The Context of U.S.-China Trade Tensions
The U.S.-China trade war, which intensified under the administration of U.S. President Donald Trump, has seen both nations impose significant tariffs on each other’s goods. In April 2025, the U.S. escalated its measures by imposing tariffs as high as 145% on Chinese imports, prompting China to retaliate with a 125% levy on American goods, including semiconductors. These tit-for-tat measures have disrupted global supply chains, increased costs for consumers, and forced businesses to rethink their manufacturing and trade strategies. Amid this economic standoff, China faces the dual challenge of maintaining export growth and mitigating the impact of reduced access to the U.S. market.
Southeast Asia, with its rapidly growing economies and strategic location, has emerged as a critical region for China to offset these pressures. The Association of Southeast Asian Nations (ASEAN), comprising 10 member states Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam represents a market of over 650 million people and a combined GDP exceeding $3 trillion. In 2023, ASEAN surpassed the U.S. and the European Union to become China’s largest export market, with Chinese exports to the region rising by 12% compared to a mere 2% growth in ASEAN exports to China. This trade imbalance underscores the region’s importance as a destination for Chinese goods and a platform for China’s broader geopolitical ambitions.
China’s Strategic Pivot to Southeast Asia
China’s efforts to strengthen ties with Southeast Asia are multifaceted, encompassing trade agreements, infrastructure investments, and high-level diplomatic engagements. These initiatives are designed to secure economic stability, counter U.S. influence, and project China as a reliable partner in a region wary of being caught between two superpowers.
1. Upgrading the China-ASEAN Free Trade Agreement
A cornerstone of China’s strategy is the enhancement of the China-ASEAN Free Trade Agreement (FTA). In April 2025, Chinese Ambassador to the Philippines Huang Xilian announced the successful conclusion of negotiations for an updated version of the FTA, dubbed the “third version.” This upgraded agreement aims to deepen trade ties by reducing barriers to goods and services, enhancing market access, and fostering cooperation in emerging sectors such as digital trade and green technology. Chinese President Xi Jinping, during a meeting with Malaysian Prime Minister Anwar Ibrahim, emphasized Beijing’s commitment to upgrading the FTA to counter “the law of the jungle”—a veiled reference to U.S. protectionist policies.
The FTA upgrade is particularly significant given the U.S.’s imposition of tariffs on Southeast Asian countries, with rates as high as 49% on exports like Cambodian textiles and up to 3,521% on solar panels from Vietnam, Malaysia, Thailand, and Cambodia. These tariffs, part of Trump’s “Liberation Day” policy, have pushed ASEAN nations to seek alternative markets and partners. China’s proactive approach to trade liberalization positions it as a stabilizing force, offering Southeast Asian economies a buffer against U.S. trade disruptions.
2. Infrastructure Investments and the Belt and Road Initiative
China’s Belt and Road Initiative (BRI) remains a key tool for deepening economic ties with Southeast Asia. Through the BRI, China has funded major infrastructure projects across the region, including railways in Vietnam, dams in Cambodia, and ports in Malaysia. These investments not only boost connectivity but also create dependencies that align Southeast Asian economies with China’s interests. In 2024, China’s exports to Southeast Asia accounted for 16% of its record $3.5 trillion in total exports, reflecting the region’s growing importance as a trade hub.
During his Southeast Asia tour in April 2025, which included stops in Vietnam, Malaysia, and Cambodia, Xi Jinping signed 113 agreements, many focused on infrastructure and supply chain cooperation. For instance, China and Cambodia agreed to strengthen transportation infrastructure and build “safe and stable” supply chains, a move aimed at mitigating the impact of U.S. tariffs on Cambodian exports. These projects, while economically beneficial, also serve a geopolitical purpose by reinforcing China’s image as a reliable partner compared to the U.S., which has scaled back aid projects in the region.
3. Diplomatic Charm Offensive
Xi Jinping’s three-nation tour in April 2025 was a high-profile demonstration of China’s diplomatic outreach. In Vietnam and Malaysia, Xi emphasized trade, investment, and opposition to unilateralism, while in Cambodia, he received a warm reception from Prime Minister Hun Manet and King Norodom Sihamoni. The visit, described as a “milestone” by Cambodia’s Foreign Affairs Ministry, underscored the “ironclad friendship” between China and Cambodia, where China owns half of the businesses exporting to the U.S.
China’s diplomatic efforts extend beyond bilateral ties to regional frameworks. By promoting itself as a champion of multilateralism, China contrasts its approach with the U.S.’s perceived “bullying” tactics. Chinese Foreign Minister Wang Yi’s outreach to counterparts in the UK and EU, coupled with Xi’s calls for Asian values of “peace, cooperation, openness, and inclusiveness,” aim to rally global support against U.S. tariffs. Analysts note that Xi’s tour was a success in signaling China’s presence at a time when U.S. engagement in Southeast Asia is perceived as punitive or absent.
