Singapore’s Non-Aligned AI Strategy: A Middle Power Response Model Amid the U.S.-China Tech Rivalry

Executive Summary

In his National Day Rally speech on August 23, Prime Minister Lawrence Wong outlined a strategy to navigate the AI era not by competing on scale, but on discipline and execution. This approach stems from an acknowledgment of the structural constraint that a city-state of 6 million people and 730 square kilometers cannot directly compete with the United States and China in the race for data center and semiconductor infrastructure. While not blocking the adoption of technology, Singapore is establishing its own guardrails, such as common norms for AI agents, to avoid becoming subordinate to the standards of either the U.S. or China. However, with Beijing offering exclusive incentives and Washington applying pressure on tariffs and supply chain verification, the sustainability of this non-aligned approach remains uncertain. The most likely future path is the baseline scenario in which Singapore maintains its dual-track pragmatism. South Korean companies and the government should examine this third-party positioning strategy as a reference model for navigating pressure to choose sides.

I. Situational Analysis

Singapore Responds to U.S.-China Tech Rivalry with an Independent AI Strategy: A Situational Analysis

1. Background and Developments

In his National Day Rally speech on August 23, Prime Minister Lawrence Wong laid out Singapore's vision for technology. He stated, “We will harness the power of new technologies, but we will do so our own way” [1]. This statement arises from a competitive landscape where national power is determined by land area and population size. Singapore is a city-state that cannot engage in a competition of scale like the United States or China. Prime Minister Wong’s remarks stem from an acknowledgment of this structural constraint [1].

Observers in Singapore interpret this statement as an attempt to change the rules of the game from a competition of scale. The Business Times described it as an attempt “to change the game to one where Singapore can play a meaningful role and win” [1]. This is not mere rhetoric. Singapore has a long history of offsetting its constraints in space and resources through institutional design and technology adoption. Wong himself noted in his speech that Singapore has “adapted and stayed relevant through every major technological transition” [8].

The backdrop to this is the intensifying U.S.-China AI competition. According to an EAI analysis, the axis of AI competition has already shifted from model performance to infrastructure, including data centers, semiconductors, and critical minerals [11]. The United States, with its overwhelming number of data centers and scale of private investment, is effectively demanding that its allies choose a side [11]. China, gaining confidence after the release of DeepSeek-R1, has begun building its own AI ecosystem [9][11]. Southeast Asian nations, including Singapore, are directly exposed to the pressures of this bilateral competition [12].

2. Current Situation

In his speech, Prime Minister Wong simultaneously presented two principles for technology adoption. The first is openness. He stated, “We do not block new technologies just because they are disruptive” [8]. The second is discipline. He added, “We do not embrace new technologies blindly” [5]. Although these two statements may seem contradictory, they are consistent with the Singaporean government's long-standing pragmatic approach: not to block the adoption of technology but to proactively manage its risks [5].

Specifically, the technological guardrails mentioned in the speech include common norms for the deployment of AI agents and stricter limits on social media use by young people [5]. The Business Times interpreted this as a response to “a situation where cooperation on common norms has become more difficult as competition among major powers intensifies” [5]. In other words, as the U.S. and China impose their respective AI norms and standards, Singapore is trying to establish its own regulatory framework to avoid becoming subordinate to either side.

On the implementation front, concrete projects are already underway. Singapore has partnered with technology companies to build an AI system that integrates disparate data from its railway system and performs predictive maintenance analytics based on train performance, sensor data, and asset lifecycle data [3]. This is an example of industrial AI application that leverages the characteristics of a city-state with a small land area and dense infrastructure. It can be seen as a real-world implementation of Prime Minister Wong’s philosophy of “turning our space constraints into an asset.”

The issue of energy is also an extension of this speech. Channel NewsAsia reported that new reclaimed land in the west will provide Singapore with additional space for energy and new industries [16]. A reliable power supply is essential for expanding AI infrastructure. For a country with limited land, securing the energy needed for data center expansion is a constant constraint. The acquisition of new reclaimed land can be read as a follow-up measure to alleviate this constraint [16].

Trade issues are another example that illustrates Singapore's independent path. Regarding U.S. tariff demands, Prime Minister Wong stated that it is “not realistic to track and verify the supply chains of every single cargo that passes through Singapore” [15]. While affirming that he would not allow the country's port to be used as a channel for illicit trade, he drew a line at the comprehensive verification demanded by the United States [15]. Although this is a separate issue from AI policy, it aligns with the overall tone of this year's National Day Rally speech in that it takes the same “on our own terms” stance toward pressure from both the U.S. and China.

