5G and US-China Competition: How is the Southeast Asia Landscape Evolving?
5G and US-China Competition: How is the Southeast Asia Landscape Evolving?
A quick scan of the regional picture as well as current and future implications.
5G and US-China Competition: How is the Southeast Asia Landscape Evolving?
Recent anxieties around China’s potential involvement in Malaysia’s 5G networks are just the latest example of where we have seen the U.S.-China competition prism at play with respect to Southeast Asia’s evolving digital journey, even if this understates the complexities of both regional dynamics and geopolitical realities.
WonkCount: 1,523 words (~7 minutes).
What’s Going On?
Headlines have focused on concerns by some Western countries on Malaysia’s recent announcement of a planned rollout of a second 5G network and how this could open the door to potential Chinese involvement. While Malaysia’s government has continued to tout the benefits of this dual network model following a review of an earlier decision, the anxieties over the decision by external actors including the United States and the European Union have entered the public domain, focused around both predictability in policy decisions affecting governments and businesses as well as risks to national security.
Though this is a single decision in Malaysia’s foreign policy and far from the only area subject to bouts of speculation amid multiple government changes, it fits into a broader conversation about the role of Southeast Asia’s 5G landscape in wider U.S.-China competition. In just the past year alone, we have seen similar developments framing 5G development in Southeast Asia within a U.S.-China lens, including U.S. support for 5G development in the Philippines and the involvement by Chinese companies like ZTE and Huawei in Indonesia and Thailand (see table below for a snapshot of a few select recent, relevant developments).
How Did We Get Here?
The starting point for Southeast Asian countries developing their telecommunications networks is the quest for broader digital development, and geopolitical alignment is only part of this story. 5G, used as a general shorthand for game-changing next generation wireless telecommunications networks beyond 4G networks, is viewed as a technological development tied to countries adjusting to the so-called Fourth Industrial Revolution (Industry 4.0 or 4IR) powered by cyberphysical systems, following previous revolutions enabled by steam, electricity and preliminary automation and machinery respectively. Southeast Asia’s digital economy has shown signs of promse over the past few years despite some challenges including digital gaps within individual countries and data localization measures — for example, per the recent iteration of a report series on the subject, the region was found to have reached $200 billion in gross merchandise value (GMV) three years earlier than had been projected.
As this has occurred, the region’s role in 5G networks has been in the spotlight in recent years amid wider geopolitical trends including intensifying U.S.-China competition. Though the U.S.-China dynamics manifested most clearly initially with respect to Huawei during the administration of U.S. President Donald Trump, anxieties over the role of Chinese companies in 5G networks and U.S. underperformance in this space have continued under President Joe Biden’s tenure, along with other areas like semiconductors. In the meantime, China has continued to make inroads in select Southeast Asian markets, though the exact picture depends on how widely this is viewed. Viewed more broadly through pathways beyond just agreements or direct involvement in actual deployment, for example, we have seen manifestations such as partial backing of local entities in the Philippines and Thailand, the deployment of 5G-based solutions in infrastructure projects like the China-Laos expressway or convening conferences and other fora in the region.
Why Does This Matter Today?
While actual 5G development in Southeast Asia still lags the headlines surrounding it, by some estimates, its pace could pick up in the coming years. Actual 5G deployment is a complex process — for countries in transition, it involves navigating manifold issues including coordinating bureaucracies and vendors, transitioning from legacy systems, coordinating frequencies, managing security concerns and ensuring coverage and adoption across urban and rural areas. 5G development is still in the early stages in most of the region – Singapore is the furthest ahead, but countries like Thailand have seen some challenges in terms of actual 5G adoption, while others like Brunei are in the trial stage. Despite this, some see a more optimistic picture that lies ahead: for instance, by one count, Southeast Asia along with Oceania could see 5G mobile subscription penetration rates soar to 48 percent within just the next five years.
Beyond the US-China prism, 5G development in the region has seen attention from actors aware of the mix of opportunities and challenges. For example, seeing Vietnam merely as a country that has shunned Chinese involvement in its 5G development and pursuing indigenous options belies Hanoi’s engagement of a range of companies in shaping its evolving 5G approach, including those from the United States and Europe. Similarly, a purely U.S. focus can miss efforts Washington has been undertaking in collaboration with other countries, with a case in point being U.S.-Japan cooperation in the launch of the Asia Open RAN academy in the Philippines last year.
Where Are We Headed?