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As tech competition moves into the biotech sector of the economy, China is increasingly shifting its focus to nearby regions to alleviate U.S.-induced supply chain pressures. This shift to a regional strategy enables China to leverage investments and trade to the rising demand in Southeast Asia for affordable biopharmaceutical products, as well as to reduce costs and enhance its geostrategic and technological influence.
Biopharmaceuticals as a New Battleground for U.S.-China Competition
As an economic driver, the biopharmaceutical industry has the potential to reshape geopolitics, economics, society, and national security in the twenty-first century. According to Chinese President Xi Jinping, “the biopharmaceutical industry is a strategic emerging sector that relates to national economic development and public welfare, as well as national security” (author’s translation).
In contrast to sectors where China has gained substantial global market share, such as electric vehicles, its competitiveness in biopharmaceuticals remains relatively low. For over a decade, the United States has remained a key gateway for Chinese biopharmaceutical companies seeking to enhance R&D capabilities, raise investment dollars, and pursue approval from the U.S. Food and Drug Administration (FDA) to facilitate sales in the international market.
However, China’s innovation development strategy, backed by substantial state intervention, is increasingly perceived as a challenge to the United States. Moreover, China’s access to extensive patient data boosts its advancements in artificial intelligence and genomics, but tightening data flows due to data security and biosecurity laws provides a competitive advantage to Chinese firms. According to China’s National Development and Reform Commission, the number of biopharmaceuticals currently in research and development (preclinical stage) has already surpassed that of the United States.
China’s rapid advancements in biopharmaceutical innovation raises anxiety in the United States over China’s state control and possible surveillance in AI and genomics. The COVID-19 pandemic further raised U.S. concerns about China’s dominance in the export of active pharmaceutical ingredients (APIs) and essential medical supplies as a direct challenge to the U.S. supply chain, as well as the related national security risks.
In response, the United States has implemented measures to strengthen its biopharmaceutical sector in competition with China. For instance, the Joe Biden administration escalated the rivalry with a 2022 executive order targeting Chinese biopharmaceutical counterparts. To further reduce dependence on Chinese materials, the U.S. National Security Council established the Biopharma Coalition (Bio-5) with its like-minded allies, the EU, India, Japan, and South Korea. The Biosecure Act passed in September 2024 in the U.S. House of Representatives seeks to restrict Chinese biotech firms from integrating with the U.S. medical supply chain. As a result, some U.S. companies have started reducing or severing ties with Chinese biopharma contractors. President-elect Donald Trump’s declared America First policy may accelerate the withdrawal of U.S. investments from China after his inauguration.
As tech competition moves into the biotech sector, China is increasingly shifting its focus to nearby regions to alleviate U.S.-induced supply chain pressures. As part of this transition, Southeast Asia has emerged as a favored destination.
Why Southeast Asia Is Important for China in the Biopharmaceutical Competition
Geographically, Southeast Asia is emerging as a pivotal arena in China’s biopharmaceutical competition. Dubbed as the “pharmerging” market, with a population exceeding 600 million and rapidly evolving healthcare demands, this region presents significant opportunities for China to seek to expand its influence and market share. Chinese investors are attracted by ASEAN’s market potential, trade network resources, government policy adjustments, and the growing role of digital health as a new growth engine.
First, from a geopolitical perspective, a state’s engagement in the biopharmaceutical sector can be framed as a provision of public goods, in contrast to traditional military or economic power, which often breeds suspicion. Historically, China has utilized public health cooperation—such as the ASEAN-China Health Ministers Meetings—to strengthen its bilateral relationships with Southeast Asian countries.
The region’s growing demand for accessible and affordable biopharmaceutical products, particularly in response to infectious diseases and chronic illnesses, has further motivated China to enhance its geopolitical influence. By providing medical supplies, vaccines, and capacity-building initiatives, as well as technology transfers and knowledge diffusion in advanced biotechnologies such as genomics, China can leverage its capabilities to foster regulatory harmonization, thereby enhancing its trade and/or supply chain resilience. For instance, during the pandemic, in the name of the Health Silk Road (HSR), the Chinese state biopharmaceutical company Sinovac Biotech partnered with Indonesia’s Bio Farma to produce and distribute the COVID-19 vaccine in Indonesia. Similarly, another Chinese biopharma company, Sinopharm, collaborated with Thailand to implement vaccination programs. More importantly, biopharmaceutical engagement not only facilitates trade and investment but also cultivates long-term relationships within the region. By positioning itself as a key player in addressing public health needs, China can enhance its influence in Southeast Asia.
