Winners and losers in Asia’s evolving geopolitical and economic order

THE potential recalibration of US security commitments in Asia under the Trump administration could mark a significant transition in the region’s geopolitical and economic landscape. Since the end of World War II, the US has played a stabilising role in the Indo-Pacific, supporting a rules-based framework that facilitated economic growth and regional cooperation.

However, a shift in US priorities – marked by an emphasis on unilateralism and an “America First” approach – could accelerate the evolution of the postwar global order, prompting new strategic alignments, economic adaptations and opportunities for regional leadership.

A changing geopolitical landscape

A reduced US presence in Asia would create space for regional powers to assume greater responsibility in shaping the security architecture. China has expanded its influence through initiatives such as the Belt and Road Initiative (BRI).

Beijing could play a more prominent role in conflict resolution in the region, particularly in areas like the Korean peninsula, where diplomatic engagement remains crucial. A more assertive China will likely reshape the geopolitical landscape in Asia with regard to the Taiwan Strait and the South China Sea.

Japan and South Korea, long-standing US allies, may seek to diversify their strategic partnerships while enhancing their own defence capabilities.

Japan’s military modernisation could contribute to regional security and foster a more balanced power dynamic. South Korea, meanwhile, might deepen economic and diplomatic ties with neighbouring nations, which could reinforce stability in North-east Asia.

South-east Asia, home to dynamic economies and a hub of global trade, could see a strengthening in the role of the 10-member Association of Southeast Asian Nations (Asean) as a neutral platform for dialogue.

Nations like Vietnam, Indonesia and the Philippines may increasingly pursue more flexible foreign policies, engaging with multiple partners to ensure continued prosperity.

Bifurcation of tech ecosystems

The adjustments in US engagement could accelerate a technological bifurcation between US and Chinese standards. In critical areas like 5G, semiconductors and AI, nations will increasingly face pressure to align with either the US-led or Chinese-led tech ecosystems.

This divide will extend beyond hardware to digital governance, data security and cyber norms, forcing countries to make difficult choices that could shape their economic futures.

The US and its allies are likely to maintain leadership in advanced semiconductor and cutting-edge AI research. China is catching up quickly in these areas while continuing to excel in manufacturing scalability and telecommunications infrastructure.

Smaller nations, particularly in South-east Asia, may struggle to maintain neutrality, as both bigger powers push for alignment through trade incentives, investment conditions and security partnerships. Over time, this could lead to a fragmented digital landscape where interoperability declines and innovation becomes siloed.

A fork in the road

The choices made by nations in the coming years will shape the technological global landscape for decades to come, leading to several potential futures:

• A fragmented world: The most likely near-term scenario is a greater “digital decoupling” of the world’s major economies. Escalating geopolitical tensions could accelerate the emergence of at least two parallel AI ecosystems – one led by the US and its allies, the other by China – with diverging standards and limited interoperability. This could stifle global innovation by hindering collaboration.
• Continued US dominance: The US could successfully leverage its lead in cutting-edge hardware and next-generation models to maintain its position at the top, keeping China a step behind. This depends on the effectiveness of its export controls and the pace of its own innovation.
• Rapid Chinese advances: Through its focus on efficiency, clever workarounds, and a massive push in its domestic chip industry, China could achieve near-parity with the US for key AI capabilities. This would fundamentally challenge US leadership and create a truly bipolar AI world.

The rise of DeepSeek has done more than just introduce a new competitor. It has redefined the very nature of the AI race. The choice for countries is no longer a simple technological preference but a profound geopolitical and economic calculation.

The path they choose will determine whether the future of AI is one of global collaboration and shared progress, or one of fractured ecosystems and escalating conflict over technological dominance.

Winners in the new order

• China: A reduced US presence enables Beijing to expand its economic and technological influence, particularly through BRI projects and digital infrastructure exports.
• Vietnam and India: Both nations could attract manufacturing relocations as companies diversify supply chains away from China, benefiting from their neutral positioning and competitive labour markets.
• Tech-savvy middle powers – South Korea, Taiwan, Singapore: These economies possess the advanced industries and strategic flexibility to navigate bifurcation, potentially serving as bridges between competing tech blocs.
• Resource-rich nations – Australia, Indonesia: These nations remain indispensable to both US and Chinese supply chains due to their abundance of critical mineral and energy resources.

And the losers

• Smaller Asean economies – Cambodia, Laos, Myanmar: These economies are less able to resist pressure to align with China, risking greater debt dependency and loss of economic sovereignty.
• US tech giants: If decoupling accelerates, firms such as Apple and Nvidia could lose access to China’s vast consumer market and manufacturing base.
• Global innovation: A divided tech ecosystem stifles cross-border collaboration, slowing progress in areas like climate technology and medical research.

While Asia’s economies are resilient enough to adapt, the bifurcation of technology standards and supply chains will create winners and losers, with middle powers best positioned to navigate the transition. The key challenge for the region will be to maintain open trade and innovation despite growing competition between US and China.

The writer is chief Asia strategist and head of Asia research, Pictet Wealth Management