The German government aims for an economic de-risking from China “to promote the diversification of economic relations…[and] continue to participate in China’s economic development while reducing … dependence in critical sectors”; diversification is hard for Germany because it is more intertwined with China than any other EU country; Indonesia, Malaysia, Thailand, the Philippines, and Vietnam (“Emerging ASEAN”) offer a seemingly promising alternative but economic data shows that their diversification potential is limited; Emerging ASEAN cannot replace China but can complement it. (p. 4)
China is the second largest economy in the world and will contribute more than 20 percent to global economic growth over the next five years even with current economic challenges; the IMF predicts that by 2028, China will have a larger GDP than the entire EU; the global economic share of other emerging Asian economies like India or Emerging ASEAN remains significantly behind that of China, so there is no way around China in the coming years. (p. 5, Figure 1)

China is the EU’s most important trading partner; China’s economy is especially significant for Germany with almost half of all EU exports to China attributed to German companies; Germany’s foreign trade volume with China was US$229.5 billion in 2022, compared to US$47.8 billion with Emerging ASEAN. (pp. 5-7, Figures 2-3)
For Emerging ASEAN to be considered a real alternative to China, it would need to catch up economically and demonstrate a significantly higher growth momentum than China; growth forecasts for China and Emerging ASEAN provide little reason for hope; China is expected to extend its lead in GDP growth over Emerging ASEAN in the next five years, growing by more than the projected economic output of all ASEAN economies combined. (pp, 7-8, Figure 4)
German and EU diversification efforts will be challenged by the fact that China is the sharpest economic competitor in the ASEAN region; China is the most important economic partner for ASEAN countries as the volume of trade between China and Emerging ASEAN has nearly doubled in the last five years and China-ASEAN trade relations benefit from the ASEAN-China trade area and RCEP participation; China is also increasingly specializing in sophisticated industrial goods and directly competing with German and European companies. (p. 8)