Second, regional networks and their close proximity to China present a great opportunity for China to diversify its supply chain from the United States to avert risks or supply interruptions. ASEAN has enormous trade networks (shown in table 1), improved infrastructure, and growing manufacturing capabilities, and it is seen as a key player in reconfiguring supply chains for China’s biotech development.
Since the signing of the China-ASEAN free trade agreement (FTA) in 2004, China’s biopharmaceutical trade with Southeast Asia has gained enough traction for the Chinese government to continue with its biopharmaceutical engagement strategy. Chinese biopharmaceutical manufacturing companies have easier access to raw materials in the region that further strengthen regional supply chains and China’s biopharmaceutical engagement in the region. China has become the largest supplier of APIs to Southeast Asian countries like Indonesia, Thailand, and Vietnam. Additionally, Southeast Asian countries are rich in medicinal resources and have a long tradition of using traditional Chinese medicine, heavily relying on China’s exports for these materials and equipment. According to China Pharmaceutical Innovation and Research Development Association (PhIRDA), ASEAN is the largest recipient of China’s pharmaceutical exports along the Belt and Road Initiative (BRI): Export values rose from $4.8 billion in 2013 to $13.7 billion in 2022. Furthermore, with the ratification of Regional Comprehensive Economic Partnership (RCEP), the mega FTA is expected to facilitate trade and supply chain integration, further strengthening China’s position in the regional biopharmaceutical market.
Moreover, in recent years, ASEAN has made steady progress in harmonizing pharmaceutical regulations in the biopharmaceutical sector. The COVID-19 pandemic further underscored the importance of a swift and efficient regional regulatory response to health crises, resulting in the 2022 launch of the ASEAN Pharmaceutical Regulatory Policy (APRP). In addition, to attract foreign investment, ASEAN recognizes the importance of more transparent and synchronized regional standards and practices to eliminate market entry barriers, facilitating foreign investments. Reforms in ASEAN’s biopharmaceutical sector can attract foreign investments, including from China. This is highlighted by a report from Singapore’s Economic Development Board, which aims to attract Chinese biopharmaceutical investments to the region. According to this report, of the world’s one hundred largest pharmaceutical companies, seventy-nine have an established presence in Southeast Asia. Eight out of the top ten global pharmaceutical and biotech companies are in the region.
Regional governments also aim to develop resilient supply chains in biopharma, and thus, many Southeast Asian countries have improved their respective policies to enhance their competitiveness in the biopharma sector. For instance, Singapore has built trade–investment services–intellectual property networks, with fifteen bilateral FTAs and twelve regional FTAs. Singapore binds itself in the patent linkage scheme to fulfill its obligations under the U.S.-Singapore Free Trade Agreement. Singapore has also established a worldwide patent acceleration network of thirty Patent Prosecution Highway partners, including the United States and China, to leverage its experiences in intellectual property transactions, management, filings, and enforceable dispute resolution. Through the government’s series of initiatives, Singapore has become a leading biopharmaceutical hub in Asia. As a result, global biopharmas, including Chinese ones, are encouraged to set up headquarters in Singapore to leverage trade and investment networks throughout the Asia-Pacific region.
By the same token, Southeast Asian governments (like Indonesia, Malaysia, and Thailand) also actively promote their biopharmaceutical industries through favorable policies, infrastructure development, and participation in international standard-making (see table 2). For instance, Indonesia, Malaysia, Singapore, and Thailand joined the Pharmaceutical Inspection Convention and the subsequent Pharmaceutical Inspection Co-operation Scheme, an informal but cooperative arrangement in the field of medicinal products for manufacturing.
