Small States Don't Pick Sides: The Hedging Playbook of Five Southeast Asian Nations
Myanmar, Laos, Cambodia, Brunei and Timor-Leste — five small states that rarely fall in line behind one power, instead depending on one country for agriculture and another for defence, hedging between great powers through multi-directional diplomacy.
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The argument · tap a timestamp to hear it
Small states rarely fall in line — they all hedge
Huang Yuxiang cites the "client or hedge" framework from his teacher's book: traditional theory holds that a small state inside some great power's sphere of influence must obey unconditionally, but states today are far shrewder and rarely fall in line. What they practise is multi-directional diplomacy — depending a bit more on one country for agriculture, a bit more on another for defence — which is why looking at them through traditional client-state theory makes them seem wildly contradictory. He gives Bhutan as an example: it is in effect an Indian protectorate, yet it has also established diplomatic relations with the UK and tried to establish them with China. However small a state is, it still wants to retain some autonomy.
— Huang YuxiangMyanmar is a state that has not finished being built
Since the 2021 military coup Myanmar has been in a long civil war with no sign of ending. The immediate trigger was putting Aung San Suu Kyi under house arrest and jailing her, which broke its earlier hedging strategy of keeping economic cooperation and channels open with both China and the US. The local historian Thant Myint-U has a book called "The River of Lost Footsteps" (Burma: The Unfinished Nation), arguing Myanmar is a state that has not completed its construction — it has a territorial map, but in reality it is a geographical term, with the dominant Bamar making up only 50% to 60% of the population, the north's Kokang long autonomous and beyond control, and the warlords of Shan State and Wa State each commanding forty to fifty thousand troops. The army's combat effectiveness is poor and corruption is severe, reflecting a country that does not know where it is going.
— Huang YuxiangNorthern Myanmar's chaos is three countries' bandits crammed together
Huang Yuxiang cites Han Enze of Xi Yang University in "Strong Neighbours at the Side: The Contest over the China-Thailand-Myanmar Borderlands": the Southeast Asian highlands, including Yunnan, Guizhou and southern Sichuan, all the way to northern Myanmar and northwestern Thailand, form one complete geographical unit above 3,000 metres, where people need not migrate — the Burmese and the Thai both came down from Yunnan along the rivers. There is a "shower effect" here — assume bandits are a constant: if you can't make it in Yunnan you run to Myanmar, if you can't make it in Thailand you also run to Myanmar. The better China controls the Yunnan border, the more bandits run to northern Myanmar. So northern Myanmar bears the bandits of three countries with the strength of one, and of course it is very hard to govern.
— Huang YuxiangLaos's value is only visible through the lens of land routes
Laos is Southeast Asia's only landlocked country, long a client state of Vietnam, a transitional geographical unit with little independence. From a sea-power perspective it does not matter, because it has no coast; but if you want to build a fast corridor, build high-speed rail, and run a railway from China to Thailand's outlet to the sea, you must pass through Laos. Its territory is all mountains, and the flat land around the capital Vientiane is basically on the Thai plain; it is naturally short of resources and can only live by connecting others and collecting tolls, like Afghanistan. It is currently hedging, seeking cooperation with Vietnam and Thailand, and there is the Greater Mekong economic cooperation framework integrating the Mekong basin economically — the World Bank says this is the last place on earth to be developed.
— Huang YuxiangCambodia's killing was killing without meaning
The last episode concluded that the more economically developed countries of Southeast Asia were all built on bloody slaughter, yet Cambodia killed so many people and its economy still did not develop well. Huang Yuxiang's explanation: that was killing without meaning. Indonesia is a country of a thousand islands, and to integrate economically it had to deal with people who disagreed — killing was the fastest method; but Cambodia itself has a long history and, through the Khmer Empire and the colonial experience, was already a state and did not need such a construction process, yet slaughtered millions in pursuit of an ideal. The result was that the people were utterly disgusted with the regime, and Vietnam's troops occupied Cambodia very smoothly.
— Huang YuxiangBrunei lives on oil but never built a second industry
Brunei was once a very large kingdom, relatively strong from the eighth to the eighteenth century, called Boni in Chinese records, and in the sixteenth century it controlled all of northern Borneo and the southern Philippines; today its area is only a little over five thousand square kilometres. Its economic success rests entirely on oil and gas development; its luck was that when it was invaded it kept a piece of territory with relatively abundant oil and gas, close to the sea and easy to develop. The problem is that all the oil money went into welfare and it did not develop much industry of its own; only in recent years has it begun to think about diversification, and it has only just started — no one knows how it will turn out.
