U.S.-China Economic and Security Review Commission• Mar 20, 2025• 2:52:55Interview

USCC's Hearing on the Competition With China in Southeast Asia and Pacific Islands

From U.S.-China Economic and Security Review Commission

Executive Summary

A 2024 survey reveals a significant geopolitical shift, with Southeast Asian elites now preferring alignment with China over the United States for the first time, a change partly attributed to the U.S.
stance on the Gaza crisis.
and China are engaged in an asymmetric competition where the U.S.
is the region's leading security provider, but China dominates economically with nearly double the trade volume and is closing the investment gap.
China is entrenching its influence through tangible infrastructure projects (Belt and Road), dominance in key tech sectors like EVs and telecommunications (Huawei), and by positioning itself as a key security partner to Pacific Island nations.
economic statecraft, including initiatives like the BUILD Act and Blue Dot Network, has failed to produce significant results, creating a perception gap where China is seen as delivering while the U.S.
offers promises.

12 quotes

Concerns Raised

Rapid decline in U.S. favorability among regional elites, ceding diplomatic ground to China.
China's entrenchment in critical infrastructure and technology supply chains, creating long-term dependencies.
The ineffectiveness of U.S. economic initiatives to counter China's tangible Belt and Road projects.
China's successful use of state-owned enterprises and security assistance to achieve geopolitical goals, such as flipping diplomatic recognition in the Pacific Islands.

Opportunities Identified

The U.S. maintains a significant advantage in services trade with Southeast Asia, an area for potential growth.
Regional countries' inherent desire to avoid domination by a single power creates demand for U.S. and allied engagement.
Collaborating with allies like Japan and Australia can create a more compelling, multilateral development and security offer.
Partnering with nations like the Philippines on law enforcement and intelligence sharing can counter Chinese-linked transnational crime.

Key Themes

Shifting Regional Alignments

Recent survey data indicates a dramatic decline in support for the U.S. among Southeast Asian elites, who for the first time favor alignment with China. This shift is significantly influenced by perceptions of U.S. foreign policy, particularly the Gaza crisis, which was ranked as a top geopolitical concern in the region.

This erosion of U.S. soft power and diplomatic preference represents a major strategic setback, potentially leading to reduced regional cooperation on U.S. initiatives and a greater accommodation of Chinese geopolitical objectives.

Asymmetric U.S.-China Competition

The U.S. maintains its role as the primary security guarantor with a strong alliance network, but China has established economic primacy. China's trade with the region is nearly double that of the U.S., and it is the largest provider of infrastructure finance, creating deep economic dependencies.

This asymmetry forces regional nations into a difficult balancing act, relying on the U.S. for security while their economic prosperity becomes increasingly tied to China, complicating U.S. efforts to build a unified front against Chinese coercion.

China's Dominance in Future-Facing Industries

China has achieved a commanding position in the technology and infrastructure sectors of Southeast Asia. Chinese firms dominate the entire electric vehicle supply chain, Huawei is the primary telecom provider outside of Singapore, and Chinese companies lead the cloud computing market.

This technological dominance gives China significant leverage over the region's digital and industrial future, potentially enabling data collection, setting technical standards, and marginalizing Western competitors in high-growth markets.

The Failure of U.S. Economic Statecraft

Despite launching multiple initiatives like the BUILD Act and Build Back Better World, the U.S. has failed to deliver tangible, large-scale infrastructure projects to rival China's Belt and Road. In contrast, China has completed high-profile projects like Indonesia's high-speed rail, reinforcing its image as a more effective development partner.

The inability to translate strategic economic plans into concrete outcomes undermines U.S. credibility and leaves a vacuum that China is effectively filling, making it harder for the U.S. to compete for influence on economic terms.

Regional Agency and Diversification

While China's influence is growing, regional countries are not passive actors. They express concerns about over-reliance on China, as seen with food security issues in Laos, and are actively seeking to diversify partnerships with other powers like Japan, Australia, and India. Established Western and Japanese firms also continue to set standards in key legacy industries like automotive and semiconductors.

This desire for strategic autonomy presents an opportunity for the U.S. and its allies to offer credible alternatives. By supporting regional initiatives and multilateral partnerships, the U.S. can empower these nations to resist Chinese dominance and maintain a free and open Indo-Pacific.

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Topics

US-China Competition Southeast Asia Pacific Islands ASEAN Geopolitics Belt and Road Initiative (BRI)Infrastructure Investment Technology Dominance Huawei Electric Vehicles (EVs)Supply Chains Diplomacy Soft Power Elite Perception Maritime Security Economic Statecraft

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