China ramps up economic diplomacy to counter US influence – Firstpost

As US-China competition continues to reshape global geopolitics, Chinese President Xi Jinping’s April 2025 tour of Southeast Asia emphasises Beijing’s intent to consolidate its regional foothold through economic diplomacy. Framed as a mission to promote “stability and certainty” in an increasingly polarised world, Xi’s trip to Vietnam, Malaysia, and Cambodia was not only high on symbolism but rich in strategic undertones.

Xi’s tour began on April 14 in Hanoi. Xi met Vietnam’s Communist Party General Secretary, To Lam, and struck a tone of ideological unity. “In a turbulent world, China and Vietnam have brought valuable stability and certainty,” Xi stated, urging both countries to “jointly oppose unilateral bullying acts” and defend the global free trade system. Xi emphasised the importance of stable supply chains, presenting China and Vietnam as allies in the fight against protectionism.

The visit yielded a slew of memoranda on supply chain cooperation and a joint railway project, along with a pledge to boost Vietnamese agricultural exports to China. While few details were disclosed, the agreements symbolised closer integration—despite ongoing maritime tensions and lingering distrust rooted in past conflicts.

Vietnam remains one of China’s most vocal regional critics in the South China Sea, but economic pragmatism continues to drive bilateral engagement. With US tariffs of 46 per cent targeting Vietnamese exports perceived as Chinese proxies, Hanoi has strong incentives to maintain trade ties with Beijing even as it deepens relations with the US and other partners.

The next stop was Kuala Lumpur, Malaysia, before concluding in Cambodia on April 18. While official statements focused on deepening cooperation, the elephant in the room—the South China Sea—was hard to ignore. China’s sweeping maritime claims continue to rankle both Vietnam and Malaysia, who have overlapping claims and have resisted Beijing’s assertiveness in contested waters.

Malaysia is a key regional player and the current chair of the Association of Southeast Asian Nations (ASEAN). Discussions centred on a planned upgrade to the China-ASEAN Free Trade Agreement, which could eliminate many tariffs across the bloc. ASEAN Secretary-General Kao Kim Hourn told Chinese state media that the updated agreement would “bring more tariffs down to zero in many cases”, broadening trade integration across sectors.

Malaysia plays a pivotal role in China’s regional strategy. It has actively supported Beijing’s participation in the upcoming ASEAN-Gulf Cooperation Council (GCC) summit in May and hosts several flagship Belt and Road Initiative (BRI) projects, including an $11.2 billion railway. China is Malaysia’s largest trading partner and a major source of foreign direct investment. Prime Minister Anwar Ibrahim, who has visited China three times since taking office in late 2022, has walked a fine line—seeking deeper economic ties with Beijing while also maintaining channels with Washington.

However, Malaysia too has been hit by US tariffs—24 per cent in its case (though it has been paused for three months)—due to perceptions of acting as a transshipment hub for Chinese exports. Like Vietnam, it finds itself squeezed between economic opportunity and strategic caution. The South China Sea remains a sensitive point, especially after recent Malaysian efforts to explore hydrocarbons in contested waters sparked diplomatic tensions. Still, Anwar’s government has continued to pursue a policy of balanced engagement, wary of becoming entangled in great-power rivalry.

Xi’s final stop in Cambodia highlighted China’s ambitions to anchor long-term influence in the region through soft power and infrastructure diplomacy. The two governments pledged to accelerate work on the “Diamond Cooperation Framework”, a broad initiative that includes the “Industry and Technology Corridor” and the “Fish and Rice Corridor”—projects designed to connect industrial zones and agricultural hubs with Chinese markets and expertise.

In total, 37 cooperation agreements were signed during the visit, covering sectors such as trade, investment, finance, agriculture, education, health, tourism, women’s affairs, and water management. Xi also emphasised support for Cambodia’s “strategic autonomy” and sovereign development path—language that stands in sharp contrast to Western emphasis on democratic governance and human rights.

All three countries on Xi’s itinerary—Vietnam, Malaysia, and Cambodia—have been impacted by the Trump-era US tariffs, which remain largely intact. Cambodia, in particular, has been subjected to tariffs of up to 49 per cent, as it is viewed as a conduit for Chinese transshipments.

Xi has seized upon this discontent to frame China as a “responsible major power” committed to open markets. “A trade war and tariff war will produce no winner, and protectionism will lead nowhere,” Xi wrote in an op-ed in Vietnam’s Nhan Dan newspaper, calling for regional unity in defence of globalisation and multilateralism.

For Xi, this tour is more than just diplomacy—it’s a calibrated response to “Trumponomics” and the growing appeal of economic nationalism. Analysts note that Xi sees US President Donald Trump’s disruption of the liberal international order as an opportunity. By positioning China as a stable and dependable economic partner, Beijing hopes to fill the leadership vacuum left by the West’s retreat from multilateralism.

Yet, challenges remain. While China retains significant economic clout in Southeast Asia, regional perceptions are shifting. According to The State of Southeast Asia Survey 2025, 52.3 per cent of respondents said they would prefer to align with the US over China (47.7 per cent)—a reversal from 2024, when China had a narrow edge. Still, China has made gains in trust: 36.6 per cent of respondents expressed confidence in Beijing in 2025, up from a low of 19 per cent in 2021, while distrust has declined from 50.1 per cent to 41.2 per cent.

China also continues to rank as the region’s most strategically relevant dialogue partner, with a mean score of 8.80. Six of the 10 ASEAN countries—Brunei, Indonesia, Laos, Malaysia, Singapore, and Thailand—rated China as their top strategic partner, reflecting their deep trade ties and participation in BRI projects. But concerns persist. Beijing’s heavy-handed tactics in the South China Sea and the Mekong River, its occasional use of economic leverage, and fears of interference in domestic affairs continue to hinder its soft power outreach.

In sum, Xi’s Southeast Asia tour reflects China’s growing awareness that hard power alone cannot win hearts and minds in the region. Through trade, infrastructure, and high-level diplomacy, Beijing is betting on economic interdependence to cement its influence. But unless it addresses long-standing anxieties—particularly around maritime disputes and economic coercion—China’s charm offensive may fall short of displacing US primacy in Southeast Asia.

The author is a former ambassador to Germany, Indonesia, Ethiopia, ASEAN and the African Union. He tweets @AmbGurjitSingh. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.