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Trends in Division of Labor Adjustment in the Asia-Pacific Region Under the Impact of Trump 2.O and China's Role in It

TmeAsaynamic patot he 50 years of continuously expanding trade，investment and industrial cooperation， the region has formed a highly-tied multi-level labor division system covering vertical integration and horizontal complementarity of industrial chains. From the V-shaped developmentmodel inthetwentieth century to the East Asian production network in the twenty-first century， theintra-industryand intra-product division oflaborin the Asia-Pacific region has been ever deepening. However， due to the region's high dependence on theU.S.market， the division oflabormodel in the AsiaPacific suffers structural problems and isrelatively fragile.Under the shock of Trump 1.O，countries in the Asia-Pacific region were forced to make adaptive adjustments， causing short-term turmoil in the regional economic order. Trump's strong return in 2025，driven by the“America First”principle，broughtforthaseries of policies with strong unilateralism， isolationism and protectionism tendencieswithin justafewmonths， which had a huge impact on the division of labor and economic growth in the Asia-Pacific region. Against this backdrop， countries in the Asia-Pacific regionurgentlyneedtochangetheir development strategies，optimizeand restructure trade and investment， promote therebalanceadjustment of regionallabordivision，andforma morebalancedandsustainablenew labor division system，so as to lay a solid foundation for the stable growth oftheAsia-Pacific economy in the context of major changes.

ECONOMICSTRATEGYADJUSTMENTSOFMAJORASIA-PACIFICCOUNTRIESANDNEWTRENDSINTHEREGIONALDIVISIONOFLABOR

Theoutbreak of the global financial crisis in 2oo8 fully exposed the fragility of the division oflaborin the Asia-Pacific region characterized by \"East Asia production， U.S.and Europe consumption\". After the crisis， many scholarscalledonthecountries in EastAsiato implementan economic rebalance strategy by expanding domestic consumption and intra-regional imports of final consumer goods， thereby reducing reliance on the U.S. market.However， as influenced by the traditional mercantilist mentality， the countries in East Asia still regarded exportsas the most important engine for economic growth.Asa result， notonlywasthedivisionoflaborin theAsia-Pacificregionnot effectively adjusted，butthetradeimbalance withtheUnitedStatesalsobecame more severe.During Trump's first terminoffice，heinitiatedthe“tariff war”and “tradewar”against China on the grounds of reducing U.S. trade deficits，and preached\"de-Sinicized\" supplychains，causingchaosin the economicandtradeorderintheAsiaPacific region and across the globe.

I.AdjustmentofTradeandInvestmentStrategiesinMajorAsia-Pacific Countries

The“tariffwar”and“tradewar” initiatedbytheUnitedStatesagainst China in 2018 covered approximately two-thirds of the goods imported from China.Under the protection of hightariffs， thevalueofU.S.imports from China dropped significantly fromUSD 563.2billion in 2018to USD462.6 billion in 2024，a decrease ofabout 17.9% .China'sshare in the total U.S. imports dropped sharply from 21.6% to 13.8% 號

In response to the aggressive \"tradewar”launchedby theU.S.， Chinahasadoptedthe“dualcirculation\"newdevelopmentpattern and implementedaseriesofmeasures todiversifytradeandinvestmentto reduceitsrelianceontheU.S.market. During this process， Southeast Asian countrieshavebecome China'skey partners.From 2018 to 2024，China's exportstoASEANincreasedfrom USD 319 billion to USD 586.5 billion， agrowthofabout 83.9% ，anditsshare inChina'stotal exportsrose from 12.9% to 16.3% .Since2020，ASEAN has been China’s largest trading partnerfor five consecutive years.Meanwhile，China'sdirectinvestmentin Southeast Asia has also significantly increased， from UsD 12.8 billion in 2018 to USD 17.6 billion in 2023.

WhiletheBidenadministration maintained thehigh tariffsimposed bythe Trumpadministrationon China， it also sought to contain China by formingalliances such as the \"Chip 4^s alliance and the Indo-Pacific Economic Framework （IPEF）.Against thisbackdrop，Japan and South Koreahavebegunto implementthesocalled“de-risking\"strategyof“China plusone\".Many Japanese and South Koreanenterpriseshavereduced their investmentsinChinaandincreased theirdirectinvestmentsinSoutheast Asiainstead.Forinstance，Japan's foreign direct investment （FDI） to China dropped from UsD 12.46billion in 2021 to USD 3.48 billion in 2023，a decreaseofabout 72.1% ，whileitsFDI toASEANrosefromUSD3.52billion toUSD 23.24 billion，an increase of about5.6times.

