Southeast Asia’s Balancing Act Amid the US-China Trade War

Smaller countries have occasionally been caught up in a rivalry between two big powers especially if they are dependent on both powers. Southeast Asia is dependent on China for its economic survival, while they are tied with the US for security  because of China’s creeping assertiveness in the South China Sea, a water body that shares China and  most of the  Southeast Asian states.  China claims ninety percent of the waterbody and  militarized the artificial islands against the interests of other regional stakeholders  as well as the US and other major powers. On the other hand, the economic interaction between China and Southeast Asia has been growing strongly, both in terms of trade and investment, and Southeast Asia  finds China as a dependable economic partner than the US as Washington is going ahead with the ‘America first’ policy.

Economic Interdependence with China

The economic reliability of China for Southeast Asia can be seen from the statements of the regional elites in the latest Boao Forum held in end-March 2023 in China’s southeastern city  of Boao  where they expressed their anxiety about the ‘spillover effects of great power rivalry’ between the US and China.  Malaysian and Singapore Prime Minsters opined on March 30 that the US-China tension is the ‘most worrying’ factor in the region and called for a ‘healthy competition’ between the two instead of zero-sum rivalry.  The Boao Forum for Asia (BFA) was formed in 2001 by 25 countries from Asia and Australia on the lines of the Davos Economic Forum under the initiative of China after the 1998 Asian financial crisis for closer regional integration and also to address various economic issues concerning the region. With various forms of trade agreements China signed bilateral trade agreements with individual Southeast Asian countries as well as comprehensive agreements such as the China-ASEAN Free Trade Agreement and  Regional Comprehensive Economic Partnership (RCEP), China has become the driver of regional economic dynamism. 

China considered the Covid-19 pandemic as an opportunity to enhance its ‘feel-good’ diplomacy and a ‘friend-in-need’ for Southeast Asia.   It responded to the needs of the region through diplomatic, medical, and material support and China’s vaccine assistance really helped the region to stem the spread of the disease.  Of the total global vaccine donations delivered by China, two-thirds went to Asia and five of the ten top recipients were in Southeast Asia: Indonesia (1), Philippines (5), Myanmar (6), Cambodia (9), and Vietnam (10). Beijing has described the China-Southeast Asia cooperation to fight the pandemic as an “exemplary model” and a “new type” of international relations.

The ‘China-Plus One’ strategy adopted by Beijing to counter the US’  decoupling with China has helped attract large scale Chinese investments into the Southeast Asian region. Under this strategy, Chinese companies retained their production facilities inside China to cater the domestic demands while setting up production centres in Southeast Asian countries, especially in Thailand, Malaysia, and Vietnam, for the international market. As a result, Southeast Asia became China’s largest trading partner in 2022 replacing the European Union, with 14.6 per cent of its total foreign trade. By July 2022, China-ASEAN two-way investment exceeded $ 340 billion and was expected to increase further with the implementation of the Regional Comprehensive Economic Partnership (RCEP).  On the other hand, the Indo-Pacific Economic Framework (IPEF), announced by the Biden administration in May 2022 to isolate China economically, received lukewarm response from the region because IPEF doesn’t offer greater access to the US market for Southeast Asian products. Both the US and China are competing for holding the Southeast Asian region economically with them but China has become more attractive than that of the US, despite Washington’s outreach to the region through political and diplomatic efforts.

Military reliability with the US

Even as China is the most attractive economic power for Southeast Asia, Beijing’s stance on various territorial   disputes brings the region closer to the US militarily. Even though the erstwhile   hub-and-spoke model alliance system under the US has lost its relevance today,  the   US is still the reliable security partner for many of the regional countries. Countries such as Thailand, Indonesia, Singapore, Philippines, and Vietnam maintain close security cooperation with the US for their own security as well as for regional stability. They are worried about  China’s creeping assertiveness in the South China Sea, especially the gray-zone tactics of Beijing. China believes the ‘grey-zone’ tactics would help it gain control of the waterbody which not only  reduces the scope for a military clash between China and other claimant states but it prevents the US intervention in support of the regional strategic partners. There are variations in regional countries’ approach to the US of its role in the dispute, however, there is a growing realization that the US military power is a ‘public good‘ for the region and the only factor that can hold China back from a military adventurism. The US’ external security umbrella indeed helped the region to sustain the ‘ASEAN centrality’ in regional multilateral mechanisms that has been accepted across the spectrum and summits like East Asia Summit and ASEAN Regional Forum take place in Southeast Asia only.

To withstand China’s military action, the regional countries are enhancing their defence capabilities with fighter aircraft and submarines sourced from foreign countries. Even though the US is still the largest supplier of arms to the region, Southeast Asian countries have widened the sources of arms to France, Russia, Israel, and South Korea.  Singapore in 2020 decided to    purchase 12 Lockheed Martin F-35B Joint Strike Fighters, to replace the older F-16C/D fighter jet, and the F-35B delivery will start in 2030. Recently, Manila and Washington have agreed to the US military to access four new bases  in Philippines territory- three  on the main island of Luzon, close to Taiwan, and one in Palawan province in the South China Sea (SCS)-  as part of the 2014 Enhanced Defense Cooperation Arrangement (EDCA) between the two. Besides, the US has committed $80m investments to improve infrastructure at the five current bases: the Antonio Bautista Air Base in Palawan, Basa Air Base in Pampanga, Fort Magsaysay in Nueva Ecija, Benito Ebuen Air Base in Cebu and Lumbia Air Base in Mindanao. To this understanding, China warned Manila against closer defence ties with the US and becoming a ‘chariot of geopolitical strife’. Current Philippine President Ferdinand Marcos Jr has been attempting to lean towards the US to counter China’s maritime assertiveness in the SCS, a major shift from the policy of his predecessor Rodrigo Duterte who wanted close ties with China.

At the same time, Southeast Asia is warry of sandwiched in the high-power politics by major powers. They have strongly expressed their concerns about the formation of the Quad (Quadrilateral Security Dialogue) and the AUKUS (Australia-United Kingdom-US). They fear that taking the regional security issues into the larger major power configuration would dilute the ‘ASEAN centrality’, thus will reduce the importance of Southeast Asia/ASEAN in the larger Indo-Pacific framework. To avoid the region embroiled in the US-China competition, the regional elites prefer balancing tactics and seek a non-confrontation approach.


In the US-China rivalry for regional supremacy, Southeast Asia plays its card carefully to maintain its importance in the geopolitical framework of the Indo-Pacific. It wants to maintain its centrality, while closely working with both China and the US on economic security matters. India too gives ASEAN centrality in its Indo-Pacific strategy which was announced by Indian Prime Minister Narendra Modi in his 2018 Shangri La Dialogue in Singapore.[1] Because of the demand for ‘ASEAN centrality’ by Southeast Asia in the Indo-Pacific architecture, the region has managed to maintain the US-China rivalry as a bilateral issue only, not a regional security concern. 

[1] Prime Minister’s Office, “Text of Prime Minister’s Keynote Address at Shangri La Dialogue”, Government of India,  June, 1, 2018,, accessed on April 18, 2023.    

Joshy M Paul
Joshy M Paul
Research Fellow with the New Delhi based Centre for Airpower Studies. He can be contacted at :mpjoshy[at]