Legacy or Liability? Auditing U.S. Alliances to Compete with China

Alliances remain crucial to American statecraft in an era of great-power competition, but not all alliances are equally fit for purpose when it comes to the China challenge. This report assesses seven key allies’ concrete contributions to U.S. China strategy—and their limits—across military, economic, and technological domains, factoring in each ally’s capabilities, political will, and entanglement risks. The comparative analysis indicates that while some alliances bolster U.S. aims vis-à-vis China, others offer more modest benefits, sometimes with greater risks.

Whether U.S. alliances are fit for purpose is an essential question U.S. policymakers must constantly be asking and answering. Presidents Donald Trump and Joe Biden debated it. Trump has been skeptical of allies while Biden warmly embraced them. Both approaches had merits, and both had drawbacks. The fact is, alliances are not inherently good, as Biden evinced, nor inherently problematic, as Trump often has. Alliances can greatly amplify a nation’s political, military, and economic strength—but they can also entrap nations in unnecessary wars, create security dilemmas, and drain resources.

The key question U.S. strategists and policymakers must confront today is whether the costs associated with current U.S. alliance structures are justified by their benefits. Some see the durability of U.S. alliances as a sign of their success, but durability may simply reflect habit. The historical legacies of America’s alliances of course offer benefits—better working relationships between allies, for example—but at the end of the day, if U.S. alliances do not yield concrete benefits toward America’s key strategic goals, serious reforms will be needed.

New Thinking About Allies

A number of prominent experts now recognize the need for fresh thinking about U.S. alliances, but more can be done. On the positive side, recent discussion of alliances has broadened to include more attention to economic, technological, and diplomatic power. For example, former Biden officials Kurt Campbell and Rush Doshi have emphasized the need to develop the nonmilitary dimension of U.S. alliances in Asia by deepening allied capacity across the board.¹ Also on the positive side, Republican and Democrat-aligned experts, such as Elbridge Colby and Ely Ratner, have emphasized the importance of U.S. alliances paying clear and concrete benefits to the United States.²

Both the broader perspective and the emphasis on benefits to the United States are welcome and are central to this report. This study emphasizes the need to consider two additional factors, however: allied will and entanglement risks. Doing so provides a more complete cost-benefit picture of what allies truly contribute—and where Washington could exercise more caution.

To begin with political will, it is one thing for an ally such as Japan to express growing concern over China’s behavior, another for them to adopt Washington’s preferred China strategy. Treating allies as more than “tripwires, distant protectorates, vassals, or markers of status,” to borrow Campbell and Doshi’s phrasing, means more than asking allies to contribute capability—it also means accepting that they are independent and sovereign actors whose interests align only imperfectly with the United States. Grand plans for strengthening U.S. alliances need to face up squarely to the reality that allies have wills of their own. Doing otherwise runs the risk that in an effort to bring them around to U.S. strategy, Washington will end up offering allies more security protection than is warranted—thus opening the path to greater strategic overextension.

Entanglement—being dragged by allies into conflicts of limited U.S. interest—has been debated in academia but needs to be taken seriously in policy discussions.³ Skeptics argue that evidence of entrapment in recent decades is limited to a handful of cases. If U.S. relative power is declining globally, however, the risks of entanglement may increase as U.S. adversaries act more boldly and create more crises, each of which offers the chance for U.S. entanglement. Meanwhile as U.S. relative power wanes, Washington may become more concerned about demonstrating its will and the strength of its commitments—and therefore more willing to adopt risky policies when the crises do arise.

Fear of entrapment or entanglement should obviously not be the sole consideration in determining U.S. alliance relationships, but those who argue that Washington can manage all its entanglement and entrapment risks down to acceptable levels are underestimating them. Entanglement is often conceived in terms of being dragged inadvertently into a war on account of a crisis, but some of the costs of entanglement occur well below the level of all-out war. Moreover, even if the probability of entrapment in an all-out war is fairly low, the risk varies from one case to another, and in all cases, the consequences of being entrapped in a war with China would be extremely high. At a minimum, those who downplay these risks put a very high level of confidence on Washington’s capacity to consistently conduct a skillful diplomacy that maintains sufficient flexibility to avoid war.

What Allies Can Bring to Strategic Competition with China

This report thus combines these three key elements of assessment—what an ally can bring, its will to cooperate, and the risk of entanglement—while taking a broad view of alliances that goes well beyond the military dimension. The focus is on support to U.S. strategy toward China. China is one of the central, or potentially the central challenge of U.S. foreign policy in the next decade, and as such it offers an excellent lens through which to consider what U.S. allies bring to the table.

Allies have increasingly been brought into U.S. strategy toward China since its aspirations to great power status became clear a decade ago.

Allies have increasingly been brought into U.S. strategy toward China since its aspirations to great power status became clear a decade ago. The Biden administration was especially conscientious about its use of alliances and other partnerships to strengthen deterrence in the Indo-Pacific, and the Trump administration has also touted the importance of allies in countering China, albeit with less consistency.⁴ Recently, Trump’s harsher approach to allies, along with his trade policies, have prompted concern among allied capitals about America’s reliability as a partner. Public opinion in several of the allies studied reflects a growing perception that the United States may be less dependable or less likely to come to their defense in a crisis.⁵

Too often the U.S. debate about allies has had a primarily military focus. Under the Biden administration, the AUKUS partnership with Australia and the UK was a leading example, as was the expansion of U.S. military basing in the Philippines. When it comes to strategic competition, nonmilitary contributions to U.S. security are hugely important, however. Consider, for example, the importance of allies in building more resilient global supply chains or supporting China-related U.S. objectives in multilateral fora and with third countries around the world.

To develop a more comprehensive framework for assessing U.S. alliances, we examined the written strategies and official policy statements of the Trump I, Biden, and Trump II administrations. From this, we derived eight primary areas where the United States expects allies to contribute to its China strategy:⁶

1. Preventing the unwanted dissemination of leading-edge technology to China. As China has advanced technologically, concern that it might equal or surpass the United States in vital national security technology has increased. Policy experts differ over how far the United States should go to limit the dissemination of advanced technologies to China, but very few would advocate for a no-holds-barred approach that permits China (or any country) to gain access to secret military technology or to gain the upper hand in artificial intelligence (AI). The United States thus needs the close cooperation of allies that have advanced technology that could accelerate China’s own progress in sensitive technology areas.
2. Controlling financial investment that would strengthen China’s military or national security capabilities. Whereas the need to prevent the unwanted dissemination of technology is age-old, the desire to restrict investment in certain sectors of China’s economy is more recent. These restrictions are often viewed as a corollary to export controls, however, in that they aim to stem U.S. investment in military or other sensitive sectors in China, and with that reduce certain types of knowledge transfer to these Chinese sectors. Allies are less focused on this area than the United States, but their attention is rising. If it chooses to continue down this path, Washington will need the cooperation of allies who are major investors in China’s economy.
3. Providing the United States with alternatives to China-based sources of chip production. The COVID-19 pandemic underscored the extent to which decades of offshoring production to China had left America vulnerable to supply chain disruption across a range of manufactures. Subsequent efforts to reorient supply chains away from China through a process of friend-shoring is a sensible response, especially in key sectors where a cutoff in the supply of a particular good would be devastating to U.S. security. One such sector is microprocessors. Even though the United States still controls the supply chains of the world’s most advanced chips, many legacy chips are still made in China (or in part made in China). The United States needs allies who can replace portions of this supply chain in their own countries in order to reduce the risk that China will be able to control this global market.
4. Providing the United States with alternative sources of critical minerals. In addition to the production of legacy chips, the United States also seeks to ensure access to critical minerals. China controls a huge part of the world’s critical mineral and rare earth mining and processing, giving it considerable leverage over the United States and other advanced industrial economies. Without critical minerals, it is impossible to produce many advanced technologies, including some of the most advanced U.S. military technologies. Allies are thus badly needed to build alternative sources of supply. Some allies are more capable of supporting this aim than others.
5. Providing concrete military support to U.S. deterrence in the Indo-Pacific, through strike capabilities, basing, intelligence, or other means. Even if strategic competition with China is far more than a military problem, there is no question that military force should and will play a vital role in U.S. strategy. Allies should therefore also be expected to make meaningful military contributions. To date, the military capabilities of most allies pale in comparison to those of the United States, although a few offer weapons that can be added to those of the U.S. military itself. Most allies, however, offer mainly basing or logistical support to U.S. forces operating in the region. Allied contributions to the U.S. intelligence picture, although not uniquely military in nature, also vary greatly.
6. Coproducing important weapons systems with the United States. Some allies work with the United States to develop or produce important weapons systems. This offers the Pentagon opportunities to reduce the costs of certain advanced weapons systems or solve specific defense production bottlenecks. The benefits of this cooperation are usually considerable for the allies themselves—and strengthening allies is rightly one of the objectives of coproduction. Capacity to make meaningful contributions to U.S. capabilities from co-production, however, is unusual.
7. Supporting U.S. efforts to sustain U.S. preferences for global order in international institutions. China increasingly believes that it has so called “structural” power to change the international rules of the game to suit its preferences.⁷ This creates a competition for power and influence in today’s international and regional institutions. Beijing’s vision for world order, while often vague and self-interested, appeals to people around the world who are skeptical of Washington’s claim that the U.S.-led world order benefits them. Chinese diplomats have meanwhile become far more skilled at operating in existing global institutions. To shape the future order and prevent a broad adoption of China’s preferences, the United States needs allies with sway in the world’s multilateral forums—including global forums such as the United Nations and key regional forums such as ASEAN.
8. Influence with the Global South. China is actively courting developing nations through initiatives like the Belt and Road Initiative. Allies that can offer alternatives—development aid, investments, and diplomatic support—to help counterbalance Beijing’s sway in these regions. The United States obviously does not need to dominate the entire world to protect its interests, but it would be unwise to ignore China’s efforts to gain influence in regions where the United States has important interests at stake—and a mistake to overlook the fact that the United States stands to benefit from allies who have measurable influence in third countries around the world.

The Costs and Benefits Seven U.S. Allies Bring

This report examines the capacity and will of seven key allies across these eight categories. The allies include the four major U.S. Indo-Pacific treaty allies—Australia, Japan, the Philippines, and South Korea—as well as its three major European allies—France, Germany, and the United Kingdom. We assessed each ally’s capacity and will to contribute concretely to the eight U.S. goals, assigning a value of “very important,” “somewhat important,” and “not important” in each case. These assessments are by nature subjective, but we have made every effort to ensure that they are congruent across the cases by adhering to clear definitions of what we mean by “very,” “somewhat,” and “not” important in each category—these definitions are provided in a section before the case studies.

The allies assessed were selected in part because they are widely viewed as key when it comes to China. They were also selected because the United States has treaty commitments to defend them, which means they all pose at least a theoretical risk of entanglement—although this risk varies widely as discussed throughout this report. Given the security commitments the United States has made to them, these allies should be expected to provide substantial benefits to U.S. security. Important partners like India or Taiwan are thus not included because the United States does not have a treaty commitment to defend them, although future analysis might usefully focus on them.

U.S. allies have been responding to the rise of China in different ways, and their policies have evolved over the course of the last decade. Few allies, if any, are as seized with the challenge that China poses as Washington has been, but concern has grown especially since the pandemic and China’s bungled diplomacy of that era. Allies in Asia have become more wary of China’s power and the possibility that it might destabilize the region with its ambition. This has fueled a deepening of U.S. alliances. Recent U.S. policies—the tariffs mentioned above, for example—could counter this trend, however.

Few allies, if any, are as seized with the challenge that China poses as Washington has been, but concern has grown especially since the pandemic.

Allies in Europe have tracked U.S. concern about China to some degree, but the degree has varied substantially by country. Even among the major U.S. allies in this report, there are clear variances. Germany’s deep investment in China’s auto industry creates headwinds for German leaders focused on meeting the geopolitical challenge from China. Political leaders in the UK have vacillated, while France under President Macron has sought to position Europe as a third pole in a U.S.-China-EU world—although one clearly still linked to the United States. The EU has acknowledged the challenge and sought a strategy of “de-risking” from China that would avoid economic and political decoupling altogether. China’s support for Russia’s war on Ukraine hardened Europe’s line to some degree, but not enough to bring key European capitals fully into line with Washington.

As of 2025, allied ability to meaningfully contribute to U.S. objectives with China thus varies substantially.

• Japan has the capacity to further U.S. aims with China across all eight categories—and is very important in seven of them. The United States thus gains major benefits from the alliance with Japan and at fairly low risk and cost—a balance that will move further in Japan’s direction as it continues to increase its military spending.
• Australia can contribute to U.S. strategic objectives, albeit somewhat less than some other allies. Compared with other allies, however, this alliance poses a lower risk that the United States would be inadvertently dragged into a war.
• South Korea has substantial economic and military power, but it has been very reluctant until recently to use its military to counter China, due to its laser-focus on the threat from North Korea. South Korea nevertheless requires a major investment of military power from the United States and the alliance could lead to war with North Korea—and by extension China.
• European allies—Germany, France, and the United Kingdom—can at best only make modest military contributions to deterrence in the Indo-Pacific, but they could be far more important to achieving technological, diplomatic and political objectives.
• The Philippines’ value stems primarily from its advantageous military geography—but it remains much less relevant on technological and diplomatic measures and presents entanglement risks.

The benefits America gains from any single alliance may also be viewed in the context of the alliance system as a whole. Adding an ally to a network may offer benefits that go beyond those from a purely bilateral relationship—for example, if that ally serves as a crucial node in a network that would otherwise not function. Allies can also add military, economic, and political resilience. The challenge, however, is to determine what the marginal gain from a particular ally may be in terms of resiliency. After all, the more resilient a network of allies grows, the less important any particular ally becomes. A wise strategy would seek to limit U.S. costs and risks as the marginal benefit from adding additional allies diminishes.

Study Limitations

This study brings together a wide range of data sources across what we assess to be the key issues that policymakers should consider in assessing the value of U.S. alliances. It also provides a framework that could be replicated in other cases to further deepen U.S. understanding of the value of its various alliance and partner relationships around the world. It is not intended as a comprehensive assessment of the overall value of U.S. alliances, nor the overall value of the allies assessed. The allies herein are assessed only in relation to their capacity to contribute to U.S. objectives on China. This is obviously very important, but it means that contributions that, for example, France makes to security in Europe are not considered herein.

