How has China’s Free Trade Agreement with ASEAN changed global manufacturing trends?

Prior to 2007, much of the global chain moved to China to take advantage of its well-organized infrastructure, cheap labor, and ultra-low taxes. However, after the implementation of the Enterprise Income Tax Law of 2007, tax incentives in China were severely curtailed. Furthermore, as labor costs continue to increase in China, employing Chinese workers can be extremely costly. Coupled together these changes have allowed ASEAN to become increasingly competitive as a manufacturing base fulfilling demand unaddressed by China. And as China’s middle class consumer market continues to develop, China’s domestic demand has created the need for additional manufacturing capacity. ASEAN’s regional competitiveness has allowed for the repositioning of manufacturing into the Southeast Asia region.