Last but not least, as data are increasingly viewed through a security lens, China aims to reduce its reliance on U.S. biopharmaceuticals and shift to the region that it already has a relatively good relationship with. Southeast Asia, with the abundant potential data resources in the region, can help China diversify its biopharmaceutical sources and lesson its own concerns about supply chain vulnerabilities.
The large population in Southeast Asia covered by still relatively weak data protection regulations enables China to leverage its strength in big data and artificial intelligence in its competition for influence and market share. In all ASEAN countries, foreign new drug application does not require additional data, meaning there is no need for local trials during the drug registration process. This allows China to conduct multi-centered clinical trial through digitalization of the process or to use existing data to generate evidence for drug registration, rather than relying solely on novel clinical trials. China’s ability to leverage data has already made advancements in the region during the COVID-19 pandemic. By utilizing disease surveillance, real-time health screening, and early diagnosis technologies, China demonstrated its capability to collect and analyze health data, assisting crisis-stricken countries in the region, such as Brunei.
As ASEAN’s digital health sector is projected to grow at a rate of 9.84 percent annually by 2029, Chinese companies will have a significant opportunity to expand their presence and capitalize on the burgeoning demand for innovative healthcare solutions through harnessing huge data potential in the region. By integrating genomic data from large populations like Southeast Asia, China can enhance its capabilities in using genomic and clinical data to facilitate drug discovery and development processes, allowing the country to compete in the international market.
Chinese Biopharma Engagement in Southeast Asia
Before 2003, China’s engagement in the biopharmaceutical sector within the region was limited due to Beijing’s underdeveloped biopharmaceutical sector, in comparison to the dominant presence of Western biopharmas. However, China’s involvement was notably accelerated during the SARS outbreak in 2002–2004. Following the SARS outbreak, China institutionalized its public health cooperation with ASEAN countries under the 10+1 health cooperation mechanism.
While close trade relations between China and ASEAN have facilitated China’s increasing biopharmaceutical engagement in the region, China has also promoted its influence and boosted opportunities for its biopharmaceutical industry through the biotech promotion and industry cooperation plan under the banner of the BRI. The launch of the HSR in 2015 further marked a pivotal shift in China’s biopharmaceutical strategy.
China’s biopharma venture into Southeast Asia is characterized by a multitrack approach, with domestic actors like ministries, research institutes, and biopharmaceutical firms joining the science diplomacy—using science as a vehicle to ameliorate diplomatic relations (see tables 3 and 4). Through various channels, China’s biopharmaceuticals are instrumental in promoting public health as a public good and potentially setting standards in research and development with the region. For example, the Chinese Academy of Sciences (CAS) created the CAS Innovation Cooperation Centre in Bangkok (known as the Bangkok Center) in 2017; the center provides a wide range of areas where Chinese scientists can access local clinical trial facilities and data.
Moreover, under the Chinese leadership’s strategic focus on leveraging technology to strengthen relationships and secure supply chains, private Chinese biopharmaceutical companies also actively aligned themselves with the state’s geostrategic goals to strengthen their advantages in developing drugs and treatment. For instance, the CEO of China’s BGI Group Zhao Lijian (not the former Ministry of Foreign Affairs spokesman by the same name) has exemplified BGI’s role in supporting the HSR over the years, hailing its role in bolstering the medical capacities of BRI-participating countries. Through self-initiated engagements, BGI has advanced genomic technology and operational standards via collaborations in countries like Singapore, Thailand, and Indonesia. For instance, BGI has initiated a research project with Thailand’s National Center for Genetic Engineering and Biotechnology to provide testing for individuals at high risk of atherosclerotic cardiovascular disease. Activities like this, as highlighted by a regional manager of BGI, are aligned with state directives under the BRI and the notion of a China-ASEAN community with a shared future.
Falling in line with the state direction, many Chinese biotech companies have acquired the capability to navigate international markets to expand their businesses. BGI is now the leading sequencer of human DNA at the global level. Other companies like WuXi AppTec and WuXi Biologics are by revenue the world’s largest providers of contract drug discovery and manufacturing.
