US-China tech race a challenge for Asean

The contest for supremacy in AI between the two superpowers will make both too formidable for the Southeast Asian bloc to choose.

In December 2025, US President Donald Trump announced a major recalibration of American technology export policy: he would allow Nvidia’s H200 artificial intelligence chips to be sold to selected Chinese buyers, subject to vetting and a 25% surcharge.

On the surface, this shift in US–China technology diplomacy might appear to be a pragmatic economic decision — opening a multibillion-dollar commercial channel for American semiconductor giants while retaining strict controls on the most advanced chips.

But in Beijing and Washington alike, the move has been interpreted as both a strategic gambit and a symptom of deep anxiety about the future balance of power in AI and semiconductors.

For Asean policymaking — and indeed for countries across Asia — this episode underscores a broader and perhaps unsettling truth: the US–China technology race in AI is deepening interdependence even as it accelerates competition, producing a geopolitical dynamic that will be too consequential for the region to avoid choosing sides.

Yet such a choice may be less about ideology and more about navigating unavoidable technological transformation.

What is the Nvidia H200 controversy then?

For decades, semiconductors have been at the core of the US–China economic and strategic rivalry.

American export controls have sought to limit China’s access to high-performance chips, which are essential to advanced AI, cloud computing, autonomous systems, and even military applications.

These restrictions were designed to maintain US technological primacy and slow China’s ability to compete at the frontier of AI innovation.

Earlier this year, the Trump administration formally approved the export of Nvidia’s H200 chips — powerful AI accelerators that stand just below the very top tier of what the US will allow to leave its borders — to “approved customers” in China, with conditions intended to prevent unauthorised military use and ensure rigorous security reviews.

US lawmakers swiftly reacted.

A House committee moved to require Congressional oversight of AI chip exports and even proposed legislative bans on more advanced processors, reflecting bipartisan concern in Washington that America may be relinquishing a hard-won technological edge.

In China, public commentary was equally charged — but framed very differently.

China’s fear: a Trojan Horse?

Rather than view the H200 export approval as an olive branch, many commentators in China see it as a “sophisticated Trojan horse” strategy: an effort to embed US technology deep within the architecture of China’s AI ecosystem, forcing Beijing into long-term dependence on American semiconductor supply and standards.

That response reveals Beijing’s own sense of vulnerability.

China’s domestic chip industry has made impressive gains in recent years, with homegrown alternatives and strong state backing for firms such as Huawei, Alibaba-linked T-Head, Baidu, and Biren Technology.

Yet when it comes to the most advanced AI processing hardware, Chinese innovation still trails US capabilities — a gap exacerbated by decades of export controls and chokepoints in global supply chains.

For many in Beijing, the fear is that allowing American AI chips into the Chinese market is not a door ajar but a wedge that could undermine self-sufficiency goals, shape domestic standards according to US interests, and give American firms — and by extension US foreign policy — leverage over China’s long-term technological strategy.

Domestic dynamics in the US

In the US, reactions are equally polarised.

Tech industry executives argue that limited exports to China will help sustain US leadership in AI and keep America’s semiconductor giants commercially competitive against a backdrop of slowing global demand and intensifying overseas competition.

Yet national security hawks warn that this may be strategically self-sabotaging.

As one tech leader recently said of the H200 clearance, exporting such powerful chips to China is akin to “selling nuclear weapons to North Korea” — a provocative comparison that reflects deep concern about the unintended geopolitical consequences of American technology policy.

This burst of bipartisan anxiety in Washington and alarmist framing in Beijing — both pointing to the same policy move — highlights an underlying paradox: each side believes that constraining the other’s technological progress is essential to maintaining its own security and influence, even as both are pushing the frontier of AI and semiconductor innovation.

A race with no true winner?

Viewed from Asean capitals — from Kuala Lumpur to Jakarta and Manila — this is no mere commercial dispute.

The US–China tech race is reshaping global production networks, investment flows, and standards for emerging technologies that Asean economies are aggressively seeking to adopt. AI, in particular, is transforming industry, governance, education, logistics, and urban planning across Southeast Asia.

Countries here want access to the best technology, but they also fear being caught in a competition that could force them to pick strategic alignments at odds with economic interests.

The H200 controversy illustrates a much broader trend: America and China are engaged in a high-stakes strategic competition that binds them too closely to step away and yet pushes them to build capacities that make both powers more formidable.

Each incremental technological advance — whether in chips, AI models, or manufacturing prowess — raises the bar and deepens reliance on global interconnectedness while simultaneously weaponising that connectivity for strategic leverage.

Implications for Asean and the global order

For Asean, this means navigating a complex terrain where no actor is wholly benevolent or entirely malevolent, and where choices are rarely binary.

Countries like Malaysia, with ambitions for digital transformation and AI adoption, must seek balanced engagement with both US and Chinese technology ecosystems — including regulatory frameworks that safeguard national interests without constraining innovation.

Asean should leverage its collective voice in global standard-setting and export control discussions rather than being passive recipients of external tech alliances.

Building deeper intra-regional cooperation on semiconductor supply chains, AI ethics, and education in advanced technologies can reduce vulnerability to external pressures and create alternative growth pathways that are not fully dependent on either Washington or Beijing.

Conclusion

The US decision to allow Nvidia’s H200 chips to enter China has triggered alarm and opportunity on both sides of the Pacific.

What it reveals is not just anxiety over a single technology export — it is the strategic anxiety of two great powers locked in a race that will define the shape of global power and prosperity in the 21st century.

As this contest unfolds, Asean and the broader international community cannot afford to be mere spectators.

Instead, the region must craft policies that advance its technological and economic interests while preserving autonomy in an increasingly fractured world. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.