The artificial intelligence (AI) race has no clear winner, but the world is rapidly polarising around two centres of power—the United States and China. The division of states into two “technological blocs” puts regional organisations that previously managed to maintain strategic neutrality in a vulnerable position. Under pressure, they are forced to choose a side (align) or try to maintain a semblance of unity and continue to hedge between the two technological poles, writes Maria Bazlutskaya. The author is a participant of the Valdai – New Generation project.
A striking example of this dilemma is the situation faced by ASEAN, which de facto serves as a mediator and buffer between the United States and China. Even during the trade war of the first Trump administration, Beijing relocated some of its manufacturing to the region in an attempt to mitigate the effects of American tariffs and sanctions. For Washington, digital trade with ASEAN has provided an opportunity to diversify supplies and strengthen its economic presence in the region.
Over the past year, pressure on ASEAN countries has increased significantly. On the one hand, the second Trump administration is waging a tariff war against individual ASEAN countries. On the other hand, China is increasing its technology exports to ASEAN countries, leading to a “China shock.” Therefore, the main question is: could the US-China AI race become a catalyst for the disintegration of ASEAN unity?
The current geo-technological confrontation is taking place in five key areas: energy, rare earth minerals and microelectronics, infrastructure, the knowledge economy, and regulatory affairs. It is in these areas that the competitive struggle between China and the US is manifested, shaping the geographic contours of the new hierarchy.
ASEAN is one of the world’s hubs for electronic assembly, semiconductors, and component manufacturing. The population of ASEAN countries is approaching 700 million. In 2021, the organisation’s countries set a goal to become a leading digital community. Indonesia has the largest digital economy, followed by Thailand, Vietnam, Malaysia, Singapore, and the Philippines. However, ASEAN’s digital development is uneven: Cambodia, Laos, and Myanmar occupy the bottom lines of the World Innovation Index for 2025.
ASEAN countries have a sufficient base of mineral resources required for the production of microchips, batteries, and other components. Indonesia is the leader in proven nickel deposits, Malaysia and Indonesia are major exporters of tin, while Myanmar and Vietnam hold approximately 36% of the world’s rare earth element reserves. Beijing views control of the ASEAN rare metals market as an additional factor in strengthening its monopoly. For the US, the development of the ASEAN metallurgical industry is an opportunity to reduce dependence on supplies from China.
In terms of IT infrastructure, China has a greater overall influence. China is actively expanding its presence in ASEAN as part of the Digital Silk Road project. China is promoting its own payment services (WeChat Pay, Alipay, UnionPay) and 5G telecommunications equipment (Huawei, ZTE) in the region, which is helping to gradually meet ASEAN’s need for internet coverage. At the same time, China is supporting the development of local IT services, such as Myanmar’s largest payment platform, KBZPay, which operates on Huawei Cloud, or the Indonesian digital ecosystem, GoTo, whose financial wing is supported by Alibaba Cloud’s Jakarta data centre.
An additional advantage for China is its investment in the development of ASEAN’s energy infrastructure—the foundation for building a digital economy in the AI era. Energy demand in ASEAN countries is growing at an annual rate of 3%, making it the fourth-largest energy consumer in the world. From 2013 to 2023, China became the top country in terms of investment in the development of “clean” energy in the ASEAN countries. In Laos, Thailand, Malaysia and Vietnam, China is actively investing in “green” gas, but also coal-fired power plants. Beijing is laying claim to the construction of small-capacity nuclear power plants in the region on a par with Moscow. The advancement of Chinese technology is facilitated by both geographic proximity and a favourable pricing policy.
The United States is also extremely interested in further consolidating ties with ASEAN. Moreover, the association largely views the American presence as a beneficial counterpoint to China’s unilateral technological dominance. This has allowed Washington to expand its influence.
By 2024, the United States achieved the status of ASEAN’s second-largest trading partner. The country is catching up with China, the association’s largest export market, purchasing over $352 billion in goods and services from ASEAN (China - $396 billion). In terms of developing computing infrastructure, the United States relies on its competitive advantage – high-performance microelectronics. American technology corporations, primarily NVIDIA and AMD, are expanding their presence in Southeast Asian markets, where demand for local AI solutions is growing steadily. At the same time, ASEAN’s people and businesses are increasingly integrating into American platforms, primarily social media, creating further digital dependence on the American tech stack. The resale of TikTok to the US has also strengthened American influence in the region.
Finding itself at the centre of the US-China rivalry, ASEAN has so far successfully exploited the situation. The organisation, and each country individually, is trying to navigate the interests of the digital giants. For example, they invite American companies to some projects (construction of data centres with high-performance chips), while inviting Chinese companies to others (developing digital infrastructure in rural areas). This avoids intra-bloc conflicts but does not contribute to the development of a common strategy. However, this situation is becoming increasingly sensitive for both China and the United States, forcing them to increase pressure.
