The Asia-Pacific could be counted as one of the winners in an era of geopolitical competition. Most are officially neutral in the China-U.S. struggle for power, allowing them to do business with both sides. For them, China is a major source of investment and imports, and a destination for exports. The U.S., for its part, is an important export market and the only country present in the Asia-Pacific with the military strength and presence to challenge China’s potential domination.
As a result, many in Southeast Asia have built themselves up as “connector economies”: a product or inputs might first be manufactured in China, then transported for the next production step in Vietnam, and ultimately ending up in the U.S. or Europe. Undergirding this approach is what interlocutors called the region’s pragmatic approach to geopolitics, where political disputes and squabbles are separated from the (presumably) shared interest in doing business. Vietnam may have serious territorial disputes with its northern neighbor in the South China Sea, but it is still happy to welcome Chinese investment and be part of China’s supply chains.
But there is a palpable fear that this cozy status quo could be eroding, exemplified by the oft-heard phrase: please do not make us choose. Countries in the region do not see many benefits from formally aligning with either side, particularly if alignment means narrower opportunities to maintain and deepen ties with the other. But they now see that the space for sitting on the fence may be shrinking, as both the U.S. and China pressure capitals not to make deals that disadvantage their interests. And the neat separation of politics, security and economics may be eroding. Just look at the U.S. shortening military exercises with South Korea owing to dissatisfaction with Seoul’s efforts to invest in the U.S., or China’s tightening restrictions on exports to Japan due to Tokyo’s comments on the impact of a Taiwan contingency on its security.
So far, these moves to pressure states to choose sides have not extended to the entire region, and it seems unrealistic that either Washington or Beijing would force countries to fully align their economic and security ties with their own interests. After all, not even in Europe – more closely aligned with and reliant on the U.S. than most countries in the Asia-Pacific – has such a choice been forced. Pressure is also not a one-way street, as countries in the Asia-Pacific may possess resources or technologies that give them a degree of leverage over the great powers, such as Indonesia with its plentiful supplies of copper or Taiwan with its state-of-the-art chips.
Instead, we should understand geopolitical alignment as an uneven process, where there might gradually be fewer and fewer areas of economics, trade, and security where working with both sides remains possible. In practice, this could mean that even neutral countries in the Asia-Pacific could no longer use both U.S. and Chinese AI models or software based on them. Or the West and China might repatriate more and more links in their supply chains closer to their own bloc or within their borders, placing tariffs to protect these industries from competition, leaving third countries in the cold. And it’s not necessarily just about negative pressure, either: perhaps Beijing or Washington offers an unbeatable deal in return for closer political alignment.
None of these developments necessarily constitute a one-way ratchet: some kind of alignment in the form of derisking is only the current trend. As one interlocutor put it, new restrictions or tariffs are like throwing a rock into a stream: it will redirect the flow of water – flows of goods and capital – into new channels but will not stop it. Understanding geopolitical trends is one thing, but in-depth analysis of events on the ground and the local context is crucial to understanding whether the rock is just a harmless pebble or the foundation for a dam.
