When high-level economic and trade talks between China and the U.S. start in May 2025 in Geneva, global capital and industrial chains will focus on a critical region—Southeast Asia. This area was once a symbol of the 'Flying Geese Model,' a winner in the 'Value Chain Era,' and is now quietly entering a brand-new, more complex, and critical stage of development.


In the latest U.S.-China talks, Vietnam became one of the first countries to achieve 'initial results,' while just days before, the border conflict between India and Pakistan reminded people once again: geopolitical security and industrial chain stability are becoming core variables in a new round of games. Southeast Asia is no longer just a 'processing base' for manufacturing transfers; instead, it is being treated as a 'buffer zone, breakthrough point, and even fulcrum in great power competition.'



From 'Flying Geese' to 'Within Chains,' the growth path of Southeast Asia is no longer an old story


Looking back at the development models in Asia after World War II, the 'Flying Geese Model' and 'Value-Added Trade Model' constitute two generations of development paradigms in Southeast Asia. Japan played the role of the leading goose, exporting industries, followed by the four Asian Tigers and emerging ASEAN countries gradually taking over, completing the industrial migration of manufacturing under the North-South division of labor structure. After the 1990s, with the rise of global value chains, a production/distribution network centered around China was established, and the participation model of Southeast Asia shifted from inter-industry to 'intra-industry trade + vertical specialization.'


This model is particularly prominent in Vietnam. After joining the WTO in 2007, the share of foreign value added in its exports rapidly increased, exceeding 48% in 2022, the highest in Southeast Asia. This indicates that Vietnam is no longer just manufacturing 'export goods,' but is deeply embedded as a collaborative manufacturer in the global industrial chain, including value chains involving China, the U.S., and Japan.


This is precisely the key dimension that Mlion.ai can apply when assessing regional economic evolution. Its ability to analyze on-chain data combined with foreign trade structure can accurately capture trend signals such as 'breakpoints in cross-border industrial chains,' 'evolution of export structures between countries,' and 'paths of supply chain restructuring,' which are highly valuable for researchers and investors.



Vietnam and Malaysia: Dual hedgers in geopolitics and industry


Currently, the focus of U.S.-China trade has shifted from terminal goods to the semiconductor and critical resource sectors. This has made Vietnam and Malaysia potential disruptors under the spotlight.


  • Vietnam: Not only has it gained order dividends amid U.S.-China trade frictions, but the U.S. has also promised to help develop its semiconductor and rare earth industries. The U.S.-Vietnam relationship has risen to **'Comprehensive Strategic Partnership'** in 2023, standing on equal footing with China, India, Russia, and others.


  • Malaysia: It has become the world's sixth-largest semiconductor exporter, accounting for 13% of the global packaging and testing market. Penang has become the new 'Silicon Valley of Asia,' attracting $12.8 billion in foreign investment in 2023, mainly from Chinese companies, indicating a quiet reversal in 'capital flows under policy confrontation.'



Behind these dynamics lies the profound impact of geopolitics on the restructuring of industrial chain structures. Mlion.ai's on-chain investment behavior tracking system, combined with functions such as cross-border capital flow, industry density distribution, and investment intention heat maps, can help users understand and quantify this 'policy → capital → production capacity' migration path.



China and the U.S. 'Double Pressure': The Third Model of Southeast Asia is Quietly Taking Shape


In the past, the development model involved first industrial replacement and then value chain integration. Now, Southeast Asian countries face a **'reconstruction space driven by great power strategies'**, which forces them to consider the pressure of 'strategic alignment' while participating in global trade.


The United States is accelerating support for specific Southeast Asian countries in promoting the 'Indo-Pacific Economic Framework' (IPEF), attempting to replace China's dominant position in the industrial chain from two directions: high-end manufacturing (semiconductors) and critical resources (rare earths). Meanwhile, China remains the largest end market in the region, maintaining the stickiness of the production network within the region due to its enormous import demand and policy coordination capabilities.


Therefore, countries like Vietnam, Malaysia, and Thailand are actually forming a 'third trade form': maintaining neutrality amid geopolitical layers while simultaneously connecting core industries with both China and the U.S. This means that the future of these countries will increasingly depend on their ability to control policy-sensitive industries and their diplomatic maneuvering space.



The regional landscape has changed, and market judgments cannot remain on the old map.


For investors and researchers, Southeast Asia is no longer a simple 'replacement factory.' It is becoming a new hub region where institutions, industries, capital, and diplomacy are highly integrated. This also requires a shift in analytical perspective from 'low-cost transfer' to 'multilateral interaction construction.'


For example, after 2022, the share of the U.S. market in ASEAN exports rose to 14.8%, surpassing China (14.79%); while the share of the intra-regional market (ASEAN to ASEAN) declined from 24% in 2018 to 21.3%. This reflects a retreat of 'regionalism' and a strengthening of 'great power preference exports' amid the retreat of globalization.


Understanding the evolution of trade and industrial chain migration paths under this new order will require the integration of AI models and structured data, which will become indispensable tools. The AI research report system, policy context analysis, and cross-chain supply chain visualization functions of the Mlion.ai platform serve as powerful aides for investors and policymakers to gain insights into this transition logic.



Conclusion: Is the 'Third Path' under geopolitical competition a hedge or an opportunity?


The development space of Southeast Asia has not been compressed due to U.S.-China confrontation; rather, it has gained more strategic maneuvering space by becoming a 'node that great powers cannot bypass.' However, at the same time, this opportunity also presents a challenge.


  • On one hand, the progress of economic integration within the region is hindered, and the effects of ASEAN integration are below expectations;


  • On the other hand, the industrial strategies of the two powers, China and the United States, are increasingly unfolding in the form of 'partnership building' rather than 'market competition';


  • Southeast Asian countries are facing the challenge of how to build a stable, efficient, and sustainably growing industrial system without taking sides.


This is a structural reshaping, not a cyclical adjustment. Whether Southeast Asia can carve out a 'third development path' in this game depends on its ability to continuously leverage its geographical advantages, institutional neutrality, and the composite value of industrial resilience.


This is also one of the core variables that Mlion.ai continues to monitor in its AI-driven regional strategy forecasting model.



Disclaimer: The above content is for information sharing only and does not constitute any investment advice!