A second limitation is U.S. strategy itself, which is evolving. We have attempted to assess allies against a synthetic version of U.S. China strategy, derived from primary sources. This is necessary in order to hold some aspects of a complex system constant. We are not intending to claim that the U.S. strategy is ideal—although it certainly has strong suits. A further study might assess the value of these allies against strategic alternatives, and as U.S. strategy evolves it will be useful to further refine or update the major categories. Similarly, as allied contributions shift, reassessment will also be warranted and additional allies may be added. Some important allies and partners have been scoped out of this study—the Netherlands, for example, is significant when it comes to supply chains, and India could bring a range of potential benefits but is not a treaty ally.

The next chapter compares the cases for an overall picture. Individual case studies follow.

A comparative assessment of our case studies reveals key differences among U.S. allies. Japan clearly stands out, followed by Australia and South Korea. In contrast, European allies, while influential economically and diplomatically, contribute far less to Indo-Pacific military needs. The Philippines, despite its strategic location, has limited capabilities and poses higher entanglement risk. This section details these findings across eight functional areas of competition, from semiconductors to security cooperation.

The United States and its allies currently dominate most cutting-edge chip design and manufacturing, but China dominates legacy chip production and is gaining ground with advanced chips. Our assessment of each ally’s importance in reinforcing American semiconductor supply chains is based on the size of the ally’s share of global manufacturing, machinery, materials, parts, and chip production capabilities for both cutting-edge and legacy chips. Given China’s dominance in outsourced semiconductor assembly and testing (OSAT), we place particular emphasis on allies that have OSAT capabilities. (We recognize that other U.S. allies such as the Netherlands make substantial contributions here, but they are outside our scope.)¹

Japan, South Korea, and Germany Are Key Allies When It Comes to Chip Friendshoring

Japan, South Korea, and Germany are the key U.S. allies when it comes to “friendshoring” advanced semiconductor manufacturing.

• Japan is the world’s third-largest supplier of semiconductor manufacturing tools and controls around 90 percent of the market for photo resistant coating application tools, an indispensable part of the photolithography process for cutting-edge chips.² Japan partners with the United States and Taiwan Semiconductor Manufacturing Corporation (TSMC) to create next-generation two-nanometer chips as well as legacy chips. It also has domestic OSAT capabilities.³
• South Korea is the second-largest semiconductor producer in the world and is constructing the world’s largest semiconductor production hub. This should secure their importance in the supply chain for the near future.⁴
• Germany produces an estimated third of the world’s high-purity polysilicon used in semiconductors.⁵ Leading German companies also supply input chemicals and specialized machine parts required for advanced chip fabrication processes.⁶ Germany also has some OSAT capabilities for its semiconductor industry.⁷

These three allies are also likely to be willing to assist the United States with friendshoring. While South Korea and Japan remain wary of antagonizing China, each aligned its supply chains with the United States in response to the 2022 CHIPS and Science Act and have taken legislative action to bolster their roles in the semiconductor supply chain through strategic investments.

Critical minerals are important for a variety of strategic applications. For the purposes of this study, we focus on twenty minerals used in the manufacturing of advanced batteries, rare earth permanent magnets, advanced semiconductors, and arms production. These applications were chosen as key technologies that will influence future economic and military capabilities in the strategic competition between the United States and China. The full list of minerals and applications can be found in Appendix 3.

Given that these twenty minerals are all relatively scarce and are essential for manufacturing these applications, we do not distinguish between their comparative importance. Allies’ raw material contributions are crucial, as U.S. supply chains here are weaker than in chips and more vulnerable to Chinese leverage. To assess the extent to which allies can contribute to strengthening U.S. resiliency in this area, we focused on whether the ally had important critical minerals reserves, large-scale mining operations, or high-volume processing and refining capabilities.

Japan, South Korea, and Australia Are Key Allies on Critical Minerals

• Australia has reserves of most critical minerals, including the world’s largest reserves of lithium, graphite, cobalt, rare earths, and high-purity silicon. It is also the first producer of rare earths outside of China. Australia also has potential to produce gallium as a byproduct of other metal production, a key input for advanced semiconductors where China has a near monopoly on the global supply.⁸
• South Korea produces critical minerals for advanced batteries, electronics-grade silicon and high-purity tungsten for military applications. South Korean companies are also leading global producers of precursor chemicals for advanced batteries and are starting to develop production capabilities for rare earth magnets, though these are still at much lower volumes than China.⁹ South Korea’s Sangdong mine will become one of the largest sources of non-Chinese high-purity tungsten and has received substantial U.S. government support.¹⁰
• Japan is also very important for U.S. critical mineral interests for batteries, rare earth magnets, semiconductor chips, and military applications. It has significant volumes of recycled platinum and titanium sponge.¹¹ It also refines antimony, lithium hydroxide, and high-purity gallium and produces refined nickel product and tungsten.¹² Japan also has strong financing institutions for overseas investments to friendshore critical minerals supply chains.¹³

Germany, the Philippines, the United Kingdom, and France are also able to contribute to strengthening critical minerals supply chains, but to a lesser degree. For example, Germany produces polysilicon for semiconductors and has lithium deposits and refining capabilities.¹⁴ The Philippines is the world’s second-largest miner of nickel and the sixth-largest producer of cobalt.¹⁵ The United Kingdom has refining capacity for platinum and the potential for large scale lithium refining.¹⁶ Its tungsten deposit at Hemerdon, one of the largest in the world, could supply significant volumes of tungsten for key defense applications.¹⁷ France has committed efforts to build a domestic critical minerals supply chain including launching a rare earth element production line for permanent magnets.¹⁸

After the COVID-19 supply chain shocks and due to the risk of China’s withholding critical minerals in response to U.S. export control measures, most U.S. allies recognize the importance of reinforcing supply chains, so we expect them to continue to support the process. Some countries, such as the Philippines—and to some extent the UK—face domestic hurdles to developing their capabilities. The Philippines, for example, needs stronger and more business-friendly mining infrastructure and regulatory frameworks.

U.S. allies still have some sensitive and proprietary technologies—especially microelectronics, advanced computing and quantum technologies, artificial intelligence, and advanced telecommunications—that the United States seeks to deny to China. Those allies’ cooperation in preventing unwanted technology transfer will therefore be important to Washington.

That said, U.S. allies have so far done less than the United States to prevent unwanted dissemination of their technology to China. This is largely due to concern over Chinese retaliation and lower levels of concern about the consequences of technology transfer in the first place. Germany’s chip and automotive markets are currently very intertwined with China’s, for example, making technology restrictions especially vulnerable to such retaliation. Policies are evolving, however, as evidenced by Japan and the Netherlands’ decision to cooperate with the United States to limit the export of advanced chipmaking technology to China.

Japan and South Korea Are Currently the Key Allies in Preventing Unwanted Tech Access

• Japan has a competitive advantage in NAND memory, power semiconductors, microcontrollers, and complementary metal-oxide semiconductor (CMOS) image sensors as well as a world-class quantum research industry and a strong biotechnology sector.¹⁹
• South Korea is also important in this category, although less so than in the past as its technology industry has lost ground to China’s.²⁰ South Korean firms still lead globally in memory-chip technologies and have a large manufacturing presence in China.²¹ South Korea has other technological strengths, including AI and telecommunications infrastructure.²²

The United Kingdom, Germany, Australia, and France are also important, however, given their chip design capabilities and quantum computing research. The Philippines is the only ally in our study which is not important when it comes to protecting proprietary advanced technology.

Allied foreign investment in China’s technology sector could pose risks if it strengthens China’s military capabilities. We thus examined whether allies were important contributors to China’s inbound FDI, how much is in advanced technology manufacturing, and whether allies have outbound FDI screening regimes.

Japan, South Korea, Germany, and France Are the Key Investors in China

• Japan was the fifth-largest source of FDI in China in 2024.²³ Japanese companies’ investments in China are concentrated in the technology, manufacturing, and automotive industries, such as Toyota’s plan to build a new wholly owned EV manufacturing plant in Shanghai to strengthen its presence in the world’s largest automotive market.²⁴
• South Korea was the seventh-largest source of FDI in China, at $3.51 billion in 2023.²⁵ The Korea Investment Corporation, South Korea’s sovereign wealth fund, is eyeing data centers and AI startups in China’s tech hubs, which some argue could facilitate China’s AI boom—and negatively affect U.S. efforts to stay ahead.²⁶
• Germany was the eighth-largest sovereign source of FDI in China in 2024. From 2016 to 2023, it accounted for over half of EU FDI in China; these investments are largely from Germany’s automotive and chemicals industries.
• France was the ninth-largest sovereign source of realized FDI into China at $1.34 billion in 2024.²⁷ France was also one of the fastest-growing sources of direct investment in China that year, and France has invested extensively in Chinese technologies, particularly in AI companies and biotechnologies.²⁸

Many allies are in the process of developing their outbound investment screening tools, although they may not place the same emphasis on controls as the United States. The relatively smaller size of their venture capital markets, however, reduces the importance of doing so while the importance of external markets for some—such as Germany, South Korea, and Japan—raises the cost of following the United States’ lead.²⁹

Given the Indo-Pacific’s size and distance from the continental United States, the U.S. military relies on allied basing and logistics to project power into the Indo-Pacific. Some allies also offer strike capabilities relevant to regional deterrence.

Japan and Australia Are Growing in Importance

Japan and Australia both have a history of housing U.S. personnel or equipment, engage in consistent logistics coordination with the United States, and have native strike capabilities. Importantly, they would likely—although not certainly—offer support in the event of a war.

• Japan hosts the most U.S. military personnel in the world, with half of those forces stationed in Okinawa, which is only 400 miles away from Taiwan.³⁰ Okinawa is home to Kadena Air Base, which is the largest combat wing in the Air Force.³¹ Japan has also committed to spending 2 percent of its GDP on defense, strengthening its advanced cyber warfare capabilities, and procuring counterstrike weapons systems.³² It has advanced anti-submarine warfare, anti-ship warfare, and maritime reconnaissance capabilities.³³
• Australia’s location, strong logistics coordination with the United States, and strike capabilities make it another very important regional military ally. The United States has a sustained rotational Marine Corps presence in northern Australia and expanded access to key Australian air bases such as through upgrading them to accommodate deployments of U.S. B-52 strategic bombers.³⁴ Australia also conducts bilateral and multilateral exercises with key U.S. allies such as the Talisman Sabre, Pitch Black, and Predator Run multilateral training exercises.³⁵ Beyond its coordination under AUKUS to receive U.S. Virginia-class nuclear submarines (although under review at the time of writing), Australia is also expanding its missile-defense with acquisitions of U.S. SM-2/SM-6 missiles.³⁶

South Korea is home to large numbers of U.S. forces and has its own offensive capabilities. Those capabilities are directed against North Korea, however, and Seoul has historically been reluctant to countenance providing military support to the United States in a conflict with China. The Philippines is also a somewhat important partner due to proximity to Taiwan, but its own military capabilities are limited.

The question of whether U.S. allies in the region would in fact join the United States in a conflict over Taiwan is more fraught than often acknowledged. In the event of a war, several factors would influence allied levels of support for the United States, including domestic politics, how the conflict began, and China’s own threats and efforts to deter their participation. This ambiguity is gradually diminishing as China’s assertiveness grows, but it remains a sobering strategic dilemma for Washington.

America’s allies in Europe are not relevant in this category today—with the exception of some intelligence contributions of the United Kingdom. European military capabilities are rapidly increasing, but their focus remains, as it should, on securing Europe against Russian aggression.

As Ukraine-related concerns about shortfalls in the U.S. defense industrial base have grown, Washington has looked to allies to help fill gaps. Allies also participate in longstanding co-development initiatives that aim to spread costs and benefits of large weapons platforms such as the F-35. An ally’s importance in such areas can best be gauged by their past record, technological prowess, and size of their defense industry.

• U.S.-UK cooperation includes nuclear weapons, stealth technology, anti-submarine-warfare technology, radar systems, satellite technology, quantum computing, advanced radars, hypersonics, and military applications of AI.³⁷ The UK also has a major financial stake in the F-35 program, to which it enjoys privileged access.³⁸
• South Korea’s shipyards are increasingly important in light of bottlenecks in the United States.
• Japan and Australia are both working with the United States on hypersonics.
• Germany is cooperating with the United States, although the focus is primarily on needs in Europe, rather than priorities for a potential conflict with China.
• France focuses weapons development on European partners; the Philippines has limited defense industry of its own.

Allies can shape structure and outcomes in global and regional institutions relevant to competition with China. We thus assessed allied capability across key international organizations—globally and in the region—through monetary contributions, voting power, and leadership positions.

• The United Kingdom is on the UN Security Council and was third-most-aligned country with the United States in terms of UN votes in 2023.³⁹ It is also in regional organizations the United States is not part of, such as the Association of Southeast Asian Nations (ASEAN), in which it is a Dialogue Partner, and the Asian Infrastructure Investment Bank (AIIB), where it is ranked ninth in voting power.
• Japan specifically aims to mitigate the potential threat from China’s rise with a free and open Indo-Pacific.⁴⁰ It plays a central regional role in the Quad, the Trilateral Strategic Dialogue, and the Security and Defense Cooperation Forum, and through other groupings with Australia, the Philippines, and South Korea.⁴¹
• France’s seat on the Security Council makes it very relevant, even though it is less important in Asian regional fora than the UK.
• Germany carries weight in several multilateral forums, including the World Trade Organization, the UN Human Rights Council, the AIIB, and the Asian Development Bank (ADB).⁴² It has also been a Development Partner to ASEAN since 2017 and works with the organization under the ASEAN-Germany Development Partnership Committee.⁴³
• Australia is seeking to deepen multilateral ties in the Indo-Pacific, is a founding member of the Asia-Pacific Economic Cooperation, the Quad, and the Minerals Security Partnership. It ranked fifth in voting power among members of the ADB in 2024, and sixth among those of the AIIB in total subscriptions and voting power in 2025.⁴⁴
• South Korea is an important player in the Asia-Pacific Economic Cooperation and the fifth- and eighth-largest member by voting power, respectively, in the China-led Asian Infrastructure Investment Bank and Asian Development Bank.⁴⁵ It is not a member of ASEAN but works closely with it through the ASEAN-Korea Cooperation Fund.⁴⁶
• The Philippines has less diplomatic clout, but is a member of ASEAN, the Asian Pacific Economic Cooperation, the AIIB, the ADB (whose headquarters is in Manila), and several minilateral fora.

The extent to which allies are willing to align themselves with the United States in international forums when it comes to China varies. The United Kingdom is probably the most aligned in this regard, with the other allies often, although not always, following the U.S. lead.

