SINGAPORE, 11 February 2026 – Southeast Asian economies must remain flexible, strategically neutral, and economically integrated to withstand mounting pressure from intensifying US–China trade tensions, as global supply chains fragment and geopolitical competition reshapes Asia’s economic landscape.
Analysts and policymakers warn that ASEAN faces growing risks as the world’s two largest economies increasingly compete for influence across trade, technology, and investment, placing the region at the centre of global economic realignment.
ASEAN’s Strategic Position Offers Opportunity and Risk
ASEAN has emerged as a critical manufacturing and investment destination as companies diversify supply chains away from China amid rising geopolitical tensions and trade restrictions.
Countries such as Vietnam, Malaysia, Thailand, and Indonesia have benefited from supply chain shifts, attracting foreign direct investment from global manufacturers seeking to reduce dependence on China.
However, ASEAN’s close economic ties with both the United States and China create a delicate balancing act. China remains ASEAN’s largest trading partner, while the United States continues to play a key role as a major export destination and investment source.
This dual dependence makes ASEAN vulnerable to policy changes, trade restrictions, and economic disruptions stemming from US–China rivalry.
Economic Fragmentation Threatens Trade Stability
The growing trend toward economic fragmentation, including tariffs, export controls, and technology restrictions, is creating uncertainty across global markets.
Supply chains that were once optimised for efficiency are increasingly being reorganised around geopolitical considerations, raising costs and complicating cross-border trade.
ASEAN economies, which rely heavily on exports and foreign investment, face the challenge of adapting to these shifts while maintaining competitiveness.
Experts emphasise that ASEAN must avoid becoming overly dependent on any single major power and instead pursue diversified economic partnerships.
Regional Integration and Neutrality Key to ASEAN’s Resilience
Maintaining economic neutrality and strengthening regional integration are seen as critical strategies for ASEAN’s long-term stability.
ASEAN’s ability to remain politically neutral allows member states to engage with both the United States and China while minimising geopolitical risks.
Trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and ASEAN-led economic initiatives help reinforce regional economic cooperation and reduce vulnerability to external shocks.
Strengthening intra-ASEAN trade, improving regional infrastructure, and enhancing supply chain connectivity are essential to sustaining growth amid global uncertainty.
Structural Advantages Position ASEAN for Long-Term Growth
Despite geopolitical challenges, ASEAN retains strong long-term growth prospects due to favourable demographics, expanding middle-class populations, and increasing industrialisation.
The region’s strategic location, manufacturing capabilities, and growing digital economy make it an attractive destination for global investment.
As companies continue diversifying supply chains, ASEAN is likely to remain a key beneficiary of global production realignment.
However, the region’s success will depend on its ability to remain adaptable and responsive to evolving geopolitical and economic conditions.
Strategic Outlook: ASEAN’s Flexibility Will Define Its Global Role
ASEAN’s future economic trajectory will be shaped by how effectively it navigates geopolitical tensions while maintaining openness to global trade and investment.
By preserving neutrality, strengthening regional cooperation, and diversifying economic partnerships, ASEAN can mitigate risks and capitalise on emerging opportunities.
For investors and policymakers, ASEAN’s ability to remain nimble and strategically balanced will be critical in determining whether the region emerges as a long-term winner in the evolving global economic order.
Source: SCMP