Overall， the“tradewar”and“technology war”launched by the Trump andBiden administrations against China have had a huge impact on thebehaviorpatternsof Asia-Pacific countries.These countries have been facilitating the so-called economic \"derisking\"through industrial chain restructuring，and the tendency towards \"politicization\"and\"pan-securitization\" oftradeissueshasalsobeencontinuouslystrengthened.On thisbasis，in thefaceofanuncertaininternational order，Asia-Pacificcountriesarestriving to seek a balance in great-power rivalry and geopolitical competition， and driving the evolution of regional industrialchaindivisionoflabor towardsamulti-center，nestedhierarchical pattern by adjusting trade and direct investment strategies.

II.New Trendsin Division ofLa borin theAsia-Pacific Region

Due to strategic adjustments by governments and enterprisesin the Asia-Pacific region， the division oflaborin the region has taken on some newfeaturesin recent years，which arespecificallyreflected inthefollowing three aspects.

First， there have been significant changes in the structure oflabor division. Southeast Asia is catching up with China and becoming a new regional manufacturing center. In 2017， the FDI flowing into China's and ASEAN's manufacturing sectors was approximatelyUSD33.5billionand USD31.4 billion respectively，which wereroughly equal.However， from 2018 to 2023， the FDI flowing into China's manufacturing sector was USD 133.4 billion， while that flowing into ASEAN's manufacturing sector wasUSD301.3billion，about2.3 times that of China. The rapid inflow of FDIhasliftedASEAN'smanufacturingoutputfromUSD665.1billion in 2018 to USD 769.3 billion in 2023，an increase of approximately 15.6% （204號

Second， while China's position as the“world'sassembly factory”has relatively declined，it has continuously climbed up the Asia-Pacific region's industrial chain through transformation towards higher value-added production and increased exports of intermediate products.With rising labor costs and the advancement of industrial upgrading strategy， China hasgraduallyreduced itsrelianceon low-end manufacturing and shifted towards high-tech industriessuch as electronic information，new energy equipment，and biomedicine， continuously optimizing its export structure. In2024 ，the proportion of China's mechanical and electrical products in total exports was 59.4% ，amongwhich thecombined exportvalueof“new three”itemssuchaselectricvehicles， lithium batteries，and photovoltaic productswasUSD 138.6 billion，with a compound annual growth rate of 37.3% from 2020 to 2024. China's exportsof intermediate products have continued to increase， accounting for 72.4% of its total exports in 2023， covering semiconductor components， precisionmachinery， etc.

Third，although the division of labor pattern in the Asia-Pacific region characterized by“East Asia production，U.S.and Europe consumption\"has undergone structural changes， the nature of the countries'asymmetric dependence on the United States has not changed. Compared with the “triangle trade”before the U.S.-led “trade war\" against China， which was mainly characterized by China's trade surplus with the U.S.and China's deficits with Japan and South Korea， the current \"triangle trade”ismainly characterized by a significant increase in ASEAN's trade surplus with the U.S. and a significant trade deficit with China. From2018 to 2023，ASEAN's trade surpluswith theU.S.increased from USD 58.4 billion to USD 143.6 billion， while itstrade deficitwith China increased from USD 83.2 billion to USD 122.4 billion. This change in the division of labor structure，where intermediate products are imported from China for processing and then re-exported to the U.S.， has made Southeast Asian countries like Vietnam“transit stations” inSino-U.S. trade.However，with the adjustment of the trade structure， the essential feature of “East Asia production，U.S. and Europe consumption”as a whole has remained. From 2018 to 2024， the total trade deficit of the U.S. withAsia-Pacific countries expanded from USD 638.5 billion to USD 701.9 billion. The fundamental reason for the situation liesin the fact that the division of labor in the Asia-Pacific remains a production network based onmercantilism rather thanabalanced development of production and consumption within the region. The U.S.， as the ultimate market provider for Asia-Pacific countries， still plays an irreplaceable key role.

THEPATHANDCHALLENGESOF DIVISIONOFLABORADJUSTMENTIN THEASIA-PACIFICREGIONUNDER THEIMPACTOFTRUMP2.0

After Trump's return to the White House，hecontinued theunilateralism and isolationismpoliciesadopted duringhis first term.However， Trump 2.0 ismore sophisticated inpolitical operation. By means of the strong support fromdomesticconservativeforces，the “AmericaFirst”policyimplemented bythe Trump administration has taken on a more aggressive tone and ismore resoluteinexecution，which willundoubtedlyhavea broaderand deeper impact on the economic landscapeof the Asia-Pacificregion.

