TL;DR
After US tariffs, both American and Chinese firms cut back on investing in China and rushed into Southeast Asia, boosting the region's economy.
When the US slapped tariffs on almost all its trading partners, it set off a chain reaction, and businesses worldwide had to rethink their supply chains.
Where to put the factory? A tricky choice
Imagine you are an American boss wanting to build a plant to make electronic components. Build in the US? Labour is expensive, but no tariffs — yet if tariffs are lifted one day, the plant becomes uncompetitive. Build in China? Labour is cheap, but tariffs are high, and you could get caught between two governments.
A third option: Southeast Asia
Why not pick a less conspicuous region with reasonable labour costs, low tariffs, and a way to diversify away from China? A new Asian Development Bank study confirms it: since 2024, both American and Chinese firms have sharply increased their investments in ASEAN countries, while their investments in China have dwindled.
This investment boom is set to boost GDP growth, wealth, and stock markets in Southeast Asia in the long run.
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