3. Key Actors and Positions

The Singaporean Government (Prime Minister Lawrence Wong)is the central actor in this issue. Prime Minister Wong’s position can be summarized as an intent to “change the game from a competition of scale to one of rules” [1]. He simultaneously emphasized openness in technology adoption and rigor in risk management, while also separately addressing the impact on the labor market. His statement, “We do not block new technologies just because they are disruptive, but neither do we leave affected workers to fend for themselves,” is a case in point [8]. On manpower policy, he reaffirmed the principle of continuing to “bring in foreign workers in a careful and controlled way, but we will ensure that Singaporeans remain the majority in our own country” [14]. This is interpreted as a move to politically manage domestic pressures for workforce restructuring resulting from AI adoption.

The United Statesis an actor demanding that allies and partners integrate into its AI ecosystem through its “Pax Silica” concept [11]. In Southeast Asia, it is reportedly pressuring countries in the region to join U.S.-led AI consortiums while simultaneously criticizing China-led bodies as exclusionary [12]. On the trade front, it is demanding that Singapore verify its supply chains in relation to forced labor and export circumvention issues [15].

Chinais an actor that has begun building an alternative AI ecosystem since the release of DeepSeek-R1, leveraging its low-cost, high-efficiency models [9][11]. Reports indicate that it is approaching Southeast Asian nations with incentives to join its AI framework [12]. It is also pursuing a parallel strategy of penetrating Asian countries that want their own AI capabilities through open-source models [10].

ASEAN Member Statesare seeing their non-aligned tradition of avoiding full integration into either the U.S. or Chinese camp tested in the current phase of AI competition [12]. The joint statement by regional ministers at the Asia-Pacific Economic Cooperation (APEC) Forum on Digital Technology and AI in support of open-source AI models is considered a rare case of consensus aimed at moving beyond the U.S.-China dichotomy [10].

4. Key Issues

The first issue is the position a country without scale can take in the AI competition. Singapore lacks the resources to compete in the race to develop its own foundation models. Instead, it has opted for a strategy of using its dense urban infrastructure as a testbed to accumulate capabilities in applied AI and transform them into exportable assets [1][3]. The success or failure of this strategy is still in the validation phase.

The second issue is autonomy in norm-setting. As both the U.S. and China seek to propagate their own AI norms and infrastructure standards, the key question is whether Singapore can maintain its negotiating leverage by establishing its own guardrails [5][11]. Prime Minister Wong’s comment that “cooperation on common norms has become more difficult” reflects this awareness of the problem [5].

The third issue is the balance between openness and control. The dual approach of not blocking technology adoption while managing its impact on the labor market, and of embracing new technologies but not blindly, will be tested for its coherence in actual policy implementation [5][8].

The fourth issue is how U.S. demands on tariffs and supply chains will combine with its demands on AI infrastructure. The precedent of Singapore rejecting comprehensive verification on trade issues [15] suggests the possibility that it will selectively accept U.S. demands in the AI sector as well. Depending on the U.S. response, this could become a point of friction in the bilateral relationship.

II. In-Depth Analysis

Singapore Responds to U.S.-China Tech Rivalry with an Independent AI Strategy: An In-Depth Analysis

1. Analysis of Root Causes

The root cause of Singapore's pursuit of an independent AI strategy is the structural limitations of its national scale. A city-state with a population of 6 million and a land area of just over 730 square kilometers cannot participate in the same kind of scale-based competition as the United States or China. It cannot compete with the two superpowers on any metric, be it the number of data centers, semiconductor production capacity, or the total number of research personnel. The U.S. operates 5,427 data centers, more than 10 times that of any other country [11]. Competing by trying to close this gap is not an option for Singapore in the first place.

Behind Prime Minister Wong’s statement in his National Day Rally speech that “we will harness the power of new technologies, but we will do so our own way” lies an awareness of the need to move beyond the logic of scale [1]. The Business Times described it as a provocative idea in a world “increasingly dominated by a competition of scale, which pits country against country on size, territorial holdings and military might” [1]. The logic is that if Singapore cannot win the game of scale, it must create the rules for a different game in which it can play a meaningful role [1].

This awareness is not new. Since its founding, Singapore has a history of offsetting its constraints in land and resources through policy design and institutional innovation. Prime Minister Wong’s own mention in his speech that Singapore has “adapted and stayed relevant through every major technological transition” is an extension of this self-perception [8]. The core of his remarks is that the same logic will be applied in the AI era.

2. Structural Context

Political Structure: The Tension Between Non-Alignment and Pragmatic Diplomacy

A long-standing principle of Singaporean diplomacy is to avoid explicitly choosing sides between major powers. However, the AI competition has entered a phase that tests this principle. According to a report by the SCMP, the United States and China have been pressuring Southeast Asian countries in recent months to join their respective AI frameworks. Beijing is offering preferential treatment to attract Global South partners and is simultaneously promoting a narrative that criticizes U.S.-led bodies as exclusionary [12]. The non-aligned stance of Southeast Asian nations has thus been put to a practical test in the AI domain [12].