I. New Characteristics of Trump 2.0Foreign Economicand Trade Policies

Imposingtariffs and “withdrawingfrom agreementsand organizations”remainthekeymeansfor the Trump administration to promote the “America First”policy.However， comparedwith the previous term，Trump 2.0 foreign economic policies have shown three significant changes.

First，the scope of tariff strikes is broader.During Trump1.O， themain targetof tariff and trade suppression was China，while the suppression on other countrieswas relatively limited. According to the estimates of the Peterson Institute forInternational Economics （PIE）， from January 2018 to January2022， theU.S. tariff rate on Chinarose from 3.1% to 19.3% ，while theaverage tariff rate imposed by the U.S.on the rest of the world increased only from 2.2% to 3.0% However， under Trump 2.0， the scope of tariff suppressionhassignificantlyexpanded， almost featuringa full-scale offensive. Aseries of tough tariff measures havebeenintroducedsinceMarch thisyear，starting from a 25% tariff on imports from Canada and Mexico， to a 25% tariff onallU.S.imported steel，aluminum，andautomobiles. On April 2， Trump even announced that starting from April 5，a 10% \"baseline tariff' would be imposed on all imported goods， and from April 9 （laterpostponedfor9Odays），ahigher \"reciprocal tariff”would be imposed on about 6O countries and regions withthelargesttradedeficitswith theUnited States.In particular， the tariffrateonChinahasbeencontinuouslyraised， reaching 245% on April 16.These measures have severely impacted theglobal tradesystemand triggeredwidespread opposition and countermeasuresfromthe international community.

Second，effortshavebeenmade to promote the return of manufacturingthrough the“external （tax） raise and internal （tax） decrease” policy. During Trump 1.0，attempts were made to promote the return of manufacturing byraising tariffson China， but few outcomes were achieved. After Trump's return to power， to effectively promote the reshoring of manufacturing， while continuing to raise tariffs，he promised to reduce the domestic corporate tax rate from 21% to 15% .Under the pressure and inducement of the Trump administration， several major projects have been announced in theUnited States withina fewmonths.Forexample， the Japanese SoftBank Group and OpenAI jointly launched the“Stargate Initiative”，withaninitial investment of USD 10o billion and a commitmentto increase thetotalinvestment toUsD5oobillionin thenextfour years.Taiwan Semiconductor Manufacturing Co.（TSMC） announced an additional investment ofUSD 100 billionintheUnitedStatesto build threenewadvanced processwafer fabrication plants， two advanced packaging facilities，and one research and development team center.

Third， the use of policy tools is lessconstrained. During Trump 1.0， the“l(fā)ong-arm jurisdiction”actswere mainlybasedonSection3O1ofthe TradeActof1974andSection232 ofthe Trade ExpansionAct of1962， which required congressional approv al and were executed under congressional supervision.However，tobypass the cumbersome congressional processand implementprotectionist policiesmore efficiently，Trump 2.0 beganto considerusing the International Emergency EconomicPowers Act of 1977，which grants the president greater power to bypass congressional oversight and takevarious economic measures by declaring a national emergency to deal with any so-calledexternalthreatthatharms the national security， foreign policy， oreconomyoftheUnitedStates.For example，on April 2，based on the International Emergency Economic PowersAct， Trump directly declared a national emergency and thereby imposed differentlevelsofhigh tariffson countries around the world. This means that the U.S.government hasofficiallylauncheda“tradewar” againsttheworld.

II.The Inevitable Path for DivisionofLaborAdjustmentintheAsiaPacific Region Under the Impactof Trump 2.0

Trump's “NewDeal\"in his second termindicatesthatthetraditional divisionoflabormodelintheAsia-Pacificregionbased onproductionand export hasbasically come toan end. In the future， only through adaptive structuraladjustment，institutional reform and regional cooperation can Asia-Pacificcountriesbuildamore balanced production and consumption division oflabor system，and thus breakawayfromthedependenceon theU.S.marketand embark onasustainablepath of economic growth.

