As artificial intelligence (AI) cements itself as a cornerstone of global power, Southeast Asia finds itself at the center of a complex and high-stakes rivalry between the United States and China. Established in 1967 amid Cold War tensions, the Association of Southeast Asian Nations (ASEAN) was designed to foster regional stability and cooperation, helping its diverse member states resist the pressures of superpower influence. Today, ASEAN nations stand to benefit from the advanced AI-driven technologies, digital infrastructure, and investments offered by both the U.S. and China. Yet, the intensifying pressure to align with one of these powers presents a dilemma, not only for ASEAN as a regional bloc but also for individual member countries, each balancing distinct political, economic, and security interests. This divergence in national priorities could reshape ASEAN’s digital landscape and redefine its collective approach to technological autonomy.
China’s expansive Digital Silk Road (DSR) has embedded AI infrastructure throughout Southeast Asia, enhancing economic connectivity but also raising concerns over data privacy and political influence. At the same time, the U.S. promotes a model of “digital democracy,” advocating for a liberalized vision of AI while embedding surveillance capabilities into its technology partnerships. This dynamic presents ASEAN with challenges to its sovereignty, as the U.S.-China AI rivalry makes ASEAN’s traditional stance of non-alignment increasingly difficult to maintain. While ASEAN’s approach of balancing between both superpowers allows it to leverage technological advancements from each side, it may ultimately need to recalibrate its strategy to safeguard sovereignty and avoid overdependence on any single global power.
Southeast Asia’s Strategic Neutrality
ASEAN’s legacy of non-alignment, deeply rooted in its Cold War origins, shapes its current approach to navigating the U.S.-China AI rivalry. Founded in 1967 during a period of intense geopolitical turbulence, ASEAN was established as Southeast Asia’s response to the ideological battleground between the United States and the Soviet Union, where the region risked becoming a proxy for superpower conflicts. The founding members—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—sought to foster unity and prevent regional divisions that could destabilize their newly independent nations. This pursuit of neutrality and cohesion allowed ASEAN to resist pressures from both the Western and Soviet blocs, reinforcing its identity as a stabilizing force in a region vulnerable to ideological and territorial fragmentation.
Over the decades, ASEAN’s non-aligned stance evolved into what a US-based private sector intelligence analyst describes as “a sort of strategic balancing act,” where member nations carefully navigate major geopolitical pressures without outright alignment. This principle of non-alignment became the “ASEAN Way,” characterized by consensus-building, respect for sovereignty, and a non-confrontational approach to disputes. The analyst notes that this tradition of neutrality has allowed ASEAN to “keep the coin spinning as long as possible,” strategically leveraging relationships with both superpowers to secure economic and technological gains while avoiding dependency. However, he cautions that as U.S.-China tensions intensify, “it’s getting harder to keep that neutrality intact.”
Today, ASEAN’s legacy of non-alignment positions it as a key player in the global AI landscape, enabling the bloc to engage with both U.S. and Chinese AI initiatives. However, as the US-based private sector intelligence analyst suggests, “ASEAN’s path is narrowing,” indicating that the traditional approach of neutrality may become increasingly challenging to maintain without compromising regional cohesion and sovereignty.
However, the polar AI models of the U.S. and China now present ASEAN with complex risks and diminishing room for neutrality. The U.S. promotes a liberal AI model, focusing on an open, secure, and inclusive digital ecosystem in partnership with allies. Through its International Cyberspace and Digital Policy Strategy, the U.S. emphasizes “digital solidarity,” aiming to build a cooperative framework that advances secure and rights-respecting digital governance across nations. This approach aligns U.S. technology initiatives with international standards, promoting inclusive data governance and collaborative multistakeholder processes to ensure transparency and resilience.
The extensive surveillance practices within U.S. tech partnerships complicate ASEAN’s calculations, as intrusive oversight risks conflict with ASEAN’s priorities for data sovereignty and regulatory independence. The National Security Agency (NSA), for example, has become one of the largest adopters of AI within the U.S. intelligence community, using advanced AI tools to monitor global communications, analyze cybersecurity threats, and even oversee its analysts. Despite pledges of transparency, the NSA has not disclosed the extent of its AI-driven surveillance capabilities, leaving critical questions about privacy safeguards unanswered. This lack of transparency raises concerns for ASEAN nations, which must carefully consider the implications of aligning with U.S. tech initiatives that could expose sensitive regional data to extensive foreign monitoring.
China, by contrast, employs a centralized, state-driven AI strategy with extensive data access and infrastructure projects through its DSR initiative, creating a “country-as-platform” model that integrates AI into ASEAN’s critical sectors, from trade to smart cities. Through close partnerships with Chinese government-aligned companies, this model establishes control points that can shift economic alignment toward Beijing.