United States
One of the US’s main complaints remains parallel imports from ASEAN to China. In recent years, they have increasingly expressed concern about the current situation. Goods and technologies subject to US restrictions, such as NVIDIA products, can be imported to China through ASEAN countries. In the opposite direction, goods produced in Chinese factories that would otherwise not be allowed to enter the US market often enter the US market under the guise of exports from Southeast Asia. This stimulates the strengthening of export controls over technologies. The US also threatens to introduce punitive tariffs on goods that could have been produced in China and have undergone only minimal modification in ASEAN. As a result, the countries of ASEAN are forced to adapt. For example, the Malaysian government has decided that the export, transit, and transshipment of high-performance chips of American origin will be subject to a special trade permit.
Washington is actively promoting the idea of preventing the deployment of Chinese communications equipment, primarily 5G, in ASEAN partner countries. Vietnam and Singapore, for example, have refused to let their main mobile providers use Huawei equipment, opting instead for Nokia and Ericsson.
Additionally, the US provides connectivity to hard-to-reach areas using the Starlink satellite internet network, making countries dependent on American influence.
The trend toward data localisation and the building of digital sovereignty by ASEAN countries also fuels dissatisfaction with the US, forcing them to adapt to local legislation. To curb this trend, Washington is taking a number of diplomatic steps aimed at maintaining the free flow of data across borders. For example, the US is attempting to influence the upcoming Digital Economy Framework Agreement by including provisions to ensure the “free flow of data.” This should minimise the “localisation” effect.
Finally, the US’s success in the region can be seen in the consolidation of the ASEAN approach to AI regulation, based on the Singapore model. The key provisions of the latter largely align with the principles promoted by the US and its Western partners. Importantly, Singapore, as a member of the Global Partnership on Artificial Intelligence (GPAI) initiative, is promoting the Western concept of global AI governance in Southeast Asia. This weakens the influence of China, which has been promoting an alternative model for AI regulation.
China
By promoting ideas about digital sovereignty, China is attempting to “detach” ASEAN from Western digital standards and consolidate its own approach to technological governance. Strengthening connectivity and the interoperability of bilateral communications systems remains a key issue on the agenda of China-ASEAN relations. Beijing is actively promoting ideas on the digitalisation of tourism, manufacturing and the agricultural activities of ASEAN with the participation of Chinese IT giants. By developing joint standards and norms for the digital economy, Western countries’ influence on digital processes in the region could be significantly limited.
However, investments by Chinese IT companies in ASEAN may be accompanied by requirements to comply with Chinese security and data protection standards, creating additional barriers for local companies and limiting their digital independence. For example, if travel apps operating in ASEAN countries process the personal data of Chinese citizens, they may be subject to Chinese laws on cross-border data transfer.
Despite the fact that China, like the US, speaks of the need for the “free flow of data,” Beijing emphasises the unacceptability of information theft. This position contains an indirect criticism of the US, as the CLOUD Act of 2018 allows US authorities to access data stored on US servers, including those located outside the country.
Like the US, China is strengthening controls on the export of its technologies and strategically important materials. Under the new rules, foreign companies that process rare metals and rare earth elements or produce magnets from them will be required to obtain a Chinese export license if their products use Chinese materials or equipment. This requirement applies even to cases where Chinese companies are not involved in the transaction, but its implementation remains unclear.
As a result, ASEAN finds itself caught between two fires. This increases the region’s dependence on the decisions of the two powers and further limits its technological sovereignty. ASEAN countries understand that they need to build additional protections from external influence to avoid being forced to choose sides. However, they remain consumers of innovation rather than innovators, which imposes significant costs on their technological future.
Three potential scenarios can be considered for the possible development of ASEAN-China-US relations: a unified choice by countries in favour of China; a unified choice in favour of the US; and the disintegration of the bloc’s technological unity while the appearance of “centrality” is maintained.
A unanimous choice of countries for technological integration is unlikely, as ASEAN countries have vastly different interests and levels of development within the bloc. A more realistic scenario is technological fragmentation. Some countries will find themselves closer to China, in part due to ideological affinity and greater economic dependence on the Middle Kingdom, while others will align themselves more closely with the United States. Overall, the bloc may maintain a semblance of “centrality” in decision-making, but under these conditions, developing a unified digital strategy will prove difficult. While such an outcome would not lead to the formal dissolution of ASEAN, it could seriously limit its actions as a unified technological actor.