Onthe one hand，in theface of the huge threatposed by the U.S.high tariff policy，theonlychoiceforthe Asia-Pacificeconomiestomaintain stable economic growth is to expand regional trade and enhance consumption.In 2024， China， Vietnam，Japan SouthKoreaandTaiwanProvince ofChinaranked first， third，seventh， eighth and ninth respectively among thesourcesof theU.S.tradedeficit. Under the“America First”policy， these countries and regions will undoubtedly become thekey targets of the Trumpadministration'shigh tariff policy and have to consider reducing dependence on exports to the U.S. to safeguard their own interests.Against the backdrop of the regionalization of the global economy， enhancing trade and consumption within the region is undoubtedly an important way forthe economiesin theAsia-Pacific regiontobreakawayfromtheirdependence on the U.S.

On the otherhand， the Asia-Pacific countriesshouldrebalancethedivision of labor within the region.In themeanwhile，theeconomiesin the region have huge potential for expandingtradewitheachotherand enhancing consumption across the region.Take the European Union （EU） asan example. The intra-regional share of final consumer goods exportsof its membersisabout 50% while that of the Asia-Pacific region is only 27.4% .Inthenext10years，the Asia-Pacificeconomiescanincrease theproportionto the level of the EU through dynamic adjustment of imports and exports and consumption. Looking into the future， according to the prediction of the McKinsey Global Institute in theU.S.， by 2030， Asiawillcontributemorethanhalfof the global consumption growth. The enhancement of consumption capacityintheAsia-Pacificcountrieswill lay a solid foundation for achieving abalance between consumption and productionwithinthe region.

III. Challenges in Building a BalancedDevelopmentSystemof DivisionofLabor in the Asia-Pacific Region

Despite considerablepositive expectations，rebalancingthedivision of labor in the Asia-Pacific region still faces some significant challenges.

First，theinherentmercantilism and export-oriented policyapproach of the economies within the region arethemainobstaclestotherebalanceadjustmentof the Asia-Pacific economy.Undertheinfluenceof mercantilism，manyeconomiesin the region act upon the rationale that exportsdriveeconomicgrowth，and thereforeneglectingthecultivation of domestic markets.Asa result，currentaccountimbalanceshavebeen increasing.In1990， the proportion ofcurrent account surpluses of the Asia-Pacific economiesto theirtotal GDPwas 0.74% Afterthe1997 Asian financialcrisis，itcontinuedtorise andreachedapeakof 4.59% in 2007. After the 2oo8global financial crisis， itdeclinedbutstillremainedatarelativelyhighlevelof 2.20% in 2022.

Second， the regional cooperation mechanismsneedstobefurtherenhanced.Aftermorethan20yearsof development， the Asia-Pacific countries and regionshave signed and formulated over 2OO free trade agreements.Among them，the world's largest free trade agreement， the Regional Comprehensive Economic Partnership （RCEP），came into effect in 2022.However， the current regionalcooperationmechanismsin theAsia-Pacific regionstillhave structural deficiencies and cannot fully adapttothenewsituationandnew challenges brought about by the century-old changes. The vast majority of free trade agreements such as RCEP stillmainly focuson tariff reduction， withrelativelylow-level rules and standards， few regulations on emerging fields such as the digital economy and intellectual property rights， and the shortage of binding provisions onissuessuchastheenvironment and labor rights. The rules of origin， although simplified， are still complex andhavealowutilizationrate.Atthe same time，in regional financial cooperation，effectivemechanismsforrisk prevention and response are still seriously lacking.As the core mechanism of the Asia-Pacific financial safety net， the Chiang Mai Initiative Multilateralization（CMIM），duetoproblems such as insufficient funding and the mandatoryrequirementtolinkloan amountswith the International MonetaryFund（IMF），hasneverbeenactivatedbymembercountriessinceits establishmentin2000.

