Policy Backgrounders

US Policy in the Indo-Pacific: The 2025 Shangri-La Dialogue

June 05, 2025

The annual Shangri-La security dialogue in Singapore featured an address by Secretary of Defense Pete Hegseth outlining US policy in the Indo-Pacific, while China downgraded its attendance this year. US allies in the region are concerned about requests for increased defense spending, particularly given the additional pressure on tariffs.

• For the first time, a European leader (French President Emmanuel Macron) delivered the keynote address, a sign of growing European interest in Asian security and the intertwining of European and Asian security.
• Secretary of Defense Hegseth’s speech contained strong language on China, particularly on the South China Sea and warned of “devastating consequences for the Indo-Pacific and the world” should China attempt to conquer Taiwan but without formally committing the US to Taiwan’s defense, restoring a traditional policy of strategic ambiguity.
• Hegseth also called on Asian allies to increase defense spending to 5% of GDP – a target that will be very difficult for these countries to meet, although some may increase defense spending in the near term.
• The Dialogue took place against the backdrop of tariffs on important regional allies and trading partners; it is virtually impossible to separate geopolitics and geoeconomics in current Asian security policy.

The Shangri-La Dialogue

The International Institute for Strategic Studies hosts an annual Dialogue at the Shangri-La Hotel in Singapore focusing on security in the Asia-Pacific “where ministers debate the region’s most pressing security challenges, engage in important bilateral talks and come up with fresh ideas together.” This year, the Dialogue served as an opportunity for the Administration to deliver its priorities for Asia-Pacific security – with a backdrop of concern over China and reactions to the significant “Liberation Day” tariffs on key allies and trading partners.

This year’s event was marked by significant changes. For the first time, a European official (President Macron of France) delivered the keynote address, and the Chinese Defense Minister skipped the meeting for the first time since 2019 (the Chinese delegation was led by Rear Admiral Hu Gangfeng of the National Defense University). But the real focus of the meeting was US policy in the region.

President Macron’s Speech

French President Emmanuel Macron was the first European leader to deliver the keynote address at the Dialogue. He made the most of the opportunity, focusing on what he termed “the common interest in strategic autonomy between Europe and Asia” as well as a “new partnership between Europe and Asia.” [1]

The war in Ukraine was both the backdrop and in part the rationale for his remarks, calling out the “risk” of “just to look at the crises [in one region] and to forget our principles and to forget the fact that all these [current] crises and these wars are interconnected.” More specifically, Macron declared that if “Russia could be allowed to take [part] of the territory of Ukraine. . . without any reaction of the global order,” then how should the world react if something were to happen in Taiwan or the Philippines? It would essentially destroy the concept of a single global order unless “we stick to our principles” – “what is at stake in Ukraine is our common credibility, to be sure that we are still able to preserve territorial integrity and sovereignty . . . No double standard.” Reacting to the presence of North Korean troops fighting with Russia, in very strong language, Macron stated that “if China does not want NATO being involved in Southeast Asia or in Asia, they should prevent, clearly, [North Korea] from being engaged in fighting in Europe.”

He continued that “the main risk today is a risk of division of the world and a division between the two superpowers. And the instruction given to all the others [countries]: you have to choose your side.” In Macron’s view, this will “kill the global order, and we will destroy methodically all the institutions we created after the Second World War in order to preserve peace and to have cooperation” among nations – precisely at the time when they are needed the most.

Thus, for France, the key is to ensure a form of “strategic autonomy”: “we want to cooperate [with the US] but we do not want to depend. We want to cooperate, but we do not want to be instructed on a daily basis what is allowed, what is not allowed, and how our life will change because of the decision of a single person.” More pointedly, he noted how “the unpredictability of the new tariff approach and the end of a rule-based order for our trade” impacts not only prosperity but in fact “our capacity to finance our defence efforts” -- precisely what the US is asking Europe (and Asia) to increase.

Europe’s Role in Asia

President Macron’s speech (and his tour of Southeast Asian countries including Singapore, Indonesia, and Vietnam) marked a recognition of Europe’s growing involvement in Asian security, with increased European carrier group deployments to the region and naval exercises in the Indian Ocean, along with visits from German and Italian ships. This marks both an increased recognition of the intertwining of European and Asian security and perhaps also a response to questions over the extent of the US’ continuing commitment to the region. The EU is seeking to reinforce both economic and security ties with Southeast Asia.

Secretary Hegseth’s Speech

Secretary of Defense Pete Hegseth spoke at the plenary session on Saturday. His remarks were strong against China but overall, less critical of US allies than his remarks in Europe in February. Continuing the themes from February, however, Hegseth emphasized that the Indo-Pacific is the US “priority theatre” and said that “[w]e are reorienting towards deterring aggression by Communist China,” seeking a situation of “peace through strength” in which China “cannot dominate us or our allies and partners.” He added that “[w]e will not be pushed out of this critical region, and we will not let our allies and partners be subordinated and intimidated.” 

