Shifting Balance in the Asia-Pacific
The power struggle between the United States and China in the Asia-Pacific has placed Southeast Asian nations in a strategic bind, forcing them to navigate an increasingly complex geopolitical landscape. While experts disagree on whether China’s assertiveness or U.S. policies under the Obama administration sparked the rivalry, most agree that both powers have contributed to today's climate of mistrust.
Beijing’s Belt and Road Initiative (BRI) is seen either as a direct response to Washington’s 2011 “pivot to Asia” or as an expression of China’s long-term ambitions for regional influence. At the same time, U.S. credibility in the region was undermined during Donald Trump’s presidency. His administration’s withdrawal from the Trans-Pacific Partnership (TPP) and other multilateral agreements raised doubts among ASEAN members about America's commitment to the region.
“If the U.S. retreats from its leadership role,” warned one ASEAN diplomat, “the peace and prosperity underwritten by the U.S.-backed rules-based order since World War II could unravel.”
China’s Expanding Footprint
China has capitalized on the perceived U.S. withdrawal to strengthen its position in Southeast Asia. Trade figures underscore this shift: every country in the region now trades more with China than with the U.S., often by a margin of two to one. In 2017, bilateral trade between China and ASEAN reached $500 billion, with projections topping $1 trillion by 2020.
But economic interdependence comes with costs. Concerns are mounting among Southeast Asian governments that dependence on Chinese infrastructure financing could erode their economic sovereignty. President Xi Jinping has sought to calm regional unease by emphasizing “common destiny” and shared regional identities, yet skepticism persists. Some leaders fear that China's outreach is less about partnership and more about entrenching influence.
Caught in the Middle
Amid rising nationalism and waning confidence in U.S. leadership, ASEAN nations are treading cautiously. Many are reluctant to align too closely with either Washington or Beijing. Analysts suggest that instead of a one-size-fits-all approach, Southeast Asia is developing tailored strategies that reflect the unique political and economic circumstances of each member state.
This ambivalence presents both a challenge and an opening for other global actors. As China extends its influence and the U.S. recalibrates its presence, the European Union sees an opportunity to expand its strategic role in the region, one that champions liberal values, human rights, and multilateral cooperation.
From Trade Partner to Security Actor
While the U.S. and China dominate headlines in the Indo-Pacific, the European Union is quietly carving out a broader role in Southeast Asia. Traditionally perceived as an economic partner rather than a geopolitical force, the EU is increasingly leveraging its economic weight to bolster regional stability, advance liberal democratic norms, and fill the void left by U.S. retrenchment.
The EU is already ASEAN’s largest foreign investor and second-largest trading partner outside Asia. In recent years, Brussels has signaled its intent to move beyond trade. Acceding to ASEAN’s Treaty of Amity and Cooperation in 2012, the EU began deepening its security and political engagement. With regional tensions growing, European officials now view Southeast Asia not just as an economic opportunity but as a test case for the EU’s ability to project influence globally.
Diplomacy Through Soft Power
Unlike Beijing’s top-down infrastructure diplomacy or Washington’s security-focused posture, the EU promotes a model centered on institution-building, rule of law, and human rights. The bloc’s support for conflict resolution has already yielded tangible results. Following the 2005 peace deal between the Indonesian government and the Free Aceh Movement, the EU led a monitoring mission alongside ASEAN nations. It later supported peace processes in Southern Mindanao and post-coup transitions in Myanmar, until renewed violence and the 2021 military coup triggered EU sanctions and asset freezes.
The EU’s emphasis on preventive diplomacy and development assistance has been consistent. But critics argue Brussels must be more assertive. As a “non-claimant but interested party” in South China Sea disputes, the EU supports the United Nations Convention on the Law of the Sea (UNCLOS) and insists on peaceful conflict resolution. Yet its reluctance to “name and shame” regional aggressors has drawn scrutiny.
Challenges to Cohesion and Credibility
Still, the EU’s ability to act cohesively remains a major obstacle. Diverging national interests among member states limit Brussels’ capacity to speak with one voice on foreign policy. Unlike NATO, the EU lacks a unified defense posture, complicating military cooperation with ASEAN countries. While some EU members pursue bilateral defense ties in the region, collective initiatives often fall short.
The bloc’s recent efforts to build a common defense identity through the Permanent Structured Cooperation (PESCO) framework are a step forward. Launched in 2017, PESCO enables a subset of EU nations to collaborate on military readiness, mobility, and interoperability. European officials hope these moves will enhance the EU’s credibility as a security partner, particularly in Asia’s fast-changing strategic environment.