In the Philippines, for example, Chinese-backed telecom firms like DITO have disrupted the long-standing telecom duopoly of Smart Communications and Globe Telecom. While these partnerships improve connectivity, they also raise concerns over data privacy and national security due to the potential for the Chinese government to access the infrastructure. DITO is financially backed by China Telecom, a state-owned enterprise, which means the Chinese government could exert influence over the network’s operations and data flows. Additionally, the Safe Philippines project, involving city-wide surveillance with CCTV networks funded by Chinese companies, underscores these security concerns, as data collected by the system may be accessible to Chinese authorities under China’s cybersecurity and intelligence laws. Such projects risk embedding Chinese standards and influence deeply into the Philippines’ digital infrastructure, potentially undermining political autonomy and data sovereignty by creating access points for foreign oversight and control.
While Singapore exemplifies ASEAN’s strategic balancing, selectively engaging with both superpowers while building local AI capabilities, it underscores the region’s reliance on a complex balancing act to protect autonomy. For instance, Singapore’s National AI Strategy (NAIS) has evolved from an initial focus on AI adoption, referred to as NAIS 1.0, to a comprehensive approach that prioritizes developing homegrown talent and establishing governance frameworks to protect its interests, called NAIS 2.0. However, as AI rivalry sharpens, ASEAN’s non-alignment approach will face increasing pressure, potentially compelling it to reassess its neutral stance to safeguard data sovereignty, regulatory independence, and long-term digital security. This shifting landscape suggests that ASEAN’s non-aligned approach, while advantageous in the past, may become untenable in a world shaped by diverging technological spheres of influence.
Digital Colonization and Environmental Risks
Southeast Asia’s reliance on foreign AI infrastructure has embedded its technology deeply within ASEAN’s critical sectors, from telecommunications to AI-driven services and digital ecosystems. In Indonesia, for instance, Chinese company Huawei’s dominance in telecommunications creates difficulties in diversifying providers or protecting local data from foreign oversight. This influence has raised concerns about national data security. Dependency on Chinese technology may expose Southeast Asian nations to potential data access by Chinese authorities and compromise their autonomy.
Dependency on Chinese infrastructure creates “points of control” that could be leveraged for political or economic influence. In Indonesia, cybersecurity experts caution that reliance on Huawei’s infrastructure risks “digital colonization,” likening it to historical economic dependencies that limited national autonomy. Chinese companies not only dominate the physical infrastructure but also extend influence through cloud services, surveillance systems, and smart city projects. Collectively, these dependencies pose substantial risks to data privacy and national security, challenging ASEAN countries’ ability to independently govern their digital landscapes and make strategic decisions without external influence.
Beyond concerns of sovereignty, the environmental costs associated with AI infrastructure in Southeast Asia present an equally critical challenge. The proliferation of data centers, essential for supporting AI, cloud computing, and Internet of Things (IoT) applications, is significantly driving up energy demand across the region. This demand is projected to push the market for data centers to $5.29 billion by 2029, reflecting the intense computational and cooling needs required to operate high-performance servers, especially in the region’s tropical climate. Cooling systems alone consume substantial energy, amplifying the environmental toll.
AI’s processing requirements demand specialized chips and vast computational resources. Experts suggest this could consume as much electricity as entire small countries. This energy-intensive use has led to a surge in emissions; for instance, emissions from data centers supporting AI technologies like Google’s have increased by approximately 48% over five years, primarily due to AI advancements. As such, he emphasizes the importance of scalable, smaller AI models tailored for specific sectors, which could help ASEAN nations reduce their reliance on extensive cloud computing while conserving energy and maintaining operational efficiency.
According to a government representative involved in shaping Singapore’s economic policy for the country’s industrial landscape, the rapid expansion of AI technology has underscored a pressing need for “sustainable AI” measures. These include strict regulatory standards aimed at reducing energy consumption and managing the carbon footprint of data centers. “Our data centers within Singapore must comply with certain standards,” he explained, emphasizing the government’s proactive approach to enforcing operational efficiency. AI chips, he noted, require “hybrid cooling systems,” contrasting them with traditional chips and highlighting the advanced cooling infrastructure necessary to meet AI’s high computational demands. Singapore has taken steps to implement stringent data center regulations, positioning itself as a potential model for other ASEAN nations that aim to balance technological growth with environmental sustainability.
Southeast Asia, managing rapid digital and economic growth, now faces the critical task of aligning these advancements with sustainability goals. The high energy demands of data centers not only strain local power grids but also deepen reliance on non-renewable energy sources, raising questions about the long-term viability of the region’s AI infrastructure. To address these challenges, Southeast Asian nations are taking steps to incorporate energy-efficient practices and promote renewable energy solutions within their digital frameworks. For instance, initiatives like Vietnam’s Power Development Plan 8 (PDP8) demonstrate a commitment to energy efficiency by incorporating technologies such as battery storage, waste-to-energy, and solar power into the energy mix. Vietnam’s PDP8 aims to transition half of the country’s buildings to rooftop solar by 2050, with a targeted increase in both wind and solar energy outputs, thus setting a path towards renewable energy that could serve as a model for other nations in the region.
