The Trump Effect
How the US and China are driving Factory Asia’s FDI evolution
Commissioned by Hinrich Foundation
A sweeping reset of global trade policies under Trump 2.0 have triggered a sharp global pullback in foreign direct investments, yet Asia has shown notable resilience. In a study for the Hinrich Foundation, Oxford Economics examines how structural shifts in Factory Asia and China’s rise as a regional investor have been reshaping regional capital flows. The report explores what these changes mean for the trajectory of Asia’s FDI in a rapidly changing global environment.
Trump 2.0 has brought a sweeping reset of trade and investment policies worldwide, triggering a sharp retrenchment in global foreign direct investment following the “Liberation Day” announcements in April 2025. Yet Asia has proved notably more resilient than other regions, despite facing some of the highest US tariff exposure and deep integration with global value chains.
This resilience is not accidental. It reflects structural shifts in Factory Asia that pre-dated Trump 2.0. Investment has been reallocating out of China but largely staying within Asia, supported by diversified production networks, a sectoral tilt toward future-oriented industries, and China’s growing role as a regional investor. These dynamics have concentrated new investment in a small group of Asian economies, led by Vietnam, India, Malaysia and Indonesia.
In this study for the Hinrich Foundation, Oxford Economics examines how these shifts are reshaping Asia’s FDI landscape and what they imply for the region’s investment trajectory in an increasingly protectionist global environment.
The experts behind the research
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Thang Nguyen-QuocAssociate Director, Macro Consulting
Thang Nguyen-Quoc, Ph.D. leads Oxford Economics Asia’s Macro consulting team in Singapore. In this capacity, he supports clients with carrying out bespoke forecast and scenario modelling, as well as thought-leadership reports on trade and green transition. His core expertise is in policy analysis related to international trade and investment. His doctoral thesis evaluated the impacts of digitalization, protectionism and regionalism on the trade patterns of developing countries, using a range of econometric techniques.
Prior to joining OE in 2022, Thang spent a decade delivering flagship economic reports on Asian and African economies at the Organisation for Economic Cooperation and Development (OECD) in Paris. He also worked in various roles at the World Bank, National Academy of Social Sciences (US), and Vietnam Commercial Bank. He got a Ph.D. in International Economics from University Paris-Dauphine, M.Sc. from Barcelona School of Economics and B.A. from Ohio Wesleyan University.
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Theng Theng TanEconomist, Macro Consulting
Theng Theng Tan is an Economist with the Macro Consulting, Asia team. Prior to this, she was with the Macro Investor and Services team, where she covered Vietnam and provided macroeconomic analyses of country and broader regional trends. Before joining OE, Theng Theng was a public policy researcher with the Khazanah Research Institute, a think tank funded by the Malaysian sovereign wealth fund, Khazanah Nasional Berhad. Theng Theng holds an MSc Economic Policy degree with University College London.
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