Highlights

• Southeast Asian nations are strategically hedging between the US and China over critical minerals, with distinct approaches based on geology and supply chain dependencies.
• Malaysia and Indonesia practice 'light hedging' to maximize policy autonomy and economic gains.
• The Philippines employs 'heavy hedging' to reduce overreliance on Chinese nickel markets.
• As US-China trade tensions intensify, ASEAN's independent mineral policies may serve as a blueprint for resource-rich small states seeking growth without geopolitical entanglement.

Southeast Asia is emerging as one of the most strategically contested theaters in the global race for critical minerals—and a new Pacific Focus study offers a sharp, comparative look at how Malaysia, Indonesia, Vietnam, and the Philippines are positioning themselves between Washington and Beijing. The headline finding: ASEAN isn’t choosing sides—it’s hedging, but in very different ways depending on each nation’s geology, industrial base, and dependence on China’s supply chains.

Postdoc researcher Xinlei Zhao (opens in a new tab), School of International Relations at Sun Yat-sen University (opens in a new tab) cites in this paper “Navigating the US–China Rivalry: ASEAN's Position on Critical Mineral Resources,” Pacific Focus (Nov 2025) that Malaysia plays the most agile game. With rare earth processing already onshore, it practices “light hedging”—courting Chinese and U.S. partners while preserving maximum policy autonomy. Kuala Lumpur uses foreign engagement to accelerate industrial modernization, not geopolitical alignment.

Indonesia, now a nickel superpower, adopts a similar light hedge. Its focus is pragmatic: build a nickel-centered critical minerals industry, expand exports, and channel great-power competition into economic gain. Jakarta is less concerned with alignment than with securing investment for downstreaming.

The Philippines, by contrast, is practicing “heavy hedging.” Deeply embedded in China’s nickel supply chain, Manila is now welcoming U.S. and allied investment to avoid overreliance on a single buyer. The strategy reflects a dual ambition: to protect resource security and upgrade into higher-value processing.

Then there is Vietnam, sitting squarely in the middle—leveraging its growing rare earth potential to balance both powers, yet constrained by persistent Sino-Vietnamese tensions that cast uncertainty over cooperation with China.

Xinlei Zhao’s broader warning is clear (and not new for the _Rare Earth Exchanges_™ community): with Trump’s re-election and an intensified U.S.–China trade war, critical minerals will become a central battleground of the next geopolitical phase. ASEAN’s “independent mineral policies” may offer a blueprint for other resource-rich small states seeking growth without becoming pawns.

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