The end of hedging: why small states face impossible choices between Washington and Beijing

For the better part of three decades, a constellation of smaller states built their foreign policies on a deceptively simple principle: play the great powers off one another, accept investment from all sides, and resist exclusive alignment. Singapore hosted American naval facilities whilst deepening trade ties with Beijing. Gulf monarchies purchased Chinese infrastructure and American fighter jets in equal measure. Central Asian republics balanced Russian security guarantees against Chinese economic largesse. The strategy, often termed hedging, allowed middle powers to preserve autonomy whilst extracting concessions from competing suitors.

That era is ending. The intensifying contest between Washington and Beijing is no longer a competition for influence that tolerates neutrality. It has become a struggle over the architecture of the global economy itself—over which technical standards will govern telecommunications, whose supply chains will manufacture advanced semiconductors, and which security partnerships will define the Indo-Pacific. In this environment, hedging is increasingly read not as prudent statecraft but as disloyalty, and the room for manoeuvre that small states once enjoyed is narrowing to the point of closure.

The shift is most visible in the technology domain. A decade ago, a country could install Huawei equipment in its mobile networks whilst maintaining close intelligence ties with Washington. Today, American officials present governments with a stark binary: adopt Chinese 5G infrastructure and forfeit access to certain American technology and intelligence sharing, or exclude Chinese vendors and risk economic retaliation from Beijing. The choice is not merely symbolic. It shapes which firms can operate in a given market, whose technical standards become embedded in national infrastructure, and ultimately whose geopolitical orbit a country inhabits.

Semiconductor supply chains have become another flashpoint. The United States has moved aggressively to restrict China's access to advanced chipmaking equipment and to secure commitments from key producers to prioritise American and allied demand. Countries that host semiconductor fabrication facilities or supply critical inputs—Taiwan, South Korea, the Netherlands, Japan—face mounting pressure to align their export controls and investment screening with American policy. For smaller states in Southeast Asia that have sought to position themselves as neutral nodes in regional production networks, the message is unambiguous: the supply chain is being redrawn along geopolitical lines, and there is no middle ground.

Infrastructure partnerships tell a similar story. The Belt and Road Initiative once offered developing countries an alternative source of financing with fewer governance conditions than Western institutions imposed. Many governments embraced Chinese-built ports, railways, and power plants whilst maintaining memberships in American-led financial and security frameworks. But as Washington has framed Belt and Road projects as vectors of strategic dependence—warning of debt traps and dual-use facilities—recipient countries find themselves pressed to choose. Some have renegotiated or cancelled Chinese contracts under American pressure; others have seen aid and trade access curtailed for proceeding with them.

The Gulf states illustrate the dilemma with particular clarity. For years, they maintained security alliances with the United States whilst diversifying economic ties toward China, which became the largest buyer of their oil and a major investor in their sovereign wealth portfolios. Yet as Washington has demanded that allies limit technology cooperation with Beijing and as China has signalled its willingness to play a larger political role in the region, the balancing act has grown precarious. Hosting Chinese naval vessels or adopting Chinese surveillance technology now risks friction with American defence commitments; excluding China risks alienating the largest customer for the commodity on which these economies depend.

Southeast Asia, long considered the laboratory of hedging, faces the starkest pressures. The Association of Southeast Asian Nations was built on the principle of centrality—the idea that the region could set its own agenda and avoid becoming a theatre for great-power rivalry. But as Washington has elevated the Quad and AUKUS as security architectures that exclude China, and as Beijing has asserted territorial claims and economic leverage with growing assertiveness, ASEAN's cohesion has frayed. Member states are splitting along lines of alignment, with some gravitating toward American security partnerships and others deepening economic dependence on China. The middle ground that once defined the region's diplomacy is eroding.

Central Asia, historically Moscow's sphere of influence, has become another arena where hedging is breaking down. China's economic presence in the region has grown formidable, driven by Belt and Road investments and energy imports. Russia's focus has shifted westward, and its capacity to provide economic support has diminished. Yet the war in Ukraine has forced Central Asian governments to navigate a new set of pressures: Western sanctions on Russia, Chinese ambivalence about the conflict, and American interest in securing alternative supply routes for critical minerals. The triangular balance that sustained these states' autonomy is collapsing into a binary choice between Beijing and a Western bloc that includes a weakened Moscow.

The consequences extend beyond the foreign ministries of small states. A world in which middle powers cannot hedge is a world with less flexibility, fewer cross-cutting ties, and more rigid bloc structures. Hedging strategies, for all their opportunism, created interdependence that cut across geopolitical divides. A country that relied on Chinese trade and American security had an interest in preventing a rupture between the two. When that country is forced to choose, it loses its stake in managing the rivalry, and the system loses a buffer against escalation.

The argument for forcing alignment is not without merit. Proponents in Washington contend that the previous era's tolerance for hedging allowed China to gain access to critical technologies and infrastructure that now pose security risks, and that half-measures are inadequate when the contest is over foundational economic and military capabilities. From this perspective, demanding exclusive alignment is not an abandonment of alliance management but a recognition that the stakes have risen and that ambiguity is a luxury neither side can afford.

Yet the costs of this rigidity are considerable. Smaller states that are compelled to align lose the leverage that hedging provided, becoming more dependent on their chosen patron and less able to resist its demands. The international system loses the stabilising effect of cross-cutting ties and the moderating voices of states with a stake in preserving openness. Trade and investment flows fragment along geopolitical lines, reducing efficiency and increasing the risk that economic interdependence, once thought to be a brake on conflict, is replaced by parallel structures that deepen mistrust.

There is also the question of whether exclusive alignment is enforceable. Many smaller states have domestic political constraints, economic dependencies, and geographic realities that make a clean break with either Washington or Beijing prohibitively costly. Forcing a choice may produce not genuine alignment but resentful compliance, hedging by other means, or outright defection. A strategy that assumes smaller states can be compelled into exclusive partnerships may underestimate their capacity for resistance and the costs of coercion.

The erosion of hedging is not yet complete. Some states retain sufficient economic weight or strategic importance to resist binary choices, at least for now. Others are experimenting with new forms of diversification—courting India, the European Union, Japan, or regional partnerships as counterweights to both Washington and Beijing. But these alternatives are themselves constrained by the same forces driving the collapse of hedging: the technological decoupling, the securitisation of supply chains, and the growing unwillingness of the great powers to tolerate ambiguity.

What remains to be seen is whether the international system can sustain a stable equilibrium in the absence of the buffering role that hedging states once played. A bipolar order with little room for neutrality is not unprecedented—the Cold War demonstrated that such a structure can persist for decades. But it is also a structure prone to crises, in which every gain for one side is perceived as a loss for the other and in which smaller states become battlegrounds rather than mediators. Whether the current trajectory leads to a stable division or to a more volatile and conflict-prone world depends in part on whether Washington and Beijing recognise the value of preserving some space for ambiguity, and whether smaller states can find new strategies to assert their autonomy in an era that seems determined to foreclose it.

This article was produced with AI assistance and reviewed against our editorial standards.