In the Shadow of Giants: Navigating U.S.–China Rivalry and Investment Uncertainty in Southeast Asia
Abstract
As intensifying strategic rivalry between the United States and China reshapes the global political economy, Southeast Asia has become a critical arena in which geopolitical competition intersects with foreign direct investment (FDI) flows. For developing economies in the region, heightened great-power tensions generate both risks and opportunities, amplifying economic uncertainty while potentially reconfiguring patterns of external capital dependence.This paper examines how Southeast Asian states’ political alignments vis-à-vis the United States and China condition—and are conditioned by—FDI inflows amid escalating bilateral tensions. Focusing on three analytically contrasting cases—the Philippines as a U.S. treaty ally, Cambodia as a close partner of China, and Indonesia as a strategically non-aligned middle power—the study investigates whether and how political allegiance translates into differentiated investment outcomes. Employing a qualitative comparative research design, the analysis draws on academic literature, policy documents, stakeholder policy dialogues, and English- and Chinese-language news sources, supplemented by semi-structured interviews with scholars, journalists, policymakers, civil society actors, business leaders, and diplomats.
By linking geopolitical alignment to investment outcomes and economic vulnerability, this paper advances a more systematic understanding of how great-power rivalry conditions development strategies in Southeast Asia, demonstrating that political alignment is not merely a diplomatic posture but a material determinant of economic resilience. This research is ongoing, and while the full findings are still being developed, the ASSA meeting will feature preliminary results and selected analytical insights from the study.