Southeast Asia has always been an area of significant interest for great powers due to its advantageous position, rich resources, and diverse cultures. This region, characterized by its ever-evolving geopolitical landscape, serves as a crucial arena for great power competition.

Over the past decades, the emergence of China and renewed attention from the United States have introduced a new dynamic to the competition for dominance in Southeast Asia.

The United States of America is the most dominant extra-regional actor in Southeast Asia. The geostrategic centrality of the Southeast-Asian region has aroused the interests of US foreign policymakers for decades and has always been an epicenter of great-power competition. Geopolitically, this region holds great significance in nurturing US interests due to the important sea lanes that pass through it, the mineral resources which it hosts, and its greater proximity to China, USSR, and India which are the important actors neighboring this region. Moreover, the resilience of illiberal regimes in the region is yet another determinant that attracted American attention. During the Cold War, the US implemented a containment strategy in response to developments in Southeast Asia, aiming to protect its security interests. It engaged in the Indochina War for over four decades, driven by the belief that the spread of communism in one Southeast Asian nation would lead to a domino effect. This perception of the Domino theory made Indochina a significant concern for the US.

Later, under the Trump administration, the US pursued the Free and Open Indo-Pacific (FOIP) strategy, to directly confront the growing influence of China, forewarning other nations about China’s “predatory economics” and its propagation of governance principles linked to the increasing prevalence of authoritarianism in the region. ASEAN has articulated its perspective on the Indo-Pacific through the “Outlook on the Indo-Pacific,” emphasizing the importance of inclusivity and the central role of ASEAN. The US to pursue its security interests in Southeast Asia as preeminent power needs continued strategic access in this region. This is realized by US Seventh-fleet based in Japan, and with “places not bases” in Southeast Asia including strategic partnership with Singapore and traditional alliances with Thailand and the Philippines.

Located at the intersection of great power competition, Southeast Asia occupies a strategic position where the world’s busiest sea routes converge. The region serves as a gateway between the Indian and Pacific Oceans through the East-West Sea route, while also connecting Northeast Asia to New Zealand and Australia through the North-South route. These two shipping routes, are deemed as the economic lifelines regulating much of the intra-regional trade and have great relevance for international commerce and security.

The strategic sea lanes in Southeast Asia hold significant military value for the United States, serving as vital conduits for the transportation of US forces between the Indian Ocean, the Western Pacific, and the Persian Gulf.

Moreover, the economic significance of Southeast Asia is greatly associated with the profusion of raw materials in the region i.e., oil, rubber, tin, petroleum, manganese, cobalt, copper, rice, gold, etc. ASEAN, inhabiting over 500 million people, is the largest market for American goods and services, and an important US investment destination with its share of global FDI rising from 11.9% in 2019 to 13.7% in 2020. The US total goods and services trade with ASEAN was valued at $441.7 billion in 2021. Despite the impact of the COVID-19 pandemic, foreign direct investment (FDI) inflows into ASEAN reached approximately US$137 billion, marking a decrease from the previous peak of US$182 billion.

The incumbent rise of China as a major power offers a significant trajectory bringing in a progressively self-assured, and influential actor into the strategic mix. Since 2013, China has adopted a proactive approach to “neighborhood diplomacy,” aiming to foster a “community with a shared future” in its neighboring regions. Economic statecraft, which involves using economic tools to achieve foreign policy objectives, plays a central role in its evolving foreign policy doctrine.

The Belt and Road Initiative (BRI) serves as a key component of China’s statecraft, focusing on strengthening infrastructure, trade, and investment links between China and countries in Southeast Asia and beyond. Notably, China has implemented various projects in the region, including hydropower dams, oil and gas pipelines, and extensive railway plans. Additionally, China has adopted a proactive approach to safeguard its territorial assertions in the South China Sea, relying on the contentious “nine-dash line” that encompasses a considerable area of the disputed waters, overlapping with the claims of various Southeast Asian nations. These conflicting territorial claims have been a primary cause of strain and discord within the region. The geographical proximity of China, along with its aspirations to establish a sphere of influence, combined with the absence of a major Southeast Asian power capable and willing to strongly resist Beijing’s dominance, leaves the region particularly susceptible to external pressures.

ASEAN appreciates China’s economic reforms and recognizes its potential for global economic competitiveness. ASEAN seeks constructive engagement with China, aiming to establish economic ties through trade and investment.

These economic linkages are crucial for building a lasting ASEAN-China relationship. Trade between ASEAN and China has experienced substantial growth, with the volume more than doubling since 2010, reaching USD 507.9 billion in 2019, which accounted for 18% of ASEAN’s total trade. This significant increase can be attributed to the 2005 ASEAN-China Trade in Goods Agreement, which led to a nearly fourfold expansion in bilateral trade. China’s economic influence has grown, evident by its invitation to the ASEAN Informal Summit and its support for the Thai currency. This demonstrates China’s significant economic clout and the role it can play in the region. Furthermore, Singapore’s largest investments are in China, underscoring the deepening economic relations between China and ASEAN.

In the complex landscape of US-China rivalry, Southeast Asian countries are adopting diverse strategies to safeguard their interests both individually and as a region.

The impact of great power rivalry in Southeast Asia has far-reaching consequences for regional stability and security.

On the positive side, this rivalry brings about economic opportunities and increased investments for the countries in Southeast Asia. However, it also creates potential tensions and conflicts, particularly in areas like maritime security, where overlapping interests and claims can arise. To navigate this complex geopolitical situation, Southeast Asian states have adopted a policy of strategic autonomy. They strive to maintain friendly relations with all major powers while simultaneously strengthening regional security cooperation. This approach aims to strike a balance and safeguard the interests of Southeast Asian nations amidst the competing influences of great powers.