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Across Southeast Asia, green transition efforts are increasingly being articulated through broader strategies of industrialisation. With green industrial policies framed as<\/a> economic opportunities, renewables are no longer just a technocratic response to climate change, but tools for Southeast Asian states to pursue structural transformation and enhance competitiveness. But interdependence with China makes these transition strategies feasible and vulnerable at the same time.<\/p>\n Southeast Asian states are increasingly leveraging intensive manufacturing<\/a> of climate-related sectors, such as electric vehicles (EVs), battery materials and solar panels, to accelerate economic growth. Indonesia\u2019s resource nationalist policy has shifted from<\/a> concentrating resource wealth among domestic companies towards deregulating higher value-added activities to facilitate the integration of domestic companies and state capital into key sectors in global value chains.<\/p>\n Southeast Asia\u2019s green industrialisation<\/a> commitments emulate the Chinese model, now popularised in the region as a \u2018green growth\u2019 agenda. ASEAN remains a primary destination for Chinese green manufacturing investment, with Vietnam, Malaysia, Thailand and Indonesia constituting four of the top five<\/a> destinations for Chinese green investment by project count in 2024. In Indonesia, over 30 Chinese-led projects are concentrated<\/a> in battery material production. In Vietnam, Malaysia and Thailand, Chinese investment is concentrated in solar.<\/p>\n Many observers interpret China\u2019s role in Southeast Asia\u2019s green transition through a geostrategic, state-centric lens, with Chinese investments viewed as a means for Beijing<\/a> to weaponise industrial dependencies. But these investments are really a response to the pathways of capitalist development in China. How the green transition unfolds in the region will likely depend on the direction of China\u2019s capitalist development.<\/p>\n The contradictions in China\u2019s accumulation regime often result in crisis tendencies. Overcapacity is one contradiction<\/a> of China\u2019s development, characterised by a highly efficient production system that generates large volumes of output but comes at the cost of severely compressed profit margins. China\u2019s development model increasingly centres on three strategic sectors, termed the \u2018new three<\/a>\u2019 \u2014 EVs, batteries and solar panels \u2014 replacing the \u2018old three\u2019 \u2014 clothing, home appliances and furniture \u2014 that once underpinned China\u2019s exports.<\/p>\n The new three is rooted in low-cost domestic supply chains and consistent government supports driving economies of scale, such as the 2007 National Climate Change Program and the Made in China 2025 initiative launched in 2015. China\u2019s domestic economy recorded a sharp increase<\/a> in fixed-asset investments in 2022 and 2023 in sectors central to the new three, including non-ferrous metal ore mining and processing and EV and electronic manufacturing. Chinese battery manufacturers continue to dominate more than 60 per cent of global EV battery production.<\/p>\n But the rapid expansion of the new three has generated the new contradiction<\/a> of \u2018involution\u2019, marked by overcapacity<\/a>, aggressive pricing strategies and entrenched deflation. Severe overcapacity and intense price wars in China\u2019s solar industry resulted in losses in photovoltaic manufacturing of around US$40 billion in 2024. A similar pattern of margin compression is evident in the Chinese EV sector<\/a> \u2014 profit margins continue to plunge sharply, with only three of 130 companies<\/a> \u2014 BYD, Li Auto and Geely \u2014 recording profits as of mid-2025, albeit with thin margins.<\/p>\n But Beijing\u2019s crackdown on involution \u2014 a new initiative to address the issue of excessive competition among firms and persistent deflationary pressures \u2014 has unwittingly propelled green transitions across Southeast Asia by generating waves of outward manufacturing investments in new three sectors. These investments benefit from long-standing economic interdependencies with ASEAN countries, the prevailing structure of low-cost production and government subsidies across Southeast Asia.<\/p>\n The internationalisation of China\u2019s new business groups resembles the early years of the Belt and Road Initiative, when China\u2019s economy grappled with a housing glut and deep factory-gate deflation. But the anti-involution push is reshaping the key conditions for ASEAN countries to transform productive structures<\/a>. Thailand and Indonesia have emerged as important nodes in China\u2019s EV manufacturing network. BYD has begun exporting<\/a> EVs produced at its Rayong facility in Thailand while building a US$1.3 billion manufacturing plant in Indonesia.<\/p>\n China\u2019s anti-involution push coincides with pressures within Southeast Asian political institutions to address<\/a> economic crises and environmental sustainability. These institutions have long depended on economic growth as a source of legitimacy, making short-term growth measures politically indispensable.<\/p>\n Yet the internationalisation of China\u2019s new business groups generates new contradictions in the regional economy. While emerging as new production hubs, Southeast Asian countries have simultaneously turned into key markets for absorbing the oversupply of new three products, as Chinese automakers aggressively capitalise on EV incentives rolled out by Southeast Asian government to improve profit margins. In the first seven months of 2025, China exported 3.7 million vehicles, one-third of which were EVs, with Southeast Asia accounting for the largest share<\/a> of Chinese EV imports.<\/p>\n Green transition efforts have sustained, if not expanded, extractivism by reproducing high-intensity resource extraction justified by the climate crisis. Strong demand for the new three and the surge in the technology and artificial intelligence sectors have unleashed demand for critical minerals<\/a>, exacerbating the environmental and social crisis driven by dwindling pipelines for new mines.<\/p>\n In 2024, China imported 129,500 metric tonnes<\/a> of rare earth elements, worth around US$1.5 billion, with Myanmar supplying 34 per cent of the total. Myanmar\u2019s conflict-affected regions have emerged as \u2018green energy frontiers\u2019 in the pursuit of the new three. Indonesia has rapidly expanded nickel mining<\/a>, with output feeding mainland Chinese producers of battery precursors, battery packs and EVs. Green transitions feature a continued uneven distribution<\/a> of environmental destruction.<\/p>\n