China’s expansion of artificial intelligence technology in Southeast Asia faces increasing scrutiny over its impact on local economies and industries, raising questions about the long-term benefits for host countries. Observers warn that while Chinese companies often compete on low prices, this approach could undermine the capacity of Southeast Asian firms to develop their own technological capabilities, potentially provoking economic backlash similar to what China has encountered in Europe.
European Commission President Ursula von der Leyen has described a “second China shock,” highlighting concerns in Europe that continued trade imbalances and industrial dumping threaten the continent’s manufacturing base. This European experience serves as a cautionary example for Southeast Asian nations as they engage with China’s growing technological footprint.
Analysts say Chinese technology providers must address four key challenges to ensure mutually beneficial outcomes: supporting local industries in moving toward higher-value production, enabling domestic actors to design and adapt technologies rather than merely operate imported systems, contributing to local economies through hiring and investment, and ensuring that economic gains translate into better jobs, incomes, and accessible services for local populations.
The Association of Southeast Asian Nations (ASEAN) has taken formal steps to deepen cooperation with China through the ongoing ratification of an upgraded ASEAN-China Free Trade Area agreement. The protocol aims to enhance collaboration in the digital economy and supply-chain connectivity, potentially facilitating broader adoption of Chinese AI solutions across ASEAN member states.
Recent commercial activity reflects this momentum. The China-ASEAN Expo held in Guangxi showcased demand for AI-enabled solutions in sectors including transport, smart logistics, urban management, and industrial parks. Organizers reported 88 requests for cooperation and over 8,000 AI-assisted business matches prior to the event, alongside an AI marketplace featuring hundreds of products from dozens of companies. Nonetheless, questions remain over where technological expertise and commercial benefits will be concentrated.
Experts advocate that each major China-ASEAN AI project pass three critical tests. First, procurement practices should focus on building local technological independence by equipping engineers and teams to operate, maintain, and improve systems without relying on external suppliers. Second, host countries should secure equitable ownership or licensing rights for new applications, data, and improvements generated through collaboration, ensuring fair commercial agency for local partners. Third, the distribution of productivity gains should extend to workers, small enterprises, and consumers. Given the potential for AI-driven job displacement, contracts and budgets ought to include provisions for worker retraining, redeployment, and transition support—responsibilities that should be shared by Chinese technology providers rather than deferred to host governments.
Proponents argue that measurable outcomes demonstrating growth in local capabilities and the emergence of homegrown firms able to partner with, supply, or compete alongside Chinese companies will be the strongest rebuttal to accusations of “technological dumping.” They warn that if Chinese AI investments are perceived to undercut local industrial futures, resentment and resistance may grow, undermining regional cooperation.
The situation presents a crucial juncture for China and Southeast Asia as both seek to harness AI’s transformative potential while safeguarding sustainable and inclusive economic development. The success of this partnership may hinge on transparent collaboration, mutual capacity building, and shared prosperity that benefits broader segments of society.