ASEAN’s push for sustainable AI and energy-efficient data center operations highlights the urgent need to prioritize both economic and ecological goals. By encouraging investments in renewable energy and integrating energy-saving innovations, such as AI-driven cooling systems for data centers, Southeast Asia can work towards digital ambitions that are both economically beneficial and environmentally responsible, reinforcing the region’s role as a leader in sustainable digital development.
Strategic Pathways for Southeast Asia’s AI Future
As Southeast Asia becomes an arena for the intensifying U.S.-China AI rivalry, ASEAN faces the urgent task of strengthening its regulatory frameworks and embracing sustainable AI practices to preserve regional autonomy and environmental integrity. By advancing regulatory initiatives that promote sovereignty and ethical AI, as well as energy-efficient technologies suited to local environmental needs, ASEAN aims to navigate digital transformation on its terms.
To preserve sovereignty and protect member states from external influences, ASEAN has focused on developing a unified governance structure that upholds privacy and ethical standards across the region. The Digital Economy Framework Agreement (DEFA), launched in 2023, represents a landmark step toward this vision. DEFA’s ambitious agenda goes beyond traditional agreements by fostering a harmonized digital ecosystem designed to protect data sovereignty and support regional resilience against external dependencies. Through DEFA, ASEAN aims to empower businesses across its member states by promoting secure digital trade, cross-border e-commerce, and interoperable systems for digital identities and payments. These cybersecurity and data protection measures are central to ASEAN’s vision of a self-governed digital future, reducing reliance on foreign technology governance frameworks while ensuring that the region’s AI development aligns with its values and standards. Projections suggest that DEFA’s digital integration efforts could triple Southeast Asia’s digital economy by 2030, potentially unlocking $2 trillion in value for the region.
In tandem with regulatory strengthening, ASEAN has recognized the critical need to promote sustainable AI practices, particularly as the region’s digital expansion drives substantial energy demands. The rapid rise of data centers supporting AI, IoT, and cloud computing in ASEAN has introduced new environmental challenges, particularly in terms of energy consumption. Data centers in ASEAN countries are expected to generate $13 billion in revenue by 2028, but their growth comes with an energy cost that strains local power grids and heightens reliance on non-renewable sources. Globally, data centers consume approximately 240 to 340 terawatt-hours (TWh) of electricity annually, with up to 70% of this energy dedicated to cooling systems. In Southeast Asia’s tropical climate, the need for cooling further amplifies energy demands, emphasizing the urgency for sustainable AI technology tailored to regional environmental realities.
To address these challenges, ASEAN has adopted forward-looking initiatives that prioritize energy efficiency. A white paper, jointly developed by the ASEAN Centre for Energy and Huawei, outlines four essential characteristics for next-generation data centers—Reliable, Simplified, Sustainable, and Smart—emphasizing innovative cooling and energy-saving solutions that reduce environmental impact. Huawei’s high-temperature chilled water fan wall, for instance, is an innovative approach that increases cooling efficiency and lowers Power Usage Effectiveness (PUE) and carbon emissions by optimizing temperature settings. Meanwhile, AI-driven cooling systems, like Google’s DeepMind, demonstrate the potential to reduce energy consumption for cooling by up to 40% by using machine learning to adjust operations in real time based on usage and climate conditions.
ASEAN’s commitment to sustainable AI is further reflected in its ASEAN Plan of Action for Energy Cooperation (APAEC), which includes a target for a 32% reduction in energy intensity by 2025. Some member states have adopted stringent PUE standards to achieve this goal. Malaysia, for example, has established a minimum PUE requirement of 1.9, with a PUE of 1.6 as an exemplary benchmark, while Singapore mandates a PUE of 1.3 for new data centers—a standard among the world’s highest. These policies illustrate ASEAN’s dedication to advancing a greener digital landscape through AI-driven energy efficiency, signaling to the global community its commitment to sustainable development.
Forging an Independent and Sustainable Digital Future
Southeast Asia’s neutral yet pragmatic approach to AI has proven essential for preserving its autonomy and fostering sustainable development amidst an intensifying U.S.-China rivalry. ASEAN’s legacy of non-alignment, rooted in its Cold War origins, has enabled the region to balance superpower influences effectively, capitalizing on technological advancements while safeguarding its collective sovereignty. However, as AI becomes a cornerstone of global power, the pressures to align with one of these powers challenge ASEAN’s traditional stance. By pursuing strategic pathways—such as the DEFA, energy-efficient AI technologies, and ethical governance standards—ASEAN demonstrates its commitment to an independent and sustainable digital future, positioning itself as a resilient force in the global AI landscape.
As ASEAN’s decisions will shape the region’s digital sovereignty, environmental footprint, and position in international relations, stakeholders and global observers alike must understand the stakes involved. ASEAN’s role in the AI arena not only influences the balance of global power but also sets a precedent for how regions can maintain autonomy while embracing digital transformation. Recognizing and supporting Southeast Asia’s journey toward a self-governed, sustainable AI ecosystem is essential for those invested in a balanced, ethical, and sustainable global AI future.
Featured Image: Nikkei Asia
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