Roland Rajah, the Lowy Institute’s lead economist, and his co-authors found in the December 2025 report that 60 per cent of ASEAN’s imports from China are intermediate inputs: the parts and components that go into finished products. Capital goods, the machinery and equipment factories use to make things, account for roughly a further 30 per cent. China supplies more than 40 per cent of the capital goods ASEAN imports, ahead of Japan, South Korea and Western Europe, according to the same December 2025 report.

China’s equipment exports to the region grew in 2025. Its exports of electromechanical equipment to seven ASEAN members (Vietnam, Thailand, Indonesia, Singapore, Myanmar, Malaysia and the Philippines) rose 28.3 per cent year on year in the first three quarters of 2025, and its exports of transport equipment rose 42.7 per cent, according to Luo Zhiheng, chief economist at Yuekai Securities, writing in China Daily on 24 November 2025. Across all goods, China’s trade with ASEAN reached 7.55 trillion yuan in 2025, up 8 per cent, according to customs data released on 14 January 2026 and reported by Xinhua, China’s state news agency.

Vietnam bought US$186 billion of goods from China in 2025, making China its largest source of imports, according to National Statistics Office data reported on 6 January 2026 by Viet Nam News, the English-language daily of the Vietnam News Agency. That is about 41 per cent of Vietnam’s total imports of US$455 billion, by VCA’s calculation from the same report. Inputs for production, meaning machinery, equipment, spare parts, raw materials and fuels, made up 93.6 per cent of everything Vietnam imported in 2025 from all sources, according to the same report. Foreign-invested firms accounted for US$317.6 billion of Vietnam’s 2025 imports, according to the same report. VCA looked at the roles of South Korean, Japanese and Chinese investors in Vietnam’s manufacturing boom in February 2026.

Chinese manufacturing foreign direct investment (FDI) in ASEAN almost doubled in 2018 and stayed about three times above its 2014 to 2017 average from 2018 to 2021, according to an April 2025 report by Rhodium Group, a New York-based research firm. Indonesia and Vietnam together took about 56 per cent of the value of China’s investment in the region over 2018 to 2024, Thailand 18 per cent and Malaysia 14 per cent, Rhodium found.

China’s share of each ASEAN economy’s manufacturing FDI was barely 10 per cent in 2015 and has since risen above 25 per cent in Thailand, Indonesia and Vietnam, HSBC Global Investment Research said in a note reported on 30 December 2025 by The Nation, a Bangkok-based English-language news site. China accounted for close to 40 per cent of Thailand’s approved FDI applications since the start of 2025, according to the same report.

VCA’s assessment is that the move of production from China to Southeast Asia has changed where final assembly happens more than where inputs come from. A buyer who switches to a factory in Vietnam or Thailand reduces its exposure to Chinese assembly, but the factory’s parts and machinery may still come from China.

The Lowy Institute’s authors found that Southeast Asia’s exports have performed strongly partly because firms there use competitive Chinese intermediate inputs. China’s manufacturing investment in ASEAN has more than tripled to US$19 billion a year in recent years, but the United States and its partners have been investing almost US$50 billion a year, the December 2025 report found. Its authors conclude that Southeast Asia “remains reasonably well diversified with many other trade and investment partners”, most of them aligned with the United States, and that together these partners more than outweigh China’s role.

Rhodium warned in April 2025 that US tariffs of more than 30 per cent on ASEAN economies would deal a major blow to the region’s diversification boom and to China’s FDI there. It suggested ASEAN negotiators could soften the blow by seeking a high tariff gap between ASEAN and China and continued access to Chinese inputs for a few more years. By April 2026, the US Supreme Court had struck down the reciprocal tariff regime Rhodium was analysing, and Washington had replaced it with an across-the-board tariff under Section 122 of the Trade Act of 1974, according to an analysis published on 23 February 2026 by ING THINK, the economic research site of Dutch bank ING.

Rules of origin decide which country a product counts as coming from, often by limiting how much foreign content it can contain or by requiring certain processing steps in the exporting country. VCA’s view is that these rules will decide how much access to Chinese inputs survives: the tighter importing governments write them, the more the Chinese parts in a Vietnamese or Thai product count against it.

For a manufacturer in Vietnam or Thailand, the open question as of April 2026 is which will cost more: replacing Chinese suppliers, or proving to customs officers abroad that enough of each product was made at home.

Update, 3 October 2026: From 24 July 2026, the United States has applied additional Section 301 tariffs, on top of normal duties, of 10 per cent on goods from Indonesia, Malaysia and Cambodia and 12.5 per cent on goods from Vietnam, Thailand, the Philippines and Singapore, with some products exempt, according to the notice released by the Office of the US Trade Representative on 23 July 2026. Both rates are below the 30 per cent level Rhodium described. The tariffs are being challenged in US courts. The article describes the position as at 23 April 2026.

Correction, 24 September 2026: An earlier version of this article attributed figures reported by China Daily to Chinese customs data and omitted one of the two growth figures. This has been corrected.

Correction, 3 October 2026: This article was revised to correct Rhodium Group’s investment figures, which described shares of 2018 to 2024 investment value as shares of a 2017 to 2023 increase and cited totals that do not appear in Rhodium’s report; to attribute the China Daily figures to the economist who wrote them; to remove a figure and start date for BYD’s Indonesian plant; to remove trade figures that the cited China Daily article did not contain; and to remove claims that could not be sourced. The headline, summary and search title were rewritten to match.