ASEAN'S DEFA cannot shield it from US-China digital tug-of-war

As ASEAN pushes ahead with the Digital Economy Framework Agreement (DEFA), aimed at integrating its digital markets and making the region more competitive in the 21st-century economy, the ambitions of digital trade liberalisation may run into an unavoidable geopolitical wall: the intensifying technological and strategic rivalry between China and the United States (US).

Despite DEFA’s potential to boost ASEAN’s digital gross domestic product (GDP) by up to US$2 trillion by 2030 (World Bank, 2021), the regional initiative is caught in a growing bifurcation of the global digital economy, Bernama cited an academician writing today.

Whether it leans toward the US-led Clean Network Initiative or China’s Digital Silk Road, ASEAN will be forced to navigate competing standards, infrastructure, and security ecosystems — none of which are neutral.

DEFA in a Fragmented Digital Order

DEFA was designed to harmonise ASEAN’s digital rules across e-commerce, cybersecurity, AI governance, and cross-border data flows (ASEAN Secretariat, 2023). In theory, it offers a unified strategy for digital economic growth. But as Rühlig (2021) notes, the global digital ecosystem has increasingly devolved into a “digital Cold War,” with both the US and China pushing incompatible digital standards.

On one side, the US’ Clean Network aims to exclude Chinese vendors like Huawei and ZTE from 5G and cloud infrastructures due to national security concerns (USTR, 2021). On the other hand, Beijing’s Digital Silk Road offers low-cost infrastructure, data centres, and AI platforms built on Chinese protocols (Kurlantzick, 2020; Laskai, 2020).

ASEAN’s central dilemma is this: how can DEFA enforce regional digital integration without forcing its members to choose between American and Chinese digital spheres?

ASEAN's exposure to this rivalry is amplified by its deep trade interdependencies. In 2023, ASEAN’s total trade with the world reached US$3.97 trillion, with China and the US ranking as its first and second-largest external partners, respectively (ASEANStats, 2024).

ASEAN’s digital economy alone is expected to exceed US$1 trillion in value by 2030, led by e-commerce, fintech, logistics tech, and cloud computing (World Bank, 2021).

China accounts for nearly 20 per cent of ASEAN’s digital trade hardware imports — including servers, semiconductors, and consumer electronics — while US firms dominate software, cloud platforms, and cybersecurity services.

Countries such as Vietnam and Thailand depend on hybrid supply chains where Chinese hardware runs on US operating systems, leaving them acutely vulnerable to disruptions caused by sanctions, bans, or cyber threats (Pekkanen, Ravenhill & Kallender, 2022).

Technical Standards as Strategic Alignments

As DEFA moves into the implementation stage, ASEAN members must decide on technical standards governing cloud storage, data localisation, cross-border privacy, and AI ethics. These are not merely administrative matters — they are embedded in political alignments (Wang, 2021).

Whether a country adopts GDPR-style data protections (inspired by the European Union), US-backed open protocols, or China’s more centralised model determines which digital bloc it may gravitate toward.

For instance, Singapore and Malaysia have quietly leaned toward US standards for cybersecurity and digital governance (Singapore Ministry of Communications and Information, 2023), while Laos and Cambodia continue expanding their partnerships with China for broadband access and e-payment infrastructure (Jones & Zeng, 2021). This divergence threatens to split ASEAN’s digital ambitions even before DEFA is fully operational.

Regulatory Gaps and Power Asymmetries

DEFA also lacks a clear enforcement mechanism to ensure regulatory convergence. ASEAN’s existing digital readiness varies widely: while Brunei and Singapore have nearly universal Internet access and strong data regimes, Myanmar and Laos still struggle with basic digital infrastructure and rule-of-law issues (World Bank, 2021). Without adequate institutional support, DEFA risks becoming another declaratory framework — impressive on paper, ineffective in practice.

Moreover, ASEAN’s bargaining position with global tech giants such as Amazon Web Services, Google Cloud, Tencent, and Huawei remains weak. Regulatory fragmentation reduces ASEAN’s ability to negotiate collectively, exposing member states to coercion, surveillance, and digital exploitation from external powers (Zhang & Alami, 2023).

DEFA represents a critical leap forward in ASEAN’s effort to modernise its economic architecture. But it cannot shield the region from the deeper geopolitical forces now structuring the global digital order. As the US and China escalate their contest for technological supremacy, ASEAN will find its room for manoeuvre narrowing.

The question is not whether DEFA can succeed, but whether it can do so without being consumed by the very fault lines it seeks to bridge. - April 26, 2025

The author, Phar Kim Beng (PhD) is a professor of ASEAN studies at the International Islamic University Malaysia.