China’s manufacturing push is flooding Asia with exports—and choking Gen-Z jobs

But it’s now being hit by a double whammy: an export base that has come under pressure from a flood of cheap goods from China, unquestionably the region’s dominant power, and US President Donald Trump’s trade war.

It is frustrating a generation already struggling with stagnant wages and soaring living costs. They’re having to face the fact that the manufacturing jobs that powered prosperity for their parents are becoming scarce, while the white-collar ladder is increasingly crowded for graduates too.

To sustain growth as domestic demand stalls and its property sector continues to act as a drag, China has doubled down on manufacturing. Its annual trade surplus is now over $1 trillion, despite a deepening plunge in shipments to the US. Its exports are swamping neighbouring economies and stirring resentment abroad. French President Emmanuel Macron has warned that the EU may take strong measures if Beijing fails to address the imbalance.

Southeast Asia and other countries in the Global South are absorbing a disproportionate share of Chinese exports. The members of the Association of Southeast Asian Nations (Asean) are particularly vulnerable as their own low-cost markets are struggling to compete with the scale of China’s output. Import curbs and other measures have done little to stop the flow.

Labour-intensive industries employing younger workers are hit hardest. Around 60 textile factories have closed in Indonesia since 2022, leading to the loss of an estimated 250,000 jobs. The Indonesia Fiber and Filament Yarn Producer Association has estimated another half-million are at risk in 2025, effectively wiping out one of four jobs in the sector in a matter of years.

Indonesia isn’t the only country affected. Thailand recorded roughly 2,000 factory shutdowns last year; officials cited cheap Chinese imports as a major factor. These entry-level manufacturing jobs traditionally absorbed young people; their most reliable path into the middle class is narrowing.

It doesn’t stop at low-end production. The US–China Economic and Security Review Commission warns that China’s overcapacity is now reshaping markets far beyond textiles and toys—advanced industries backed by state financing and an aggressive industrial policy.

Economists David Autor and Gordon Hanson argue that China Shock 2.0 could be even more disruptive than the first, which took place between 1999 and 2007 and upended America’s economy, leading in part to the loss of nearly a quarter of all US manufacturing jobs.

The political consequences of the new China shock are already emerging. In parts of Asia, younger voters are angrier and more sceptical of their leaders and economic elites, which risks intensifying pressures on governments.

That anger was on display on the streets of Indonesia, Timor-Leste and the Philippines this summer, as a generation fed up with rampant corruption, nepotism and a lack of jobs led protests demanding more accountability. In Nepal, angry youth opposed to graft forced the government out of power in early September.

Beijing, aware of these problems, may not want to upset its neighbours’ economic stability. The region is already reeling from Trump’s tariffs—presenting an ideal opportunity for China to expand its influence.

Recent official meetings made a veiled reference to uncertainty overseas, calling for “better coordination between domestic economic work and an international economic and trade battle.” Party leaders have vowed to “act without delay” to develop new growth engines.

There are bright spots. Exports from Southeast Asia to the US rose about 23% year-on-year in September, with Vietnam and Thailand leading. Much of this is companies diversifying their production from China because of geopolitical tensions. But that growth still isn’t necessarily creating secure jobs for young workers.

Simply blocking Chinese imports is unlikely to work—they have become crucial in the region’s supply chains. More credible responses would focus on helping domestic firms find new markets and become more efficient, coordinating regional trade defences rather than acting alone, and expanding retraining and income support for displaced workers. Without policies that ensure that Gen-Z shares in the benefits of trade, economic frustration risks hardening into political volatility.

China’s economic model is exporting uncertainty across Asia’s labour markets. And no amount of cheap goods will make up for that. ©Bloomberg

The author is a Bloomberg Opinion columnist covering Asia politics with a special focus on China.