Can Southeast Asia Benefit From the China-US AI Race?
As Washington and Beijing compete to turn technology into influence, the region needs to negotiate what it gains and what it is expected to give up.
Southeast Asia confronts a dilemma in the China-US artificial intelligence race. The U.S. State Department reportedly cautioned its partners against mixing involvement in Pax Silica, a U.S.-led technology program, with participation in China's World AI Cooperation Organization (WAICO). This suggests Washington aims to ensure alignment among its partners in AI matters.
For Southeast Asian nations, the challenge extends beyond diplomacy. Early technology decisions can determine future affordability, as businesses and public services may become overly reliant on a single foreign supplier. Thus, Southeast Asia must balance development benefits and political maneuverability while competing powers still seek its cooperation.
Both the U.S. and China are drawing countries into separate agreements with different terms. Pax Silica, initiated in December 2025, unites nations seeking closer collaboration across technology supply chains, including critical minerals and AI systems. Its allure lies in potential investments, industrial partnerships, and advanced American technology.
WAICO, founded by 29 countries in Shanghai on July 16, aims to promote international AI cooperation and global governance, focusing on equitable access for Global South countries. Notably, Kazakhstan and Uzbekistan have joined both initiatives. Singapore views Pax Silica as non-binding and emphasizes mutual economic benefit when joining WAICO.
The U.S. letter's impact lies in its potential to limit flexibility. The deal's attractiveness for Southeast Asian governments depends on the benefits offered, the costs imposed, and their willingness to accept the terms. China's offer includes 5,000 training opportunities for developing countries over five years and AI cooperation centers with regional organizations like ASEAN, addressing concerns about limited resources.
This also bolsters China's claim to represent underrepresented countries in technology governance. However, WAICO's inclusiveness does not guarantee influence over the agenda or commercial gains. Southeast Asian participants should evaluate China's offer based on the capabilities gained and the influence they have in the cooperation itself.
Washington's leverage comes from its ability to restrict access to advanced computing equipment. A U.S. directive from May reaffirmed that exports of certain equipment to China and its overseas subsidiaries may require American approval. This dependency on American decisions may still affect a Chinese company operating in Malaysia.
While commercial success can provide political stability, it may also result in increasing costs associated with changing suppliers. Therefore, Southeast Asian economies should weigh the benefits of American investment, Chinese technology, and partnerships against the potential costs of losing technological independence. Singapore demonstrates that some options remain viable, with its participation in Pax Silica alongside the use of Chinese-origin technology.
Ultimately, the true test is whether cooperation empowers local firms and institutions to make independent decisions or merely enhances their ability to continue buying from the same partner.
Written by urgent.news from The Diplomat's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
