How to Survive a Great-Power Competition

As relations between China and the United States grow more antagonistic, the rest of the world is watching with unease. Washington has repeatedly accused Beijing of spying on Americans and trying to steal its secrets, most recently by sending a balloon over the United States. Beijing has alleged that Washington is working to cut it off from international markets. The two sides are engaged in an ongoing trade war, and they continue to increase their military expenditures. A violent showdown over Taiwan looks increasingly possible.

This alarming competition has created headaches for many countries, but it is arguably most challenging for developing ones. Washington is pressing partners and allies to support its efforts to penalize its adversary, as is Beijing—even though good relations with both China and the United States have helped lift hundreds of millions of people from poverty. A confrontation between Beijing and Washington, even a nonviolent one, would weaken the trading system that has allowed the global South to flourish. And if the two powers did go to war, smaller and weaker states could get dragged into the conflict.

Few places have come under more intense pressure from the U.S.-Chinese rivalry, or have more to lose from it, than Southeast Asia. The region, home to nearly 700 million people, is often seen as a testing ground for China’s attempts to expand its power. Beijing often refers to the area as its “periphery,” and it is building a strong military presence in the region’s waters while rolling out a variety of Southeast Asian infrastructure projects under its Belt and Road Initiative. Washington, for its part, has campaigned hard to stop Southeast Asian countries from agreeing to Chinese-led programs. It wants partners and allies to support its ban on various Chinese technologies, even though Beijing’s systems help foster economic growth on the cheap.

For Southeast Asia, these demands feel all too familiar. During the Cold War, the region was an epicenter of great-power rivalry as the Soviet Union and the United States (and later China) vied for supremacy. The contest led to violence that killed millions—in traditional wars, civil wars, and systematic state repression. The region’s people do not remember this period fondly, and they do not want to repeat it.

But for Southeast Asia, this new era of great-power conflict is unlikely to resemble the last one. Despite China’s economic power, the region’s countries have been able to resist its attempts at domination, and they have done so without consistently relying on Washington’s containment initiatives. Instead, Southeast Asia has strengthened and established multilateral institutions, anchored in the Association of Southeast Asian Nations (ASEAN), that have made the region an independent force. When the area’s countries have fostered ties with China and the United States, they have done so on their own terms. They have learned how to use U.S.-Chinese competition to their advantage, playing the two powers against each other for their own economic benefit. Southeast Asia has even become a diplomatic behemoth, one able to bring great powers together.

Whether the region can maintain its position is an open question. If tensions between Beijing and Washington lead to a military conflict, the area’s countries could find themselves under intense pressure to pick sides. Southeast Asia is far from a monolith: its countries have different foreign policies and aims, some of which are at odds with one another. But the region’s rapid growth and expanding economy suggest that its countries will become more powerful over time and, with it, quite possibly more able to prevent external interference. Southeast Asia may have once been defined by great-power conflict, but today, it can become a model for how to manage great-power competition.

THEN AND NOW

Throughout the Cold War, Southeast Asia was internally divided. Many countries in the region, such as Indonesia, were led by anti-Soviet regimes that violently suppressed communist movements. Others, such as Cambodia, were ruled by Marxist-Leninists. As a result, the area was fraught with tension. In 1967, for instance, noncommunist states founded ASEAN to check the expansion of Marxism-Leninism. Communists in Laos and Vietnam, meanwhile, fought and won bloody civil wars.

But as the Cold War ended, Southeast Asia worked hard to move beyond this acrimonious past. Vietnam, for example, overcame diplomatic isolation and turned into one of the region’s most proactive and outgoing countries. ASEAN extended membership to its former adversaries, transforming itself from an anticommunist group into one with a broad political and economic agenda. It also became a security forum that frequently brings the region’s diplomatic and defense leaders together to work on trust building and conflict prevention.

Southeast Asians have benefited greatly from this peace dividend. The relatively stable international system fostered global integration, allowing the region’s states to become manufacturing hubs and the recipients of
substantial investment. They signed various free-trade agreements, bolstering connectivity and economic growth. In 1990, only two of the world’s 40 largest economies were in Southeast Asia. By 2020, that number had increased to six.

But competition between China and the United States threatens these gains—and in ways that feel disconcertingly familiar. Washington, for example, has justified its competition against China by arguing that it is promoting democracy, the same explanation it gave for the war in Vietnam decades ago. It is an excuse that will win the United States few friends in Southeast Asia. The region is home to many different political systems, and its states proudly work across ideological lines to advance their interests. Even Vietnam has moved past its ideologically driven foreign policy, instead striking up friendships with any government that can offer support. Today, that includes Washington.

