Summary:

In a year marked by both resilience and weakness, China’s economy expanded by 5% in 2024, hitting its official growth target but registering a slowdown from the previous year. This growth was led primarily by a sharp rebound in net exports, which turned positive early in the year and accelerated significantly toward year-end. Exports to ASEAN played an outsized role in this resurgence, reaffirming Southeast Asia’s growing importance in China’s external economic strategy. Chapter 1 of the volume presents a full macroeconomic assessment of these trends and their policy implications.

Our competitiveness analysis continues to offer deep insight at the provincial level. In Chapter 2, Hubei posted the sharpest gains, bouncing back from its COVID-induced collapse. Guangdong remains the most competitive province over the past decade, while Tibet remains last, though simulation models suggest that targeted policy upgrades could significantly shift its rank.

At the regional level, the picture remains uneven as shown in Chapter 3. The Eastern Coastal Area dominates. And the Northeast continues its long stagnation, unchanged since 2014.

A key theme of this year’s edition lies in China’s evolving foreign investment posture. Chapter 4 documents the decline in inward FDI, particularly in strategic sectors, as flows from the US, Germany, and South Korea recede. While recent policy incentives have slowed this trend, their effects remain limited in the face of weak domestic demand. At the same time, Chinese outward FDI into ASEAN has gained new strategic significance. Faced with geoeconomic uncertainty, leading provinces such as those in the Guangdong and Yangtze Deltas are increasingly channelling investments into Southeast Asia—particularly in high-tech sectors like semiconductors and motor vehicles—as they seek stability and continued global integration.

The findings reveal persistent subnational disparities in China’s competitiveness and show how its most capable provinces are adapting—by redirecting capital abroad to manage domestic constraints and external uncertainty. ASEAN has emerged not just as a trade partner, but as a key destination for outbound investment tied to China’s economic restructuring. Grounded in provincial and firm-level data, this volume offers policymakers a sharper view of how leading Chinese provinces like Guangdong and Zhejiang are reshaping their footprint across Southeast Asia.

By YI, Xin