CORE SESSION 1: MACRO AND MARKETS

ASEAN’s slowdown marks the end of resilience and the start of transformation.

U.S. exceptionalism has long anchored global growth, but its future is uncertain. A unique mix of innovation, openness to global talent, and the U.S. dollar’s status as the world’s currency of trust has given America both economic and capital dominance. Yet the foundations of this privilege are beginning to shift due to changing attitudes toward immigration, corporate responsibility, and global engagement.

ASEAN’s structural growth has clearly shifted. ASEAN’s GDP annual growth has slowed from 6% in 2000 to around 4% today, coinciding with China’s WTO accession and a decline in manufacturing intensity. The drag stems from weaker capital accumulation and total factor productivity growth amid difficult external shocks like Brexit, trade wars, and the pandemic.

Foreign direct investment is now emerging as a key catalyst for renewal. Despite headwinds, ASEAN’s recent growth has been supported by investment recovery and new FDI flows into advanced electronics, EVs, and data centres. Neutrality has become a comparative advantage for attracting diversified capital.

China’s model is entering a new phase of outward-looking innovation.

China is moving beyond the old Made in China 2025 model. After years of local government-driven competition that created excess capacity, Beijing is pivoting toward “anti-involution” – discouraging redundant investment and rebalancing towards sustainable, demand-led growth.

A new phase of globalisation is emerging, led by China. For the first time, Chinese firms are expanding overseas as growth drivers shift from domestic competition to external markets. This includes strategic investments in ASEAN to access global demand while mitigating trade frictions with the US.

Differences in investment motivations are reshaping global capital flows. Western FDI has largely been driven by labour-cost arbitrage, seeking efficiency and margin gains through offshore production. In contrast, Chinese FDI is increasingly motivated by access to new markets, technology transfer, and deeper understanding of local enterprises – signalling a strategic shift from cost competition to capability building.

ASEAN is at the crossroads of two giants – neutrality as an advantage towards harnessing growth.

ASEAN is navigating great power competition at the heart of global capital realignment. ASEAN sits at the epicentre of the next phase of global capital flows as China exports not just goods but capital. The region’s neutrality and demographic scale make it both a buffer and beneficiary of US-China realignment.

Intra-regional integration is now essential to harness these tailwinds. To harness these tailwinds, ASEAN must deepen intra-regional FDI and build regional champions beyond banks that integrate regional markets and consumer bases (e.g., Mr. DIY, Jollibee).

Balancing opportunity with social adjustment will be the key challenge. Chinese FDI is already reshaping industries from nickel to apparel. The challenge for ASEAN lies in cushioning the socioeconomic costs of disruption while upgrading domestic value chains and pursuing coordinated industrial policies to ensure inclusive gains.

Quotes

“If the last 10 years for ASEAN has been about resilience and dealing with challenging external environment, I think the next 10 years will be about transformation. […] ASEAN could see a renaissance of re-industrialisation.”
– Allen Ng

“Exceptionalism, in many ways, is a privilege, not an entitlement… Whether that exceptionalism can continue really remains to be seen”
– Kevin Bong

“While manufacturing sector creates value, it is the service sector that distributes value among everyone. This is where more opportunities would exist not only for China, but also for every other country that is investing in the service sector.”
– Shan Guo