However, escalating tensions and increasing scrutiny from the U.S. legislature regarding Chinese biopharmaceutical investments like those by BGI and WuXi Biologics have driven Chinese biopharmaceutical companies to look into Southeast Asia to diversify their investment risks. If it is passed, China’s five most-prominent biotech companies would face sanctions under the Biosecure Act, highlighting the growing challenges that Chinese biopharmaceutical firms encounter in accessing the U.S. market.
Tapping on regional networks, Chinese biopharmaceutical companies see Southeast Asia as an attractive location to re-establish supply chains due to the region’s proximity to China and its extensive regional networks.
One pronounced option for Chinese companies to diversify their geopolitical risks is utilizing Singapore as a manufacturing base—a policy known as Made in Singapore. By establishing manufacturing operations in Singapore, Chinese firms can leverage the city-state’s robust regulatory environment, advanced infrastructure, and strategic location in the Asia-Pacific. For instance, Chinese biopharmaceutical companies like WuXi Biologics that face sanctions from the United States announced a substantial investment of $1.4 billion to establish an integrated contract research, development, and manufacturing organization (CRDMO) service center in Singapore. By investing in Singapore, Chinese companies not only enhance their production and research capabilities but also strengthen their competitiveness in the global biopharmaceutical landscape.
The other prominent feature in Chinese biopharmaceutical companies’ engagement is their choice to work with local partners that consist of both Chinese and host country government agencies, biotech companies, and research institutes, along with relevant investment and financing groups to diversify the risks. This multitrack, collaborative approach has gained significant traction in recent years. For instance, the China-Indonesia Healthcare and Biotechnology Investment Forum involves the Chinese Embassy in Indonesia, the Indonesian Ministry of Health, the Indonesian Food and Drug Authority, the Indonesian Embassy in China, the China-Indonesia Chamber of Commerce, Chinese private capital firm Legend Capital, Chinese biopharmaceuticals, and over a dozen medical companies and third-party investors such as Temasek from Singapore. This collaborative ecosystem not only enables the pooling of resources, expertise, and market insights but also allows Chinese biopharmaceutical firms to enjoy host governments’ political and policy support.
Impacts on Southeast Asia
Southeast Asia stands to gain from the biopharmaceutical investments from China. The region could benefit from increased access to technologies, investments in biomanufacturing, and opportunities for R&D as China increases its biopharmaceutical engagement in the region.
For most regional countries, governments are constrained in providing healthcare spending to support citizens in purchasing expensive, innovative medications, resulting in a preference for low-cost generic drugs and medical treatment. How governments, especially in multiparty democratic countries like Indonesia, Malaysia, and Singapore, can deliver affordable healthcare solutions is critical to their political legitimacy and the countries’ social stability.
However, developing a single biopharmaceutical can be a lengthy, high-risk, and costly process, typically taking ten to fifteen years and costing $2.6 billion that many regional governments cannot afford. While sharing many similarities with high-tech sectors such as the semiconductor industry, biopharmaceuticals remain highly human-driven and cover all walks of life in respective national jurisdictions. The demand for effective treatments for diseases like cancer and preparation for aging has huge impacts on national welfare and fiscal and trade policies. According to UN population data from 2024, countries like Singapore and Thailand—where low birth rates and aging have presented social and economic challenges—the percentage of the population aged sixty-five and above will exceed 25 percent of the total population in 2050. In particular, Singapore is projected to become a super-aged state in 2026, so it has huge interests and stakes in developing advanced genomic techniques and cellular studies to support its aging society.
