Southeast Asian countries face an unprecedented choice: align with China's World AI Cooperation Organisation (WAICO) or join the US-led Pax Silica initiative, a decision that could reshape the region's decades-long strategy of staying neutral in great-power rivalries. Both superpowers are actively lobbying the region's governments to join their competing AI frameworks, with sources revealing that Beijing has offered "exclusive privileges" to founding members and Washington has warned countries they may be excluded from its alliance if they join China's organization.

WAICO, established in Shanghai last month at the World Artificial Intelligence Conference, launched with 29 founding members, primarily from developing nations in the Global South. Five Southeast Asian countries signed on as founding members: Cambodia, Indonesia, Laos, Malaysia, and Myanmar. The organization brands itself as advancing "AI for good and for all," positioning itself as an inclusive alternative to what Beijing describes as exclusionary Western initiatives.

In contrast, Pax Silica, the American-led framework, has 24 members and focuses on strengthening supply chain security, widely understood as an effort to isolate China from critical technology networks. Only Singapore and the Philippines from Southeast Asia have joined this initiative. The divergence in membership reveals how the region is already splitting along AI lines.

Why Is AI Becoming the New Battleground for US-China Competition?

The rivalry between Washington and Beijing over AI governance has intensified dramatically as Chinese open-source AI models increasingly rival closed systems built by American firms like OpenAI and Anthropic. The Trump administration has introduced export controls and other measures to restrict China's access to advanced technology, escalating the technological competition. Chinese President Xi Jinping elevated WAICO's launch by attending the Shanghai conference in July, calling it "a major move by China to answer the call of the Global South and unite the international community together to promote vigorously AI development and governance".

According to Reuters reporting cited in the source material, Washington is preparing to tell a dozen countries that they essentially must pick sides, warning of exclusion from Pax Silica if they sign up for the Chinese framework. This represents a significant shift in how major powers are approaching technology diplomacy, moving from quiet pressure to public ultimatums.

"Southeast Asia will be one of the primary battlegrounds for US-China competition over AI. While Southeast Asian countries will seek to keep their options open, probably hedging between Chinese and US AI systems, they may not have this luxury," said Jeremy Chan, a senior analyst at the political risk consultancy Eurasia Group.

Jeremy Chan, Senior Analyst at Eurasia Group

How Are Southeast Asian Nations Responding to Competing Pressures?

Southeast Asian leaders have long maintained that they will not be forced to choose sides in great-power competition, a principle known as non-alignment that has guided the region's foreign policy for decades. However, this stance is being tested as never before. Sources told the South China Morning Post that Chinese officials heavily lobbied Association of Southeast Asian Nations (ASEAN) countries to back WAICO before its establishment, with the lobbying reaching senior government levels.

The pressure from both sides is creating a complex calculus for Southeast Asian policymakers. On one hand, China's open-source approach to AI technology offers cheaper and more accessible solutions that appeal to developing economies. On the other hand, alignment with the US framework could provide access to more advanced technology and security guarantees. The region's traditional strategy of hedging between great powers is becoming increasingly difficult to maintain.

• Chinese Lobbying Strategy: Beijing pitched WAICO as an inclusive body championing developing economies, offering exclusive privileges to founding members and emphasizing the organization's commitment to "AI for good and for all."
• American Pressure Tactics: US officials pressed Southeast Asian counterparts about their plans to join WAICO and signaled disapproval of membership in the Chinese-led organization, with Reuters reporting Washington would warn countries of exclusion from Pax Silica if they joined China's framework.
• Regional Hedging Challenges: Southeast Asian countries prefer multi-alignment and hedging strategies that have served them well historically, but the binary framing of AI bloc membership is making this approach increasingly difficult to sustain.

When asked about Reuters' reporting on Washington's ultimatum, Chinese foreign ministry spokesman Lin Jian stated that Beijing firmly opposed forcing countries to take sides or creating bloc confrontation on AI. "All countries have the right to decide for themselves who they wish to partner with according to their own national conditions and development needs," he said.

"The preference for most, if not all, of Southeast Asia is multi-alignment and hedging because this has served it well but that looks increasingly difficult to do. I think it can further strain ASEAN centrality and, at its most extreme, create dual-track tech architecture in Southeast Asia," noted Dylan Loh, associate professor of foreign policy at Singapore's Nanyang Technological University.

Dylan Loh, Associate Professor of Foreign Policy at Nanyang Technological University

What Are the Long-Term Implications for the Region?

The pressure from Washington and Beijing on Southeast Asia is not entirely new, but experts note that major powers are now "much more prepared to do so publicly," according to analysts familiar with the region's diplomatic dynamics. This public framing of memberships in binary terms could complicate decision-making for Southeast Asian countries, forcing them into choices that risk displeasing one superpower or the other.

The stakes extend beyond AI governance. If Southeast Asian countries are forced to choose between competing AI blocs, it could undermine ASEAN's centrality in regional affairs and potentially create a "dual-track tech architecture" where different parts of the region operate on incompatible AI systems and standards. This fragmentation could have economic, security, and political consequences for years to come.

Jeremy Chan from Eurasia Group suggested that while the US may not push too hard for immediate alignment in the near term, Washington will seek to prevent Southeast Asian countries from aligning too closely with Chinese AI technology and standards. This suggests a longer-term strategy of technological containment rather than immediate bloc formation.

The outcome of this competition will likely shape not only Southeast Asia's technological future but also the broader question of whether developing nations can maintain genuine strategic autonomy in an era of great-power technological competition, or whether they will be forced into competing blocs that limit their choices and constrain their development options.