Seizing a Window of Opportunity
The EU's latest Asia strategy documents, including the 2018–2022 ASEAN-EU Plan of Action and the 2019 Joint Ministerial Statement, outline ambitious goals: greater cyber and maritime security cooperation, intensified counterterrorism efforts, and progress toward a future EU–ASEAN free trade agreement. The plan reaffirms support for ASEAN centrality and pledges deeper engagement in regional and multilateral forums such as the Asia-Europe Meeting (ASEM) and the G20.
But Brussels remains cautious in its outreach. The EU has been reluctant to extend financial aid or trade benefits to governments accused of corruption or rights violations, as seen in its 2018 decision to suspend Cambodia’s preferential trade status. This principled stance limits the EU’s leverage in countries heavily reliant on Chinese investment, such as Laos or Cambodia.
Still, as Southeast Asian states seek alternatives to Beijing’s influence and remain wary of Washington’s long-term reliability, the EU’s credibility as a partner rooted in multilateralism and rule of law may prove increasingly attractive. For now, Europe’s challenge lies in matching its normative ambitions with coherent, sustained engagement.
A Trusted but Cautious Partner
As China’s influence expands and the U.S. sends mixed signals, Japan has steadily reinforced its presence in Southeast Asia, both diplomatically and economically. Once a wartime occupier in the region, Japan has spent the last five decades rebuilding trust through bilateral cooperation, infrastructure investment, and an unwavering commitment to ASEAN’s principles.
Today, Tokyo is viewed as a stable partner. It has forged strategic partnerships with key ASEAN members such as Vietnam, Malaysia, Indonesia, and the Philippines, and is gaining ground even in the Mekong subregion, where Chinese influence has long dominated. Leveraging its strong industrial base, Japan offers a blend of infrastructure development and capacity building, often with more transparent terms than Beijing.
Unlike China’s preference for bilateral deals that create dependency, Japan’s aid and investment come with fewer political strings. As Southeast Asian countries grapple with debt risks and sovereignty concerns tied to the Belt and Road Initiative (BRI), Tokyo’s model has become increasingly appealing.
Security Through Economic Power
Japan’s strategy is rooted in what analysts describe as “quiet power.” Rather than competing militarily with China, Japan emphasizes economic diplomacy and soft-power initiatives. But Tokyo has also begun strengthening its defense posture. Recent years have seen Japan beefing up its own military capabilities, expanding defense cooperation with Southeast Asian nations, and providing maritime security assistance.
This subtle shift reflects Tokyo’s growing awareness that economic influence alone may not be enough to maintain regional balance. While Japan has traditionally avoided entanglement in security flashpoints, such as the South China Sea, it now acknowledges that stability in the Indo-Pacific requires a blend of deterrence and diplomacy.
Japan’s approach contrasts with that of the United States under the Trump administration, which frequently veered between transactional deals and confrontational rhetoric. Despite Trump’s occasional barbs, such as labeling Vietnam a “trade abuser”, Vietnam and other ASEAN countries continued to deepen military and strategic ties with Washington. Still, many looked to Japan to provide consistency.
A Fragmented but Adaptive Region
Southeast Asia’s geopolitical calculus is far from uniform. Countries like Cambodia and Laos remain deeply reliant on China, while others, including Vietnam, Indonesia, and the Philippines, are actively diversifying their partnerships. For many, the goal is not to pick sides, but to preserve autonomy in an increasingly polarized region.
The region's infrastructure needs, estimated at $2.76 trillion through 2030, make Chinese financing difficult to resist. Yet concerns about debt, sovereignty, and the environment have prompted some nations to reconsider Chinese-led megaprojects. Myanmar has delayed port projects over debt fears, Thailand has stalled rail agreements, and Malaysia famously suspended $23 billion worth of BRI deals under Prime Minister Mahathir in 2018 before renegotiating them at lower costs.
Even the Philippines, under President Duterte, sought economic ties with China while downplaying a favorable international tribunal ruling on the South China Sea. Yet tensions over maritime disputes persist, driving countries like Vietnam to hedge with multiple partners, including the U.S., Japan, India, and Australia.
Outlook: A Multipolar Indo-Pacific?
As Southeast Asia adjusts to the shifting balance of power, one trend is clear: no single external actor holds uncontested sway. Instead, the region is increasingly defined by hedging strategies, multifaceted alignments, and diplomatic agility. This environment opens space for the European Union, Japan, and other middle powers to play stabilizing roles, if they act decisively and coherently.
For now, ASEAN’s unity remains fragile, challenged by economic disparities and diverging national interests. China’s “divide and rule” strategy, favoring bilateral agreements over ASEAN-wide initiatives, has exacerbated this fragmentation. But the diversity of ASEAN responses also reflects resilience. Countries are adapting, recalibrating, and, where possible, asserting their agency.
In a global order where the rules are contested and alliances are shifting, Southeast Asia is no longer just a stage for great power rivalry, it is a strategic player in its own right.