On May 12, 2025, China unveiled its latest defence white paper, boldly titled China’s National Security in the New Era. The document, which the Chinese government describes as a ‘holistic’ approach to security, sets out Beijing’s vision for its place in a rapidly shifting global landscape. The timing couldn’t have been more significant: just months later, on October 9, China’s Ministry of Commerce announced sweeping new export restrictions on rare earth elements—materials critical to electric vehicles, semiconductors, and modern defense systems. These twin moves have sent shockwaves through Southeast Asia and across the world, laying bare the fierce contest for influence and resources that now defines US-China relations.
The 2025 defence white paper is more than a policy document—it’s a statement of intent. According to the report, China aims to place itself squarely at the center of both regional and global affairs, pushing back against what it sees as the US-led ‘Indo-Pacific strategy’. This American approach, now increasingly security-oriented, is seen by Beijing as a direct challenge to its ambitions. The white paper draws on the ancient Chinese concept of tianxia—‘all under heaven’—to argue that harmony and stability in Asia can only be achieved through a prosperous and powerful China. As the paper puts it, “peace, stability and prosperity in a hierarchical Asia will emanate from China’s leadership.”
But the United States isn’t about to step aside. US Secretary of Defense Pete Hegseth was quick to reassure America’s Asian allies, calling their alliances “iron-clad” and “the cornerstone of peace and security,” while insisting that “America First does not mean America Alone.” The message was clear: Washington intends to remain a key player in the region, even as it faces an increasingly assertive China.
For Southeast Asian countries, this escalating rivalry presents a dilemma. As outlined in the white paper and echoed by regional analysts, these nations are now under mounting pressure to choose between economic development and security partnerships—either with China or the United States. Some, like Cambodia and Laos, appear more willing to support Beijing’s vision. But this dynamic risks deepening divisions within the Association of Southeast Asian Nations (ASEAN), as seen in the group’s 2012 deadlock over a joint statement, and could threaten the region’s hard-won sense of unity.
China’s core national interests, as spelled out in the 2025 white paper, include the reunification of Taiwan and the stability of Xinjiang, Tibet, Hong Kong, Macau, and the South China Sea. Beijing makes no bones about its willingness to use force to defend these interests if necessary—a stance that has raised hackles in neighboring capitals and in Washington alike. The South China Sea, in particular, remains a flashpoint, with China advocating for bilateral negotiations with claimant states while showing little urgency to finalize a Code of Conduct with ASEAN, even as the regional bloc hopes to wrap up talks by 2026.
According to the white paper, China is eager to present itself as a holistic provider of both economic and security benefits, rather than as a threat to its neighbors. This is especially important as the United States, under President Trump’s second term, appears to be focusing less on economic and cultural engagement in the region and more on countering China’s rise. Yet, as The State of Southeast Asia: 2025 Survey Report from the ISEAS–Yusof Ishak Institute makes clear, the United States still wields greater economic and strategic influence in Southeast Asia than China does—despite Washington’s sometimes inconsistent engagement since the end of the Cold War.
Against this backdrop, the autumn of 2025 brought a dramatic escalation in the economic contest between the world’s two largest powers. On October 9, China’s Ministry of Commerce announced new export controls on rare earth elements (REEs), magnets, and related technologies. These restrictions, set to roll out in phases on November 8 and December 1, don’t just cover materials mined in China. They also apply to any foreign-made products containing more than 0.1 percent Chinese-origin REEs or manufactured using Chinese technology—a move with sweeping implications for global supply chains.
President Trump wasted no time in denouncing the Chinese decision, calling it “economic aggression” and threatening to slap 100 percent tariffs on all Chinese imports starting November 1. He also vowed new export bans on what he termed “critical software.” For its part, Beijing insisted that its new policy was about ensuring “responsible and secure trade.” But as The Business Times noted, these dueling measures mark a new phase of economic warfare—one focused not on tariffs alone but on the deep technological and material interdependence that now links the two superpowers.
This rare earth showdown is more than a spat over commodities; it’s a symptom of a broader strategic reality. As The Business Times put it, “Interdependence no longer guarantees stability – it guarantees leverage.” China, long the world’s leading supplier of rare earths, is leveraging its dominance to push back against US efforts to contain its rise. The United States, in turn, is scrambling to diversify its supply chains and shore up alliances across Asia and beyond.
The ripple effects are being felt acutely in Southeast Asia. Countries like Vietnam, which has its own disputes with China over the South China Sea, is expected to deepen security cooperation with powers outside the region—even as it tries to reassure Beijing that these moves aren’t aimed directly at China. The Philippines, meanwhile, is moving ever closer to Washington, hardening its stance on maritime disputes and signaling a willingness to align more closely with US security objectives.
Yet for all the talk of rivalry and confrontation, most Southeast Asian states are determined to avoid choosing sides outright. Instead, as the ISEAS–Yusof Ishak Institute survey highlights, they are pursuing a delicate balancing act—welcoming engagement from all major powers as a way to maximize their own strategic autonomy, buffer against great power excesses, and keep their options open in an unpredictable world.
China’s ambitions aren’t limited to the military or economic spheres. The white paper points to a series of global initiatives rolled out in recent years—the Global Development Initiative (2021), Global Security Initiative (2022), and Global Civilization Initiative (2023)—as evidence that Beijing is seeking a broader role in addressing global challenges. The underlying goal, analysts suggest, is to reduce US strategic influence and present China as a responsible stakeholder in global affairs.
But winning over Southeast Asia won’t be easy. The region’s leaders remain wary of overdependence on any single external power, and memories of both Chinese assertiveness and American unpredictability run deep. As Ananta Swarup Bijendra De Gurung, Assistant Professor at Jawaharlal Nehru University, observes, Southeast Asian states must “cultivate pragmatic relationships that address their domestic development concerns while ensuring maximum strategic autonomy in foreign affairs.”
As 2025 draws to a close, the stakes have never been higher. The US-China rivalry is no longer just a contest of words or tariffs—it’s a struggle over the very architecture of regional and global order, with nations across Southeast Asia caught in the crossfire and working hard to chart their own course.
