- China’s export-driven manufacturing surge is flooding Asian markets with low-cost goods, undermining local industries and shrinking entry-level factory jobs traditionally absorbed by young workers.
- Factory closures across Southeast Asia are accelerating, with Indonesia and Thailand seeing large-scale shutdowns, putting hundreds of thousands of youth jobs at risk.
- Rising unemployment among Gen Z is triggering social and political pressure, prompting calls for regional industrial strategies, retraining, and workforce resilience to counter a potential 'China Shock 2.0'.
China’s manufacturing renaissance continues to redefine economic trends throughout Asia, especially among young generations of workers. While Beijing continues to concentrate on export-driven manufacturing to fuel economic growth, which continues to slow due to stagnant domestic and property sectors, cheap Chinese products continue to flood markets throughout Asia, causing significant challenges to the integrated employment opportunities offered to Generation Z workers.
China’s export-driven manufacturing strategy continues to contribute to China’s current trade surplus, which remains above $1 trillion per year, despite exports to the US slowing significantly. For many decades, the countries in both East Asia and Southeast Asia have been taking advantage of globalization in order to develop their factory sectors very quickly, thus creating millions of jobs that caused large numbers of their population to move into the middle class.
However, this trend seems threatened in the wake of increased shipments of products, ranging from simple ones in the past to more complex ones in recent times, into the region contributed by China. Countries in the Association of Southeast Asian Nations are very much at risk because their factories are unable to compete with the magnitude of products coming in cheap from China.
The sector that has been most visibly affected is the kind where young people used to look for entry-level jobs. For example, in Indonesia alone, there have been 60 textile factory closures since 2022, which have left the country without 250,000 potential factory workers. Moreover, another 500,000 factory jobs are at risk. For example, in Thailand, there have been 2,000 factory closures.
Moreover, the cheap importation of goods has been identified as the major cause of this. The closures mean that the kind of factory job that used to act as a stepping stone for graduates has now vanished. The overall disruption is more than the conventional sectors. According to reports by US-China Economic and Security Review Commission sources, the current China overcapacity has spread to the higher-end industry chains like electric vehicles, batteries, pharmaceuticals, and robotics.
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Economists like David Autor and Gordon Hanson have argued that the 'China Shock 2.0' trend may pose a threat compared to the first wave of competitiveness that disrupted the global manufacturing industry in the first decade after the year 2000. The social implications of these changes are already evident. The lack of job opportunities among the youth has led to social unrest in some nations like Indonesia, the Philippines, and Nepal, which has been a result of unemployment, among other social issues like corruption.
The government is under immense pressure from its citizens due to the lack of job opportunities, among other aspects, related to the economy, which has made the citizens question the current approach related to the economy. Although there are possible silver linings, such as an increase in Southeast Asian exports to the US due to firms diversifying out of China, it has yet to lead to job creation for the younger generation.
There are calls for policymakers to develop collaboration and strategies at the regional level that develop home industries and markets and provide retraining assistance to displaced workers. If not, it is argued that the revolution facing the global economy may lock in inequality and spark politics that fuel instability in Asia.