The Global South’s importance in U.S.-China competition is debated and can be difficult to measure, but it would be a mistake to ignore. Allies with influence stand to contribute, for example, through development aid, finance, and diplomatic weight. We use allied development assistance and institutional capacity for investment as rough proxies for influence. It should be noted that several allies—Europe especially—that have played important roles are now cutting funding.

Very Important: Japan, Germany, France, and United Kingdom

• Japan was the fourth-largest provider of ODA among OECD members in 2024 with $16.77 billion, focused especially on Asia.⁴⁷ It also leverages the massive financial power of its development finance institutions, the Japan Bank for International Cooperation and the Japan International Cooperation Agency—again, especially in Asia.
• Germany was the second-largest provider of development assistance in the world in 2024, sending $32.4 billion abroad, with important bilateral amounts in Asia and Africa.⁴⁸ Its development finance arm, Deutsche Investitions- und Entwicklungsgesellschaft (DEG), supports private-sector investments in developing and emerging markets worldwide.⁴⁹ Berlin is also a key player in the EU’s Global Gateway, a $317 billion initiative for investing in high-quality infrastructure in the Global South to counter China’s Belt and Road Initiative.⁵⁰
• France is a major leader in global development assistance and is the fifth-largest donor country in 2024, with assistance amounting to $15.4 billion.⁵¹ It is especially strong in Africa, but also invests in Asia and Latin America, although Paris is careful not to characterize its aid as challenging China.⁵² Through its development finance arm, Proparco, it finances private sector projects in Africa, Asia, Latin America and the Caribbean, and the Middle East.
• The United Kingdom was the fourth-largest development lender in absolute terms, with $18 billion in 2024—although set to decline.⁵³ The UK development-finance institution, British International Investment (BII), has worked closely with its U.S. counterpart, the U.S. International Development Finance Corporation, on joint initiatives.⁵⁴

Somewhat Important: Australia and South Korea

• Australia is the world’s fourteenth-largest provider of ODA, but has been especially active in its neighborhood, supporting development in Pacific Island nations—often with the specific aim of countering China’s influence.⁵⁵ It does not have a dedicated development finance institution, however.
• South Korea is a somewhat important and in 2024 was thirteenth among the providers of assistance. It allocates 54 percent of its bilateral development assistance to Asian countries, providing $1.3 billion in 2023.⁵⁶ It has some capacity to compete with China’s BRI investments through financing vehicles funded by the Korean Overseas Infrastructure and Urban Development Corporation (KIND).⁵⁷

Observations

The foregoing comparison should help clarify which alliances are worth the most attention and investment from Washington policymakers and alliance strategists. There are real benefits from alliances but also risks and limitations to what can be achieved. Pushing allies beyond what their domestic politics will likely allow or failing to account for the increased entanglement risks with some allies, could thus backfire.

When domestic public sentiment, political leadership, economic interests, or national geopolitical objectives diverge from U.S. goals, allies are obviously going to be far less inclined to support them. Moreover, even though allied concern about the challenge China poses has increased the willingness and capabilities of allies to support U.S. goals, perceptions of the United States are not altogether rosy.⁵⁸

As discussed in detail in the case studies that follow, it would be a mistake not to also consider entanglement risks, which vary widely. Some allies amplify deterrence with little downside (Australia, Japan), while others, such as the Philippines, raise the danger of unwanted escalation for the United States. These risk assessments should factor more clearly in alliance design and management.

The United States should invest in its alliances, but with appropriate realism and restraint. America’s alliance network is an asset but must be frequently refined and recalibrated. U.S. strategy should prioritize its relations with allies that deliver the most impact, work with Europe to leverage their potentially strong nonmilitary contributions, and be realistic about gaps in allied political will and over-commitment risks. U.S. alliances can be fit for purpose in the twenty-first century, but only with clear-eyed adjustments to align them with today’s strategic realities.

Economic Goals

“Friendshoring” aims to minimize vulnerable points in critical supply chains through relocating to or creating redundancies in manufacturing capabilities in allied countries.

Reinforce Semiconductor Manufacturing Supply Chains

• This ally has a large share of the global semiconductor market. It produces a major share of key semiconductor manufacturing equipment, materials, or parts, and/or it has a large number of cutting-edge chip production capabilities, and/or it has a large role in the production of legacy chips and/or OSAT capabilities.

• This ally has some share of the semiconductor market. It produces semiconductors manufacturing equipment, materials, or parts, and/or it has high-end chip production capabilities, and/or it plays a meaningful role in the production of legacy chips and OSAT capabilities.

• This ally plays a minimal or no role in the semiconductor supply chain.

Increase Critical Minerals Supply Chain Resiliency

• This ally provides access to significant reserves, large scale mining operations, or high-volume processing and refining capabilities that could supply U.S. critical mineral needs. Alternatively, this ally provides a significant source of non-adversarial production capacity. The identified minerals are grouped by their primary commercial or security application and are listed in the appendix to this chapter.

• This ally provides access to some supplies of reserves, mining outputs, or processing and refining capabilities of critical minerals on a commercial scale that could supply U.S. critical mineral needs. 

• This ally lacks significant reserves, mining, or refining and processing capabilities that could supply U.S. critical mineral needs and is unlikely to develop these on a commercial scale in the near future. 

Technology Goals

Limit China’s Access to Advanced Technology

• This ally has significant advanced-technology production capabilities and intellectual property. It is crucial for developing (and containing the spread of) advanced microelectronics, advanced computing and quantum technologies, artificial intelligence, biotechnology and biomanufacturing, or advanced telecommunications. Or, it has a significant technology production presence in China, Chinese investments in its domestic advanced technology industry, and/or partners with Chinese institutions on technology development.

• This ally has some advanced technology production capabilities and holds some share of intellectual property. This ally has some role in the development or production of microelectronics, advanced computing and quantum technologies, artificial intelligence, biotechnology and biomanufacturing, and advanced telecommunications. Or this ally has some manufacturing presence in China and Chinese investments in its advanced technology sector.

• This ally has little to no advanced technology production capabilities and little to no share of U.S. advanced technology intellectual property or technology production in China.

Restrict Foreign Direct Investment (FDI) in China’s Technology Sector

• This ally is one of the top ten sources of FDI in China’s technology sector, or a large share of its global FDI is in manufacturing of advanced technology in China, or it is a leading country in advanced technology production or innovation with few FDI restrictions on sensitive technology or dual-use technology exports.

• This ally is a source of FDI in China’s technology sector but is not one of the top ten sources. It has some technology production or innovation and may have technology FDI restrictions.

• This ally has little to no FDI in China’s technology sector.

Military Goals

Provide Basing, Logistics, and Strike Capabilities in Case of a Conflict Over Taiwan

• This ally is geographically close to Taiwan and hosts major U.S. bases, personnel, and materiel; or it can greatly bolster U.S. intra-theater lift capabilities and provide facilities for refueling, intercepting communication, and electronic countermeasures (jamming). It also participates in regular joint exercises to enhance interoperability with the U.S. military. This ally also possesses relevant native strike capabilities, including surface, sub-surface, air, or other capabilities.

• This ally hosts some U.S. bases, personnel, and materiel, or it has some ability to assist in U.S. intra-theater lift capabilities and to provide facilities for refueling, intercepting communication, and electronic countermeasures (jamming). This ally also participates in some joint exercises to enhance interoperability with the U.S. military.

• This ally hosts few or no U.S. bases, personnel, and materiel, or is not located in the region. Or it does not have intra-theater lift capabilities and facilities for logistics assistance and participates little in joint interoperability exercises in the theater.

Co-Develop Military Technology and Weapons Systems with the United States

• This ally has a robust military technological innovation base and has a record of decades of working with the United States on joint production programs. The United States relies on this ally for the development of one or more of its weapons systems.

• This ally has some military technological innovation capacity and has on occasion worked with the United States on joint production programs. It also possesses capacity for civilian technological innovation with potential for dual-use military application.

• This ally has little to no civilian innovation capacity and is not a part of joint production programs with the United States.

International Engagement Goals

Actively Participate and Cooperate with the United States in International Organizations and Global Governance

• This ally is a traditional leader in creating structures for global governance and has major influence in key international organizations. Or it also is a permanent member of the UN Security Council and is a major funder of international organizations. Or this ally plays a major role in key regional organizations through monetary contributions, leadership positions, and votes that blocks China’s influence or ascension in these organizations.

• This ally provides some funding to international organizations. It has periodically worked with the United States on advancing U.S. goals in key organizations. This ally is a part of key regional organizations but does not have substantial influence or participate significantly in them. It has worked with the United States on the creation of multilateral and minilateral international organizations aimed at limiting China’s influence.

• This ally provides little or no funding to international organizations. It does not have a record of working with the United States on advancing U.S. goals in key regional organizations or in multilateral and minilateral international organizations aimed at limiting China’s influence.

Estimated Influence with the Global South

• This ally is a substantial provider of ODA to countries in the Global South. It also has a robust development finance institution that offers alternative funding mechanisms to pivot the Global South’s reliance away from China.

• This ally is a provider of ODA. It has a development finance institution or similar programs that provide funding alternatives to the BRI to pivot the Global South’s reliance away from China.

This ally provides little ODA or is an ODA recipient.

Australia

The U.S.-Australia alliance has received growing attention from experts as Australia’s once warm relations with China have run aground. Australia is a capable partner across a range of issues, although it brings fewer resources—military or economic—than some other allies. It is also far smaller in population than the other allies in this report. The alliance with Australia, however, does not demand as much from the United States as some other alliances—there is little likelihood of being inadvertently entangled in a war with China on account of Australia. Canberra is also likely to continue to assist Washington in reinforcing supply chains, limiting China’s access to advanced technology, co-developing weapons systems, and providing development assistance to the Global South. It would be very important in a war over Taiwan—though its participation is not guaranteed.

Recent Trends in Australia’s Relations with the United States

Australia’s long-standing relationship with the United States has significantly deepened over the last decade, including with several initiatives for containing China. Its 1952 ANZUS Treaty with New Zealand and the United States is the foundation of the alliance.¹ Since then, Canberra and Washington have coordinated closely on international crises and worked together on counterterrorism in the Middle East and dispute-resolution in the East and South China Seas.² Importantly, Australia is a member of the “Five Eyes” intelligence group.³

Since their 2005 free-trade agreement, bilateral goods and services trade between Australia and the United States has more than doubled, and two-way investment has more than tripled.⁴ In 2023, Australia had the eighth-largest direct investment position in the United States at $116 billion, as well as the fourth-largest trade surplus with the United States at $17.3 billion.⁵ The two economies have become more integrated, but the Trump administration’s tariff policy might change this.⁶

The 2021 launch of AUKUS was a key development,⁷ through which the United States will share advanced nuclear-propulsion and sonar technologies to co-develop nuclear-powered submarines.⁸ Following their ministerial consultations in 2023, Australia granted the United States additional access to its airbases and agreed to host U.S. submarines for “regular and longer” visits.⁹ The two countries also launched a Strategic Commercial Dialogue in 2022 with the aim of strengthening trade relations, cooperating on critical supply chains, and coordinating responses to common threats.¹⁰

Prime Minister Anthony Albanese worked extensively with then president Joe Biden bilaterally and within multilateral groupings, such as the Quad with India and Japan.¹¹ He has said he had “very warm” phone calls with Trump, and the two leaders have signaled their intent to meet to discuss AUKUS and tariffs.¹² The relationship with the United States fared well during Trump’s first administration, when Australia was one of only two countries exempted from its tariffs on steel and aluminum.¹³ Public opinion about the United States is on a downtrend, however. According to the Lowy Institute, Australians’ trust in the United States has fallen by 20 percent since 2024, reaching its lowest level in the institute’s two-decade history.¹⁴

Recent Trends in Australia’s Relations with China

Australia’s relationship with China has been turbulent over the last decade. The two countries proclaimed a “comprehensive strategic partnership” in 2014, but tensions mounted from 2017 when Australia’s domestic intelligence agency issued a warning about Chinese interference through political donations.¹⁵ In 2018, Canberra introduced anti-foreign interference legislation and banned Huawei and ZTE from 5G networks, prompting Beijing to cut off diplomatic ties.¹⁶ Relations deteriorated further in 2020 when then prime minister Scott Morrison called for an investigation into the origin of the COVID-19 pandemic in China. In response, Beijing imposed heavy tariffs on Australian goods and detained several Australian nationals.¹⁷

Australia’s relationship with China has been turbulent over the last decade.

The Labor government in office since 2022 has pursued rapprochement with China through “strategic equilibrium” and “stabilization,” a shift from the more confrontational approach of the previous Liberal-National Coalition government.¹⁸ This has meant softening the rhetoric about China and working to ease mutual export restrictions, while being careful not to distance Australia from the United States.¹⁹ Albanese went to China in 2023 for the first prime-ministerial visit there in seven years, and followed with a second official visit and meeting with President Xi Jinping in July 2025.²⁰ At the time, he said that, even with the removal of trade restrictions and the restoration of diplomatic contacts, the relationship would likely “remain difficult.”²¹

Risks of U.S. Entanglement from the Alliance with Australia

One manifestation of the tensions between China and Australia has been recent naval exercises by the Chinese navy in the vicinity of Australia.²² The U.S. military operates closely with Australian counterparts and in theory could become entangled in a military crisis between Australia and China. Right now, however, this possibility is remote. The recent standoff between Australia and China has the character of mutual posturing by regional powers rather than the raw aggression that has characterized China’s military and grey zone operations in the South China Sea—both Australia and China have been careful to keep the potential for accidental escalation low. On balance, therefore, America’s alliance with Australia poses the least risk of entanglement of any U.S. ally in the Indo-Pacific.

Australia’s Ability to Reinforce Semiconductor Manufacturing Supply Chains

Australia is not an important ally for the United States in “friendshoring” semiconductor manufacturing supply chains because it lacks commercial-scale manufacturing facilities for semiconductors, relevant manufacturing equipment and OSAT capabilities.²³ Australia also does not domestically produce and refine input materials necessary for semiconductors. Australia does possess research and development capabilities in semiconductor technologies in its universities and research institutions.²⁴ National- and state-level initiatives are seeking to develop Australia semiconductor R&D capacity through industry and university partnerships. While U.S.-Australia collaboration under AUKUS Pillar 2 does not explicitly cover semiconductor supply chains, its goals for cooperation in advanced technologies including AI, quantum, and electronic warfare rely on securing semiconductor supply chains.²⁵ Overall, Australia has little to offer the United States that would help it shift the production of legacy or leading-edge chips away from China.

