China Surpasses the US as Southeast Asia’s Dominant Economic and Political Force in 2025

• How Did China Cement Its Leadership in Southeast Asia?
• Where Has the U.S. Lost Ground—and Why?
• ASEAN’s Strategy: Playing Both Sides Against the Middle
• Can the U.S. Stage a Comeback?
• FAQ: China vs. U.S. Influence in Southeast Asia

In a seismic shift for Southeast Asia, China has overtaken the United States as the region’s most influential external power, according to recent analyses. Through aggressive trade partnerships, infrastructure investments, and consistent diplomatic outreach, Beijing now holds a commanding lead in economic influence—accounting for 26% of ASEAN’s imports and 20% of its exports, compared to America’s 16% share. While the U.S. retains strong defense ties with allies like the Philippines, Trump-era tariffs and aid cuts have eroded its economic footprint. Meanwhile, Southeast Asian nations are diversifying partnerships to avoid over-reliance on any single power. Below, we break down the key drivers, data, and geopolitical implications of this power realignment.

How Did China Cement Its Leadership in Southeast Asia?

China’s dominance stems from a trifecta of trade, investment, and diplomacy. The numbers speak for themselves: Beijing now accounts for 26% of Southeast Asia’s imports and 20% of its exports—outpacing the U.S. by 6-10 percentage points. In Cambodia, Laos, and Myanmar, China’s influence is 60-150% stronger than America’s, per Bloomberg data. "China is everywhere in Southeast Asia," notes the report, highlighting Beijing’s "steady presence" through projects like the Belt and Road Initiative (BRI). Unlike the U.S., which has pursued "patchy" diplomacy, China has methodically courted ASEAN capitals with high-level visits and infrastructure deals. Case in point: Laos’ $6 billion China-Laos railway, completed in 2021, now serves as a trade artery linking the landlocked nation to global markets.

Where Has the U.S. Lost Ground—and Why?

The TRUMP administration’s policies accelerated America’s decline. Tariffs averaging 19-20% on ASEAN goods (40% for Laos/Myanmar) and an 83% cut in foreign aid alienated regional partners. "The global policies of the Trump administration on tariffs, aid cuts, and international education accentuated the disconnect," the report states. Even security allies like the Philippines have grown wary; while joint military exercises continue, Manila now sources 30% of its imports from China versus 9% from the U.S. (2024 data). The dismantling of USAID programs and funding cuts to Voice of America further weakened soft power. "The U.S. shows two differing faces in Southeast Asia," observes Susannah Patton of Lowy Institute. "Strong in defense, but increasingly peripheral to economic priorities."

ASEAN’s Strategy: Playing Both Sides Against the Middle

Southeast Asian nations are hedging their bets. Vietnam, despite tensions with Beijing over the South China Sea, remains China’s top trade partner in ASEAN ($175 billion in 2024). Meanwhile, Indonesia and Singapore are deepening ties with the EU and India. "China leads the U.S. by a clear margin, but hasn’t created an uncontested sphere of influence," Patton notes. The region’s exports to the U.S. still grew 5% year-over-year in Q2 2025, suggesting America’s consumer market remains vital. However, ASEAN’s new industrial policies—like Thailand’s EV manufacturing push with Chinese automakers—signal where the growth opportunities lie.

Can the U.S. Stage a Comeback?

Recent moves suggest a recalibration. U.S. Trade Representative Jamieson Greer announced pending deals with Vietnam and Indonesia to reduce tariffs, calling for "balanced and reciprocal" trade. But challenges persist: Vietnam risks losing $25 billion annually if 20% U.S. tariffs stay, per UNDP estimates. Meanwhile, China’s digital yuan pilot in Myanmar and Cambodia’s reliance on Chinese tourism (40% of pre-pandemic arrivals) underscore Beijing’s entrenched advantages. As one Cambodian official quipped, "America sends warships; China sends bullet trains and tourists."

FAQ: China vs. U.S. Influence in Southeast Asia

What percentage of ASEAN trade does China control?

China accounts for 26% of Southeast Asia’s imports and 20% of its exports, surpassing the U.S. (16%) as of 2025.

Which countries favor China over the U.S. by the widest margin?

Cambodia, Laos, and Myanmar—where China’s influence is 60-150% stronger, per Bloomberg.

How have Trump-era policies affected U.S. standing?

Tariffs (19-40% on ASEAN goods), an 83% aid cut, and visa restrictions eroded economic ties, though defense partnerships endure.