China navigates tariff turbulence: What Xi Jinping's Southeast Asia trip signals

Chinese President Xi Jinping and Vietnam's President To Lam - File Photo

In his first overseas trip of the year, Chinese President Xi Jinping kicked off a five-day three-nation Southeast Asia tour today. The visit to Vietnam, Malaysia and Cambodia is part of Beijing’s effort to cement stronger strategic ties in Southeast Asia amid an escalating trade war with the US.

The visit, framed by Beijing as a diplomatic push for "win-win cooperation," is widely seen as a calculated move to deepen regional alliances, fortify trade routes, and counterbalance Washington’s growing influence in the Indo-Pacific.

Beijing is trying to present itself as a stable alternative to an erratic Trump, who announced -- and then mostly reversed -- sweeping tariffs this month that sent global markets into a tailspin.

China’s struggles amid tariff storm

US tariffs – at a whopping 145 per cent -- are already beginning to bite. Chinese exporters in key sectors—electronics, electric vehicles, solar panels, and heavy machinery—are facing cancelled orders and held-up cargo. Freight forwarders report a spike in calls from clients trying to reroute or even abandon shipments mid-voyage.

With its relative geography, manufacturing strength, and a larger consumer demographic, Southeast Asia is becoming increasingly important in China’s offshore economic strategies. This part of the world is important not only for the Belt and Road Initiative objectives, but also for the maintenance of the local value chains that are being created around the Western economies.

Why Vietnam, Malaysia, and Cambodia?

All three countries are part of the Association of Southeast Asian Nations (ASEAN) grouping with which China had the largest trade amounting to USD 962.28 billion last year, with China’s exports totalling USD 575 billion.

Many Chinese observers warned the competitive trade nature between China and its Asian neighbours -- since they are all export-driven economies with the US being one of their key markets -- could hinder Beijing's efforts to rally them, a dilemma further compounded by territorial disputes on both land and sea.

Though Xi’s visits to these countries were on the cards for a while, the timing of the visits coincides with Trump’s tariffs against Chinese goods while pausing levies against the rest of the countries.

Vietnam, a manufacturing powerhouse, and Cambodia, where the garments and footwear sector is crucial to the economy, were among the worst hit by US tariffs, set at 46 per cent and 49 per cent respectively. Meanwhile, Malaysia is geopolitically vital and is a key player in the Strait of Malacca. Its position on the South China Sea remains diplomatically balanced, making it a potential swing state in the power tussle.

The 10-member Association of Southeast Asian Nations (ASEAN) was the biggest recipient of Chinese exports last year, data from China's customs authority shows, importing $586.5 billion in Chinese goods.

Vietnam was the biggest ASEAN buyer with a bill of $161.9 billion, followed by Malaysia, which imported $101.5 billion in Chinese goods in 2024.

'Bamboo diplomacy'

Xi will be in Vietnam on Monday and Tuesday, his first trip there since December 2023.

Vietnam has long pursued a "bamboo diplomacy" approach, striving to stay on good terms with both China and the United States.

It shares US concerns about Beijing's increasing assertiveness in the contested South China Sea but it also has close economic ties with China.

Xi will then visit Malaysia from Tuesday to Thursday.

Malaysian Communications Minister Fahmi Fadzil said Xi's visit was "part of the government's efforts... to see better trade relations with various countries including China".

Xi will then travel on Thursday to Cambodia, one of China's staunchest allies in Southeast Asia and where Beijing has extended its influence in recent years.

"The Cambodian-Chinese ties have not changed... and we will continue to make it robust," Prime Minister Hun Manet said at the recent inauguration of a Chinese-funded road.

He said Xi's visit would confirm their close relationship and called China "a key partner" in the development of Cambodian infrastructure.

Firming up ties with Southeast Asian neighbours could also help offset the impact from a closed United States, the largest single recipient of Chinese goods last year.

Beijing "wants to use this time to show it's the opposite to the coercive and self-interested US," the ICG's Le Thu said.

"China has been a dominant and resident power centre in the region, and there will only be stronger pull," she said.