By Muhammad Izzuddin Al Haq
China’s overseas investment machine—once the financial engine of the Belt and Road Initiative (BRI)—is beginning to lose momentum. Official figures show that China’s non-financial outward bound direct investment grew only 1.3 percent in 2025, signaling a sharp slowdown and raising questions about the long-term returns of Beijing’s flagship global infrastructure strategy.
The slowdown is especially visible in Southeast Asia, where many BRI projects have generated rising debt burdens and fiscal pressure for host governments rather than the sustained economic gains originally promised. While Chinese investment into BRI partner economies technically rose 17.6 percent in 2025, the surge in spending has not translated into stronger or more sustainable returns. This divergence between investment volume and returns suggests that China requires strategic recalibration to support its main aims of gaining surplus through BRI. Yet whilst education investment appears an obvious alternative to infrastructure spending, examining why Beijing hasn’t already pursued this strategy reveals formidable barriers on both sides.
The STEM Gap and China’s Capacity
Most glaring are the critical STEM deficiencies seen in Southeast Asia. Whilst Singapore ranks amongst global top performers, most ASEAN members lag significantly. Vietnam exemplifies the challenge despite producing 690,000 STEM students in 2023, as it has only 300 recognized AI specialists and meets less than 20 percent of its annual semiconductor engineering demand (currently 15,000 specialists against a 2030 target of 50,000). The annual shortfall of 150,000-200,000 ICT workers constrains the region’s competitiveness in knowledge-intensive sectors.
China, by contrast, produces 3.57 million STEM graduates annually, over 40 percent of all university degrees, and awarded over 50,000 STEM doctorates in 2022, with projections exceeding 77,000 annually by 2025. Yet Chinese universities attract primarily Pakistani and African students whilst Southeast Asian engagement lags conspicuously behind Western campuses. This educational decoupling poses long-term strategic risks for Beijing’s regional influence.
Why does Beijing Hesitate?
China’s bureaucratic framework remains structurally biased toward infrastructure. The Ministry of Commerce, state-owned enterprises, and policy banks built their capacity around construction projects generating immediate and quantifiable outputs. However, educational partnerships require coordination between the Ministry of Education, provincial universities, and scholarship councils historically operating with limited international mandates. Reallocating funds would necessitate bureaucratic restructuring that challenge existing institutional interests.
At the same time, educational influence creates uncomfortable tensions for Beijing. The mechanism making educational exchange effective, nurturing independent-minded professionals who understand Chinese institutions, also risks creating alumni networks that may critique governance models or advocate for pluralism. The U.S.-China educational exchange precedent demonstrates this double-edged dynamic. Although overseas returnees have often helped facilitate business partnerships and commercial networks, China remains cautious about expanding such exchanges. Many Chinese students educated abroad return with liberal democratic ideas—a development that the party-state views through the lens of ideological security.
Moreover, China faces credibility problems infrastructure temporarily circumvented. Despite recent ranking improvements, the perceptions of limited academic freedom affect their appeal to international students. Even though China has become the world’s largest provider of English-taught degree programs outside the Anglophone sphere, elites from the Southeast Asia region still tend to favor Western universities because they are seen as offering higher quality, more globally transferable qualifications, and greater political neutrality.
The ASEAN Calculation
ASEAN governments face equally complex nature. In Vietnam, despite needing precisely what Chinese collaboration offers, Hanoi simultaneously pursues U.S.-Japan-EU partnerships whilst maintaining South China Sea disputes. Vietnamese policymakers would welcome technical training in renewable energy whilst resisting AI or cybersecurity collaboration, limiting the strategic depth Beijing seeks.
The Philippines and Thailand face political volatility. Educational partnerships requiring 10–15-year commitments span multiple political cycles. The frameworks launched under China-friendly administrations could face budget cuts from successors. This makes governments cautious about integration that could become domestically controversial.
Indonesia illuminates elite perception challenges. Despite being Southeast Asia’s largest economy and a major BRI participant, Indonesian technocrats send children to Australian, British, and American universities. This reflects not merely quality but social capital. Melbourne or Berkeley degrees attract globally recognized credentials whilst Chinese PhDs carry less portable prestige.
In addition, ASEAN increasingly frames Chinese educational overtures through “comprehensive influence” concerns. Thailand’s 2023 Confucius Institute debates, Cambodia’s scrutiny of Chinese-language programs, and Malaysian civil society pushback reflect growing soft power penetration sensitivity. Educational partnerships welcomed as technical cooperation in 2010 now trigger sovereignty concerns in 2026’s contested environment.
Regionally, the nature of competitive landscape complicates receptivity. U.S. Fulbright outreach, Australia’s New Colombo Plan, and Japan’s JICA scholarships offer alternatives with fewer political complications, allowing governments to hedge against over-dependence whilst maintaining technical training access. China’s late entry requires compelling advantages to outweighing sovereignty concerns.
Constrained Opportunities
Given these barriers, what remains viable? Targeted initiatives ranging from joint climate resilience institutes, semiconductor engineering scholarships structured as partnerships with ASEAN universities rather than full Chinese degrees, and faculty exchanges focused on pedagogical development, could build incremental trust addressing specific gaps. These cannot replicate comprehensive U.S.-China educational exchange but represent politically feasible steps.
The U.S.-China precedent demonstrates transformative partnerships are possible, but that analogy reveals why replication faces obstacles. The 1972-2010 engagement era occurred during a fundamentally different geopolitical context elaborating American unipolarity, Chinese developmental pragmatism, and mutual convergence optimism. In the contrary, current strategic competition, ideological divergence, and zero-sum framings create suspicions that détente-era exchange did not occur.
The STEM skills shortfall in Southeast Asia continues to grow, and China has the capacity to respond. Yet turning strategic cooperation into education partnerships involves political constraints on both sides. As Western universities expand across ASEAN, Chinese institutions face a shrinking opportunity. Heavy resource mobilization may repeat BRI’s top-down weaknesses. Therefore, meaningful progress requires shared influence and reduced control from Beijing.
Muhammad Izzuddin Al Haq is an undergraduate student of International Affairs Management at Universiti Utara Malaysia specializing in International Law and Diplomacy. Concurrently, he serves as Director-General of World Order Lab. His research interest lies on International Security and Global Governance.
