The geopolitical competition between Washington and Beijing is increasingly focusing on artificial intelligence, presenting Southeast Asian nations with a familiar and challenging diplomatic dilemma. As both superpowers attempt to translate technological leadership into global influence, regional governments are finding that technology agreements made today could severely limit their political and economic choices tomorrow.
A clear indication of this mounting pressure emerged in August, when a draft U.S. State Department letter warned partners against combining participation in Pax Silica, a U.S.-led technology initiative, with competing frameworks. Although the draft did not name specific organizations, it was widely understood as an attempt by Washington to discourage participation in China’s World Artificial Intelligence Cooperation Organization (WAICO). While the undated draft's final status remains unconfirmed, its political intent was unmistakable: Washington wants its AI partnerships to carry a stronger expectation of diplomatic alignment.
For Southeast Asian governments, the consequences of these competing initiatives extend far beyond diplomatic discomfort. If local businesses and public services become heavily dependent on a single foreign tech supplier, resisting that supplier's home government becomes far more difficult and costly. Consequently, regional leaders must negotiate development benefits and political autonomy together while Washington and Beijing are still actively courting them.
Currently, distinct American and Chinese initiatives are drawing countries into separate agreements. Pax Silica, which launched in December 2025, unites countries seeking closer cooperation across tech supply chains, spanning critical minerals to advanced AI systems. Its primary appeal lies in the promise of major investments, industrial partnerships, and access to cutting-edge American technology.
Conversely, China's WAICO was established on July 16, when 29 countries signed its founding agreement in Shanghai. By August 12, Chinese Foreign Minister Wang Yi reported that the organization had grown to 38 founding members. WAICO aims to promote international cooperation and global AI governance, with a specific focus on ensuring that nations in the Global South receive equitable access to pivotal AI technology.
Washington also wields significant leverage through its control over advanced computing hardware. Export guidance issued by the U.S. in May reaffirmed that shipping certain advanced equipment to Chinese companies and their overseas subsidiaries requires American approval. This means a Chinese company operating in Malaysia remains dependent on decisions made in Washington for its hardware access, regardless of Kuala Lumpur's diplomatic relationship with Beijing.
This technological integration can create a subtle, long-term lock-in effect. While a well-integrated system can initially attract investment and win support from local businesses, the cost of switching suppliers rises over time. Eventually, governments may face domestic pressure from employers, investors, and public agencies to maintain access to a specific platform, even if relations with the supplier's home country deteriorate. Thus, commercial success can solidify a foreign partnership's political staying power before any formal alliance is signed.
However, technological dependence is not inherently negative, as Southeast Asian economies stand to benefit significantly from both American investment and Chinese technology. Pursuing absolute technological independence would carry prohibitive costs. The critical test for regional governments is whether their foreign partnerships leave local firms better equipped to make independent decisions or simply lock them into buying from the same supplier.
Singapore has demonstrated that a balanced approach is possible. The country participates in Pax Silica while continuing to utilize Chinese-origin technology. For example, AI Singapore's SEA-LION models draw on both Alibaba's Qwen and Google's Gemma, adapting them to Southeast Asian languages and cultural contexts. This local expertise allows Singapore to select and customize foreign tools for its own regional purposes.
Other governments are using their physical resources as leverage. On September 4, Thailand paused 166 data center projects—including both active construction and those awaiting approval—to establish clear rules regarding resource consumption and domestic economic benefits. This move highlights a key development question: how much should a host country gain in exchange for providing land, electricity, water, and public support to foreign tech giants?
While this bargaining power has limits, ASEAN can play a crucial role in helping member states negotiate from a position of strength. By utilizing its existing AI governance frameworks, ASEAN can facilitate the sharing of expertise and help members compare how foreign partnerships serve regional interests. Coordinating expectations on training, local participation, and service continuity would make it much harder for global suppliers to take advantage of governments negotiating in isolation.
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