Third， the lack of political mutual trust among major Asia-Pacific countriesseriouslyundermines the efforts torebalancethedivisionoflaborin the region. The Biden administration hasattempted to force Asia-Pacific countriesto“takesides”in thesecurityand economic fields through the construction of\"Chip 4^s alliance and IPEF. The U.S. policy orientation of \"pan-securitization\"，whichintertwines economic issues with geopolitics， has caught the Asia-Pacificeconomiesin a“double game”dilemma.On the one hand， countries such as Japan and South Korea， in order to obtain security guarantees or technological resources，havecateredtotheUnited States and continuously promoted the so-called \"de-risking\" strategy of\"Chinaplusone\". On the otherhand， these economiesareworried that excessive dependence on the United States will result in the loss of strategic autonomy and theymay even become victims of great power competition. Therefore，ASEAN insistson promoting the regional economic integration strategy centered on the RCEP. South Korea takes a vague stance when the United States seeks to contain China's semiconductor industry and maintains technological cooperation with China as much as possible， while Japan cautiously responds to the policy coordination efforts of the United States towards China to protectitsowninterests.With Trump's returntopower， the level ofU.S.interventionin Asia-Pacificaffairsmight come down to a certain extent， objectivelyreducing the pressure on AsiaPacific economies to “take sides”，and creating a certain strategic space for them to rebuild political mutual trust basedonmutual benefitandwin-win cooperation. However， due to longstanding structural contradictions suchashistorical entanglements， territorial disputes，and economic competition， it remains a daunting task forAsia-Pacific economies to deepen political mutual trust. They need to continuously enhance cooperation to accumulate trustandlayasolid foundation for ultimately achieving rebalanced labor division in the region.

CHINA'SROLEINTHEDIVISIONOF LABORADJUSTMENTINTHEASIAPACIFICREGION

China and its neighboring countries in the Asia-Pacific region are closelyinterdependentwitheach other，with economic ties ever deep ening.Although China's economic reliance on the Asia-Pacific region has relativelydeclinedoverthepastdecade or so， the region remains China's largest economic partner. In the face of the impacts brought by Trump 2.0 and the increasing pressure from the trendofregionalizationin theworld economy，itisnecessaryforall economies in the Asia-Pacific region to work together to promote the construction oftheAsia-Pacificeconomiccircle through rebalancing regional division of labor to reduce dependence on theUnited States.As one of the major economies in the region， China playsa key leading role in promotingregionaleconomicrebalanceto safeguard the overall interests of the regional economies.

First， China is closely connected withthe Asia-Pacific economies through trade and investment， playing a pivotal role in the regional supplychain. In 2024，China's total trade volume exceeded 43 trillion Chinese yuan，making it the largest trading partner of 83 countries and regions and holding an important position in the global supply chain. In 2023， China'stradevolumeofintermediategoodswith the Asia-Pacific region reached 8.2 trillion Chinese yuan， accountingforabout 65% of its total trade volume with the region and 33.2% of its total global trade in intermediate goods. Overall， according tothe Asian Economic Integration Report 2023releasedbythe Asian DevelopmentBankinDecember 2024，China contributed 37.6% of thegrowth ingoodstradeand 44.6% of the growth in service trade in the Asia-Pacific region in 2021，with a contribution rate of 64.2% to the region's economic growth.

Second， China is growing rapidly and has a strong competitive edge in digital technology and green development，which canserveto boost economic growth and coordinated digitaland greentransformationin the Asia-Pacific region through direct investmentandinternational trade. In the field of digital technology， Chinese enterprises pioneer global digitaltransformationandindustrial development through the construction of5G base stations，investmentin digitalinfrastructure，andintelligent manufacturing：In the field of green development， China has become a dominant force in the global clean energysupplychainwith its core technological advantages in photovoltaic componentsand lithium batteries. In recent years， Chinese enterpriseshave continuouslyincreased theirinvestmentinrelatedindustries inSoutheast Asia.For instance，in 2024，the first overseaselectric vehiclefactoryofBYD，Chinese NEV manufacturer，wascompletedand put intooperationinThailand，withan annual production capacity of 150，000 vehicles.In 2023，China'sinvestment indigitalprojectsintheAsia-Pacific region exceeded USD 20 billion， helping countries like Indonesia and Malaysia build cloud computingplatformsandupgradecommunication networks.Thecooperation between ChinaandotherAsia-Pacificcountries has effectively promoted local digital andgreen development， andChina's international competitivenesshasalso beencontinuously enhanced.

Third，asa keymarket provider for final product exports in the AsiaPacific region， China plays a leading role in rebalancing the regional division of labor. With economic developmentandincomerise，thedomestic market sizeofChina continuesto expand，and the demand for final consumer goods importsisincreasing.From2013to 2023，China'sshare of final consumer goods exports ofAsia-Pacificcountriesrose from 7.6% to 12.2% ，whiletheU.S.share dropped from 22.3% to 21.7% Although there is still a yawning gap between China and the United States， the gap is constantly narrowing： With the continuous strengthening of the Chinese government's policy support for boosting consumption， domestic demand， and domestic economic circulation，China's domestic consumption will continue to grow in the future，which is of great significance for expanding the consumption scale within the Asia-Pacific regionand promoting the rebalance of regional division of labor.