Southeast Asian states have understandably continued to resist the need to make aggregate choices amid growing U.S.-China competition, even as there is increasing scrutiny from both Beijing and Washington about countries allegedly swinging or tilting from one power to another. Yet in conversations with policymakers from all 11 countries in Southeast Asia over the past year, it has been clear that the very focus on an aggregate U.S.-China choice also belies the more consequential strategic question of the individual choices that Southeast Asian states make on their own with respect to key areas, alternatives and architectures that could reverberate throughout the rest of the 21st century.
The reality of increased scrutiny on the choices of Southeast Asian states is one that exists “if not by word, then by deed,” as Malaysia Prime Minister Anwar Ibrahim succinctly put it last year in a sentiment often heard in the region. As the United States and China compete, there is more attention to choices perceived to be creating inroads for one side or the other, be it China’s presence at Cambodia’s Ream Naval Base or new U.S. defense sites in the Philippines, to cite just two examples in the defense realm. Yet amid this scrutiny is the broader question of prioritization. Put simply, given the constraints on time and resources in a global U.S.-China competition across domains, and amid two ongoing wars outside the Indo-Pacific, what are the choices that really matter and should be given the most attention?
One conception is focusing on “swing states,” a decades-old term used to describe countries which have significant clout but are not closely aligned with China or the United States. U.S. officials have used the term to describe nations in Southeast Asia, including Indonesia and Vietnam. While the term may have utility in describing more nonaligned states, it can also run into limits. Situating countries in a U.S.-China spectrum can simplify the multiplicity of choices – or misrepresent the “ends” of perceived “swings” – in an environment where other powers like Australia, India, and Japan also have a role.
Focusing on changes in just a few capable, less aligned states understates the fact that “swings” that can occur on either end, as seen in the setbacks Washington experienced in its alliances with the Philippines and Thailand in the second half of the 2010s. Narrowing the focus to more nonaligned swing states also does not offer much guidance on which choices policymakers should focus on within these countries. In general, sectors like telecommunications are relatively more tied to national security and hence present greater risks than other sectors like retail or entertainment.
An alternate conception would be to focus on select choices that all Southeast Asian states are making on their own with respect to key areas, alternatives, and architectures that could have long term implications. A focus on “swing sectors” rather than “swing states” would acknowledge agency and flux across all Southeast Asian states but also shift the focus from aggregate U.S.-China choices to a narrow set of select strategic industries or sectors that matter as well as the broader range of alternatives and architectures within them. These include areas that carry a relatively greater risk in national security terms, including artificial intelligence, critical minerals, telecommunications, and strategic infrastructure. This would result in a more focused conversation that moves away from scrutiny on any single U.S.-China choice or the tendency to “overgeopoliticize” domains that are relatively less strategic, which carries real world implications in terms of reducing efficiency and increasing costs in industries.
The first aspect concerns how Southeast Asian states will approach strategic areas or industries. This relates to what these countries themselves view as strategic industries in the context of heightened geopolitical competition, beyond U.S. notions of a “small yard, high fence.” Thinking on this front is already ongoing. Singapore is trying to shape global conversations around the basket of critical and emerging technologies. It is already on its second artificial intelligence strategy and has rolled out a national quantum strategy.
Vietnamese officials have spoken of an “ecosystem” approach to managing strategic sectors like semiconductors that cultivates a select group of trusted partners rather than viewing decisions more transactionally. Yet shaping such approaches is also far from straightforward. Approaches to industries like electric vehicles – described more as “computers on wheels” than simply cars – are still far from clear, even as estimates point to about three-quarters of all EVs sold in Southeast Asia already being made by Chinese car makers. Outstanding questions remain. For instance, how do countries manage the risk that so-called “small yards,” once in place, may keep growing larger into domains where the tradeoffs between efficiency and security may be less clear?
The second aspect relates to how Southeast Asian states may weigh competing alternatives within these strategic industries. This is more complex than it initially appears. At times, first-mover alternatives risk constraining rather than enabling future ones. For example, in the critical minerals space, while Indonesia is trying to leverage its growing dominance in the global nickel industry to draw in diverse partners including the United States, it has encountered challenges due to China’s heavy involvement in an industry rife with environment and rights concerns.
It can also be hard to create alternatives. In the realm of strategic infrastructure, the Philippines avoided China taking over a bankrupt strategic shipyard in Subic Bay with the help of a creative solution by the United States and its partners. But it has taken longer for alternatives like an O-RAN (Open Radio Access Network) architecture to emerge in the telecom space to offset Huawei’s dominance. Some officials in Laos contend that few competing alternatives were readily available when the state-run electricity corporation entered into a power-grid sharing agreement with a Chinese state-run firm in 2021. These officials were not unaware of the risks that lay therein.
The third and final aspect relates to how Southeast Asian states put in place architecture that shapes decision-making on strategic industries. This can help insulate domestic decisions from capture and build confidence for foreign partners to engage. As challenging as this may seem, there are some developments of note. For example, in the investment space, Southeast Asia just saw its first-ever investment screening law, with Singapore passing legislation that scrutinizes activity by entities across sectors deemed to be critical to national security interests.
In the defense space, where transparency concerns persist, Southeast Asia has begun to see more countries publishing white papers that at least shed light on security thinking and intensify interagency conversations, including Malaysia (2019), Brunei (2021), and Cambodia (2022). Cross-border developments are also notable. For example, in the digital domain, for all its faults, ASEAN is slowly moving ahead with the first Southeast Asia-wide artificial intelligence approach following the publication of a guide in early 2024. More like-minded Southeast Asian states are also intensifying conversations in other strategic areas including subsea cables.
To be sure, the approaches Southeast Asian states are taking across these strategic industries are still in the process of flux amid domestic, regional, and global changes. Nonetheless, there is enough movement to reinforce the fact that the focus on an aggregate U.S.-China choice belies the consequential individual choices regional countries are already beginning to make in specific strategic industries and sectors regarding key areas, alternatives, and architectures. Rather than just focusing narrowly on situating a few swing states on a neat U.S.-China spectrum, policymakers in Washington and other capitals outside the region would do well to also prioritize more comprehensively the swing sectors that matter for the 21st century and are being shaped by countries large and small.