No Mere Shock Absorber: ASEAN Setting Terms On China Trade

2025-06-25 08:11:04

(MENAFN- Asia Times) China's manufacturing surge – dubbed by some as the“Second China Shock” – has raised fears that a deluge of cheap Chinese imports could deindustrialize large swathes of Southeast Asia.

Yet framing Southeast Asia as a victim , as the term“shock” implies, reflects not only a misunderstanding of the region's historical autonomy and strategic agency but is also a misreading of China's intent.

Historically, China's trade with the region has been asymmetrical but stable, often built on complementary strengths rather than competitive overlap.

Historian Wang Gungwu's“The Nanhai Trade: The Early History of Chinese Trade in the South China Sea”, traces this dynamic from the Han dynasty (211 BCE) to the founding of the Song dynasty in 960 CE, highlighting both the economic foundations and imperial attitudes toward maritime commerce.

During this period, kingdoms in the region such as Srivijaya and Ayutthaya exported spices, rice, metals and timber to China in exchange for ceramics, textiles and manufactured goods.

The modern iteration of this relationship is governed by a more institutional framework. The 2002 CAFTA marked a structural shift from tributary privileges to rules-based trade, facilitating a surge in trade between China and Southeast Asia. In 2009, China overtook Japan as ASEAN's largest trading partner.

Today, China–ASEAN trade is projected to reach US$1 trillion, surpassing the combined trade volumes of the United States and the European Union with China and making ASEAN China's largest trading partner.

This new and multifaceted trade sheds light on the nature of China's trade surplus with Southeast Asia, which extends beyond conventional narratives of high-tech dominance or state-driven funneling of overcapacity into the region.

Shaping the engagement

Clearly, the nature of China-ASEAN trade has evolved, driven by the rising value of China's intermediate and finished goods relative to Southeast Asia's commodity exports. This shift, combined with the region's growing middle class and purchasing power, has contributed to the widening trade imbalance.

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