— Huang YuxiangTimor-Leste cannot even afford to fly
Timor-Leste is a little over ten thousand square kilometres, half the size of Taiwan, 90% mountains, geologically granite and limestone, basically impossible for agriculture; the capital is a little over a hundred square kilometres and the population is basically all in the capital. It was colonised by Portugal, and its value within the Portuguese empire was as a place to exile convicts. Its natural conditions are extremely poor, it was long under harsh Indonesian rule, and it has only been independent for 20 years. You can tell from the flights: you cannot fly there directly from China, you must go via Singapore on Timor Air, and Timor Air belongs under Singapore Airlines and seems to have stopped operating after the pandemic, so you can only fly from Australia. It cannot even afford cargo — it does not even have planes.
— Huang YuxiangJapan penetrated Southeast Asia through economic reparations
The US is simpler: its traditional ally is Thailand, as the front line containing Vietnam. Japan is more complicated: after the war it had to pay economic reparations, and through reparations it penetrated the local economy — reparations were not food, but aid given to you, like the Marshall Plan: I give you aid, but you must buy my goods. Japan has always been a player in Asian regional integration, until China launched the Belt and Road and things changed somewhat. Japan's territory is very small, so it must expand politically and economically outward to have generous welfare and an economic base, which is why it has always pushed the Asian Monetary Fund and the Chiang Mai Initiative, done half-and-half by China and Japan. The US pivot to Asia, Japan's arc of freedom and prosperity, and China's Belt and Road — their points of intersection are all in Southeast Asia.
— Huang YuxiangIn their own words · checked verbatim
Basically it's all a kind of multi-directional diplomacy — multi-angle, multi-directional. For example, for agriculture I depend a bit more on that country, for defence I rely a bit more on that place.
就基本上呢 都是一种叫多向量外交 就是多角度 就multi-directional 这样的一个做法 就比如说农业呢 我就依赖那个国家多一点 国防就靠那个地方多一点
Huang Yuxiang11:11
So it means something called the shower effect — whether these places are well governed sometimes actually depends on whether the other side is well governed. Because if we assume bandits are a constant, then if you can't make it in Yunnan you run off to Myanmar.
所以它有一个意思就是说叫淋浴效应 就是这些地方管得好不好 其实有时候呢 是取决于另一边管得好不好 因为盗贼 我们假设是一个常数的话 那么你在这个云南混不下去 就跑到缅甸去吧
Huang Yuxiang17:16
Because investors are not actually afraid of so-called dictatorship or autocracy — what they fear more is uncertainty. So this country has no investment value.
因为投资者呢 其实是不害怕 所谓的独裁或者专政的 他们更害怕的是不确定性 所以这个国家是没有投资价值的
Huang Yuxiang25:22
Their point of intersection is in Southeast Asia. Now the US should be [pivoting] strategically, but the point of exchange is all in Southeast Asia.
他们的交错点 就是在东南亚 现在美国就应该战略了 但交换点都在东南亚
Huang Yuxiang58:41
The Vietnamese, it's not just that — that's a treasure. Why? That's Chinese characters — you can't read them.
越南的人是不只那是宝物 为什么呢 那是汉字啊 看不懂啊
Huang Yuxiang1:06:46
Figures
| Bamar share of Myanmar's population | around 50% to 60% | 14:14 |
| Troop strength of Shan State and Wa State warlords | forty to fifty thousand troops | 14:14 |
| Death toll of Myanmar's 8888 democracy movement | several thousand | 19:17 |
| Population of the Khmer Empire | over ten million | 33:26 |
| Nominal territory of the Khmer Empire | 73% of Indochina | 36:28 |
| Area of Brunei | a little over five thousand square kilometres | 46:35 |
| Population of Brunei | over four hundred thousand | 47:35 |
| Area of Timor-Leste | a little over ten thousand square kilometres, half of Taiwan | 50:37 |
| Time since Timor-Leste's independence | 20 years | 51:38 |
| Time Hun Sen has been in power | 33 years | 41:30 |
Glossary
- hedging
- A diplomatic strategy in which small states bet on multiple sides among great powers to reduce the risk of dependence on any one.
- multi-directional
- Depending on different great powers in different domains — agriculture, defence and so on — rather than falling in line behind one.
- reconciliation
- The core goal of transitional justice: letting a society move on after settling accounts with its history.
- The Art of Not Being Governed
- A study of the anarchist history of the Southeast Asian highlands, explaining how hill peoples evaded the central empire.
How to listen
Founders and investors watching Southeast Asia expansion, geopolitics and emerging-market investment; analysts who want to understand how small states hedge between great powers.
The opening ~8 minutes on feedback from the last episode and the transitional-justice controversy can be skipped; go straight to 10:11 for the five countries.