Resentment grows in Southeast Asia over China’s economic dominance

There is a growing resentment among Southeast Asian countries over China’s aggressive economic clout. In the name of partnership and shared prosperity, Beijing has been flooding regional markets with ultra-cheap goods, creating trade imbalances, suffocating local industries, and triggering unemployment. This strategy, adopted well before the US-China trade war escalated global tensions, has now sparked a wave of economic nationalism. Countries such as Indonesia, Vietnam, Thailand and Malaysia have begun resisting Beijing’s predatory trade practices.

In Indonesia, the textile sector has actually become a frontline casualty of China’s “problem of plenty.” Due to weakened global demand and a real estate crisis, Chinese companies are now offloading surplus goods at giveaway prices, including textiles and machinery. It became evident at the recently held textile exhibition in Jakarta, where Chinese firms dominated and showcased high-end manufacturing equipment, leaving little room for local producers to shine.

Indonesian manufacturers complained that waves of low-cost Chinese goods – often smuggled into the country to avoid high tariffs – were driving them to the wall even before US President Donald Trump’s “Liberation Day” announcement of reciprocal tariffs, including a punitive 145% tax on all Chinese goods, reported Asia Times. These aggressive tactics have had devastating consequences. More than 250,000 textile workers have been laid off in just two years, and more than 60 garment manufacturers, including Sritex—the country’s largest textile maker—have shut shop. Smuggled Chinese goods, which evade tariffs, continue to flood the market, further undercutting Indonesian producers.

Now there is a growing fear that China will dump even more products into Southeast Asia. Last year, Indonesia considered tariffs as high as 200% and even blocked Chinese-heavy e-commerce platforms like Temu.

Vietnam, which shares a land border with China, has been caught in a transhipment trap. While its export economy has boomed in recent years, much of this growth is tied to Chinese inputs. Chinese companies have set up several factories in Vietnam, using local labour to re-export goods to the United States under the "Made in Vietnam" label. This has triggered accusations of transhipment—a tactic to dodge US tariffs. US officials claimed that China uses Vietnam as a backdoor to avoid penalties, potentially dragging Hanoi into trade disputes. At the same time, Vietnam is struggling with its own flood of cheap Chinese imports. To deal with cheap Chinese imports, Vietnam has twice imposed temporary anti-dumping duties on Chinese steel in one year. And after Trump's latest tariffs announcement, Vietnam is reportedly set to crack down on Chinese goods being trans-shipped via its territory to the US. Despite Beijing’s charm offensive, Vietnam remains wary, especially given territorial tensions in the South China Sea.

Thailand, with which China has close relations, too has suffered due to China’s dirty trade practices. The country’s trade deficit with China surged to $36.6 billion in 2023, up from $20 billion in 2020. Local manufacturers are unable to compete with the tidal wave of low-cost Chinese products. More than 100 factories in Thailand have closed every month for the last two years, according to an estimate from a Thai think tank.

The rise of Chinese goods has been amplified by platforms like Shopee, Lazada, and TikTok Shop, which allow Chinese exporters to reach consumers directly, bypassing local supply chains. In order to deal with these problems, Thailand has tightened customs inspections and imposed new taxes on small-value imports under 1,500 Thai Baht ($45; £34). The government is also reviewing its participation in the China-ASEAN Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP) to safeguard local businesses.

In Malaysia, the trade deficit with China rose from $3.1 billion in 2020 to $14.2 billion in 2023. While Malaysia has benefited from Chinese investments in ports and infrastructure, local businesses are increasingly calling for protection. It is now reviewing its anti-dumping laws and considering stricter enforcement. Trade Minister Tengku Zafrul Aziz has made it clear: Malaysia will prioritize its national interest. “If the issue is about something that we feel is against our interest, then we will protect ourselves,” he stated bluntly during Xi Jinping’s recent visit. The dilemma for Malaysia, like many of its neighbours, is strategic: while it doesn’t want to choose sides in the US-China standoff, unchecked imports from China are threatening its domestic economy.

Though not a Southeast Asian country, South Korea’s experience is a cautionary tale for the rest of Asia. In 2023, it recorded its first trade deficit with China in 31 years. The economic fallout has been severe: nearly 1,000 companies filed for bankruptcy in the first half of the year alone. Many analysts point to the influx of subsidized Chinese goods as a major cause. Korea’s high-tech industries, which once held a competitive edge, are now being out priced and out produced by Chinese rivals. This is pushing Seoul to reconsider its own trade and industrial strategies. Across Southeast Asia, the root of the crisis is China’s structural surplus and subsidized production.

It is high time that Southeast Asian nations stop treating China's dumping as just a side effect of globalization. These countries must unite to pressurize China to stop flooding their markets with ultra-cheap goods. They must frame strict anti-dumping regulations, impose higher tariffs on key Chinese imports and demand more balanced and fair trade deals. If not confronted now, China's trade aggression will continue to undermine their domestic industries, increase dependency and leave entire sectors unemployed. The region must act collectively to protect its economic sovereignty.