As geopolitical tensions escalate and economic dynamics shift, Southeast Asia, located in the heart of the Indo-Pacific, has emerged as a region of significant strategic value, with notable implications for U.S. foreign policy. The region’s expanding economic growth, critical maritime trade routes, and rising Chinese influence emphasize the need for a recalibrated U.S. engagement strategy that can maintain regional stability and a rules-based international order.
Southeast Asia’s growing geopolitical significance
A comprehensive approach to Southeast Asia’s defining characteristics is essential to fully appreciate its strategic importance in the global arena. Southeast Asia, a densely populated region encompassing eleven nations—ten of which are members of the Association of Southeast Asian Nations (ASEAN)—is characterized by political and religious plurality. Following the global financial crisis of 2008, the region experienced some of the fastest economic growth globally. The region’s strategic importance is entrenched in its geography, particularly its control over the Strait of Malacca and the South China Sea, two of the busiest sea lanes in the world. Given its complex colonial history and long-standing great-power rivalries, Southeast Asian countries adopted strategic hedging, balancing between neutralism and nonalignment.
The rise of Chinese influence in the region
The emerging influence of China in Southeast Asia could be a harbinger of the U.S. losing ground. China’s geographic proximity, historical and cultural ties, as well as the growing trade, investment, and diplomatic presence in the region, could explain why Southeast Asian countries may prefer aligning with China over the U.S. This year’s report from the ISEAS-Yusof Ishak Institute, an ASEAN Studies Center, revealed that among respondents choosing between the U.S. and China as preferred ASEAN allies, China edged past with 50.5% while the U.S. had 49.5%. This shift signifies a gradual decline in U.S. influence, especially in countries like Laos, Malaysia, Indonesia, Cambodia, Thailand, and Brunei, where the U.S. has shown less diplomatic engagement. This transformation is particularly noticeable in Muslim-majority countries, partially influenced by the U.S. stance on the Israel-Hamas conflict.
China’s economic strategy Vs. U.S. investment approach
The competitive dynamic between the two great powers is further demonstrated in soft power diplomacy, especially in bilateral relations. While Washington touts its relations with Vietnam, for instance, Beijing has benefited from a similar level of partnership since 2008. Over the past decade, China surpassed the U.S. in terms of overall investment volume in Southeast Asia with state-backed financing, employing a range of economic policies, notably the Belt and Road Initiative (BRI), to advance its strategic objectives in the region. BRI investments, including large-scale sub-regional projects on connectivity and infrastructure developments, are widely welcomed by Southeast Asian nations, despite the associated risks of debt dependency, with Indonesia, Vietnam, Laos, the Philippines, and Cambodia being the primary recipients of Chinese investments.
Challenges and opportunities for U.S. engagement
Consequently, as Chinese engagement in the region expands, Washington faces challenges in both bilateral and multilateral engagement, even though U.S. commitments have previously fostered transformative growth in Southeast Asia. However, Southeast Asia lacks U.S. diplomatic presence; in some countries, diplomatic personnel are limited. As a result, the U.S. perception of Southeast Asian nations’ needs may be narrow. In parallel, U.S. investments focus primarily on technology, education, energy, and sustainable development. These areas are supported by a combination of private-sector investments and government support programs, which collectively aim to promote regional growth. This qualitative contrast between the two great powers reveals that China’s engagement leads to debt dependency, while the U.S. aims for long-term and sustainable growth with less immediate but stable economic impacts.
A call for a sustainable U.S. presence
In conclusion, a recalibration of the U.S. engagement strategy in Southeast Asia is vital in maintaining regional stability, given the strategic importance of the region. As Southeast Asian nations gradually gravitate toward Chinese partnerships, the U.S. must advance its diplomatic and economic presence to regain influence. By focusing on sustainable development while also enhancing security cooperation, the U.S. can foster long-term relationships in the region, ensuring that they remain a key player in shaping the geopolitical landscape of Southeast Asia.
*Angeliki Vrettou is International Relations analyst.