Southeast Asia’s Reliance on Chinese Technology: Opportunities and Risks in the Digital Transformation Era

Hải Băng wrote this article in Vietnamese and published it in Luật Khoa Magazine on May 15, 2025. Đàm Vĩnh Hằng translated it into English for The Vietnamese Magazine.

Amid the global wave of digital transformation, Southeast Asia is emerging as one of the fastest-growing technology regions in the world. However, the region's increasing dependence on Chinese tech companies, particularly Huawei, has become a “double-edged sword,” bringing both economic opportunities and serious cybersecurity and geopolitical challenges.

Huawei’s Sweeping Influence and China’s Tech Giants

With a population of over 690 million and a digital economy projected to reach 1 trillion USD by 2030, Southeast Asia is a highly attractive market for global tech giants. [1][2] Chinese companies such as Huawei, ZTE, and Tencent have rapidly seized market share, largely through a combination of competitive pricing and the ability to roll out large-scale projects. 

Huawei, for instance, is a key provider of telecommunications infrastructure, cloud computing, and AI applications across the region, from supporting 5G deployment in rural Indonesia to driving Thailand's "smart transformation." [3][4][5][6] This influence extends beyond hardware to software platforms like WeChat and Alipay, all part of Beijing's broader "Digital Silk Road" strategy. [7]

The primary reasons Southeast Asian countries rely on Chinese technology are pragmatic. Compared to Western competitors like Sweden’s Ericsson or Finland’s Nokia, Huawei’s telecom equipment can be 20–30% cheaper. [8] This cost advantage is often paired with attractive state-backed financing, such as concessional loans and technical support, which helps ASEAN countries overcome budgetary and manpower constraints.This advantage was further strengthened by geopolitics. The Trump administration’s suspension of U.S. Agency for International Development (USAID) programs created a vacuum in the region, enabling China to expand its influence through its own massive initiatives and aid packages. [9]

Underlying Risks

Reliance on Chinese technology is not merely an economic matter; it is a strategic issue that carries significant cybersecurity and geopolitical risks for Southeast Asian nations. Experts have warned that Chinese-made hardware and software could create serious security vulnerabilities, a fear grounded in China’s 2016 Cybersecurity Law, which requires businesses to assist the government in information gathering. [10][11] This has raised concerns that user data in Southeast Asia could be exploited, as exemplified by a case in the Philippines where a Huawei-supplied surveillance system was suspected of containing a “backdoor” for unauthorized access. [12]

Việt Nam has been particularly cautious about these risks. [13] This wariness is rooted in China’s status as a major security threat, demonstrated by events like the 2016 cyberattacks on Hà Nội’s Nội Bài and Hồ Chí Minh City’s Tân Sơn Nhất airports. As a result, Hà Nội has relied on its own state-owned enterprise, Viettel, to develop core network devices and was largely non-committal to a Huawei 5G proposal in 2016. [14]

However, recent developments suggest this long-standing caution may be shifting. In May 2024, Deputy Prime Minister Trần Lưu Quang stated that Huawei is encouraged to invest in key sectors like “telecommunications, digital transformation, artificial intelligence, and green transition.” [15] Similarly, major industrial hubs like Bắc Ninh province have also called for Huawei’s investment in high technology, semiconductors, and human resource training. [16] These moves signal that Huawei’s footprint in Việt Nam could soon grow significantly, despite the underlying security concerns.

While these “friendly” signals from Việt Nam may suggest confidence in its technological defenses, Southeast Asia remains fertile ground for cybercriminals, and a failure to manage the expansion of Chinese technology could have severe consequences. The region is the most cyberattacked in Asia, with incidents doubling in 2024 compared to 2023. [17] This problem is worsened by a lack of unified ASEAN cybersecurity standards and a history of Chinese hackers targeting military and government organizations in countries involved in the South China Sea dispute. [18]

Beyond cybersecurity, reliance on Chinese technology carries significant geopolitical risks. Through initiatives like the Indo-Pacific Economic Framework (IPEF) and a joint trade and technology council with the EU, the United States is actively trying to curb China’s influence and set global tech standards. [19] The heavy dependence of many Southeast Asian nations on Chinese tech undermines these efforts and places them in a difficult position, often facing pressure to pick sides in the strategic competition between global superpowers.

Indonesia is a prime example of this geopolitical squeeze. While Jakarta depends on American cloud services from Amazon and Microsoft, its use of Huawei equipment in its 5G network has prompted direct warnings from the U.S. about the risks of “espionage and sabotage.” [20]

In the current era of digital transformation, Southeast Asia’s reliance on Chinese technology is an unavoidable reality. While this relationship has fueled economic growth and improved connectivity, it also exposes the region to severe cybersecurity and geopolitical risks.

To maximize benefits while minimizing these threats, the region must pursue a multi-pronged strategy. This includes diversifying technology partnerships, particularly with Western countries; investing in domestic companies to strengthen self-reliance; and establishing a unified regional cybersecurity framework to protect critical digital infrastructure.

By maintaining a flexible and neutral stance, Southeast Asian nations can continue to benefit from advanced technologies from both the U.S. and China. Only through such a balanced approach can the region move toward a truly sustainable and secure digital future.