Australia’s Ability to Increase Critical Minerals Supply Chain Resiliency

On the other hand, Australia is very important for U.S. critical mineral interests. Australia possesses large scale deposits across many of the critical minerals and rare earths essential for U.S. strategic applications. It is the world’s largest miner of lithium and rutile titanium and the fourth-largest miner of rare earth elements for magnets and a leading rutile producer.²⁶ Australia possesses among the world’s largest reserves of lithium, cobalt, manganese, nickel, tantalum, tungsten bauxite (for gallium), and zinc (for germanium).²⁷ Australia is attempting to build refining and processing facilities for lithium, graphite, cobalt, rare earths, and high-purity silicon.²⁸ In May 2025, Australia’s Lynas Rare Earths became the first facility to separate the materials and produce rare earth metal oxide outside of China, with its Malaysian refinery successfully refining dysprosium and terbium, two key rare earths in high-performance magnets.²⁹ The company has signed a contract with the U.S. Department of Defense to build a processing facility in Texas, but it is uncertain if it will be built.³⁰ The potential for Australian gallium production for advanced semiconductors as a byproduct of bauxite processing could be especially important for U.S. interests, since China has a near monopoly on global supply.³¹

Australia possesses large scale deposits across many of the critical minerals and rare earths essential for U.S. strategic applications.

Australia has demonstrated ongoing political interest in assisting U.S. efforts to pivot critical mineral supply chains away from China. However, Australia currently sends a large share of its minerals and rare earth elements to China for refining, creating a key chokepoint in the critical minerals supply chain.³² To remedy this, it is investing in its processing and refining capabilities, as part of the Critical Minerals Strategy 2023–2030.³³ Canberra has undertaken domestic efforts to redirect its supply chains, including over four-billion-dollar in tax incentives to produce critical minerals through 2034, aimed at reducing reliance on Chinese sources. As part of the Quad and the Minerals Security Partnership, it participates in several U.S.-led international efforts internationally to diversify the processing and refining of critical minerals away from China.³⁴ Australian Strategic Minerals also received a letter of interest for $600 million of funding from the U.S. Export-Import Bank (EXIM) to develop rare earths and critical minerals mining.³⁵

Australia’s Ability to Prevent Unwanted Dissemination of Advanced Technology to China

Australia has a small semiconductor industry, but investments in quantum computing, space, and resource technology and biotechnology make it a somewhat important ally to the United States when it comes to preventing the unintentional dissemination of sensitive technologies to China. It ranks ninth globally in quantum research output and it is a global leader in superconducting circuit-based quantum processors, with the company Diraq producing the highest-fidelity ones to date.³⁶ Australia also has a robust biotechnology innovation and research sector, with expertise in synthetic biology, vaccine development and clinical trials, but lacks the capacity to produce biotechnology products at scale.³⁷

Australia is very likely to continue working with the United States in this regard. It shuttered its technological research programs on several fronts with China in 2019.³⁸ Having banned Chinese technology companies Huawei and ZTE from its 5G networks, this year it banned the use of the Chinese AI DeepSeek app from federal-government devices.³⁹ Australia is collaborating with the United States and United Kingdom under AUKUS Pillar 2 to coordinate the development and deployment of “advanced capabilities” with active working groups on: quantum technologies, artificial intelligence and autonomy, advanced cyber, undersea capabilities, and innovation.⁴⁰ For example, the “Quantum Technologies” working group has established the AUKUS Quantum Arrangement (AQuA), an initiative to coordinate American, British, and Australian RDT&E efforts concerning quantum technologies such as alternatives for positioning and navigation systems.⁴¹ Australia and the United States have also taken steps to deepen their tech cooperation through public-private partnerships, such as the $3 billion investment by Australia in Microsoft in 2023.⁴²

Australia’s Ability to Restrict FDI in China’s Technology Sector

Australia is not an important ally for the United States when it comes to restricting FDI in China’s technology sector, largely due to the fact that its FDI in China is limited: Australian firms invested $450 million in China, while total FDI in the country was $163 billion.⁴³ This investment is facilitated by the 2015 China-Australia Free Trade Agreement (ChAFTA) where Australian businesses have benefitted from lower tariffs.⁴⁴ By contrast, that same year, China’s FDI stock in Australia was $57 billion and Hong Kong’s was $95 billion, making them respectively the tenth- and fifth-largest investors in the country.⁴⁵ Chinese FDI in Australia is concentrated in mining and has expanded to healthcare and infrastructure in recent years, including a Chinese company controversially obtaining a ninety-nine-year lease on the strategic Port Darwin in northern Australia in 2015.⁴⁶ Although China has reduced its FDI in Australia over the last few years, the size of its existing investments present a strategic vulnerability.

Australia is somewhat likely to support restricting its FDI in China’s technology sector, as well as technology transfers and military funding, exports and related services to China. The 2024 Defence Trade Controls Amendment Act and the Defence Trade Legislation Amendment Regulations intends for Australia to develop a “robust export control regime.” The Act introduced three new offenses concerning violations related to the supply, resupply, or servicing of goods on the Defence and Strategic Goods List to countries requiring permits, and established two implementation working groups for industry and higher education research.⁴⁷ Australia does not, however, have a developed national security screening regime for outbound foreign direct investments and Australian firms are unlikely to stop investing in China altogether.

Australia’s Basing, Logistics, and Strike Capabilities in Case of a Conflict Over Taiwan

Australia is a very important ally for the United States when it comes to providing basing, logistics, intelligence, and strike capabilities for the U.S. military in the case of a Taiwan contingency. Australia does not allow permanent foreign military bases on its territory, but the United States has had a sustained rotational Marine Corps presence in the north of the country since 2012 and expanded access to key Australian air bases since 2017.⁴⁸ Tindal Air Base in northern Australia, for example, was upgraded to accommodate deployments of U.S. B-52 strategic bombers, and U.S. B-2 Spirit stealth bombers were deployed to the air force base at Amberley in eastern Australia in 2022 and 2024.⁴⁹ Under the U.S.-Australia Force Posture Agreement of 2012, both countries have invested in critical military infrastructure—such as maintenance and fuel facilities—positioning bases in northern Australia as “unsinkable aircraft carriers” to project U.S. power in the Pacific.⁵⁰

Furthermore, under AUKUS Pillar 1, U.S. and UK nuclear attack submarines will be rotationally deployed from Perth in southwest Australia from 2027, supported by an expansion in local maintenance and shipbuilding capacity, while a new yard is under construction in Adelaide, South Australia, which will build nuclear-powered submarines.⁵¹ Through AUKUS, Australia is scheduled to receive three American Virginia-class nuclear attack submarines in the early 2030s, although there are significant doubts that the United States can raise submarine production output enough to meet this.⁵²

Australia has precision strike capabilities including over seventy F-35A multirole stealth fighters and the U.S. HIMARS system.⁵³ The Albanese government has committed over one billion dollars to purchase additional stocks of advanced medium-range missiles and is developing loitering munitions to strengthen air defense and aerial strike capabilities.⁵⁴ At sea, Australia has purchased and tested U.S. LRASM anti-ship missiles and has Tomahawk land attack cruise missile–equipped surface vessels.⁵⁵ Australia’s current Collins-class submarines are armed with anti-ship missiles and torpedoes.⁵⁶

Australia is the only Indo-Pacific ally that provides high-value intelligence to the United States.

Australia is the only Indo-Pacific ally that provides high-value intelligence to the United States. It is a member of Five-Eyes and operates a joint satellite communications and signals intelligence surveillance base at Pine Gap since 1988. The Jindalee Operational Radar Network (JORN), which has over-the-horizon cover up to 3,000 kilometers, also provides valuable monitoring capabilities for U.S. operations in the region.⁵⁷

Australia has increased bilateral and multilateral exercises with the United States.⁵⁸ The Talisman Sabre, Pitch Black, and Predator Run multilateral training exercises have coordinated large deployments in the Pacific between the two countries and key allies and partners. Australia’s navy also conducts maneuvering exercises in the South China Sea with the navies of the United States and the United Kingdom.⁵⁹ An Australian two-star general is embedded in the command structure of the U.S. Indo-Pacific Command,⁶⁰ and in 2023 an Australian was appointed as the first foreigner in a deputy commander position in the U.S. Pacific Air Forces in 2023,⁶¹ underscoring the two militaries’ deepening integration.⁶²

Australia has not committed to supporting Taiwan in a conflict.⁶³ This reflects that fact that public opinion in Australia is divided over involvement in a war over Taiwan. In a 2023 poll, 42 percent of respondents said they supported Australia getting militarily involved if China invaded Taiwan (down from 51 percent in 2022) while 56 percent said they were opposed.⁶⁴ The share of those saying they were “very concerned” about China opening a military base in the Pacific also dropped from 60 percent to 42 percent.⁶⁵ In response to Chinese exercises around the island, Canberra often states that it opposes “any unilateral change to the status quo across the Taiwan Strait,” and it has encouraged “peace and stability” across the strait in joint statements with the United States.⁶⁶ Canberra, like Washington, thus maintains a policy of strategic ambiguity in this regard. Various degrees of support are possible to imagine—for example, Australia could offer the United States support with logistics, command-and-control, intelligence, surveillance, and reconnaissance—but not deploy its own forces into combat.⁶⁷

Australia’s Ability to Co-Develop Military Technology and Weapons Systems with the United States

Australia is a somewhat important ally for the United States when it comes to co-developing military technology and adds value—but the United States would not be significantly disadvantaged if that cooperation were to end. There is collaboration across a wide range of advanced weapons systems including commitments to co-develop, co-produce, and co-sustain the PrSM, a next-generation long-range precision-guided missile for the HIMARS rocket system; co-producing and co-assembling GMLRS rockets in Australia by 2025; and co-producing M795 155 mm high explosive howitzer ammunition.⁶⁸ Both countries’ governments and companies collaborate on the Guided Weapons and Explosive Ordnance Enterprise under which Australia has invested over $2 billion to acquire more long-range strike systems and manufacture longer-range munitions domestically.⁶⁹ Australia also develops advanced aerial combat systems with the U.S. including the Integrator drone and the MQ-28 Ghost Bat autonomous “wingman” combat drone while Australian companies continue to participate in the production of parts for the F-35.⁷⁰ Australia has also pledged to invest $3 billion in the U.S. submarine industry to support the timely delivery of the Virgina-class vessels it is due to receive.⁷¹

Australia can sustain its collaboration with the United States via its robust research ecosystem—which includes specialized technology fields such as quantum computing, hypersonics, and advanced materials—but this requires additional funding to maintain its waning competitive edge.⁷² Australia and the United States collaborate on hypersonic technology under the Hypersonic International Flight Research Experimentation program that was established in 2007.⁷³ AUKUS includes a funding pool of $252 million for a Hypersonic Flight Test and Experimentation Project Arrangement, which will allow its members to use each other’s testing facilities and to share technical information to develop, test, and evaluate hypersonic systems.⁷⁴ To facilitate the co-development of advanced military technologies, Australia was granted a partial exemption from the U.S. International Traffic in Arms Regulations (ITAR), such that over 70 percent of defense-related goods covered by ITAR no longer require State Department export licenses.⁷⁵

Australia is very likely to continue co-developing military technology with the United States, particularly considering the long-term goals of AUKUS and the immense capital benefits Australia derives from this cooperation—although the small size of its defense industry and bureaucratic barriers are real limitations. As a part of its efforts to reconstruct its defence spending infrastructure, Canberra released its 2024 Integrated Investment Program (IIP) that allocated an additional $5.7 billion and $50.3 billion above the previous spending trajectory through 2033–34.⁷⁶ The 2024 IIP also reprioritizes funding and directs a plurality of it to maritime readiness and long-range strike capabilities.⁷⁷ Canberra launched the Advanced Strategic Capabilities Accelerator in 2023 to overcome these hurdles and to facilitate defense cooperation within AUKUS, committing up to $2.47 billion over the next decade to streamline funding.⁷⁸ Projects include the Ghost Shark stealth and autonomous long-range submarine.⁷⁹

Australia’s Ability to Support the United States to Shape the Future of Global Governance

Australia is a key ally for the United States in its efforts to deepen multilateral ties in the Indo-Pacific, including as a founding member of the Asia-Pacific Economic Cooperation (APEC), the Quad, and the Minerals Security Partnership. It does not, however, play a key role in global international institutions.

By total subscriptions and voting power, Australia ranked fifth among countries participating in the Asian Development Bank in 2024, and sixth among those in the China-led Asian Infrastructure Investment for 2025.⁸⁰ Australia became first Dialogue Partner of the Association of Southeast Asian Nations (ASEAN) in 1974, established a “comprehensive strategic partnership” with it in 2021, hosted a fiftieth anniversary Australia-ASEAN special summit in 2024, and works closely with its members through the ASEAN-Australia Centre.⁸¹ Australia’s APEC Support Program gives technical support for economic development projects in regional neighbors including Papua New Guinea and Indonesia.⁸² Australia also plays a leading role in the Pacific Islands Forum (PIF), contributing approximately 36 percent of the budget for the PIF Secretariat in 2023.⁸³ In 2022, Australia also joined the United States in launching the Indo-Pacific Economic Framework for Prosperity (IPEF), which aims to align the United States and its allies and partners in the region on supply chain resilience, clean development, and fair-trade practices.⁸⁴

Australia voted with Washington in 73 percent of UN General Assembly votes in 2023, making it the ninth most-aligned country.⁸⁵ Among Asia-Pacific countries, Australia was joint-first (100 percent) on Ukraine-related votes and second (73 percent) in votes classified as important by the State Department.⁸⁶ However, Australia will not move in lockstep with the United States at the UN on contested issues such as the Israel-Gaza war.

