Southeast Asia sits at the center of one of the most significant geopolitical and economic rivalries of the 21st century: the competition between the United States and China.
Both powers see the region as vital to their strategic and economic interests, and their engagement with Southeast Asian nations has intensified in recent years.
As countries in the region navigate between economic development and geopolitical balance, the question of which superpower holds greater economic influence becomes increasingly relevant.
While both the United States and China play major roles, current trends suggest that China has taken the lead in terms of economic influence across Southeast Asia.
USA
The United States maintains significant economic influence in Southeast Asia, particularly through foreign direct investment (FDI). In fact, U.S. companies remain some of the largest investors in the region, with cumulative investments that support high-quality jobs, manufacturing, and services.
American firms are deeply involved in sectors like finance, pharmaceuticals, electronics, and consumer goods, offering both capital and expertise.
In addition, the U.S. plays a key role in the digital economy through its tech giants. Companies such as Google, Microsoft, Amazon, and Meta have established a strong presence in ASEAN markets, with major data centers, regional offices, and digital training programs. These investments help shape the future of Southeast Asia’s internet infrastructure and innovation capacity.
However, America’s engagement often lacks the large-scale infrastructure and trade integration that China offers. The U.S. has not matched China’s ambitious regional initiatives with its own physical projects.
Furthermore, Washington’s withdrawal from the Trans-Pacific Partnership (TPP) in 2017 reduced its long-term trade strategy in the region, although it has since launched the Indo-Pacific Economic Framework (IPEF) in an attempt to rebuild economic ties.
China
Over the past two decades, China has steadily grown into Southeast Asia’s largest trading partner. According to recent ASEAN statistics, China has consistently held the top spot as the region’s main external trading partner, with total trade exceeding $975 billion in 2023.
This figure surpasses trade volumes between ASEAN and the United States, reflecting China’s deep integration into the region’s supply chains and export markets.
China’s Belt and Road Initiative (BRI), launched in 2013, has further expanded its economic presence across the region. Infrastructure projects, including railways in Laos, ports in Malaysia, and industrial parks in Indonesia, have enhanced China’s role as a key investor in large-scale development initiatives.
For many ASEAN countries, Chinese financing and construction expertise offer an attractive alternative to slower-moving Western institutions.
Beyond trade and infrastructure, Chinese tech companies and digital platforms are also embedding themselves into the Southeast Asian economy.
From e-commerce partnerships with regional platforms to investments in fintech and cloud services, China is not only moving goods but also influencing the digital transformation of the region.
Implications
While Chinese economic presence is visibly larger in terms of trade and infrastructure, Southeast Asian governments often view U.S. economic ties as more sustainable and aligned with high standards.
According to surveys conducted by regional think tanks, many Southeast Asian elites continue to prefer U.S. economic leadership, associating it with better governance, transparency, and rule of law.
This reflects a nuanced view: while China dominates in terms of volume and immediacy, the U.S. is valued for quality, stability, and long-term potential.
Strategically, both countries are aware that economic influence is a tool of diplomacy. China uses its investments to deepen political ties, often linking economic deals to its strategic goals in the South China Sea and other contested areas.
USA however, tends to frame its engagement around broader themes like democracy, human rights, and open markets, which sometimes resonate more with civil society and the private sector than with government elites.
China Leads, but USA is Still Too Important
When measuring raw economic influence in Southeast Asia, China clearly holds the upper hand. It dominates trade volumes, infrastructure development, and is expanding its digital and technological presence at a rapid pace. Its geographic proximity and consistent engagement through the Belt and Road Initiative have allowed it to anchor itself deeply in the region’s economic future.
However, the United States continues to exert a powerful influence through investment quality, technology leadership, and corporate presence. It remains an essential economic partner whose influence cannot be dismissed, especially in terms of soft power and innovation.
Ultimately, Southeast Asia is not choosing one power over the other. Instead, the region is engaging both leveraging China’s scale and immediacy while also valuing America’s standards and innovation.
This balancing act defines the complex economic landscape of Southeast Asia today and will shape its trajectory in the years to come.