Southeast Asia’s Delicate Balancing Act
For Southeast Asian nations, the intensifying U.S.-China rivalry presents both opportunities and challenges. While China’s economic leverage is undeniable, the region is cautious about over-reliance on Beijing, given territorial disputes in the South China Sea and concerns about trade imbalances. Countries like Vietnam and Malaysia, for instance, have maritime disputes with China, yet trade has served as a balancing factor. Malaysia’s Trade Minister Tengku Zafrul Aziz encapsulated the region’s dilemma, stating, “We can’t choose, and we will never choose [between China and the U.S.].”
The U.S. tariffs have placed additional pressure on Southeast Asian economies, prompting them to negotiate relief with Washington while deepening ties with China. The “China+1” strategy, adopted by many ASEAN countries during the first Trump administration, has seen companies shift production from China to Southeast Asia to diversify supply chains. However, the latest tariffs, which target Southeast Asian exports, have disrupted this strategy, pushing the region closer to China. As Tommy Wu, senior China economist at Commerzbank, noted, the trade war could tighten ties between Southeast Asia and China, as well as with Europe and other Asian neighbors.
Implications for Global Trade and Geopolitics
China’s strengthened ties with Southeast Asia have far-reaching implications for global trade and geopolitics. By positioning ASEAN as a key export market and investment destination, China is reducing its dependence on the U.S. market and creating a regional economic bloc that aligns with its interests. The upgraded China-ASEAN FTA and BRI projects are likely to accelerate this trend, fostering greater economic integration in the Asia-Pacific.
However, this shift is not without risks. The surge in Chinese exports to Southeast Asia, driven by reduced domestic demand and U.S. trade barriers, has strained local industries in countries like Thailand and Indonesia. In 2023, China’s trade surplus in manufactured goods reached $1.8 trillion, exacerbating trade deficits in ASEAN nations. This imbalance could fuel resentment and calls for protectionist measures, complicating China’s regional ambitions.
Geopolitically, China’s charm offensive challenges U.S. influence in Southeast Asia, a region critical to Washington’s Indo-Pacific strategy. The U.S.’s tariff policies, coupled with reduced aid and engagement, have created a vacuum that China is eager to fill. Yet, Southeast Asian nations are unlikely to fully align with either power, preferring a hedging strategy that maximizes economic benefits while preserving strategic autonomy.
Conclusion
As U.S.-China trade tensions escalate, China’s strategic pivot to Southeast Asia reflects a calculated effort to secure economic resilience and geopolitical influence. Through trade agreements, infrastructure investments, and diplomatic outreach, China is positioning itself as a reliable partner in a region navigating the complexities of global trade turmoil. While Southeast Asian nations welcome China’s economic support, they remain cautious of its growing dominance, balancing ties with Beijing against relations with the U.S. and other global players.
The U.S.-China trade war, which intensified under the administration of U.S. President Donald Trump, has seen both nations impose significant tariffs on each other’s goods. In April 2025, the U.S. escalated its measures by imposing tariffs as high as 145% on Chinese imports, prompting China to retaliate with a 125% levy on American goods, including semiconductors. These tit-for-tat measures have disrupted global supply chains, increased costs for consumers, and forced businesses to rethink their manufacturing and trade strategies. Amid this economic standoff, China faces the dual challenge of maintaining export growth and mitigating the impact of reduced access to the U.S. market.
Southeast Asia, with its rapidly growing economies and strategic location, has emerged as a critical region for China to offset these pressures. The Association of Southeast Asian Nations (ASEAN), comprising 10 member states Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam represents a market of over 650 million people and a combined GDP exceeding $3 trillion. In 2023, ASEAN surpassed the U.S. and the European Union to become China’s largest export market, with Chinese exports to the region rising by 12% compared to a mere 2% growth in ASEAN exports to China. This trade imbalance underscores the region’s importance as a destination for Chinese goods and a platform for China’s broader geopolitical ambitions.
China’s Strategic Pivot to Southeast Asia
China’s efforts to strengthen ties with Southeast Asia are multifaceted, encompassing trade agreements, infrastructure investments, and high-level diplomatic engagements. These initiatives are designed to secure economic stability, counter U.S. influence, and project China as a reliable partner in a region wary of being caught between two superpowers.
1. Upgrading the China-ASEAN Free Trade Agreement
A cornerstone of China’s strategy is the enhancement of the China-ASEAN Free Trade Agreement (FTA). In April 2025, Chinese Ambassador to the Philippines Huang Xilian announced the successful conclusion of negotiations for an updated version of the FTA, dubbed the “third version.” This upgraded agreement aims to deepen trade ties by reducing barriers to goods and services, enhancing market access, and fostering cooperation in emerging sectors such as digital trade and green technology. Chinese President Xi Jinping, during a meeting with Malaysian Prime Minister Anwar Ibrahim, emphasized Beijing’s commitment to upgrading the FTA to counter “the law of the jungle”—a veiled reference to U.S. protectionist policies.
The FTA upgrade is particularly significant given the U.S.’s imposition of tariffs on Southeast Asian countries, with rates as high as 49% on exports like Cambodian textiles and up to 3,521% on solar panels from Vietnam, Malaysia, Thailand, and Cambodia. These tariffs, part of Trump’s “Liberation Day” policy, have pushed ASEAN nations to seek alternative markets and partners. China’s proactive approach to trade liberalization positions it as a stabilizing force, offering Southeast Asian economies a buffer against U.S. trade disruptions.
