By Eric Vandenbroeck and co-workers

The Two Southeast Asia's

Policy makers and scholars in the West talk about Southeast Asia as a coherent region, but it has always been divided. The region’s 700 million people speak hundreds of languages and follow different religions, and its 11 countries vary in political system, size, geography, and level of economic development. Throughout the Cold War, Southeast Asia was divided between the five original founding members of the Association of Southeast Asian Nations (ASEAN) that were aligned with the United States—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—and the three countries of Indochina—Cambodia, Laos, and Vietnam—that aligned with China or the Soviet Union.

After the Cold War ended, ASEAN expanded to include Cambodia, Laos, and Vietnam, as well as the tiny sultanate of Brunei, increasing the salience of Southeast Asia as a geopolitical entity. Yet despite ASEAN’s achievements in fostering cooperation between its members, a cohesive Southeast Asia remains more myth than reality.

The reality is of two regions, not one. According to the Lowy Institute’s Southeast Asia Influence Index, which maps the sway of foreign partners across the region, two distinct networks persist among countries in Southeast Asia: Cambodia, Laos, Myanmar, Thailand, and Vietnam form a continental group that leans toward China. Indonesia, Malaysia, and Singapore make up a maritime group in which the countries are well connected, work with a wider array of governments from outside the region, and hedge between the United States and China. The Philippines is an outlier. It lacks close friends among other ASEAN countries and relies on non-Asian partners, particularly the United States, more than any of its neighbors.

The gap between these two networks of Southeast Asian countries is set to grow in the decades ahead, leading to a de facto Chinese sphere of influence in continental Southeast Asia. To prevent Beijing from encroaching even further, the United States should deepen ties with the countries that straddle Southeast Asia’s two subregions: Thailand and Vietnam.

A Singaporean naval ship near South Sulawesi Province, Indonesia.

 

Beijing’s Backyard

Rugged, mountainous jungle separates China from Laos, Myanmar, and Vietnam, and through these countries, Cambodia and Thailand. The anthropologist James Scott referred to this difficult landscape as “Zomia” and described how it prevented any state from fully controlling these highlands for much of the region’s history. In fact, these geographic barriers kept continental Southeast Asia apart from China for millennia and provided a natural limit to the expansion of the Chinese state. By the twenty-first century, however, technology has overcome terrain. Roads, railways, and special economic zones have facilitated more exchanges of people and goods between China and continental Southeast Asia.

Through its Belt and Road Initiative, China has provided financing for new infrastructure megaprojects, especially railways, across the region. Many of these projects have physically linked continental countries to China, which has changed the nature of their relationships with Beijing in a way that is not true for maritime states. In 2021, for instance, southern China was connected by rail to the Laotian capital, Vientiane. China’s ultimate vision is to attach this line to projects across Thailand and Malaysia to establish a rail link between Singapore and the Chinese city of Kunming. The effects of the railway have been profound for Laos, a small developing country that is now heavily indebted to China. The value of trade between the two countries has soared since the railway opened, much of it from agricultural exports farmed by Laotians on land leased to Chinese investors.

Laos’s connections to China have a darker side, too. In the early years of this century, Laos set up special economic zones in a legitimate effort to encourage foreign investment. But today, they are ungoverned spaces in which Chinese businesspeople and even security forces can operate outside the confines of the law. Drug trafficking, wildlife crime, the unregulated migration of workers from Myanmar and other neighboring countries, and cyber-scams have proliferated in these areas. In effect, Laos lacks full sovereignty over much of its own territory. In Myanmar, civil war has slowed progress on the road and rail projects aiming to connect China with the Indian Ocean. But an oil and gas pipeline has continued to operate despite fierce fighting.

Even Vietnam, traditionally wary of Chinese influence, has drawn high levels of Chinese private investment because of the trade war between Washington and Beijing. Already, many companies have moved their supply chains from China to Vietnam, particularly its north—a shift from the historical norm in which southern Vietnam has been a more important center for trade and commerce. The U.S. tariff on Vietnamese products, at 20 percent, is still lower than those applied to Chinese goods, so China will likely continue to invest in Vietnam.

