How Asia-Pacific can drive industrial competitiveness through a low carbon, circular economy

Across Asia-Pacific, a new industrial landscape is emerging. Carbon intensity, resource security and supply chain resilience are becoming as important to competitiveness as labour costs, energy prices and market access.

As the home to much of the world’s manufacturing capacity, critical supply chains and future demand growth, Asia-Pacific will play a decisive role in answering that question. The region has a unique opportunity to write the changing rules of the global economy.

The next phase of industrial competitiveness will increasingly be determined by how effectively countries and companies align three forces: decarbonization, resource resilience and regional cooperation.

For decades, industrial competitiveness and environmental sustainability were often presented as competing priorities. Today, that distinction is becoming increasingly blurred.

As governments, investors and customers place greater emphasis on the emissions embedded within products and supply chains, carbon performance is becoming a factor in investment decisions, procurement strategies and market access. Measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) reflect a broader shift as emissions become part of the economics of global trade.

This matters particularly for the sectors that underpin industrial growth. Steel, cement, shipping and other hard-to-abate industries form the backbone of modern economies, but they also account for a significant share of global emissions. Their transformation will shape the competitiveness of future industrial value chains.

The challenge is not only technological. In many sectors, the primary constraint is the absence of sufficiently strong markets for lower carbon products. Producers are hesitant to invest without buyers, while buyers are reluctant to commit until supply exists. Breaking this cycle requires stronger demand signals.

This is where demand-side action becomes critical.

Across hard-to-abate sectors, demand-side commitments can help bridge the gap between technological readiness and commercial scale. This provides greater certainty for producers and gives investors greater confidence that markets for low carbon products will emerge.

Combined with enabling policies, financing mechanisms and international partnerships, these signals can help accelerate the transition from pilot projects to competitive industrial value chains. Competitiveness in the next industrial era, therefore, will depend not only on technological innovation, but also on the ability to create markets that reward lower carbon production.

No country can achieve this transformation alone. The industrial systems that underpin Asia-Pacific competitiveness are deeply interconnected. Raw materials, manufacturing capacity, technology development, finance and demand are distributed across borders. The next phase of industrial growth will therefore depend on national strategies and on stronger regional cooperation that can align investment, standards and markets.

A similar shift is underway in the circular economy.

Traditionally associated with waste reduction, circularity is increasingly being recognized as a strategic response to supply chain vulnerability, resource constraints and geopolitical uncertainty.

Extending product lifecycles and increasing the use of secondary inputs can strengthen resilience while reducing exposure to volatile commodity markets. For businesses, circularity is becoming less about managing waste and more about securing future competitiveness.

This is particularly relevant in Asia-Pacific, where manufacturing networks, material flows and consumer markets are deeply interconnected. Building effective circular value chains requires cooperation across borders, trusted systems for material recovery and take-back, and clear frameworks governing the movement of secondary materials.

As demand for critical minerals, batteries and clean energy technologies accelerates, the ability to recover, reuse and recirculate materials will increasingly become a strategic economic advantage.

Progress is already emerging. Across ASEAN, policymakers and businesses are exploring new approaches to strengthen cooperation on circularity, including for plastics, electronic waste and critical materials. Such efforts can help create the scale and certainty required to attract investment while supporting more resilient supply chains.

Technology will play an important role here. Advances in digital traceability, artificial intelligence (AI) and material recovery systems are improving the efficiency and economics of circular business models. At the same time, greater investment will be needed to build circular value chains for critical minerals and other strategic materials that will underpin the clean energy transition.

Beyond reducing waste, this is an opportunity to create industrial systems that are more secure, productive, resilient and competitive.

South Korea sits at the intersection of advanced manufacturing, export-oriented value chains and evolving climate and resource expectations. As carbon performance becomes a factor in procurement strategies and market access, and as circularity becomes a strategy for resource security and supply chain resilience, South Korea can help translate these pressures into practical pathways for regional growth.

One priority should be to strengthen demand creation for lower carbon materials and technologies. Public procurement, first-of-a-kind offtake commitments and mission-driven partnerships can provide the long-term market signals needed to move clean industrial solutions from pilot projects to commercial scale.

South Korea should also work with industry and finance to lower the cost of early investment by aligning standards, data and verification approaches, helping producers and buyers to build confidence in the emissions and circularity attributes embedded within products and supply chains.

As manufacturing networks and material flows across Asia-Pacific become increasingly interconnected, South Korea could also help convene governments and companies around clearer frameworks for secondary materials, critical resource recovery and cross border collaboration. Complemented by advances in digital traceability, AI and improved material recovery systems, these efforts could help strengthen resource security while improving the economics of circular business models.

Ultimately, South Korea can become a regional anchor for public-private cooperation, linking policy, finance and industrial leadership around a shared vision for competitive and resilient growth.

Indeed, leaders from government, industry and finance will gather in Seoul from 29-30 June 2026 for the World Economic Forum's Decarbonization and Circularity for Industrial Growth and Competitiveness. They will explore how demand formation, enabling policy, finance and regional cooperation can accelerate industrial transformation across Asia-Pacific.

The opportunity is clear. The challenge now is to move with the speed and scale required to seize it.