Seeing the benefits, countries like Singapore have quickly taken the opportunity to strategize their approaches to reach out to Chinese advanced biopharmaceutical sectors. In Singapore, health sectors, research institutes, and medical service providers have established collaborative relationships with Chinese counterparts. For instance, the Chinese BGI Institute of Life Sciences, the National Cancer Centre Singapore, and BGI Genomics have forged a research cooperation agreement on cancer studies. The Economic Development Board of Singapore has even taken initiatives to assist Chinese biopharma companies to venture into Southeast Asian markets. In Thailand, the National Center for Genetic Engineering and Biotechnology partnered with the Chinese genomics company BGI to leverage its expertise and technology in diagnosing atherosclerotic cardiovascular disease. By the same token, the Indonesian government has been quite receptive to Chinese investments in biopharmaceutical sector through government support as it is aiming to promote localized manufacturing capabilities. Despite the goal of strengthening local capabilities, to a large extent, Southeast Asian countries encounter challenges from Chinese biopharmaceutical companies, especially as the Chinese counterparts improve their capabilities in using data for cutting-edge biopharmaceutical development as “disruptive innovation.” The biopharmaceutical supply chain, including in Southeast Asia, has long relied on China’s CXO companies (or Contract X Organizations, which have high flexibility in the healthcare sector) for raw materials, manufacturing, access to patients’ data, research, and services.
By offering access to advanced technology and biodata analytics, Chinese companies can leverage local data to develop biopharmaceutical products, services, and standards tailored to the region’s specific needs. This capability could not only enhance the local biopharmaceutical landscape but also potentially lead to growing dependence on Chinese biotechnology, thereby shifting geopolitical dynamics.
More importantly, biopharmaceutical development in Southeast Asia will face mounting pressures from great power competition as China expands its presence in the region. Under the second Trump administration, this dynamic is likely to intensify. Driven by his slogan “America First,” Trump’s second term is likely to continue its strategic focus on countering China’s growing influence in high-tech sectors, including biopharmaceuticals and related biomanufacturing. Therefore, the United States could apply more strict regulations on supply chains involving Southeast Asia, especially if these countries are found to be facilitating the diversion of Chinese products.
Furthermore, the region’s heavy reliance on external technologies and expertise could expose it to significant risks in the event of geopolitical tensions. For example, the ongoing competition between the United States and China over biopharmaceuticals, including issues related to intellectual property and market access, has already led to export controls and disruptions in technologies needed for biopharmaceutical development and manufacturing. Regional dependency on external actors for key materials and technologies makes Southeast Asia vulnerable to supply chain disruptions, especially if tensions between the great powers escalate. Such circumstances could create additional pressure on Southeast Asian countries, compelling them to choose sides for technological access and investments, thereby undermining their strategic autonomy.
Challenges for Chinese Expansion in the Region
While Southeast Asia stands out as a potential alternative option for offshoring Chinese biopharmaceutical companies, there are challenges concerning China’s engagement in the region. First, the region is yet to develop a mature supply chain for research, testing, manufacturing, and logistics of medicines for Chinese companies to secure a stable supply chain as many regional states struggle with limited independent R&D capabilities and insufficient capable local companies. According to the PhIRDA, Chinese biopharmaceutical investments are largely concentrated in the more developed ASEAN countries such as Thailand, Singapore, and Malaysia.
Second, despite ongoing efforts to harmonize regulations in the ASEAN pharmaceutical market, the region’s regulatory environment remains fragmented, presenting significant challenges for Chinese companies in their international expansion. Moreover, according to the Chinese media, many Southeast Asian regulatory authorities rely heavily on regulatory decisions from the U.S. Food and Drug Administration, which sets international standards for biopharmaceutical manufacturing, particularly through regulations such as Good Manufacturing Practice. This reliance complicates China’s efforts to enter the region and diversify its investments, especially in light of U.S. pressure on China’s technological expansion.
Third, it remains uncertain whether a diversification strategy into Southeast Asia will effectively help China secure a reliable supply chain to advance its biopharmaceutical sectors. During Trump’s first administration, the introduction of the Foreign Investment Risk Review Modernization Act (FIRRMA) imposed restrictions and heightened scrutiny on foreign investments including biotech and life sciences sectors. While the Biosecure Act is currently stalled in the Senate, research indicates that U.S. biopharmaceutical companies and related industries have already been preparing to reduce their ties with Chinese counterparts. As previously noted, a second Trump administration is likely to reinforce its efforts to limit China’s global economic and tech footprint. Therefore, the practice of Southeast Asia–washing, where Chinese investments and products use Southeast Asia to bypass restrictions, may become a key point of contention, posing challenges not only for the Chinese government but also the regional governments.