On Taiwan, Hegseth said “Let me be clear: Any attempt by communist China to conquer Taiwan would result in devastating consequences for the Indo-Pacific and the world. We are not going to sugarcoat it. The threat China poses is real. And it could be imminent.” He continued that “President Trump has said that communist China will not invade Taiwan on his watch. Our goal is to prevent war. And we will do this with a strong shield of deterrence, forged together with you – America’s great allies and partners.”

The speech also included strong language on China’s “illegally seizing and militarizing land features in the South China Sea,” noting these “actions betray China’s fundamental lack of respect for its neighbors and challenge sovereignty, freedom of navigation, and overflight. Any unilateral attempt in the South China Sea to change the status quo by force or coercion is unacceptable.”

While few observers expected the new Administration to be as direct in reaffirming US support for Taiwan as President Biden was on a few occasions, this return to strategic ambiguity on 

Taiwan was also perhaps less robust than some Asian allies had hoped (for instance, it could have paralleled the language on the South China Sea that “any unilateral attempt to change the status quo by force or coercion is unacceptable”). The language on the South China Sea, however, was consistent with previous US positions, although China will also have noted that the US has not conducted any “freedom of navigation operations” sailing US ships through the Taiwan Strait since the new Administration took office.

Defense Spending

The speech received most notice for its call that US allies and regional partners should raise their defense spending to 5% of GDP, noting that if “[e]ven Germany” is increasing defense spending, then Asian countries should do so as well, in the face of threats from China and North Korea. Currently, South Korea spends 2.6% of GDP on defense, with Taiwan, Australia, Japan, and the Philippines all spending less (Singapore, not a formal treaty partner, spends about 3%).

While Asian allies are cognizant of the threats, political considerations also apply. Japan is already planning for on target for 2% spending by 2027, a target set by former Prime Minister Kishida as part of revising Japan’s national defense strategy. But additional increases could put pressure on Japan’s budget at a time when the economy is suffering the effects of US tariffs, particularly on autos.

This will all have been an important subject of discussion at the bilateral and multilateral meetings with US allies held on the margins of the Dialogue, including a quadrilateral “Squad” meeting with Australia, Japan, and the Philippines. Presumably one US goal is greater purchases of US defense products, which would reduce bilateral trade deficits and assist with negotiating trade agreements. European countries, in particular France, are also making great inroads into Asia’s arms trade. After a meeting with Secretary Hegseth, Japanese Defense Minister Gen Nakatani said that “what is important is the substance of strengthened defense capabilities” rather than the percentage of GDP.

In practice, the Administration’s short-term goals will likely be more modest, for instance asking Australia to have a goal of 3.5% of GDP spending on defense (instead of the current 1.9%), matching the US percentage. But the impact on Asian economies and political sensibilities is real, with one Singaporean analyst even suggesting that too much pressure on Thailand to increase defense spending “may simply accelerate its pro-China trajectory.”

Geopolitics and Geoeconomics

Secretary Hegseth stated that “[w]e are not here to preach to other countries to embrace and adopt our politics or ideology. We are not here to preach to you about climate change or cultural issues. We are not here to impose our will on you. We are all sovereign nations. We should all be able to choose the future we want to build. We respect you and your traditions. And we want to work with you where our shared interests lie.”

While this language carries an implicit criticism of China and Chinese actions in the region, it also leaves open the question of how where and how the US will ultimately define “where our shared interests lie,” in other words the extent of what the “pivot” to Asia ultimately means. In a crisis, how would the US act? The forthcoming National Defense Strategy later this year should provide further insights into the US position.

This year’s Dialogue marked a significant change from last year, in which then-Defense Secretary Lloyd Austin spoke of a “new era of security” in the Indo-Pacific with deepening security relationships while China warned against “exclusive military alliances and what it termed “bloc confrontation.” While there has been much speculation over the possible reasons for Defense Minister Dong Jun not attending this year, the reason could be as simple as both the US and China not thinking that the time is right for a bilateral meeting of defense ministers in advance of any calls between the two countries’ leaders (Secretary Austin held a bilateral with China at the Dialogue in 2024). In addition, one observer noted that China may also wish to strengthen other opportunities for its messaging, including the Xiangshan Forum in China.

China’s absence of high representation at one meeting does not change the fundamental security issues in the region nor the pressures that both US allies and neutral states face. Southeast Asia, a dynamic region that has been a focus of increasing US policy attention in recent years does not like to be caught in the middle between the US and China – and perhaps most of all does not want to be forced to choose between the two. As attitudes in the region shift (and may continue to do so in response to tariffs), the US needs to upgrade its engagement with the region and to do so sensitively and well. In the meantime, tariffs, and the interplay of tariffs with requests for increased defense spending amidst tensions with China as China also seeks to rally other Asian countries to its side, provide the backdrop to Asian security discussions under the new Administration. In this environment, it is exceptionally difficult to separate geoeconomics and geopolitics.