China has also funded railway projects in maritime Southeast Asia. In 2023, for example, a $7.3 billion high-speed domestic railway opened joining Indonesia’s capital, Jakarta, with Bandung. Construction is underway on a project linking Malaysia’s east and west coasts by rail, at a cost of around $12 billion. Although these projects in maritime countries add to Beijing’s clout as an economic partner, they have not yet meaningfully connected either Indonesia or Malaysia to China.

 

Free and Open

Whereas continental Southeast Asia has, through its connection to China, been transformed over the past decade, this is not true of maritime Southeast Asia, which has always been exposed by its geography to many trading partners. The region’s two largest maritime countries, Indonesia and the Philippines, are immense archipelagos, and together with Singapore and Malaysia, straddle key waterways connecting Asia with the world. 

China has tried to assert control over the region’s central waterway, the South China Sea. This has alarmed countries around the globe, which need shipping lanes to remain free and open for trade. In 2016, a UN tribunal rejected China’s claims to the area within its “nine-dash line,” which covers almost the entire South China Sea. Since then, dozens of countries, as far afield as the United Kingdom, have supported the ruling, underscoring the global importance of these waterways.

Because maritime Southeast Asian countries are bigger and more important to worldwide commerce than continental states, they tend to receive investment and development finance from a larger pool of foreign donors. They also draw more interest when it comes to defense. Of the new defense cooperation initiatives between Western and Southeast Asian governments since 2017, most have been with maritime countries and Vietnam. Maritime countries, under more pressure from China’s sweeping maritime claims and steady encroachment in their exclusive economic zones, see the need to work with the United States and other Western countries. And the United States and its allies, particularly Australia and Japan, use maritime Southeast Asian countries to advance their own goals in relation to China. The United States views combined military exercises with the Philippines as a way to maintain access within the so-called first island chain, which separates China from the Pacific Ocean. Washington has stepped up military sales and cooperation with the Philippines, which has borne the brunt of China’s aggression at sea, as an investment in maintaining respect for international law and an attempt to prevent China from bending smaller countries to its will.

 

Mind the Gap

Southeast Asia’s two sets of countries will continue to diverge. The region’s maritime states will remain open to many partners. China will be its biggest source of external influence, but not by a huge margin, and many other countries, including the United States, Australia, India, and Japan, will attenuate Beijing’s sway. Continental Southeast Asia, on the other hand, is likely to become part of Beijing’s de facto sphere of influence. China won’t wield absolute power over these countries, but it will have much more leverage than any other state outside the region.

U.S. President Donald Trump appears drawn to the idea of spheres of influence. He seeks to reassert American dominance in the Western Hemisphere while showing greater deference to Russia’s interests in Europe. Perhaps the United States will ultimately see continental Southeast Asia as part of a natural sphere of influence for China. For a United States that is looking to reduce its international commitments, a decision to stop competing with China there may make sense.

Yet Washington should beware the consequences of such an arrangement. And if it does not want to undermine its own position in Southeast Asia, it should shore up ties with countries on the margins of Beijing’s zone of influence: Vietnam and Thailand. Vietnam is continental in character. It has a closed political system, a history of aligning with the Soviet Union, deep ties with Cambodia and Laos, and growing links to China. But Vietnam is becoming more maritime in its outlook. For example, in 2023, it upgraded its relationship with the United States to a comprehensive strategic partnership—a sign it considered the United States to be a vital partner. The Trump administration has squandered such goodwill, treating Hanoi as an adversary in one-sided tariff negotiations, a move that risks long-term damage to U.S. standing in Vietnam.

The United States should also pay more attention to Thailand. The country, a Cold War ally and an advanced economy, has historically been friendly to many external partners, including Western ones. Yet since 2006, Thailand’s democracy has eroded, and Bangkok has deepened both economic and defense ties with Beijing. The United States must invest more in this alliance and avoid punitive actions that push Thailand into Beijing’s arms. Washington, for example, sanctioned Thai officials in March for deporting 40 Uyghur asylum seekers to China. By shoring up its ties with Vietnam and Thailand, the United States can help ensure that maritime Southeast Asia remains open, imposing a natural limit on China’s ability to dominate Asia and preserving U.S. interests in the wider Indo-Pacific region.

 

 

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