The waters of Southeast Asia are witnessing a subtle but significant shift in power dynamics. China is steadily building economic and security ties within the region, presenting a vision for a new maritime order that increasingly appeals to nations grappling with uncertainty about the reliability of traditional alliances, particularly with the United States. This evolving landscape, while offering economic opportunities, is also shadowed by concerns over China’s assertive behavior in the South China Sea and the potential for increased regional dependence.
For years, the South China Sea has been a focal point of strategic competition between the United States and China, as outlined in a 2024 Congressional Research Service report examining the situation. China’s extensive island-building and military presence in the Spratly Islands have fueled tensions and prompted international criticism. However, Beijing is now coupling these actions with a concerted effort to become a leading investor in the region’s “blue economy” – sustainable use of ocean resources for economic growth – and a security partner for nations seeking alternatives to Washington.
China’s strategy aligns with the priorities established in the latest Plan of Action to Implement the ASEAN-China Comprehensive Strategic Partnership (2026-2030). According to Chinese state media, Beijing, in collaboration with the Association of Southeast Asian Nations (ASEAN), is investing between US$2.0 trillion and US$3.7 trillion in the blue economy from 2020 to 2050 . These investments include initiatives like establishing green shipping lanes in the Strait of Malacca and supporting eco-friendly aquaculture projects, appealing to Southeast Asian nations focused on balancing economic development with environmental protection.
A Shifting Security Landscape
Beyond economic investment, China is actively expanding its security cooperation within the region. Last year, Malaysia and Cambodia participated in joint military drills with China, signaling a willingness to engage in security partnerships outside of traditional alliances. This trend is particularly notable given growing concerns among some Southeast Asian nations regarding the reliability of the United States as an ally, especially in the event of escalating tensions in the South China Sea. A recently leaked document revealed that Vietnamese defense officials are even contingency planning for a scenario involving “a second US invasion” , a reflection of deep-seated anxieties about Washington’s commitment to the region.
Vietnam, in response to these concerns, conducted its first joint military drill with China last year, further solidifying the growing security ties between the two nations. Indonesia has also agreed to a joint development project with China in areas of the South China Sea where overlapping claims exist, despite ongoing legal criticisms of the arrangement. These developments demonstrate a pragmatic approach by Southeast Asian countries, prioritizing their own security and economic interests even if it means navigating a complex relationship with a rising China.
The United States’ Diminished Role
The shift in regional dynamics is, in part, a consequence of perceived changes in U.S. Foreign policy. In January, the United States withdrew from 66 international treaties , signaling a more isolationist stance and raising questions about its commitment to multilateralism. This decision, coupled with a broader sense of geopolitical uncertainty, has created a vacuum that China is eager to fill. The U.S. State Department condemned China’s actions in the South China Sea in October 2025, specifically citing the ramming and water cannoning of a Philippine vessel , but this response has done little to quell the growing anxieties of regional partners.
The Path Forward: Cooperation and Restraint
China’s ambition to establish a “Maritime Community with a Shared Future,” first proposed in 2019, is gaining traction, but its success hinges on two critical factors. First, the availability of viable alternatives to Chinese cooperation in the maritime domain remains limited. Many Southeast Asian nations are hesitant to fully rely on a United States perceived as increasingly unreliable and the capacity of other middle powers, such as Australia or European nations, to provide comparable levels of investment and security assistance is uncertain. Second, and perhaps more importantly, China’s behavior in the South China Sea will be decisive. Continued aggressive tactics by the Chinese navy and coast guard will likely fuel resistance and undermine efforts to build trust and cooperation.
If China demonstrates a willingness to curb its coercive behavior and prioritize peaceful resolution of disputes, it could pave the way for broader regional acceptance of its proposed maritime order. However, the path forward remains fraught with challenges, and the future of the South China Sea – and the broader Indo-Pacific region – will depend on the choices made by all stakeholders in the coming months and years.
The next key development to watch will be the outcome of ongoing negotiations between ASEAN and China regarding the Code of Conduct in the South China Sea, expected to resume in the spring of 2026. These talks will be a crucial test of China’s commitment to peaceful resolution and its willingness to address the concerns of its Southeast Asian neighbors.
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