China shock 2.0: the countries feeling the ‘Chinese squeeze’

Imagine you’re Vietnam or Indonesia, and you’ve spent years building factories, training workers, and dreaming of becoming the next South Korea. Then you discover that, instead of slowing down, China is accelerating and threatens to cut you off before you can even get started. Everyone thinks that China’s growth is a threat only to the West, but the real shock is now being experienced by Asia’s neighbors. The argument is not that China is exporting too much, but that its gigantic scale threatens to crush regional competition before it can even emerge. It's no longer just a contest between Beijing and Berlin: now Jakarta, Hanoi, and Bangkok are feeling the heat, and in some sectors, they've already been knocked out. Take Nguyen Van Binh, for example, who owns a small electronic components factory in Ho Chi Minh City. Until a few years ago, he was able to sell to major smartphone manufacturers, but today, customers prefer Chinese suppliers, who offer the same product at lower prices and with lightning-fast delivery times. Nguyen explains: “We feel like we have to run a marathon, but China is already halfway there.” The figure that is making Southeast Asian governments tremble is this: between 2015 and 2022, China's share of global exports in low- and medium-value-added sectors increased by more than 10%, just as Thailand or Malaysia were hoping to claim a slice of the pie. And it's not just about price: China's logistical capabilities, with hyper-connected ports and integrated supply chains, make it nearly impossible to compete. Another example: In Indonesia, the government has invested billions to attract apparel companies. The result? Many prefer to stay in China because they can go from idea to prototype in just a few days. The part that gets less attention? The same Chinese entrepreneurs open factories in Vietnam and Cambodia, but they bring with them the same practices and the same advantage of scale: as a result, the “China shock” is multiplying rather than diminishing. And while there is talk of decoupling in Brussels or Washington, for workers in Surabaya or Phnom Penh, the problem is here and now: stagnant wages, opportunities that vanish, and the feeling of always being one step behind. The key phrase to remember is this: China’s true impact today is not only abroad, but among its own neighbors, who risk never making the leap. If you think this perspective has changed the way you view the issue, you can indicate it on Lara Notes with I'm In: choose whether it's an interest, a personal experience, or a belief you now feel is your own. And if tomorrow you talk to someone about how Chinese competition is crushing the industrial dreams of Hanoi or Jakarta, on Lara Notes you can mark that moment with Shared Offline: it's your way of saying that a real conversation about this topic actually took place. This insight comes from the Financial Times and has saved you over a minute and a half of reading time.