Leaders from across Southeast Asia will be meeting in Manila on November 10 for the upcoming ASEAN summit. This is the same date on which the China-U.S. trade truce was set to expire. While the September 24 summit between Presidents Xi Jinping and Donald Trump has widely been characterized as “heavy on pomp and light on substance,” it did deliver one tangible benefit: more time. The extension of the trade truce offers Washington a modicum of breathing room. With that extra time, engaging leaders at the ASEAN summit should be top of the U.S. priority list. 

Meanwhile, Europe is signaling a greater willingness to confront China’s unsustainable trading practices. The limits of this relationship must be managed, so that Western countries can reindustrialize and regain market share. However, that effort should not come at the cost of compromising economic partnerships with countries in Asia. 

Since 2020, ASEAN and China have been each other’s largest trading partner. Furthermore, Southeast Asian countries have come to rely heavily on China as a provider of intermediate goods. Economic partners in Asia are restrained in their options; for them, some form of relationship with Beijing remains unavoidable. Thus, as the West seeks to shift its relationship with Beijing, it must not do so at the cost of Southeast Asian countries who are willing to cooperate toward a fairer global trade picture.

The U.S. and European position is valid. China is fully integrated into the global economy, and continues to be a manufacturing powerhouse. Problematically, however, Beijing seems to have abandoned its attempts at fixing its domestic consumption issues, as it also looks ahead to an impending demographic crisis. While the Chinese Communist Party (CCP) may outwardly project that it can sustain a globally competitive manufacturing sector, analysis of its economic outlook reflects that Beijing is far more restrained in the kind of development it can pursue. Crucially, however, China’s massive trade imbalance is likely a symptom of internal factors, and not a concerted policy objective. 

The CCP’s legitimacy continues to be derived, in large part, from its ability to guarantee domestic economic prosperity. As such, the regime’s targeted growth rates can be observed as a political goal, with overarching implications for the economy. In past years, to achieve a consistent 5 percent growth rate, Beijing has leveraged subsidies and targeted sectoral investments, while growing its exports. The net effect of these policies has resulted in a competition crisis marked by diminishing returns amongst different industries, which is further compounded by the problem of weak domestic consumption. A less ambitious growth target this year, coupled with Xi’s call for “high-quality growth,” signals that there is pressure to restructure aspects of the economy. 

Further, in the context of both global and regional trade, Beijing itself has shown an unwillingness to keep trade relationships entirely separate from its political ambitions. A study of China’s relationship with trading partners, published in 2020, has revealed a trend of politicization over time. Researchers considered the case of China-U.S. trade, and their findings were intriguing: “A positive shock to America’s exports to China leads to persistently worse relations with China… It stands to reason that Chinese officials genuinely do feel that China’s relations with the U.S. worsen when the U.S. increases its exports to China.” 

Trade activities themselves are not necessarily immune from political effect, and Chinese officials are sensitive to greater market penetration by foreign countries. In effect, this also demonstrates Beijing’s unwillingness to work toward a balanced trading relationship, and its preference for exporting more than it consumes, unless it is importing energy and commodities.

Southeast Asian countries have no choice but to confront this reality. Despite Beijing’s territorial claims in the South China Sea, China’s neighboring states continue to seek agreement on economic issues where it is possible. Interdependence runs deep, as evidenced by China’s $296 billion trade surplus with ASEAN in 2025. There is simply no other option for Southeast Asian countries seeking to move up the global value chain. 

This does not mean that these countries are unaware of Beijing’s coercion, or that they are not responding. Yet, with few international options, they are exposed to Beijing’s attempts at intertwining foreign aid with its regional ambitions. To that end, while simultaneously increasing its trade surpluses, China has also created parallel institutions such as the Belt and Road Initiative, the Silk Road Fund, and the Asian Infrastructure Investment Bank, which have been used as leverage to reward countries that support its political objectives.

It is a fundamentally positive development that the West is looking to take a stronger stance against China’s global trading practices, in pursuit of a more balanced relationship. This position opens the door to Western reindustrialization and stimulates a push for innovation, while harboring high domestic political support within democracies. However, both Washington and Brussels must not lose sight of the constrained position of Southeast Asian countries, which rely on Chinese intermediate goods to develop and rise within the global value chain. A plan to confront Beijing without subsequent outreach toward these same countries will sacrifice national imperatives for willing partners; and those are hard to come by. 

For Brussels, an alternative would be its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with the goal of stimulating market access between the West and its Southeast Asian partners. For Washington, the fact that it has become ASEAN’s largest export market is a positive step, but subsequent policies should seek to displace China as the supplier of intermediate goods without punishing Southeast Asian countries seeking to develop away from Beijing.