China's emergence as a global manufacturing centre: Implications for ASEAN

Abstract

China is fast becoming the 'factory of the world' as a result of the drastic change in its export structure over the last decade. Following its phenomenal export growth in recent years, manufactured exports now dominate China's foreign trade instead of primary commodities like agriculture. More significantly, traditional labour-intensive manufactures like textiles, clothing and footwear, which used to be the dominant export items in the early 1990s, are now being replaced by such non-traditional and more capital-intensive items as machinery, electronics and high-tech products. China's diversified export structure and emergence as a global manufacturing centre brings numerous challenges for ASEAN, which already faces strong competition from China for foreign direct investment and for export markets. After China's WTO accession, ASEAN will face a more serious export threat from an economically resurgent China, which can still retain its comparative advantage in labour-intensive products even though it is moving up the manufacturing chain, producing technologically advanced goods.