China + 1' Payday Shortchanged By Trump Tariffs

2025-04-15 06:15:53

(MENAFN- Asia Times) When Chinese President Xi Jinping visits Kuala Lumpur this week, marking his first overseas trip of the year and his first to Southeast Asia since the pandemic, he won't just be talking up trade deals and smiling for photo ops.

He'll be bringing something the United States has struggled to offer: a long-term, coherent economic vision for Southeast Asia.

President Xi's stops - Malaysia, Vietnam and Cambodia - are strategic affirmations that China remains ASEAN's most consistent and committed economic partner as US engagement continues to oscillate between promises and pullbacks.

With China-ASEAN trade already nearing US$1 trillion and digital yuan pilots expanding into regional payment systems, Beijing is doubling down on economic statecraft.

Meanwhile, Washington's approach remains reactive - punitive tariffs, vague supply chain“friend-shoring” rhetoric and no substantive trade agreements with the region's major economies.

Nowhere is this gap more evident than in how the US has mismanaged the“China Plus One” (C+1) outcome.

From China Plus One to China Through One

Originally a private-sector response to geopolitical risk, C+1 has quietly evolved into a geopolitical instrument.

Over the past decade, American and related firms have shifted substantial manufacturing capacity from China to Southeast Asia. Initially seen as a way for multinationals to diversify production and reduce dependence on China, Chinese firms themselves began using it as a workaround between 2018 and 2023.

As US tariffs over the years expanded to over 2,000 product lines, Chinese manufacturers responded by rerouting supply chains through ASEAN to maintain access to the American market.

Chinese outbound FDI into ASEAN manufacturing surged from $12.5 billion in 2017 to $37.3 billion in 2023. In Vietnam, 32% of new FDI in 2023 was Chinese in origin , with firms like Luxshare and GoerTek producing electronics for US brands such as Apple.

A 2022 Rhodium Group report documented widespread“indirect export substitution”, where Chinese inputs are finished in ASEAN to avoid US tariffs, then exported to the US labeled as Vietnamese or Thai origin.

C+1, in effect, became“China Through One.”

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