China’s Economic Rise: Implications for ASEAN Trade Flows

This paper evaluates the debate over whether China’s emergence as an economic superpower has been a complement or threat to ASEAN by examining data in the eleven years following China’s accession to the WTO. Employing a qualitative approach, it seeks to understand whether China’s growing dominance has hindered ASEAN GDP growth, exports and attractiveness as a destination for FDI. The evidence suggests that China’s rise has caused a shift in global trade patterns, with China dominating Western markets at the expense of ASEAN countries. Despite this, China’s dominance does not appear to have had a significant negative effect on growth rates for ASEAN GDP, exports, or FDI stocks. Given this, the paper concludes that while China is crowding ASEAN out of Western markets, increased Chinese demand for ASEAN imports has more than offset this effect. The result is that ASEAN exports and GDP have grown despite shifting trade patterns in the short run.