Southeast Asia has become a diplomatic behemoth, one able to bring great powers together.

The United States’ emphasis on ideology under the Indo-Pacific Strategy is not the only way it is antagonizing Southeast Asians. Washington’s push to get countries to decouple from China has also proved deeply irritating, even to longtime friends such as Singapore. The push also means that the United States is adopting a trait of its adversary: typically, it has been China that demands that governments make binary choices. (In 2017, for example, Beijing disinvited Singaporean Prime Minister Lee Hsien Loong from a Belt and Road forum after he defended an international court’s ruling about maritime claims that went against China and in favor of the Philippines.) But ever since U.S. President Donald Trump announced his “free and open Indo-Pacific” strategy alongside a volley of trade actions against China, Washington has come across as the great power demanding that countries pick a side.

Beijing, of course, has also undermined its own aims in Southeast Asia. China’s economic weight is attractive to the region, but its economic deals come with strings attached. The country’s loans, for example, often foist unsustainable debt on recipients that Beijing can wield against them. Laos now owes China some $12 billion, which is nearly 65 percent of Laos’s GDP. Indonesia’s external debt to China at the end of June 2021 stood at $21 billion, nearly five times what it was at the end of 2011. (Nongovernment studies suggest the figure may be even higher.) Cambodia now owes China a different kind of tribute: Beijing’s investments in the country appear to have won it access to the Ream Naval Base, a military facility that will give the Chinese military easier access to the South China Sea.

China’s growth-killing “zero COVID” policy now casts doubt on the country’s actual economic strength. And its extensive claims to Southeast Asia’s waters and construction on the region’s reefs are a constant reminder of Beijing’s belligerence. This assertiveness, combined with the United States’ hawkish behavior, has led many Southeast Asian states to worry that the two great powers could soon come to blows. Such a conflict would be dangerous for the entire world, but it could be especially catastrophic for this region. A U.S.-Chinese war over Taiwan, for example, would almost certainly result in a heavily militarized South China Sea, making it difficult for ships to travel freely to and from Southeast Asia. It would also significantly impede regional communications as the warring parties moved to cut or take control of the area’s undersea Internet cables. In a worst-case scenario, a conflict might even lead to attacks on the fleets of various Southeast Asian militaries. Either way, regional trade and supply chains could be harmed, stranding the area’s economy.

CHOOSING NOT TO CHOOSE

Virtually every country in Southeast Asia recognizes that an open conflict between China and the United States is undesirable. They also know that it would be bad, for politics and business, if either state dominated the region. Neutrality may be one of the few positions on which this heterogeneous group of states can agree. The question is how they can best achieve it.

So far, different countries have taken different approaches. Some have maintained their policies from the past three decades, when China and the United States got along well enough that the region was rarely pushed or pulled into one particular camp. Malaysia and Thailand, by contrast, have moved away from their past, proactive approach to diplomacy as domestic instability has absorbed each government’s attention.

Stasis and inaction might seem like a safe bet: why change course or speak out if it risks antagonizing either Beijing or Washington? But doing nothing is a losing strategy. If ASEAN states don’t act, they could become bystanders in their own region as major powers conduct military exercises, and possibly even fight, across the surrounding seas. Passivity could cost this group of smaller and medium-sized countries the agency they fought hard to obtain. If the region wants to stay neutral and succeed, it must do so in a way that is careful and considered.

Overall, however, the region has carefully navigated the rising tensions. In 2019, as a collective response to the United States’ aggressive Indo-Pacific strategy, ASEAN issued a white paper, “Outlook on the Indo-Pacific,” that explicitly rejected zero-sum regional competition and regional dominance by any single power. Instead, it positioned ASEAN at the heart of the area’s dynamics. ASEAN then made good on this self-elevation. Over the last several decades, the group has gotten outside states to invest in and trade with the region. It has brought other countries to its diplomatic conclaves, becoming the host—rather than just the subject—of discussions about regional politics. The ASEAN Defense Ministers Meetings–Plus, for example, gathers defense ministers from the ten ASEAN states and a variety of other countries, including China, Russia, and the United States, to discuss matters of regional and global concern. The group’s inclusive multilateralism may not sit well with many Americans, who mentally divide the world between friends and competitors (particularly after the outbreak of the war in Ukraine). But cooperating with everyone is a great way to avoid making enemies with anyone.