2. Infrastructure Investments and the Belt and Road Initiative
China’s Belt and Road Initiative (BRI) remains a key tool for deepening economic ties with Southeast Asia. Through the BRI, China has funded major infrastructure projects across the region, including railways in Vietnam, dams in Cambodia, and ports in Malaysia. These investments not only boost connectivity but also create dependencies that align Southeast Asian economies with China’s interests. In 2024, China’s exports to Southeast Asia accounted for 16% of its record $3.5 trillion in total exports, reflecting the region’s growing importance as a trade hub.
During his Southeast Asia tour in April 2025, which included stops in Vietnam, Malaysia, and Cambodia, Xi Jinping signed 113 agreements, many focused on infrastructure and supply chain cooperation. For instance, China and Cambodia agreed to strengthen transportation infrastructure and build “safe and stable” supply chains, a move aimed at mitigating the impact of U.S. tariffs on Cambodian exports. These projects, while economically beneficial, also serve a geopolitical purpose by reinforcing China’s image as a reliable partner compared to the U.S., which has scaled back aid projects in the region.
3. Diplomatic Charm Offensive
Xi Jinping’s three-nation tour in April 2025 was a high-profile demonstration of China’s diplomatic outreach. In Vietnam and Malaysia, Xi emphasized trade, investment, and opposition to unilateralism, while in Cambodia, he received a warm reception from Prime Minister Hun Manet and King Norodom Sihamoni. The visit, described as a “milestone” by Cambodia’s Foreign Affairs Ministry, underscored the “ironclad friendship” between China and Cambodia, where China owns half of the businesses exporting to the U.S.
China’s diplomatic efforts extend beyond bilateral ties to regional frameworks. By promoting itself as a champion of multilateralism, China contrasts its approach with the U.S.’s perceived “bullying” tactics. Chinese Foreign Minister Wang Yi’s outreach to counterparts in the UK and EU, coupled with Xi’s calls for Asian values of “peace, cooperation, openness, and inclusiveness,” aim to rally global support against U.S. tariffs. Analysts note that Xi’s tour was a success in signaling China’s presence at a time when U.S. engagement in Southeast Asia is perceived as punitive or absent.
Southeast Asia’s Delicate Balancing Act
For Southeast Asian nations, the intensifying U.S.-China rivalry presents both opportunities and challenges. While China’s economic leverage is undeniable, the region is cautious about over-reliance on Beijing, given territorial disputes in the South China Sea and concerns about trade imbalances. Countries like Vietnam and Malaysia, for instance, have maritime disputes with China, yet trade has served as a balancing factor. Malaysia’s Trade Minister Tengku Zafrul Aziz encapsulated the region’s dilemma, stating, “We can’t choose, and we will never choose [between China and the U.S.].”
The U.S. tariffs have placed additional pressure on Southeast Asian economies, prompting them to negotiate relief with Washington while deepening ties with China. The “China+1” strategy, adopted by many ASEAN countries during the first Trump administration, has seen companies shift production from China to Southeast Asia to diversify supply chains. However, the latest tariffs, which target Southeast Asian exports, have disrupted this strategy, pushing the region closer to China. As Tommy Wu, senior China economist at Commerzbank, noted, the trade war could tighten ties between Southeast Asia and China, as well as with Europe and other Asian neighbors.
Implications for Global Trade and Geopolitics
China’s strengthened ties with Southeast Asia have far-reaching implications for global trade and geopolitics. By positioning ASEAN as a key export market and investment destination, China is reducing its dependence on the U.S. market and creating a regional economic bloc that aligns with its interests. The upgraded China-ASEAN FTA and BRI projects are likely to accelerate this trend, fostering greater economic integration in the Asia-Pacific.
However, this shift is not without risks. The surge in Chinese exports to Southeast Asia, driven by reduced domestic demand and U.S. trade barriers, has strained local industries in countries like Thailand and Indonesia. In 2023, China’s trade surplus in manufactured goods reached $1.8 trillion, exacerbating trade deficits in ASEAN nations. This imbalance could fuel resentment and calls for protectionist measures, complicating China’s regional ambitions.
Geopolitically, China’s charm offensive challenges U.S. influence in Southeast Asia, a region critical to Washington’s Indo-Pacific strategy. The U.S.’s tariff policies, coupled with reduced aid and engagement, have created a vacuum that China is eager to fill. Yet, Southeast Asian nations are unlikely to fully align with either power, preferring a hedging strategy that maximizes economic benefits while preserving strategic autonomy.
Conclusion
As U.S.-China trade tensions escalate, China’s strategic pivot to Southeast Asia reflects a calculated effort to secure economic resilience and geopolitical influence. Through trade agreements, infrastructure investments, and diplomatic outreach, China is positioning itself as a reliable partner in a region navigating the complexities of global trade turmoil. While Southeast Asian nations welcome China’s economic support, they remain cautious of its growing dominance, balancing ties with Beijing against relations with the U.S. and other global players.
