"What next for Southeast Asia’s China-backed solar boom?" Dialogue Earth, 29 April 2025

In little over a decade, Southeast Asia has become one of the world’s top exporters of solar power equipment – a success driven significantly by the relocation of Chinese manufacturers to the region.

Ever since finding themselves in the crosshairs of US import tariffs in 2012, Chinese solar manufacturers began shifting their production to Southeast Asia to circumvent trade barriers.

Southeast Asia’s solar exports have primarily targeted the US, with more than 80% of the equipment it imported in the first half of 2024 sourced from Malaysia, Vietnam, Thailand and Cambodia [...].

In June 2024, then-US president Joe Biden ended a two-year relief on import tariffs for solar panels from the region’s four leading producers [...].

Additional levies [...] prompted several Chinese manufacturers to suspend or scale-back production or shift operations to Indonesia and Laos, which were exempted.

China-backed projects in Southeast Asia have attracted capital, created jobs and supported the upgrading of local industries [...].

Such industrial development is among the reasons that Southeast Asian governments “have been nearly uniformly welcoming of and seeking out” increased Chinese foreign direct investment [...].

Not all Chinese investments have been welcomed locally. [...]
controversies surrounding Chinese company Xinyi’s solar manufacturing project on Rempang Island, Indonesia. The solar facility, [...] sparked protests in 2023 from local communities over plans to evict thousands of residents.

[...] analysts had similarly suggested US tariffs “might induce producers to leave Southeast Asia altogether” in favour of regions such as the Middle East.

However, the short-term outlook for diversifying export markets seems mixed.

Southeast Asia’s domestic markets could offer a valuable hedge against external uncertainties [...].

But [...] “there is little time to wait as other regions move quickly to scale up their clean energy industries”.

“It’s not easy, as production in early products such as polysilicon is capital-intensive, amid fierce market competition. Deepening the value chain will, nevertheless, likely bring mutual benefits for both the Chinese companies and Southeast Asian countries’ long-term outlook.”