When Chinese President Xi Jinping visits Kuala Lumpur this week, marking his first overseas trip of the year and his first to Southeast Asia since the pandemic, he won’t just be talking up trade deals and smiling for photo ops.
He’ll be bringing something the United States has struggled to offer: a long-term, coherent economic vision for Southeast Asia.
President Xi’s stops — Malaysia, Vietnam and Cambodia — are strategic affirmations that China remains ASEAN’s most consistent and committed economic partner as US engagement continues to oscillate between promises and pullbacks.
With China-ASEAN trade already nearing US$1 trillion and digital yuan pilots expanding into regional payment systems, Beijing is doubling down on economic statecraft.
Meanwhile, Washington’s approach remains reactive — punitive tariffs, vague supply chain “friend-shoring” rhetoric and no substantive trade agreements with the region’s major economies.
Nowhere is this gap more evident than in how the US has mismanaged the “China Plus One” (C+1) outcome.
From China Plus One to China Through One
Originally a private-sector response to geopolitical risk, C+1 has quietly evolved into a geopolitical instrument.
Over the past decade, American and related firms have shifted substantial manufacturing capacity from China to Southeast Asia. Initially seen as a way for multinationals to diversify production and reduce dependence on China, Chinese firms themselves began using it as a workaround between 2018 and 2023.
As US tariffs over the years expanded to over 2,000 product lines, Chinese manufacturers responded by rerouting supply chains through ASEAN to maintain access to the American market.
Chinese outbound FDI into ASEAN manufacturing surged from $12.5 billion in 2017 to $37.3 billion in 2023. In Vietnam, 32% of new FDI in 2023 was Chinese in origin, with firms like Luxshare and GoerTek producing electronics for US brands such as Apple.
A 2022 Rhodium Group report documented widespread “indirect export substitution”, where Chinese inputs are finished in ASEAN to avoid US tariffs, then exported to the US labeled as Vietnamese or Thai origin.
C+1, in effect, became “China Through One.”
Universal tariffs contain US more than China
US President Donald Trump responded in April 2025 by imposing reciprocal tariffs of up to 49% on exports from ASEAN countries. Even Singapore — a long-standing US economic and security partner — is facing a blanket 10% baseline tariff.
Intended to target circumvention of existing trade restrictions, the policy will ultimately deal equal harm to US firms and consumers, disrupting supply chains and inflating costs across key industries.
Apple is a case in point. With over 95% of its iPhones, iPads and Macs assembled in China or Vietnam, new tariffs could increase US retail prices by 20-35% percent, according to internal industry estimates.
A base model iPhone could cross the $1,000 threshold. Tesla, which exported over 92,000 vehicles from its Shanghai Gigafactory to the US in 2024, has already warned of supply disruptions. HP, Dell, GoPro, Nike and Walmart all face similar vulnerabilities.
While Washington wields tariffs, Beijing has been deepening trade and investments. China-ASEAN trade reached $998 billion in 2024, outpacing US-ASEAN trade by nearly 90%. ASEAN is now fully integrated into the Regional Comprehensive Economic Partnership (RCEP) — the world’s largest trade bloc, covering 30% of global GDP.
Through the Belt and Road Initiative, Chinese tech giants are embedding across ASEAN: Huawei builds 5G infrastructure, Tencent and Ant Financial dominate digital payments and Alibaba powers e-commerce logistics.
In March 2025, China upgraded its free trade agreement with ASEAN and expanded cross-border digital RMB pilots with Malaysia and Thailand.
Reclaiming China Plus One
As President Xi launches a new charm offensive in ASEAN, Beijing has a renewed opportunity to broaden its economic proposition to the region.
This could begin with debt restructuring and the renegotiation of BRI-linked loans, particularly in countries like Laos, Myanmar and Indonesia, where debt repayment risks are rising.
Beyond infrastructure, China could deepen its engagement through joint R&D initiatives in strategic sectors such as green energy, semiconductors and agri-tech — areas aligned with both ASEAN’s development priorities and China’s industrial ambitions.
Education and talent mobility should also be part of the equation. Expanding student exchanges and vocational training would help ASEAN build its human capital while reinforcing long-term people-to-people ties.
In the digital domain, Beijing may push for a formal ASEAN-China Digital Trade Protocol — designed to complement and compete with the US-led Indo-Pacific Economic Framework (IPEF).
Such a platform would deepen regional integration in e-commerce, logistics and payments, and further anchor China’s economic presence in Southeast Asia.
The US, for its part, must move beyond rhetoric and offer meaningful participation. China Plus One could serve as the foundation for a new US-led economic architecture in Southeast Asia, if Washington is willing to invest in it strategically.
That begins with offering real incentives. A carveout from the CHIPS Act’s $52.7 billion could support back-end semiconductor operations in the region, while production tax credits and green subsidies under the Inflation Reduction Act (IRA) could be extended to solar and EV supply chains in Vietnam, Thailand and Indonesia.
While comprehensive free trade agreements may remain politically difficult, bilateral or sector-specific deals in digital trade, clean energy and cybersecurity — modeled after the US-Japan Digital Trade Agreement or the Singapore-led DEPA — could help anchor regulatory alignment and provide the predictability ASEAN economies seek in a viable economic alternative to China.
To be sure, for China Plus One to work in America’s favor, nations, including ASEAN member-states, must not feel compelled to bandwagon against the US itself.
That would risk triggering what some are calling a “World Minus One” scenario, where diversification strategies begin to regard the US as part of the problem rather than the solution.
Autonomy, access and alternatives
C+1 is already reshaping global trade flows. Between 2017 and 2024, China’s share of US imports fell from 21.6% to 13.3%, while ASEAN’s rose from 6.8% to 12.2%. These shifts are not incidental — they are structural.
In an April 2025 joint statement, ASEAN’s economic ministers reaffirmed strong ties with the US but voiced “deep concern” over the imposition of unilateral tariffs.
The world’s fifth-largest economic grouping and the US’s fifth-largest trading partner seeks not to take sides, nor to serve as a pawn in great power competition. ASEAN’s strategic interests lie in securing autonomy, access and meaningful alternatives.
The question is whether Washington can recognize the opportunity and deliver — before Beijing does.
Marcus Loh is a Director at Temus, a digital transformation services firm headquartered in Singapore, where he leads public affairs, marketing and strategic communication.
He was formerly president of the Institute of Public Relations of Singapore and presently serves on the digital transformation chapter executive committee of SG Tech, the leading trade association for Singapore’s technology industry.