Estimation of Australia’s Influence in the Global South

We estimate that Australia has some degree of relevant influence in third countries of the Global South, especially in the Pacific. It is the world’s fourteenth-largest provider of ODA, with a budget of $3.4 billion for this fiscal year.⁸⁷ Australia has been especially active in its neighborhood, for example, by engaging with Pacific Island nations through $630 million in economic assistance over five years and police-training initiatives.⁸⁸ It has focused on countering China’s expanding influence and security presence in the Pacific, as evidenced by its $118 million four-year funding package to train new Royal Solomon Police Force recruits that would “reduce any need for outside support” after the Solomon Islands signed a bilateral pact with China.⁸⁹ It allocates the bulk of its bilateral development assistance to countries in its neighborhood. In 2023, it devoted $1.2 billion to countries in Oceania and $962.3 million to countries in Asia, making it a significant alternative to China for assistance there.⁹⁰ It does not have a dedicated development finance institution, but the Australian Infrastructure Financing Facility for the Pacific (AIFFP) provides infrastructure financing through loans and grants to contribute to a “stable, secure, and prosperous Pacific.”⁹¹

What the Future Holds

Aside from re-engagement with China diplomatically, the shift to a policy of stabilization under the Albanese government has not meant significant policy changes, and Australia remains largely aligned with the United States on China and foreign policy in general.⁹² The Labor Party’s win in May 2025 elections and Trump’s apparent good relations with Albanese signal strategic continuity. That said, Trump’s imposition of tariffs has not gone down well in Canberra, and Australians’ trust in the United States has fallen to its lowest point in two decades after Trump’s return to the White House. Thirty-two percent of respondents in one poll this year said they did not trust the United States to act responsibly in the world, compared to 16 percent in 2024.⁹³ This could slow the cooperative momentum that has built up around China in recent years, limiting the scope for deepening cooperation across key strategic areas—especially if AUKUS were to run aground of political or other obstacles. Ultimately, Australia may share U.S. concerns about China, but it is looking at the problem from a different vantage point. Like the United States, it faces a challenge from China but also a risk of entanglement if it draws too close to other U.S. regional allies in this report.

Japan

Japan is the United States’ most important Indo-Pacific ally, a core player in the semiconductors sector, a technological giant, the world’s fourth-largest economy whose military capabilities are expanding, host to critical U.S. bases in the region, and a key partner to the Global South. U.S.-Japan economic relations are very robust—with bilateral trade worth $227.9 billion in 2024—and they are each the largest investor in the other’s economy.⁹⁴ Japan has increased its defense spending in response to China’s military aggression and political assertiveness, but the United States remains its main source of security. While public opinion is mixed on support to U.S. operations in the event of a crisis or war over Taiwan, Japan is likely to continue supporting U.S. diplomatic and military efforts to promote a “free and open Indo-Pacific” in response to a more assertive China.

Recent Trends in Japan’s Relations with the United States

Over the past decade, the alliance between the United States and Japan has strengthened through regular high-level diplomacy, deepening economic integration, and increasing security ties across successive U.S. and Japanese administrations. Much of the change has come as Japan has recognized the challenge posed by China and steered away from decades of restraint on defense and toward a more active regional role. Its strategy over the last decade has combined an effort to build a strong regional network of partners with a more assertive security and defense policy in the service of a “free and open Indo-Pacific.”⁹⁵

Whereas the United States once provided almost entirely for its security, Japan has recently embarked on a major transformation of its security policy that involves increasing defense spending to 2 percent of GDP, investing in key capabilities such as in cyber, and developing a long-range counterstrike capability that will allow it to strike targets in China and North Korea. Japan still needs the United States as a security guarantor, but its ability to defend itself and provide valuable capabilities for regional deterrence is increasing meaningfully.

Japan is the United States’ fifth-largest trading partner by export value and has the seventh-largest trade deficit with the United States ($68.5 billion in 2024).⁹⁶ It is also the largest source of FDI in the United States by beneficial ownership, at over $783.3 billion in 2023. Japanese investments are primarily in the manufacturing sector, accounting for over $375.5 billion (16.8 percent) of FDI in U.S. manufacturing in 2023.⁹⁷

A survey conducted after Trump’s imposition of tariffs in April 2025 found that 77 percent of Japanese respondents did not believe the United States would come to Japan’s defense in a crisis.

Japan has been subject to U.S. tariffs, however, which may explain a recent souring in Japanese perceptions of the United States. A survey conducted after Trump’s imposition of tariffs in April 2025 found that 77 percent of Japanese respondents did not believe the United States would come to Japan’s defense in a crisis—a notable increase from previous surveys, where fewer than 60 percent expressed such doubts.⁹⁸ U.S. tariffs, and changing leadership in Japan following Prime Minister Shigeru Ishiba’s September 7 resignation, introduce new uncertainties in the relationship.⁹⁹

Recent Trends in Japan’s Relations with China

The Sino-Japanese relationship is defined by Japan’s careful balance between its increasingly assertive posture and its pragmatic high-level diplomacy. Since 2004, China has alternated between being Japan’s largest and second-largest export market, highlighting a significant dependency on the Chinese market.¹⁰⁰ The 2022 Japanese National Security Strategy took the important step of labelling China as the “greatest strategic challenge” to its security and calling for a decisive shift in Tokyo’s defense posture in the region, a buildup in its long-range strike capabilities, and an effort to strengthen the alliance with the United States.¹⁰¹ Tokyo has also maintained a high-level dialogue with Beijing through bilateral exchanges on the sidelines of international forums, however.¹⁰² Ishiba and his predecessor, Fumio Kishida, framed Japan’s China policy as aiming for a “constructive and stable” relationship. This underscores its dual-track approach: deterring aggression as the region’s key counterweight to Chinese power while preserving diplomatic and economic engagement.

Risk of U.S. Entanglement Due to the Alliance with Japan

The risk that the United States would be entangled in a war on account of its alliance with Japan is low. The main risk comes from the Senkaku/Diaoyu Islands dispute. These are a cluster of uninhabited islands in the East China Sea between Okinawa and Taiwan, the largest of which is about the size of Manhattan’s Central Park. The islands are claimed by Japan, Taiwan, and China, but have been under Japanese administration since the United States handed them over in 1972. Clashes between Japanese and Chinese coast guard and fishing vessels since 2010 have increased along with China’s growing regional assertiveness and developing naval forces. There is also growing tension between Chinese and Japanese air and naval forces in the area and China has claimed an air defense identification zone (ADIZ) that includes the airspace above the islands. Japan has meanwhile upgraded its military capabilities on neighboring islands.

Historically, the United States has carefully avoided taking a position on the dispute over whether or not the islands belong to Japan, but Washington has also made clear that it considers the islands to be under Japanese administrative control and therefore covered under the U.S.-Japan Security Treaty. This raises the possibility that America could be drawn into a conflict with China over these otherwise unimportant islets. As in the case of the South China Sea disputes, Washington might seek to meet its treaty responsibilities with economic sanctions or other nonmilitary means, but if Japanese forces were seriously harmed by China, it could become difficult to avoid some form of military action—especially given that the United States has trained jointly with Japan for such a scenario.¹⁰³ Unlike the Philippines, however, Japan is a major regional power, with considerable and growing military forces and enormous political weight. This lowers the risk that the United States would actually be called upon to make good on its treaty obligations as a consequence of the dispute—both because Japan has more resources of its own and because China must move more cautiously in this case.

Broader possibilities that the United States could be dragged into a war with China by Japan are very remote.¹⁰⁴ In theory, China might conduct a bolt out of the blue attack on Japan, firing its considerable missiles against Japanese military and civilian sites. But this seems extremely unlikely outside the context of a war that has already begun between China and the United States. Indeed, the most likely route to China-Japan conflict is a U.S.-China conflict over Taiwan, in which case China might seek to strike U.S. bases in Japan. In this scenario, Japan would be entrapped into a war by its relations with America, not the other way around.

Japan’s Ability to Reinforce Semiconductor Manufacturing Supply Chains

As one of the world’s largest and most technologically advanced economies, Japan is a very important ally for the United States when it comes to diversifying semiconductor manufacturing supply chains.¹⁰⁵ In 2022, Japan passed the Economic Security Promotion Act, a landmark law aimed at safeguarding critical infrastructure, securing supply chains, and promoting technological innovation in sensitive sectors such as semiconductors.¹⁰⁶ This led to establishing the Leading-edge Semiconductor Technology Center that same year to strengthen domestic research on advanced chips.¹⁰⁷

Japan is an important ally for the input materials and tools for advanced semiconductors as it dominates the coater and developer market and is a substantial producer of photoresists and other chemicals used in the extreme ultraviolet (EUV) lithography process. Tokyo Electron is the world’s third-largest supplier of semiconductor manufacturing tools, controlling a significant part of the market for photoresist coating application tools, which are an indispensable constituent of the photolithography process.¹⁰⁸ Japanese companies make up 10 percent of the global semiconductors market but produce 88 percent of coaters/developers, 57 percent of wafer-cleaning systems, 53 percent of silicon wafers, and potentially up to 90 percent of photoresists—all key parts of the semiconductors production process.¹⁰⁹ Japan also produces over 90 percent of EUV photoresists—a key material to manufacture chips more advanced than 7 nanometers (nm)—and it accounts for 75 percent of krypton fluoride/argon fluoride (deep ultraviolet) photoresists production—crucial components for manufacturing 130nm–22nm chips.¹¹⁰ To further boost its manufacturing capacity, Japan has partnered with the United States in the Rapidus venture aimed at producing next-generation 2 nm chips.¹¹¹ TSMC, Taiwan’s preeminent semiconductors manufacturing company, also opened the Japan Advanced Semiconductor Manufacturing, Inc. foundry in 2024 that will diversify legacy and advanced chip production away from Taiwan.¹¹² Japan also possesses domestic OSAT capabilities through an alliance of thirty companies that is seeking to reduce production costs, but still at smaller scale than Taiwan or American facilities.¹¹³

Japan’s Ability to Increase Critical Minerals Supply Chains Resiliency

Japan is very important for U.S. critical mineral interests. Its secondary (recycled) platinum and palladium refining capacity accounted for around 10 percent of global demand in 2023.¹¹⁴ Japan is the second-largest producer of titanium sponge, which can be used to produce metal for aerospace structures and munitions.¹¹⁵ Japan refines antimony, is among the few economically advanced countries refining high-purity gallium, and operates one of the only lithium hydroxide facilities outside of China.¹¹⁶ Through producers like Shin-Etsu, Japan is also a producer of advanced rare earth magnets with a largely non-Chinese supply chain.¹¹⁷ Japan also produces refined nickel product and some recycled tungsten.¹¹⁸

Large quantities of cobalt, nickel, and yttrium deposits have been located in Japan’s EEZ at depths of over 5,000 meters near Minamitorishima Island (Japan’s most eastern territory).¹¹⁹ Despite plans to begin extraction from 2026, this is unlikely to be important in the medium-term due to the fact that deep sea mining at those depths will be difficult and expensive.¹²⁰ Japan has a unique ability to secure its critical minerals supply chains by financing overseas extraction projects through the Japan Oil, Gas and Metals National Corporation (JOGMEC) and Japan Bank for International Cooperation (JBIC), the former of which partnered with the U.S. International Development Finance Corporation to coordinate global diversification of critical mineral supply chains.¹²¹ Japanese trading houses such as Mitsubishi have the experience, knowledge, and capital to support diversification and friendshoring, including through overseas investments.¹²²

Given the volatility of Sino-Japanese relations, Japan has strong incentives to diversify and secure its semiconductors and critical-minerals supply chains by collaborating with the United States.

Given the volatility of Sino-Japanese relations, Japan has strong incentives to diversify and secure its semiconductors and critical-minerals supply chains by collaborating with the United States. Japan has joined the U.S.-led Minerals Security Partnership in 2022 and has signed the U.S.-Japan Critical Minerals Agreement to support the Biden administration’s clean energy friendshoring efforts in 2023.¹²³ It also works with the United States in several forums to strengthen semiconductor supply chains, including the U.S.-Japan Critical Minerals Agreement and the trilateral Economic Security Dialogue with South Korea.¹²⁴

Japan’s Ability to Prevent Unwanted Dissemination of Advanced Technology to China

Japan is a very important U.S. partner when it comes to preventing the unintentional dissemination of sensitive technologies to China. Beyond previously described capabilities in semiconductor manufacturing tools and materials for advanced chip production, it also retains a competitive advantage in NAND memory, power semiconductors, microcontrollers, and CMOS image sensors.¹²⁵ In March 2025, the Japanese legislature enacted the AI Promotion Act, which created a guiding set of AI principles while encouraging coordination and innovation between industry and government.¹²⁶ Japan has a high-end quantum research industry and ranks fifth globally in quantum research output—and among U.S. allies it ranks third in quantum computing, communications, and sensing research output.¹²⁷ In 2025, Japanese IT company Fujitsu developed the world’s largest-class superconducting quantum computer with 256 qubits and the Japanese government announced a $7.4 billion commitment to quantum technologies. It led Western nations in public investments from 2023 to 2025.¹²⁸ Japan also has a strong biotechnology sector, with research expertise in pharmaceuticals and biological sciences.¹²⁹ While Japan’s quantum and biotechnology industries are growing, they both lag those in the United States and China, making them less important in this regard.

Japan has responded positively to the United States’ efforts to restrict exports of specific technologies to China over the last few years. A key development was Japan’s deal with the Netherlands in 2023 to restrict exports of certain advanced semiconductors technology and equipment to China.¹³⁰ Following pressure from the Biden administration, Japan expanded its export restrictions to twenty-three leading-edge chip-making technologies that same year.¹³¹

That said, Japan is still more permissive than the United States. While Washington applies a strict presumption of denial, Tokyo exports to China whenever possible.¹³² Japanese semiconductors equipment providers are still reliant on Chinese markets for the largest share of their revenue: Japanese exports of semiconductors equipment increased across fiscal year 2024, with the percentage of exports to China rising from 39 percent in Q1 to 47 percent in Q4—evidence of how important allied cooperation on export restrictions can be.¹³³ Yet, at the same time, Japan sees China’s advances in chip-making as a threat to the efforts to revive its own industry, and this is likely to shape its export policy for the foreseeable future.¹³⁴

Japan’s Ability to Restrict FDI in China’s Technology Sector

Japan is a very important ally for U.S. efforts to restrict FDI into China’s technology sector, due to the fact that it was the fifth-largest source of FDI in China in 2024, investing over $2.66 billion (although it has fluctuated some in recent years).¹³⁵ Japanese companies are focusing their investments in China primarily in the technology, manufacturing, and automotive industries. For example, Toyota plans to establish a new wholly owned EV manufacturing plant in Shanghai in an effort to enhance its footprint in the world’s largest automotive market.¹³⁶

Despite these ties, slowing Chinese economic growth, persistent operational challenges, intellectual property theft, and growing geopolitical tensions have all driven Japanese firms to diversify production to other countries.¹³⁷ In a 2024 poll of Japanese firms, over half said they would either cut spending in China or keep it at current levels, a clear departure from the steady Japanese FDI increases in the years following the 2010 islands dispute.¹³⁸

Japan has a very limited outbound FDI screening regime that requires prior notification for individuals or firms involved in weapons, narcotics, or leather goods.¹³⁹ Given the size of investments in China, limited domestic markets and smaller venture capital sector, Japan is likely to be reluctant to enact further outbound FDI restrictions.¹⁴⁰ FDI data and corporate sentiment point toward a recalibration of Japanese business strategy in Asia but not a full decoupling from China.

