Balancing Act: How ASEAN Navigates China’s Expanding BRI Influence
The ASEAN Investment Report 2024, which shows a sharp rise in Chinese foreign direct investment into the region, has reignited debate over the consequences of deeper engagement with BRI.
As global power rivalries intensify, Southeast Asia finds itself at the epicenter of geopolitical recalibration. The ASEAN Investment Report 2024, which shows a sharp rise in Chinese foreign direct investment into the region, has reignited debate over the consequences of deeper engagement with Beijing’s Belt and Road Initiative (BRI). Against the backdrop of the U.S.-China strategic contest and ASEAN’s own development ambitions, a pressing question arises: Can ASEAN harness the BRI without compromising its strategic autonomy?
As China marks over a decade of Belt and Road diplomacy, its footprint in Southeast Asia is more pronounced than ever. Recent high-level visits and renewed financing pledges—from the Jakarta–Bandung high-speed railway in Indonesia to ongoing Digital Silk Road initiatives in Cambodia and Malaysia—signal that Beijing’s engagement is accelerating. These developments come as ASEAN recalibrates its external partnerships amid growing scrutiny over foreign influence, debt exposure, and digital sovereignty.
Economic Elixir or Strategic Embrace?
The promise of the BRI in ASEAN is undeniable. The region’s infrastructure needs are vast—by 2040, the gap between required and actual investment could exceed $2.8 trillion. Chinese capital, engineering capacity, and speed offer solutions that many local governments have been unable to marshal. In Laos, the Vientiane-Kunming railway has turned a landlocked nation into a land-linked hub, reducing freight times and opening up new economic zones. In Malaysia, China has emerged as a critical investor in port, energy, and industrial projects.
Moreover, China has not only built roads and railways but also launched what some call a “Digital Silk Road,” bringing 5G, data centers, and e-commerce ecosystems to ASEAN shores. Tech giants like Huawei and Alibaba are now deeply embedded in ASEAN’s telecommunications and fintech sectors. For many countries, this represents a leapfrog moment in their digital transformation agendas.
The Debt Dilemma
Yet, these investments come with caveats. The specter of “debt-trap diplomacy” continues to haunt BRI discourse, especially after Sri Lanka’s Hambantota Port was leased to a Chinese firm for 99 years following debt distress. While evidence suggests the debt narrative is more nuanced than often portrayed, it has nonetheless shaped perceptions.
Several ASEAN countries, notably Malaysia and Indonesia, have taken more cautious approaches. Kuala Lumpur renegotiated the East Coast Rail Link deal, reducing the cost by one-third. Vietnam and the Philippines have prioritized multilateral financing and diversified partnerships, wary of becoming overly dependent on Beijing. Cambodia, on the other hand, has embraced Chinese investment more openly—but not without consequences. Critics point to rising environmental degradation, eroding policy independence, and growing diplomatic distance from the West as warning signs of overexposure.
According to the ASEAN Investment Report 2024, ASEAN’s share of global FDI—including flows from China—climbed from about 5 percent in 2016to over 10 percent by 2023, underlining the region’s rapidly increasing importance in global investment, especially from China. While that underscores ASEAN’s strategic importance, it also reveals a growing asymmetry that governments must manage carefully. Balancing infrastructure needs with fiscal sovereignty is the tightrope many ASEAN states now walk.
Toward Strategic Agency
One of the more striking developments in recent years is how ASEAN countries have asserted agency within the BRI framework. Rather than rejecting Chinese investment outright or uncritically embracing it, many governments have pushed for better terms, local hiring mandates, and environmental safeguards. The China-Laos railway, for example, is not just a Chinese export of steel and labor; it has brought jobs, training, and long-term economic benefits to Laos.
Moreover, several ASEAN strategies—such as Indonesia’s Global Maritime Fulcrum or Cambodia’s Rectangular Strategy—have been aligned with BRI goals to ensure national ownership. Multilateral agreements like the Regional Comprehensive Economic Partnership (RCEP), which includes both China and ASEAN, further reflect the bloc’s commitment to rules-based trade and regional cooperation.
Risks Remain: Environmental, Digital, and Sovereign
Despite these gains, legitimate concerns persist. Environmental risks—from deforestation to biodiversity loss—are often underplayed in BRI feasibility studies. In countries like Myanmar and Cambodia, hydropower and mining projects have displaced communities and raised public opposition. The same holds for digital sovereignty. As Chinese tech giants expand across ASEAN, issues of data privacy, cybersecurity, and digital dependence will demand careful regulation and public scrutiny.
Furthermore, the geopolitical rivalry between the U.S. and China adds complexity. ASEAN’s attempt to position itself as neutral and “central” may face pressure as competition intensifies. Initiatives like the U.S.-led Indo-Pacific Economic Framework (IPEF) and India-Middle East-Europe Economic Corridor (IMEC) could fragment ASEAN’s internal unity if member states take divergent approaches.
The Path Forward
The future of ASEAN’s relationship with the BRI will hinge on transparency, sustainability, and shared governance. China, too, must evolve—moving from a lender-builder model to a partner-investor model, incorporating environmental and social standards that meet host countries’ expectations. ASEAN, for its part, must strengthen its own bargaining power. This means enhancing regional coordination, conducting rigorous project appraisals, and integrating BRI investments with ASEAN’s own Master Plan on the Connectivity 2025.
Conclusion
The Belt and Road Initiative is neither purely a Trojan horse of Chinese hegemony nor a selfless act of infrastructure diplomacy. It is a multifaceted strategy with overlapping economic and strategic goals. ASEAN’s challenge—and opportunity—is to harness the BRI’s potential without losing its autonomy. If it succeeds, the region could emerge not as a battleground for great-power rivalry but as a model for 21st-century multilateralism shaped by pragmatism, connectivity, and strategic agency.
Prof. Kashif Hasan Khan is a faculty member in the Economics Department at Ala-Too International University in Bishkek, Kyrgyzstan. Kashif formerly held positions as an assistant professor in Konya, Turkey, an international business consultant in Manila, the Philippines, and a consultant economist with the Asian Development Bank. He has multiple books with highly reputed publishers and research papers in scholarly journals that are indexed in the Web of Science, Scopus, ABDC, and other databases. He is focused on researching economic corridors, India-Central Asia connections, and international trade. He can be contacted at rfellow8[at]gmail.com