One lesson Asia’s emerging manufacturing powerhouses can learn from China

As extreme weather and climate change impacts intensify, Asian countries with tropical climates must innovate to grow their manufacturing industries sustainably. Failure to adopt greener practices risks environmental degradation, worker health issues, supply chain disruptions and economic instability. Most of the world’s goods – clothes, computers, cars and other consumables – are likely to continue being made in Asia. Despite a surge in industrial policies in the developed world urging the redirection of manufacturing back home, Asia and Oceania was the only region in the world to experience manufacturing output growth in the third and fourth quarters of last year, according to the United Nations Industrial Development Organization. Developing Asian countries are poised to take a greater share as global manufacturers diversify away from China. While China still produces about a third of global goods, it is shifting towards higher value-added manufacturing. Chinese firms are also expanding production beyond China. In the Asia Business Council’s new Asian Manufacturing Diversification Index, which examines the manufacturing capabilities of developing Asian countries, India, Malaysia, Thailand and Vietnam are emerging as new supply chain champions. These nations aim to develop their manufacturing industries as pillars of growth and create jobs for large numbers of workers. They aspire to produce not only cheap goods, but also more sophisticated products in the future. The reality is that developing Asian countries that seek to become the next China are simultaneously contending with extreme heat, air pollution, intense drought and frequent typhoons. In a single week in June, 1.6 billion people across China, India, Indonesia and Bangladesh experienced the health impact of extreme temperatures. The United Nations Environment Programme says that the industrial sector has the potential to reduce its emissions by 5.4 gigatonnes yearly in part by embracing energy-efficient technologies. Lower greenhouse gas emissions directly combat global warming, which is the primary driver of extreme heat events. These countries’ path to grow robust manufacturing sectors will need to veer from the path China pursued, which led to carbon emissions, resource depletion and immense amounts of waste. China has since enacted pollution control policies, which have reportedly yielded the fastest air quality improvement in the world in the past decade. But alarmingly, it is now increasing coal dependence and experiencing a rebound in air pollution. Newly installed solar and hydro capacity promises to dampen coal use in the future. China offers a cautionary tale for developing Asian countries on the challenging path to becoming sustainable manufacturing powers. Countries may suffer further setbacks in their manufacturing ambitions unless they are able to produce more sustainably from the start and decarbonise at a faster pace. A more competitive world of supply chains places importance on sustainability, innovation and worker protection, and at competitive costs. Asian exporters to Europe should prepare for higher sustainability standards via levies under the Carbon Border Adjustment Mechanism starting in 2026. Tariff hikes in the US and Europe on green technologies will not only affect China, but likely other Asian producers of these products. To solve the twin challenge of growth and sustainability, developing Asian countries vying to become production centres must find ways to leapfrog traditional, carbon-intensive production methods, which are no longer viable as the world strives to meet climate goals. Asian manufacturers must step up efforts to become more resilient to the effects of climate change if countries want manufacturing growth to benefit them, rather than lead to further environmental damage. For example, Esquel Group in China has led the way with waterless dyeing technology in the otherwise water-intensive textile industry. Chinese electric vehicle battery producer CATL has built carbon-neutral production facilities. Companies in southeast Asian countries like Thailand and Singapore are investing in the production of green cement that can cut emissions. Greening different parts of the supply chain will help developing Asian countries meet both high-quality growth and sustainability goals. Using low-carbon raw materials and greener product designs, as well as tapping into renewable energy sources, will make an impact in combating climate change, while also providing a competitive advantage in domestic and global markets. Early warning systems for disasters will also need to be strengthened to boost preparedness for manufacturers. By 2030, Asia’s annual losses from natural disasters are expected to exceed US$160 billion. This would exceed the entire US$100 billion annual climate finance target for the developing world under the United Nations Framework Convention on Climate Change. Transitioning to green manufacturing poses significant challenges for developing Asian countries, which often lack financial resources, high-quality infrastructure and leading technologies. Developed countries, relying on these regions for production, have a vested interest in supporting this transition. The Green Climate Fund and the Asian Development Bank can provide funding for green manufacturing technologies, such as energy-efficient machinery and renewable energy integration in factories. Singapore and cities in China have achieved successes in innovations, such as rainwater harvesting and permeable pavements. They have also made use of green roofs and walls which can reduce temperatures and cooling costs. By sharing these innovations, they can help developing economies in the region adopt sustainable practices. Sharing expertise with other countries and even collaboration among business competitors in sustainable practices can ensure these countries thrive as manufacturing bases. A new era of “Made in Asia” should be marked by environmental stewardship and closer cooperation between developed and developing economies in the region. By becoming hubs of higher-quality and greener manufacturing, developing Asian countries can achieve sustainable growth while combating climate change, enhancing resilience and boosting competitiveness. This transformation will ultimately yield long-term benefits for economies, ecosystems and communities. Janet Pau is executive director of the Asia Business Council

One lesson Asia’s emerging manufacturing powerhouses can learn from China

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Asian countries may suffer setbacks in their manufacturing ambitions if they aren’t able to produce more sustainably from the start and decarbonise rapidly

Asian countries may suffer setbacks in their manufacturing ambitions if they aren’t able to produce more sustainably from the start and decarbonise rapidly