Seen from Sydney, AI exports are not restarting East Asia's industrial ladder

Summary

Writing in the Lowy Institute's The Interpreter on 9 October 2026, trade economist Mia Mikic offers a critical reading of the World Bank's October report on East Asia and the Pacific. According to the report, China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam exported $1.4 trillion of AI-linked goods in the 12 months to April. US imports of AI infrastructure goods rose by about 60% in early 2026 while its other imports fell by a quarter; Vietnam's and Malaysia's exports in this category reached at least twice their 2020–22 average.

Mikic argues that the figures paint a misleading picture. Assembled computers, servers and routers account for 69% of Thailand's AI-linked exports and 60% of Vietnam's, while China's $785 billion of exports consists largely of intermediate goods bound for assembly in ASEAN. The highest value-added work, such as design, software, intellectual property and data, stays elsewhere. In Malaysia, data centres require investment of 4.6 million ringgit per job, against less than 1 million ringgit in electronics and autos; the hardware boom, in other words, is not creating jobs.

The author also highlights fragility. Most AI goods are exempt from US tariffs, but an exemption granted unilaterally can be withdrawn unilaterally. Large US cloud companies spent more than $1 trillion in 2025–2026, and the World Bank warns that the cycle could reverse if it has outrun demand. Mikic's prescription is openness to services and technology rather than reliance on cheap labour, competition by task rather than by sector, and defence of a multilateral rulebook. Otherwise, she argues, the rules will be written by the few countries with the most computing power.