Southeast Asia has worked hard to maintain and expand this diplomatic and security outreach. Along with the ASEAN-led multilateral security architecture, the region has established many plurilateral and bilateral arrangements with external states. They include ad hoc groups, such as the joint patrols in the Mekong River by China, Laos, Myanmar, and Thailand. They also include institutionalized agreements, such as Singapore and Malaysia’s 50-year-old Five-Power Defense Arrangement with Australia, New Zealand, and the United Kingdom. As the geopolitical environment becomes more tense, the already high number of these partnerships is likely to increase. The complex and often overlapping arrangements are critical to Southeast Asia’s efforts to engage with all but make exclusive commitments to none.

Southeast Asian states are also becoming more active in groups that include participants outside their neighborhood. Last year, for example, Cambodia hosted the high-profile East Asia Summit, Thailand held the Asia-Pacific Economic Cooperation forum, and Indonesia chaired the G-20. Indonesia’s chairmanship proved particularly successful. In November 2022, at the sidelines of the G-20 meeting in Bali, Indonesia hosted a summit that helped break the ice between China and the United States by bringing U.S. President Joe Biden and Chinese President Xi Jinping face to face for the first time since Biden assumed office. Australian Prime Minister Anthony Albanese also spoke with Xi at the proceedings, ending years of silence between Australia’s and China’s heads of state. Both meetings would have been impossible were it not for Indonesia’s neutral stance, and they helped reinforce Southeast Asia’s belief that multilateralism remains invaluable even in a disorderly world.

Individually, some Southeast Asian governments have learned that there are benefits to U.S.-Chinese competition. Beijing and Washington’s clash may frighten the region’s politicians, but it has led both governments to try to win the hearts and minds of nonaligned countries. This has helped Southeast Asian countries—home to young populations and cheap labor—extract all kinds of economic benefits. Vietnam, for example, has profited tremendously from the United States’ decoupling from China as U.S. companies have moved production to Vietnamese factories. Indonesia has also received a boost in investment from U.S. companies, including Amazon, Microsoft, and Tesla. The region is becoming increasingly critical to global supply chains.

EVERYBODY, EVERYWHERE

There is no guarantee that Southeast Asia’s balancing act will work forever. As U.S.-Chinese competition heats up, many analysts expect that the region’s states will, one day, have to take sides. Even Lee, the Singaporean leader, who is no fan of Beijing and Washington’s rivalry, said at the 2018 ASEAN Summit that ASEAN may eventually have to choose.

But unlike in the Cold War, when Southeast Asia was mostly poor, newly independent, and weak, today’s ASEAN states are largely middle income and can be influential—as the region’s diplomacy illustrates. In the years to come, these countries’ economies will continue to grow, as should their populations. Both increases will give the region dividends that Beijing and Washington lack: China’s population is contracting, and the United States is struggling with domestic political polarization that could hamper its growth and leadership capacities. The two competitors may therefore find that their relative power will decline in the decades ahead—a trend that will narrow the power disparity between these two states and the ASEAN countries.

In fact, the coming decades could give Southeast Asia distinct global advantages. The International Monetary Fund has projected that the region will have some of the highest levels of economic expansion in the world over the next several years. If there is a global recession, Southeast Asia could become the growth engine for the broader Asia-Pacific region. Indonesia and Vietnam, Southeast Asia’s biggest and third-biggest states by population, respectively, are on pace to become high-income countries in the next two decades. Southeast Asia, then, could soon have substantial international influence.

For most of ASEAN’s members, the additional sway may not always be welcome. International governance requires time and resources that many Southeast Asians would prefer to spend on their own development. But the region’s flexibility and adaptiveness will help its countries thrive and exert influence, even in turbulent times. It will help them handle a more fragmented world and make deals with parties that do not get along. Their proactive approach to neutrality is certainly a better model than the passive nonalignment that defined the Cold War’s Non-Aligned Movement. Southeast Asia’s extensive network of diplomatic connections advances its political agency, bargaining power, and economic growth. Aligning with many states is more fruitful than aligning with none.

Indeed, it may be better to think of Southeast Asia’s approach not as nonalignment but as multi-alignment. The region wants as many ties and choices as it can muster. In addition to China and the United States, it has welcomed Australia, India, Japan, and European states to be actively engaged with the region—to trade, invest, and participate in its international dialogues. Creating all these ties may take time and effort. But as Southeast Asia has illustrated, it is an effective and affordable way for developing countries to both avoid great-power conflict and become players themselves.