Southeast Asia: Not Choosing Sides but Options

For decades, Southeast Asia prospered in a world of open trade and US-anchored security and multilateral rules. However, that world is now under strain, as captured in the State of Southeast Asia 2026 Survey. The region is not simply anxious about the US or China, but uneasy about both powers in different ways. Southeast Asia is actively adjusting to a world where no single power can provide all economic, security and normative goods.

The 2026 Survey reflects a region simultaneously engaged with but wary of both powers: to respondents, China remains the most influential economic and political-strategic power in Southeast Asia, while the US holds second place in both domains. Yet concern (‘worry’) about China’s and the US’ influence outweighs ‘welcome’ (Charts 1 and 2). Concern over China’s influence is not new; what is notable is that respondents’ concern over US influence has overtaken welcome. China’s influence has not translated into assurance, especially over sovereignty issues, the South China Sea and domestic interference. Confidence in the US has slipped; its leadership on free trade has fallen to fourth place – behind ASEAN, China and the EU. On upholding the rules-based order, ASEAN has edged ahead of Washington for the first time in the Survey’s history.

That said, both powers remain indispensable to the region: China for its economic centrality and deep supply chain integration, and the US for security, technology and investment. While neither is fully trusted as an anchor of order, Southeast Asia is not turning away from either but will manage both with caution.

Chart 1. China and the US are the region’s top two economic powers but ‘worry’ outweighs ‘welcome’

Chart 2. China and the US seen as the most influential strategic powers in the region but ‘worry’ outweighs ‘welcome’

The survey also shows that Southeast Asia is diversifying towards partners that offer them something specific. The EU and Japan remain the region’s preferred partners for hedging against US-China rivalry (Chart 3) – their appeal is not about hard power. Japan’s long-standing reputation as a reliable, non-coercive and rules-supporting partner, associated with development assistance, quality investment and respect for ASEAN processes, continues to resonate. The EU is valued for its regulatory weight, support for international law, climate cooperation and institutional predictability. While neither can replace the US’ security role or China’s economic centrality, they offer what the two major powers currently struggle to provide: normative credibility without strategic pressure.

Chart 3. The EU and Japan: Still the region’s most trusted strategic partners to hedge against US-China rivalry

The role of middle powers is becoming increasingly important, as nation-states seek flexibility in a more contested and uncertain order. As Canadian premier Mark Carney suggests through the idea of “variable geometry”, cooperation is no longer fixed or bloc-based but instead shifts across issues, coalitions and interests. In this context, middle powers serve as conveners and brokers, forming issue-based partnerships that complement engagement with major powers.

For Southeast Asia, this idea is more relevant than ever. The Survey indicates that the region’s security challenges are becoming more complex and multidimensional. In the past two years, climate change has emerged as respondents’ top concern, underscoring the urgent need for technical expertise and stronger local capacity to respond to and mitigate its impacts. Simultaneously, non-traditional threats such as transnational scam operations have risen as major concerns, requiring cross-border coordination and enhanced capabilities, particularly in cybersecurity.

What emerges from the Survey’s findings is a region that has accepted multipolarity as an operational reality…

Middle powers, through flexible and targeted cooperation, can play a critical role in helping the region build much-needed capacity to navigate an increasingly complex security landscape, complementing rather than replacing ASEAN. These groupings do not replace larger institutions but help to keep rules-based cooperation alive when institutions are gridlocked. Initiatives like the Future of Investment and Trade (FIT) Partnership, co-founded by Singapore, the United Arab Emirates, New Zealand and Switzerland, for instance, exemplify this logic. They are a coalition of like-minded small and medium-sized economies pursuing open, fair and resilient trade on their own terms.

Likewise, theme-specific plurilateral mechanisms such as the Asia Zero Emission Community (AZEC) among ASEAN countries, Japan and Australia demonstrate how countries can collaborate more flexibly on energy transition and decarbonisation. Similar approaches are emerging in areas like cybersecurity and digital governance, exemplified by the Hiroshima Artificial Intelligence (AI) Process spearheaded by Japan to include several countries from the Global South. Such smaller coalitions enable faster coordination, technical capacity-building and trust-based cooperation.

Crucially, these arrangements tend to be less overtly geopolitical since they are driven more by functional needs and shared problem-solving than strategic alignment. As Prime Minister Lawrence Wong noted at the Bo’ao Forum earlier this year, what the world needs at a time of fragmentation are strong advocates for open and rules-based trade. Issue-based coalitions are one practical way to keep that advocacy functional.

What emerges from the Survey’s findings is a region that has accepted multipolarity as an operational reality: Southeast Asia is not waiting for the old order to return or aligning with either major power. Instead, it is building a layered architecture, engaging multiple partners, working with middle powers on norms and using plurilateral arrangements to fill gaps. The goal is not to choose sides but to keep all options open.

2026/137