Japan’s Basing, Logistics, and Strike Capabilities in Case of a Conflict Over Taiwan

Japan and the United States signed their Mutual Security Treaty in 1960, and Japan today hosts more U.S. military personnel than any other country in the world. These forces include the largest Air Force combat air wing, a carrier battle group, and several nuclear-powered submarines.¹⁴¹ Around half of these forces are stationed on Okinawa, but there are several other U.S. bases in Japan, such as the headquarters of the U.S. Seventh Fleet in Yokosuka and of U.S. Forces Japan at Yokota Air Base.¹⁴² Kadena Air Base in Okinawa is home to the 18th Air Wing.¹⁴³ Japan’s strategic location and the extensive U.S. military presence there make it a very important base for responding to any Taiwan contingency.¹⁴⁴

Japan’s military forces are also developing rapidly. The 2022 National Defense Strategy marks a significant departure from the country’s post-Second World War consensus on the constitutionally mandated restraint on defense issues and points the way toward a more robust deterrent capability. Japan has also committed itself to increasing defense spending to 2 percent of GDP—a level unprecedented in the postwar era.¹⁴⁵ It is also in the process of strengthening its advanced cyber capabilities and procuring a counterstrike weapons system that will allow it to strike targets in China and North Korea.¹⁴⁶ This signals a higher level of military readiness and will add an additional deterrent to Beijing’s operations against Taiwan and elsewhere in the region. Japan already has advanced anti-submarine warfare, anti-ship warfare, and maritime reconnaissance capabilities.¹⁴⁷ Japan possesses indigenously produced anti-ship missiles, has ordered U.S. Tomahawk land attack missiles for counterstrike, and is developing hypersonic gliders for deployment on land by 2026.¹⁴⁸ With over 140 on order, its air force will operate the largest fleet of F-35 stealth multirole fighters outside the U.S. Air Force and has domestically produced F-2 fighters which can launch supersonic anti-ship and land attack missiles.¹⁴⁹ Japanese submarines are equipped with indigenously developed torpedoes and anti-ship missiles, and the navy is developing a long-range submarine-launched cruise missile.¹⁵⁰

The extent of Japan’s contributions to U.S. operations, should China attack Taiwan, would likely depend on how the conflict starts.

While the U.S. bases in Japan could play a significant role in a Taiwan contingency, the extent of Japan’s possible support for U.S. operations remains somewhat uncertain. Previously, Japan’s role in a Taiwan contingency was rarely discussed, but now the strategic environment has markedly changed and this issue has emerged as a key focus of U.S.-Japan military planning.¹⁵¹ There is growing recognition in Japan that any conflict over Taiwan would directly impact the country’s security, which is reflected in the shift in public and policy discourse on Japan’s involvement from virtually nonexistent to increasingly mainstream. Public opinion is divided over Japan’s role in a war over Taiwan, but a majority envisions providing some form of support to the United States (see Table 3). The extent of Japan’s contributions to U.S. operations, should China attack Taiwan, would likely depend on how the conflict starts and whether the parliament can justify declaring a state of emergency.¹⁵²

Japan’s Ability to Co-Develop Military Technology and Weapons Systems with the United States

Japan’s advanced industrial base makes it an increasingly valuable partner to the United States for co-developing certain military technologies, particularly as it relaxes its de facto ban on arms exports. For decades, cooperation was somewhat constrained by this obstacle, with co-development of the Standard Missile-3 Block IIA missile-defense interceptor and the F-2 fighter the only exceptions.¹⁵³ Restrictions have been gradually relaxed since the de facto ban was lifted in 2014.¹⁵⁴ Since, the United States and Japan have started co-producing advanced air-to-air missiles and U.S. designed Patriot PAC-3 missiles, while Japanese companies produce some advanced engine components for the F-35 program.¹⁵⁵ Japan’s naval forces are also closely integrated with the U.S. navy through common upgrades of the Aegis ballistic missile defense system.¹⁵⁶

The United States and Japan signed a Memorandum of Understanding for Research, Development, Test and Evaluation Projects in 2023 that could strengthen technology for hypersonics and counter-hypersonics, critical areas given China’s rapid advances in this field.¹⁵⁷ In 2024, the State Department approved over $200 million in foreign military sales to support Japan’s development of the Hyper Velocity Gliding Projectile program.¹⁵⁸ Both countries are also exploring cooperation in outer space, including in deep-space observation, deep-space radar, and standalone space-domain-awareness satellites to monitor China’s expanding anti-satellite arsenal.¹⁵⁹ Lifting the ban also opened the door for Japan to work with other U.S. allies, including by collaborating in the Global Combat Air Program with Italy and the United Kingdom and by bidding to export frigates to Australia.¹⁶⁰ Japan may also participate selectively in the AUKUS security partnership between Australia, the United Kingdom, and the United States on advanced technology initiatives.¹⁶¹

Japan’s Ability to Support the United States to Shape the Future of Global Governance

Japan is a very important and increasingly influential ally in international forums and has taken a leading role in advancing a free and open Indo-Pacific—a concept it first articulated under then prime minister Shinzo Abe in 2016—to counter China’s aspirations for regional hegemony.¹⁶² It is also a founding member of APEC and signed a “Comprehensive Economic Partnership” with ASEAN in 2007 and collaborates with ASEAN through the Japan-ASEAN Ministerial Initiative for Enhanced Defense Cooperation (JASMINE) to expand efforts to “create a security environment that does not allow any unilateral attempts to change the status quo by force or coercion”—a statement easily interpreted as aimed at China.¹⁶³

While the alliance with the United States remains the cornerstone of its security strategy, Tokyo is working to diversify and to deepen its security partnerships across the Indo-Pacific and beyond.¹⁶⁴ Within multilateral groupings such as the Quad, the Trilateral Strategic Dialogue, and the Security and Defense Cooperation Forum, as well as through other groupings with Australia, the Philippines, and South Korea, Japan plays a central role in shaping regional security norms.¹⁶⁵

Japan also contributes to regional economic development as the leading contributor to the Asian Development Bank, holding the largest voting share on parity with the United States in 2024.¹⁶⁶ It has also brought anti-dumping cases against China in the World Trade Organization and pushed the G7 to counter Chinese economic coercion when it chaired the group in 2023.¹⁶⁷ Japan is also closely aligned with the United States in the United Nations: for example, it voted similarly in 90 percent of UN Security Council votes in 2023, when Japan held a nonpermanent seat.¹⁶⁸ Among the Indo-Pacific countries, Japan was the most aligned with the United States on Ukraine votes (100 percent) and fourth on “important” votes (70 percent). However, not holding a permanent seat in the Security Council limits Japan’s influence in the UN.

Estimation of Japan’s Influence in the Global South

Japan’s robust development finance institutions and its long history of overseas development lending make it a key partner for the United States when it comes to influence in the Global South and providing countries of the Global South with alternatives to financing from China in particular. Among the members of the Organization for Economic Co-operation and Development, Japan was the fourth-largest provider of official development assistance (ODA) in 2024.¹⁶⁹ In 2023, Japan allocated a massive $10.8 billion in bilateral assistance to Asian countries, $2.6 billion to African countries and $1.6 billion to the Middle East.¹⁷⁰ Japan puts enormous financial power toward development projects overseas to compete with China, leveraging its development finance institutions. The Japan Bank for International Cooperation (JBIC) finances projects and exports globally, and the Japan International Cooperation Agency (JICA) administers all Japanese ODA, through grants, loans, and technical cooperation. Japan demonstrated its significance in the development finance space when it launched its “Partnership for Quality Infrastructure” in 2015, two years after China launched the BRI. This initiative accelerated infrastructure assistance across Asia through JICA, in collaboration with the ADB.¹⁷¹ Japan deploys its development assistance in South and Southeast Asia in ways that compete directly with China’s.¹⁷² In 2023, Japan amended its Development Cooperation Charter to allow ODA partnerships aimed at enhancing economic security cooperation.¹⁷³

What the Future Holds

Abe proved to be pro-United States and hawkish on China, but the more pragmatic Ishiba sought to prioritize Japan’s needs in its relationships with China and America instead of pursuing a balancing strategy against either. Ishiba’s resignation in September 2025 amid inflation at home and coping with the Trump administration’s tariffs presents challenges for stable relations.¹⁷⁴ Still, Tokyo’s concerns about the threat posed by China may make even more dovish politicians favor deepening ties to Washington on the issue. For example, a joint statement in February 2025 took the allies’ support for Taiwan a step further by saying Japan (and the United States) would support “Taiwan’s meaningful participation in international organizations.”¹⁷⁵ China recalled diplomats from Japan to protest this development, but Tokyo has not changed its position.¹⁷⁶ Japan’s next prime minister will take up the difficult tasks of navigating ongoing trade and investment talks with Washington and fulfilling commitments to strengthen Japan’s own defense capabilities. Despite frictions, the alliance is deeply rooted. Japan and the United States have the potential to continue mutually beneficial close collaboration across economic, technological, and security domains—unless their domestic politics get in the way.

The Philippines

The Philippines is a former colony and treaty ally of the United States that has tended to seek balance between its defense relations with Washington and economic relations with Beijing. It offers Washington access to military bases near Taiwan, bolstering the United States’ capacity for deterrence in the Taiwan Strait and providing the possibility of land-based strikes on mainland China. At present, however, this alliance also presents the United States with the most significant entanglement risks of the allies in this report. The Philippines’ historic focus on internal security, its (understandable) fear of retaliation by Beijing in the event of a Taiwan contingency, and its status as a developing nation limit its importance to U.S. economic, military, and technological goals beyond military access.

Recent Trends in the Philippines’ Relations with the United States

The Philippines has had a Mutual Defense Treaty with the United States since 1951, and the two countries have long-standing people-to-people ties.¹⁷⁷ It has hedged between the United States and China in the recent past, but Chinese pressure in the South China Sea has led it to strengthen ties with Washington.¹⁷⁸ Under President Ferdinand “Bongbong” Marcos Jr., the Philippines expanded defense cooperation in 2023 by granting the United States access to four additional military bases, bringing the total to nine.¹⁷⁹ The two countries also issued bilateral defense policy guidelines in 2023 that reiterated that attacks on their nonmilitary vessels and aircraft, or on their armed forces in the South China Sea would trigger the Mutual Defense Treaty.¹⁸⁰ The renewed deepening of ties came after a testy period in relations under former president Rodrigo Duterte, who pursued warmer relations with China and distanced himself from the United States.¹⁸¹

The Trump administration seeks to strengthen military ties with the Philippines. The country was the first stop on Secretary of Defense Pete Hegseth’s Indo-Pacific tour in March, suggesting that it remains a focus for U.S. defense relations in the region. In Manila, Hegseth met with counterparts to “reestablish deterrence” in the South China Sea, pledging anti-ship missile deployments, military training, and defense-industrial cooperation.¹⁸² The Trump administration has also exempted $5.3 billion in security assistance from its foreign assistance cuts.¹⁸³ However, the Philippines was not spared from the administration’s policy of raising tariffs, and the end of USAID funding will deprive the country of hundreds of millions in assistance spanning health, education, disaster recovery support, and the economy.¹⁸⁴

Recent Trends in the Philippines’ Relations with China

The Philippines’ conflict over the South China Sea seriously complicates Manila’s relations with Beijing. For decades, China has been trying to assert military control of the South China Sea, citing what it calls the “nine dash” line, a decades-old Chinese demarcation that would make most of the South China Sea Chinese territorial waters. These assertions put China in conflict with several Southeast Asian nations, but the conflict with the Philippines has been the sharpest.

At issue is Philippine access to various small islands and fishing areas such as the Second Thomas Shoal and the Scarborough Shoal, which are within the Philippines economic exclusion zone. China claims these islands for itself and seeks to prevent Philippine military and civilians from entering them.¹⁸⁵ In 2016 China had its claim to sovereignty over these areas rejected by a UN ruling under the UN Convention on the Law of the Sea (UNCLOS), but Beijing has ignored the ruling and continued to assert control over these waters with ever greater force, including by buzzing Philippine aircraft, bumping and ramming Philippine ships, targeting them with lasers and spraying them with water cannons.

Recent Chinese maritime provocations have prompted official and public outrage in the Philippines, with Defense Secretary Gilberto Teodoro condemning “Chinese expansionism” and describing this as the country’s “greatest external threat” in March.¹⁸⁶ China’s aggressiveness may have also contributed to Marcos’s decision to take careful steps toward closer relations with Taiwan. As of April, government officials other than the president, vice president, foreign affairs secretary, and defense secretary can visit Taiwan for economic, trade, or investment-related activities, provided they travel on regular passports and do not use their official titles.¹⁸⁷

Despite Manila’s recent tilt in Washington’s direction, history and economics indicate that Washington should not assume that the Philippines will continue to seek a deeper bilateral relationship.

Despite Manila’s recent tilt in Washington’s direction, history and economics indicate that Washington should not assume that the Philippines will continue to seek a deeper bilateral relationship. South China Sea tensions belie the fact that China remains a crucial economic partner for the Philippines—it is their largest source of imports by value, with electronics, machinery, iron, and steel as leading categories.¹⁸⁸ As recently as 2023, even after profound security challenges, Manila signed fourteen bilateral trade and economic agreements with Beijing.¹⁸⁹ More than other countries in this report, Philippine politics have vacillated between pro-China and pro-Washington positions. Marcos’s predecessor, Duterte, who led the country from 2016 to 2022, pursued a foreign policy that was more clearly aimed at placating China by tilting away from Washington.

Risk of U.S. Entanglement Due to the Alliance with the Philippines

A direct intervention in the South China Sea by U.S. naval or other military forces would sharply increase the risk of an incident with China that could escalate into a full-fledged war.¹⁹⁰ Washington might thus attempt to avoid this by limiting its response to economic or political sanctions on China. If such measures failed to have any effect, however, U.S. leaders would face pressure to deploy military forces on the grounds that inaction would signal a lack of U.S. resolve in other areas, potentially exposing Taiwan to attacks.

Managing this dilemma would not be easy, and there is a clear risk that the United States could be dragged deeper into the conflict with China. Although the United States has some interest in the South China Sea insofar as it supports the rulings of international courts (although the United States itself is not a party to the UNCLOS), these territorial disputes between China and the Philippines do not engage important U.S. interests otherwise. Some analysts point to economic rationales for supporting the claims of the Philippines—specifically the principle of freedom of navigation, which could be threatened were China to succeed in establishing hegemony over the South China Sea.¹⁹¹ On a practical level, however, much (although not all) of the U.S. trade via the South China Sea is in fact going to China. The U.S. may have a broad interest in freedom of navigation, but to damage relations with China over the right to trade with China would be contradictory.

The Philippines’ Ability to Reinforce Semiconductor Manufacturing Supply Chains

As a developing nation with a much smaller economy than other allies in Asia, the Philippines is only somewhat important for the United States when it comes to “friendshoring” semiconductor manufacturing. It has some critical mineral reserves and an expanding semiconductor manufacturing base, including Panjit International’s recently opened plant which focuses on automotive semiconductors.¹⁹² The Philippines has strengths in downstream outsourced semiconductor assembly and testing (OSAT), like Texas Instruments’ site in Baguio, which is among its largest OSAT manufacturing sites outside the United States.¹⁹³ The Philippines seeks to develop this niche capability in the OSAT and packaging steps of semiconductors manufacturing and already has thirteen facilities for this.¹⁹⁴ That said, the country significantly lacks research and design and machinery production to fully exploit these resources or to participate in advanced chip fabrication.¹⁹⁵ Its ties to China—including deep trade dependence and Chinese investment in tech infrastructure—complicate efforts to insulate supply chains in the country from China-related risks.

The Biden administration designated the Philippines as a partner under the 2022 CHIPS and Science Act, which has provided U.S. State Department’s International Technology Security and Innovation (ISTI) funding for the development of the country’s semiconductors industry.¹⁹⁶ “We’re all in on the Philippines,” said then secretary of commerce Gina Raimondo during a March 2024 visit to Manila, when she announced $1 billion in investments by American companies to help chip fabrication.¹⁹⁷ ISTI funding was temporarily frozen in early 2025 due to the wider foreign investment cuts by the Trump administration.¹⁹⁸ The Philippines seeks to continue to develop its niche capability in OSAT, but the U.S. International Trade Administration lists poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, and corruption as disincentives to investment. This reduces its “friendshoring” utility.¹⁹⁹

The Philippines’ Ability to Increase Critical Minerals Supply Chains Resiliency

The Philippines is somewhat important to U.S. critical mineral interests, specifically for the raw materials of advanced batteries. It is the world’s second-largest miner of nickel and the sixth-largest producer of cobalt and possesses substantial reserves and refining capacity for both metals.²⁰⁰ There is evidence that the Philippines possesses some rare earth mineral deposits, but these are in the early stages of exploration. Only 5 percent of its gold, nickel, zinc, and silver reserves—estimated to be worth $1 trillion—has been explored.²⁰¹ This could provide an opportunity for a sectoral trade and investment deal with the United States.

The Philippines has “friendshoring” potential in critical minerals, though less than other U.S. allies and partners whose critical-minerals mining infrastructure and regulatory frameworks are already friendly to U.S. businesses. With its critical minerals reserves and semiconductors manufacturing capabilities, it could play a part in U.S. efforts to diversify its supply chains, but this would require significant development of its domestic infrastructure.²⁰²

The Philippines’ Ability to Prevent Unwanted Dissemination of Advanced Technology to China

The Philippines is not an important ally for the United States when it comes to preventing the unintentional dissemination of sensitive technologies to China. It has significant exports of electronics to China, but it lags behind other U.S. allies in frontier technologies such as artificial intelligence and quantum computing.²⁰³

Even if it were technologically more developed, the Philippines would be unlikely to limit China’s access to advanced technology because it has a long history of economic and technological cooperation with China.²⁰⁴ As noted above, the two countries signed fourteen economic agreements in 2023 that will deepen cooperation in information and communications technology, among other areas.²⁰⁵

The Philippines’ Ability to Restrict FDI in China’s Technology Sector

A source of negligible foreign direct investment in China’s technology sector, the Philippines is not an important ally for the United States for restricting this either. The Philippines total overall outbound FDI amounted to 0.6 percent of their GDP, which would hover around $2 billion total.²⁰⁶

The Philippines’ Basing, Logistics, and Strike Capabilities in Case of a Conflict Over Taiwan

The Philippines offers the United States a useful salient for deterrence across the Luzon Strait, but the significance of this strategic geography to overall U.S. strategy should not be exaggerated.²⁰⁷

Manila provides Washington with access to military bases under a 2014 defense agreement that allows the United States to construct military facilities, to preposition materiel, and to rotate forces at locations across the Philippines.²⁰⁸ In 2023, the Biden administration worked with Manila to expand sites where U.S. supplies are prepositioned—so called “EDCA” sites—adding four new locations in the northeast, directly across the Luzon Strait from Taiwan, and one on Balabac Island, the westernmost undisputed island in the Philippines, close to the Spratly Islands.²⁰⁹

The United States can strike China’s southern military bases from these bases.²¹⁰ Coastal defense systems such as the Typhon missile system can target Chinese navy ships in the Luzon Strait and provide coverage for cross-strait missile defense operations. Access to these bases also distributes forces across the region, complicating Chinese targeting and strengthening the survivability of U.S. assets.²¹¹

The Philippines’ own military contributes in only the most limited ways. Its efforts to modernize and reorient away from domestic counterinsurgency toward self-defense have been slow.²¹² It lags in key areas such as logistics and has very limited military innovation and defense-industrial capacity.²¹³ Its weak digital infrastructure and historical emphasis on internal over external security limits its value in a high-tempo, multi-domain conflict.²¹⁴ It can at best offer some logistics to U.S. soldiers on its soil.

The United States is not guaranteed to have access to the Philippines’ bases in a conflict over Taiwan.

Importantly, the United States is not guaranteed to have access to the Philippines’ bases in a conflict over Taiwan.²¹⁵ Manila has long upheld the One China policy status quo, does not have official diplomatic relations with Taiwan, and recognizes Beijing as the legitimate government of China.²¹⁶ In 2023, Marcos said: “it’s very hard to imagine a scenario where we will not get involved.”²¹⁷ But the Philippines might easily assess that it stands too much to lose in a conflict, including its territorial integrity, if it were to support the United States.²¹⁸

Proponents of this alliance argue that the geographical benefits the Philippines brings need to be understood in the broader context of regional deterrence, that their value is not simply that they permit military access to the Luzon Strait, but that they complete a broader network of dispersed military relationships that offers substantial deterrent power for the defense of Taiwan. This claim is suspect, however, given that the United States would not pull away from defense of Taiwan if it did not have access to the Philippines; the Pentagon never claimed that this access was essential before gaining it, suggesting it is not so vital. There is no question that the Philippines offers an additional benefit, but what is left unanswered is what the marginal gain of that benefit is given the plethora of other defenses now and soon to be arrayed against China.

The Philippines’ Ability to Co-Develop Military Technology and Weapons Systems with the United States

The Philippines is not an important ally for the United States for co-development of high-end military technology. It relies on foreign-produced weapons systems and has a limited innovation base.²¹⁹ The Philippines might help lower the costs of deployment of U.S. weapons somewhat by providing maintenance support, and during a March 2025 visit to Manila, Defense Secretary Hegseth outlined a vision for military co-production and announced plans to expand defense-industrial cooperation, beginning with unmanned systems.²²⁰

The Philippines’ Ability to Support the United States to Shape the Future of Global Governance

The Philippines is not an important ally for furthering the United States’ goals in international organizations and global governance. Although it is a founding member of ASEAN, APEC, the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (whose headquarters is in Manila), and other multilateral fora, the size of its economy limits its weight. For example, in the Asian Development Bank, the Philippines’ voting power and subscribed capital is less than other U.S. allies: it ranks eleventh among the sixty-seven contributing members, well behind Japan, South Korea, and Australia.²²¹

The Philippines cooperates with the United States in the Bretton Woods and UN institutions. However, its voting at the UN General Assembly is not very aligned with that of the United States. In 2023, it voted with Washington 37 percent of the time, a significantly lower alignment than that of other U.S. allies in Asia like Japan and South Korea, whose voting records were over 60 percent aligned with the United States.²²²

Estimation of the Philippines’ Influence in the Global South

The Philippines provides only minimal development, humanitarian, and disaster-relief funds in its region, including through multilateral channels such as ASEAN, accounting for less than 1 percent of intra-regional aid.²²³ It is primarily a recipient, not a provider, of official development assistance.

What the Future Holds

Proponents of deepening the alliance with the Philippines will argue that it is on a path to offer more than just militarily favorable geography, but that future—whenever it may arise—is beyond the scope of this study and theoretical at best.²²⁴ It is true that the Philippines’ geography is an asset for the United States when it comes to the military dimension of competition with China, but it is also a vulnerability given Beijing’s designs on islands in the South China Sea. If Washington continues to assure Manila of its security commitment, it must do so with clear eyes about the risks involved and the country’s military and technological limitations.

South Korea

Economically important but militarily focused on the noxious Kim regime in the North, South Korea is in a unique position among U.S. allies in Asia. It has a deeply asymmetrical defense relationship with the United States, which is responsible for defending it against aggression by North Korea—creating the risk that Washington could become entangled in a war on the peninsula—but it contributes only a limited amount to meeting other U.S. military objectives in the region—despite its considerable economic wealth. Seoul sees the competition between China and the United States as posing a risk to its economic and other interests, but it has nevertheless taken small steps toward a stronger relationship with Washington and also Japan in response to China’s rise. In other areas, however, especially semiconductors, it offers far more. It is also a major world economy and, like the other allies in this study, a cooperative democracy.

Recent Trends in South Korea’s Relations with the United States

The foundation of the relationship between South Korea and the United States is their 1953 Mutual Defense Treaty, which was complemented by the U.S.-Korea Free Trade Agreement of 2012.²²⁵ Washington has long supported Seoul in containing North Korea, enabling South Korea to emerge as an advanced industrialized economy of substantial weight in the Indo-Pacific.

South Korean contributions to U.S. efforts to compete with and deter China have grown, even as Seoul remains mainly focused on Pyongyang. The U.S.-ROK summit in 2021 lifted restrictions on South Korea’s development of longer-range ballistic missiles, thus opening up the possibility of strikes inside China—theoretically, at least—while also referencing the Taiwan Strait as a concern.²²⁶ The 2023 summit then strengthened civil nuclear collaboration, announced plans to dock U.S. nuclear-armed submarines in South Korea, and emphasized shared interests in freedom of navigation in the South China Sea and the Taiwan Strait.²²⁷

The relationship with the United States has been uncertain since Trump implied that President Lee Jae-Myung benefitted from Chinese interference to win South Korea’s April 2025 election.²²⁸ The Trump administration is considering withdrawing thousands of U.S. troops from South Korea and relocating them elsewhere in the region.²²⁹ Polling shows a modest decline in the percentage of South Koreans who believe the United States would defend them in a war with North Korea, as well as in those who view the United States as a trustworthy partner—though this decline is less pronounced than in other allied nations studied.²³⁰

Recent Trends in South Korea’s Relations with China

Of the United States’ Indo-Pacific allies covered in this study, South Korea is the most cautious about antagonizing Beijing, in part because its economy is deeply integrated with China’s. This has led to a traditional strategy of “economy with China, security with the United States,” aimed at balancing between the two powers.²³¹

Seoul has grown cautious about its relationship with Beijing in response to U.S. pressure and due to concerns about China’s regional assertiveness.

More recently, Seoul has grown cautious about its relationship with Beijing in response to U.S. pressure and due to concerns about China’s regional assertiveness. Its 2016 decision to host a U.S. Terminal High Altitude Area Defense (THAAD) missile-defense system drew Beijing’s ire because this could be used against not only North Korea but also China.²³² South Korea has also worked to de-risk its economic relationship with China while maintaining strategic relations. China’s importance as a foreign market for South Korea has declined since 2019, whereas the importance of exports to the United States has increased in the process.²³³

South Korean leaders nevertheless seek to avoid confrontation with Beijing. In 2024, for example, Yoon reinstated trilateral talks with China and Japan after a five-year hiatus.²³⁴ South Korea also hosted a trilateral meeting of their trade ministers in March 2025, which discussed a potential free-trade agreement to mitigate the impact of new U.S. tariffs.²³⁵

Risks of U.S. Entanglement Due to the Alliance with South Korea

The U.S. alliance with South Korea commits America to defending South Korea against invasion from the North. Clearly, in the event of a North-South war, the United States would be deeply involved due to the presence of large numbers of U.S. land forces, joint operational military plans with the South, and its treaty obligations. Given that defending South Korea against attack from the North is the sole purpose of the U.S.-ROK Mutual Defense Treaty it would be inaccurate to consider acting on that commitment a case of entanglement. Nevertheless, the commitment that America makes to defend South Korea comes at considerable cost and risk, risk that has been growing as Pyongyang has acquired nuclear weapons and other advanced military capabilities. A war in the Korean Peninsula would moreover involve indirect and potentially direct conflict with China, North Korean strikes on Japan, potential nuclear weapons use by the North, proliferation of loose nuclear material, and might even prompt a Chinese invasion of Taiwan—just to identify a few of the major risks.

South Korea’s Ability to Reinforce Semiconductor Manufacturing Supply Chains

South Korea is a key ally for the United States when it comes to de-risking semiconductor manufacturing supply chains.²³⁶ South Korea’s strength lies in its extensive fabrication plants as the second-largest semiconductor producer in the world, accounting in 2023 for 71 percent of the global dynamic random-access memory (DRAM) market and 53 percent of the not-and (NAND) flash market, two important memory chips with artificial intelligence and other commercial applications.²³⁷ South Korea is constructing the world’s largest semiconductor hub in Yongin, which will house six large-scale semiconductor fabs by 2030.²³⁸ South Korea’s top industry producers, Samsung and SK Hynix, are global leaders in semiconductor design and innovation, with large research centers in the country.²³⁹ South Korea also has OSAT capabilities to service its domestic producers, although they are much smaller scale than global leaders in Taiwan.²⁴⁰ Its universities have extensive research and educational collaborations with industry producers to spur chip design and development.²⁴¹ South Korea produces some domestic material such as hydrogen fluoride for semiconductor production, but remains reliant on foreign imports.²⁴² It also has a burgeoning semiconductor parts and equipment industry, but most high-end fabrication machinery is imported from abroad.²⁴³

South Korea has the political will to maintain strong cooperation with the United States on reinforcing semiconductor supply chains. In 2025, South Korea was able to secure unrestricted access to American chips as part of U.S. global technology export controls.²⁴⁴ South Korean investments in the United States were already increasing prior to the 2022 CHIPS and Science Act, with firms such as Samsung, LG, and Hyundai pledging to invest $39.4 billion dollars in the United States to build plants or to improve infrastructure for their products.²⁴⁵ Since then, South Korea has agreed to invest $350 billion in the United States as part of a trade agreement with further private investments likely.²⁴⁶ South Korea is involved in U.S.-led semiconductors initiatives, such as the Next Generation Critical and Emerging Technologies (CET) Dialogue and the “Fab 4” grouping with Japan and Taiwan. Seoul and Washington have also formed a Supply Chain and Commercial Dialogue.²⁴⁷ Under its 3050 Strategy Initiative, it aims to reduce dependence on other countries to 50 percent by 2030; as of 2024, the government had committed to provide $223.7 million annually in tax subsidies for advanced manufacturing and $74.6 million annually in semiconductors and electric-vehicle research grants.²⁴⁸ These “friendshoring” initiatives will likely depend on continued U.S. incentives and the presence of a growing market for South Korean firms.

South Korea’s Ability to Increase Critical Minerals Supply Chain Resiliency

South Korea is very important for U.S. critical mineral interests, particularly for producing advanced batteries, electronics grade silicon, and high-purity tungsten for military applications. For advanced batteries, South Korea’s POSCO Future M is a leading global producer of precursor chemicals including lithium hydroxide and NMC cathodes, while KEMCO produces high volumes of nickel sulfate and is building a new plant.²⁴⁹ South Korea also produces natural and synthetic graphite for anodes in advanced batteries.²⁵⁰ OCI is an important global source of polysilicon for semiconductors with plants in Gunsan and in Malaysia.²⁵¹ South Korea also produces antimony and tantalum and is developing praseodymium and neodymium refining for military-grade magnets.²⁵² The Sangdong mines will become one of the largest sources of non-Chinese high-purity tungsten for munitions and has received substantial government and foreign support.²⁵³

South Korea has moreover sought to develop a long-term strategy to reduce its reliance on China for critical minerals. It aims to reduce import dependency on critical minerals to 50 percent by 2030 and is expanding its stockpile capacity.²⁵⁴ Seoul has shown a willingness to work with Washington on diversifying critical minerals supply. In 2025, it is the chair of the Minerals Security Partnership (MSP), an initiative to strengthen U.S. supply chains with partners for critical minerals.²⁵⁵ Through MSP, South Korea’s POSCO International is making a purchase commitment to help develop a graphite mine in Tanzania.²⁵⁶

South Korea’s Ability to Prevent Unwanted Dissemination of Advanced Technology to China

South Korea is a key ally for the United States in efforts to prevent the unintentional dissemination of sensitive technologies to China, but its importance in this has been eroded by Beijing’s growing self-sufficiency and technological advances in sectors where South Korea has traditionally had an edge.²⁵⁷

South Korean firms lead globally in memory-chip technologies and have a large manufacturing presence in China.²⁵⁸ For example, Samsung’s Xi’an fabrication facility produces 15 percent of the global supply of NAND chips, while SK Hynix’s Wuxi and Dalian facilities account for 40 percent of its production of DRAM chips and 20 percent of its total production of memory chips.²⁵⁹ However, China now outperforms South Korea in memory-chip technology, low-power AI semiconductors, power semiconductors, and next-generation sensing technology.²⁶⁰ While China has not quite caught up with South Korea when it comes to 12–14 nanometer advanced chip nodes, its “whole nation” technology innovation approach to chip design poses a significant challenge to Samsung and SK Hynix’s current dominance in the memory-chip sector. Seoul is likely to restrict China’s access to sensitive technologies to safeguard its current leadership in chip innovation and production, but this will matter less as the latter’s advanced chip-making technologies surpass South Korea’s. South Korea has other technological strengths, including in AI (where South Korea is ranked seventh in the world), and in 5G and telecommunications infrastructure.²⁶¹

South Korea has made efforts to pivot toward the United States and to deny China access to sensitive technologies.

South Korea has thus made efforts to pivot toward the United States and to deny China access to sensitive technologies. For instance, Seoul has adhered to U.S. restrictions by blocking chip-making equipment for next-generation technology from being used in South Korean facilities in China.²⁶² Incentivized by subsidies laid out in the U.S. Inflation Reduction Act, South Korean companies have meanwhile moved to open plants in the United States.²⁶³ After the recent arrest of two former Samsung employees accused of stealing trade secrets to replicate chip-making facilities in China, South Korea has also introduced harsher punishments for technology-related crimes.²⁶⁴ It also has a legal regime that can moderate China’s access to its sensitive technology. In 2022 it passed a special act that requires the Minister of Trade, Industry, and Energy to approve the export of strategic technologies overseas.²⁶⁵ In 2024, it introduced national security screening for inbound investments in domestic firms with strategic technologies to prevent their leakage to other nations.²⁶⁶ These pieces of legislation reflect South Korea’s heightened vigilance and intent to protect its sensitive technologies. At the same time, though, it seeks concessions from the United States on trading with China. For example, in 2023, Samsung and SK Hynix received “indefinite waivers” to ship U.S. semiconductors manufacturing equipment to their factories in China “without separate U.S. approvals.”²⁶⁷

South Korea’s Ability to Restrict FDI in China’s Technology Sector

South Korea is an important investor in China’s technology sector that can facilitate or complicate the latter’s development of technologies. It is the seventh-largest sovereign source of FDI in China, at $3.51 billion in 2024.²⁶⁸ It is very unlikely that South Korean firms will stop investing in China altogether. For example, the Korea Investment Corporation, South Korea’s sovereign wealth fund, is eyeing data centers and AI startups in China’s tech hubs, which many argue could help facilitate China’s AI boom.²⁶⁹ At the same time, there has been divestment from some sectors, such as automobiles.²⁷⁰ South Korea has an outbound investment screening mechanism through the Act on Prevention of Divulgence and Protection of Industrial Technology (APDPIT). This allows the government to restrict outbound investments for a “national core technology,” or technologies developed using government research or funding.²⁷¹

South Korea’s Basing, Logistics, and Strike Capabilities in Case of a Conflict Over Taiwan

South Korea has substantial military capabilities. For example, land-strike capabilities include indigenous multiple-missile launchers, U.S. produced Army Tactical Missile Systems (ATACMS) and bunker-busters, and the air-to-surface missiles, that together with the F-35, provide long-range air-launched precision strike capabilities against land and sea targets.²⁷² South Korea also produces indigenous sea-skimming, anti-ship cruise missiles, and its destroyers are armed with anti-ship and land attack variants.²⁷³ Missile defenses range from the U.S. Patriot system and mid-range indigenous interceptors to THAAD for long-range interceptions.²⁷⁴

These capabilities are not very relevant, however, to the China problem set. Seoul has historically been very reluctant to allow the U.S. forces it hosts to play a role in military activities aimed at China. From its point of view, the 28,000 personnel stationed in the country at Camp Humphreys, which the U.S. Army calls “the largest power projection platform in the Pacific,” are there to protect the country from North Korea and not to deter China.²⁷⁵ Some experts argue that this picture is changing, but there is still clearly a long way to go. Earlier this year, the United States Forces Korea confirmed the shift toward strategic flexibility on the peninsula and that it would support “the broader objectives of the U.S Indo-Pacific Command,” with its commanding general suggesting the peninsula could be like an “aircraft carrier.”²⁷⁶ In the last few years, South Korea has reluctantly agreed to permit the United States to operate some submarine forces from its shores, and U.S. nuclear submarines now make regular port calls at Chinhae, the only U.S. naval base on mainland Asia.²⁷⁷ The China hawks in the Trump administration may press Seoul to take a firmer supportive position in a Taiwan contingency.²⁷⁸

It is unclear how the South Korean public would respond to an invasion of Taiwan by China. In a recent survey, some 42 percent of South Korean respondents supported the idea of the U.S. providing rear support missions for Taiwan from the Korean Peninsula. Around 25 percent said that U.S. Forces Korea should remain exclusively focused on defending South Korea against potential North Korean provocations in the case of a Taiwan contingency.²⁷⁹ Within South Korea, there is no consensus on what the country’s role should be.²⁸⁰

South Korea’s Ability to Co-Develop Military Technology and Weapons Systems with the United States

South Korea can be a helpful ally to the United States when it comes to military technology, but not a critical one. The United States does not rely on South Korea for complete weapons systems, and no U.S. weapons system is critically dependent on South Korean production. However, South Korea participates in the F-35 program, produces some of the metal parts that go into the fighter jets, and is currently building its own F-35 maintenance depot that will be operational by 2027.²⁸¹ During the Biden administration, the two countries expanded their cooperation on developing autonomous systems, AI, and quantum technologies through a new Defense Science and Technology Executive Committee.²⁸² They also regularly work together through the Cyber Cooperation Working Group.²⁸³ There is also an ongoing effort to strengthen the two militaries’ interoperability for unmanned systems and emerging technologies.²⁸⁴ Seoul is keen to work with Washington to co-develop military technologies.²⁸⁵

South Korea is also becoming an important ally for the United States to meet its need to expand its shipbuilding capacity, which is widely recognized as a bottleneck in the effort to expand the U.S. fleet to compete with China’s. South Korea has the second-largest shipbuilding industry in the world and it recently reclaimed from China the top spot for global orders of high-value, low-carbon ships, with over $13.6 billion in contracts.²⁸⁶ In December 2024, South Korean firm Hanwha acquired Philly Shipyard, a leading U.S. commercial and government shipyard, for $100 million.²⁸⁷ Hyundai had just before signed a memorandum of understanding with Philly Shipyard to cooperate on shipbuilding projects for the U.S. government.²⁸⁸ This trend of cooperation is likely to continue.

South Korea’s Ability to Support the United States to Shape the Future of Global Governance

South Korea is not a major player in international organizations, but it broadly supports U.S. initiatives in them. Former president Yoon expressed a vision of the country becoming a “global pivotal state,” which would see it “embracing greater roles and responsibilities” in the Indo-Pacific and pursuing “values-based diplomacy.”²⁸⁹ This entailed calling for states to band against China’s coercive influence and for Seoul to take on humanitarian initiatives in the United Nations.²⁹⁰ South Korea is an important player in the Asia-Pacific Economic Cooperation having hosted the forum in 2025, and is the fifth-largest member by subscriptions and voting power in the China-led Asian Infrastructure Investment Bank.²⁹¹ It is not a member of ASEAN but works closely with it through the ASEAN-Korea Cooperation Fund.²⁹² Compared to some other U.S. allies, it has only moderately aligned with the United States in UN General Assembly votes; in 2023, their votes coincided in 60 percent of cases, making South Korea the forty-third most-aligned country with Washington.²⁹³ However, it was joint-first among Asia-Pacific countries in Ukraine-related votes (100 percent) and fifth in votes classified as important by the State Department (62 percent).²⁹⁴

Estimation of South Korea’s Influence in the Global South

South Korea is a somewhat important ally for the United States when it comes to providing development and infrastructure assistance to the Global South and reducing reliance on China. In 2024, it was thirteenth among the providers of ODA.²⁹⁵ In 2023, it allocated 49 percent of its total bilateral development assistance to countries in Asia, amounting to $1.3 billion. It is less active in other regions: It allocated $490.5 million in bilateral ODA to African countries and 289.4 million to Latin America and the Caribbean.²⁹⁶ It has some capacity to compete with China’s development projects abroad through the Korea Overseas Infrastructure & Urban Development Corporation (KIND). KIND promotes Korean participation in overseas infrastructure projects through equity investments and project development.²⁹⁷ Further, the Korean Development Bank (KDB), though primarily focused on domestic economic development and corporate finance, also supports overseas projects that help Korean firms expand abroad, serving as another development finance alternative to Beijing’s projects.²⁹⁸

The Yoon administration aimed to double ODA by 2030, and it made commitments as a part of the trilateral partnership with Japan and the United States to continue providing physical and digital infrastructure support to Southeast Asian nations.²⁹⁹ At the inaugural Korea-Africa Summit in 2024, Seoul said it would provide expertise to assist in the efforts to set up an African Continental Free Trade Area, and it pledged to support the development of critical industries, peace operations, and education initiatives in the continent.³⁰⁰ Lee has said he aims to continue fostering good relationships with the Global South.³⁰¹

What the Future Holds

The Yoon administration (2022–2025) was one of the most pro-American in South Korea’s history.³⁰² In contrast, Lee’s DPK has traditionally favored “strategic ambiguity” between the United States and China. But Lee’s term begins at a time when the DPK’s foreign policy priorities are shifting.³⁰³ China’s economic coercion over the THAAD missile defense deployment made the DPK recognize the primacy of the security alliance with the United States, and it has incrementally shifted away from its balancing act between the two superpowers.³⁰⁴ This does not mean it will line up staunchly in the U.S. camp, however. In 2022, Lee wrote that “Seoul needs to get along with Beijing” to achieve any of its objectives in Northeast Asia.³⁰⁵ Skepticism about the need for large U.S. forces on the peninsula may increase gradually in Washington as long as South Korea resists efforts to make these forces more relevant to competition with China. Washington will likely continue to seek close cooperation with Seoul on the economic and technological challenges outlined above.

Christopher S. Chivvis is a senior fellow and director of the American Statecraft Program at the Carnegie Endowment for International Peace. He has more than two decades of experience working on U.S. foreign policy and national security challenges.

Kris Zhu was a 2024–25 James C. Gaither junior fellow in the American Statecraft Program.

Beatrix Geaghan-Breiner is a research analyst for the American Statecraft Program. She received a BA from Columbia University in 2022, where she studied the history of U.S. foreign policy.

Maeve Sockwell is a research analyst for the American Statecraft Program.

Lauren Morganbesser was a 2024–25 James C. Gaither junior fellow in the American Statecraft Program and is currently a fellow at The Cohen Group. The views expressed in this report are her own.

Senkai Hsia is a research assistant for the American Statecraft Program.

Acknowledgments

We would like to thank Dan Baer, Jon Bateman, Sophia Besch, Jacqueline Borsboom, Frances Brown, Rachel Brown, Kevin Brunelli, Toby Dalton, Samuel Denney, Darcie Draudt-Véjares, Evan Feigenbaum, Noah Gordon, Sheena Chestnut Greitens, Christopher Johnstone, Marc Julienne, Isaac Kardon, Jeongmin Kim, Kenji Kushida, Nikita Lalwani, Lucas Litle, Milo McBride, Stewart Patrick, Alasdair Phillips-Robins, Jeremy Shapiro, Matt Sheehan, Thomas Shugart, Ashley J. Tellis, Tara Varma, Stephen Wertheim, Sam Winter-Levy, and Andrew Yeo for helpful comments and input into this report. Ilyasah Queen-Bailey provided helpful support keeping us on top of administrative details throughout the project.