Navigating a connected yet contested world in S-E Asia

SOUTH-EAST Asia is at a critical geo-economic crossroads. Recent actions by major economies, notably the US administration’s imposition of tariffs at levels not seen in a century, signal a shift towards more protectionist trade policies. These actions will intensify existing pressures on global supply chains, growth trajectories, and strategic partnerships. For member states of the Association of Southeast Asian Nations (Asean), whose combined economies form the world’s fifth-largest bloc and serve as vital connectors between the world’s two largest economies – China and the United States – this evolving landscape brings both heightened risk and strategic opportunity. Navigating the moment will require agility in the face of volatility, including monitoring key geo-economic watch points, and rethinking trade linkages and resilience strategies.

Key watch points

Asean confronts a range of geopolitical “grey rhinos”. These are known risks of high impact, ranging from ones at a global level – namely, the China-US strategic competition, the fallout from Russia’s invasion of Ukraine, and the conflict in the Middle East – to those at a regional level, such as tensions on the Korean peninsula and in the maritime domain, including in the South China Sea and the Taiwan Strait. The new US administration’s approach to the global trading system is further shaping Asean’s strategic environment.

Eight key geo-economic watch points for Asean emerge from policies and pronouncements to date: