Xi builds soft push for Asia, Plus Trump's tariff whiplash hits tech giants -- China Boss News 4.18.25

Newsletter

What happened?

As Washington slammed Southeast Asia with a fresh wave of tariffs—46% on Vietnamese goods, 24% on Malaysian exports, and a punishing 49% on Cambodia—Chinese leader Xi Jinping landed in the region with Chinese investments.

In Vietnam, Xi inked deals on digital infrastructure and high-speed rail and expanded yuan trade settlements.

In Malaysia, he signed agreements on AI collaboration, semiconductor supply chains, and EV manufacturing.

And in Cambodia—Beijing’s closest partner in mainland Southeast Asia—he reaffirmed the “ironclad” alliance with pledges of military training, agricultural aid, and deeper integration into the Belt and Road Initiative.

Said another way, Xi’s tour was a calibrated counteroffensive to Trump’s economic onslaught, meant to frame Beijing not just as an alternative to Washington but as the more reliable power.

And it’s working. Southeast Asia is already China’s largest trading partner.

With the US retreating behind tariff walls, Beijing is racing to lock in long-term influence through infrastructure, currency deals, and elite capture.

Why it matters.

The ‘Diamond-Hexagon’ model

At the center of China's hope for the region is the Diamond-Hexagon Cooperation Framework—a quiet blueprint for influence, designed not to coerce, but to wed.

The “diamond” symbolizes loyalty. The “hexagon” refers to six pillars of engagement: politics, industrial production, agriculture, energy, security, and soft power.

Simply put, if the Belt and Road aims to expand China’s influence across the globe with infrastructure, the Diamond-Hexagon is configured to bury it deep within individual countries' political, economic, and cultural systems.

Launched in 2023, the framework formalizes China’s outreach to Cambodia.

There, Chinese capital fuels factories, buys crops, trains soldiers, builds dams, and saturates classrooms.

Like early efforts to colonize Tibet and Xinjiang, Beijing’s Diamond-Hexagon strategy is designed to reengineer foreign societies from within—cultivating deep, systemic dependencies that fuel China’s development and extend its control.

Things don’t always go to plan, however.

In Cambodia, the expected model client, roll-out of the Diamond-Hexagon has slowed.

China’s post-COVID economic adjustments have pulled resources inward, and deeper investments in Cambodia’s heavy industry haven’t materialized.

But Beijing swears they’re coming, and that has been enough for many in the Cambodian elite.

China invests in the ruling class.

State-owned enterprises and joint ventures flow into the hands of politically connected families—especially the Hun dynasty.

Beijing also helps Phnom Penh build internal control systems: surveillance tech, cybersecurity infrastructure, and policing tools.

The result is a resilient, Chinese-aligned regime increasingly immune to Western pressure - and popular dissent.

Of course, the Diamond-Hexagon works best in places like Cambodia: authoritarian, patronage-driven, resource-hungry.

But in Vietnam and Malaysia, it hits friction. Nationalism runs deep, and institutions are stronger.

The karat or the stick

Enter the United Front—Beijing’s strategic horizon.

A system of influence that includes media partnerships, elite scholarships, diaspora networks, quiet donations, and soft cultural exports.

It’s not diplomacy. It’s infiltration.

And it’s designed to seep into bureaucracies, campuses, and boardrooms until alignment with China becomes the default condition.

However, as with Beijing's other global “connectivity” initiatives, the United Front has seen mixed results—gaining traction in some places, stalling in others.

In Southeast Asia, it operates more effectively in Cambodia, Malaysia, and Thailand, where political openness or elite capture provides more room to maneuver.

Vietnam, however, is a harder environment—its one-party system and deep-rooted nationalism make it far less porous.

But that hasn’t deterred Xi Jinping. His soft-power push for hard regional gains is in full force—and here’s how I see the terrain:

The China-Drift Risk Matrix

• Vietnam is walking a tightrope—deepening trade with China while keeping defense ties with the US intact. Drift risk: moderate. Stakes: high.

• Malaysia may quietly renegotiate with Washington but won’t turn away from Chinese capital. Drift risk: high.

• Cambodia is already locked in. Drift risk: irrelevent. Chinese leverage: maximum.

• Indonesia delays decisions, hedging bets. Drift risk: low. Influence: definitely growing.

• Thailand diversifies, including with Japan. Drift risk: low to moderate.

Trump, meanwhile, is betting on shock therapy.

Reports suggest his "tariff-first, deal-later" strategy aims to push countries back toward Washington—until China is contained or isolated.

I’m no economist or trade lawyer, but I do know this: “International relations” is just a formal way of describing how countries—made up of people with distinct histories, conditions, and ambitions—interact.

Which is why I see at least six problems with a “light-’em-up-with-tariffs” approach:

Six flaws in the tariff logic

1. Assumes pain equals loyalty
   Tariffs hurt—but they don’t guarantee alignment. Some nations may hedge, regionalize, or pivot to China and the BRICS bloc instead.

2. Ignores diverse reactions
   Economic and historical contexts matter. Not everyone buckles under pressure.

3. Frames the world in binaries
   This overestimates the value of doing business with the US. The world is far wealthier and more multipolar than it was decades ago. Trade substitution is real—and China is a top option.

4. Sacrifices strategy for shock
   Tariffs might provoke fast responses—but they often speed up long-term moves toward economic independence. Europe is a prime example.

5. Relies on coercion, not trust
   Influence built on punishment is brittle. Would you marry your abuser? Some will, most won’t.

6. Mistakes cause and effect
   Push too hard, and the blowback can reshape the board entirely—usually in ways that sabotage your own strategy.

So, what are we left with?

On one side: China’s Diamond-Hexagon—polished, seductive, and quietly imperial.

On the other, American pressure—bruises and broken bones, painful but (hopefully) temporary.

In between, a third path: Countries with the means are no longer choosing sides—they’re building alternatives.

But in Southeast Asia—a region that craves capital and calm—the decisive factor won’t be who’s strongest but most dependable.

And that's where China comes in.

Yet to formalize spheres of influence is to legitimize Beijing’s worldview—a world carved into zones of control, giving China the space it needs to continue seeping into foreign institutions and less formal social networks.

Not coexistence, but a rising flood—until submission becomes automatic and a default condition for all.

This Week's China News

The Big Story in China Business

US TARIFF CONFUSION: TECH EDITION: For a fleeting moment last Friday, tech CEOs could breathe. The White House announced a pause on new tariffs for electronics—iPhones, laptops, modems—offering what looked like a reprieve from Trump’s tariff war with China.