Singapore's response is oriented toward securing practical benefits without being absorbed into either side's standards. The principle articulated by Prime Minister Wong, “We do not embrace new technologies blindly,” is a way of distancing itself from both the American model of openness and the Chinese state-led model [5]. The Business Times interpreted this as a response to “a situation where cooperation on common norms has become more difficult as competition among major powers intensifies” [5]. In other words, it intends to fill the vacuum left by the stalemate in multilateral norm-setting with its own regulatory framework.

Economic Structure: Tariff Pressure and Supply Chain Verification Demands

U.S. tariff policy is another axis that deepens Singapore's political dilemma. In 2025, the U.S. imposed so-called “Liberation Day” tariffs, and even after a court ruled them unlawful, Washington has continued to demand supply chain verification from Singapore on the grounds of forced labor and export circumvention issues [15]. Prime Minister Wong stated that he would not allow Singapore's port to be used as a channel for illicit trade, but he drew the line at the demand to track and verify the supply chains of all goods passing through Singapore, calling it unrealistic [15]. This suggests the possibility that a similar structure could be repeated in the AI infrastructure domain. As demands for verification of the origin and end-use of strategic goods like semiconductors and data center equipment intensify, Singapore's function as a transshipment hub could turn into a political liability.

Security Structure: Dual Exposure of Infrastructure Supply Chains

Previous EAI analysis points out that the center of gravity in AI competition has shifted from model performance to securing infrastructure, encompassing data centers, semiconductors, and critical minerals [11]. The U.S. is effectively demanding a binary choice from its allies through its “Pax Silica” concept, while China is building its own bloc spearheaded by WAICO [11]. Singapore is at the forefront of this infrastructure competition. This is because its structure exposes it simultaneously to both American and Chinese supply chains at every level, from semiconductor equipment and cloud services to AI models. The EAI analysis rated the probability of continued “selective decoupling limited to security-related items” under these conditions as the highest, at 55-60% [11]. Singapore's independent path can be seen as an attempt to secure practical benefits on a sector-by-sector basis amid this phase of selective decoupling.

3. Historical Precedents and Comparative Cases

Singapore's current strategy is less a completely new idea and more an application of its existing development model to the AI era. In the past, Singapore has created several precedents of offsetting its disadvantages in scale with institutional competitiveness. Prime examples include building a world-class transshipment hub despite limited port infrastructure and turning reclaimed water treatment technology into an export industry despite a lack of freshwater resources. The project to apply predictive maintenance AI to the railway system, mentioned in this year's National Day Rally speech, is an extension of the same logic. It has turned the constraints of a small land area and dense infrastructure into a testbed for building an AI system that integrates data on train performance, sensors, and asset lifecycles [3].

At the regional level, Singapore's approach contrasts with how other Asian countries are adopting Chinese AI models. The SCMP identifies three pathways for Asian countries to adopt Chinese AI: adopting a China-based model as a national flagship model, governments piloting Chinese systems in public services, and private startups building services on top of affordable foundational models [10]. Singapore can be seen as taking a fourth path, not fully integrating into any of these three, but instead prioritizing its own regulations and pragmatic adoption criteria.

Precedents of middle powers seeking an independent path in the U.S.-China competition existed even before AI. The phase where various countries were forced to choose between the U.S. and China over the adoption of Huawei equipment in the build-out of 5G networks is a prime example. At the time, many countries responded by separating security-sensitive domains from commercial ones. A similar dual-track logic can be detected in Singapore's current AI strategy. This is because of the coexistence of its policy to independently establish common norms for the deployment of AI agents [5] and its principle of openness not to block technology adoption itself [8].

4. Key Variables Shaping Future Developments

The first variable is the intensity of pressure from both the U.S. and China. As reported by the SCMP, if the two superpowers continue to intensify their pressure on Southeast Asian countries to choose sides, the room for Singapore's professed “our own way” approach could narrow [12][1]. In particular, if U.S. export controls expand at the infrastructure level, such as for semiconductors and data center equipment, it is possible that Singapore's own regulatory framework will effectively converge with one side's standards.

The second variable is whether U.S. demands for tariff and supply chain verification will extend to the AI infrastructure domain. If the supply chain tracking debate already occurring in the trade sphere [15] moves into the semiconductor and AI hardware sectors, Singapore will once again be at a crossroads, forced to choose between its practical interests as a transshipment hub and U.S. political demands.

The third variable is domestic political acceptability. Regarding the impact of technology adoption on the labor market, Prime Minister Wong stated, “We do not block new technologies just because they are disruptive, but neither do we leave affected workers to fend for themselves” [8]. He also reaffirmed the principle of approaching the influx of foreign labor in a “careful and controlled way” [14]. If AI adoption places a real strain on the employment structure, the government's professed balance of openness and discipline could face a political test at home.

The fourth variable is the scalability of the industrial AI use cases Singapore is developing. If concrete achievements that turn spatial constraints into strengths, like the railway predictive maintenance system [3], lead to applications in other industrial sectors and even to overseas export models, Singapore's independent path will be proven as a source of real competitiveness, not just rhetoric. Conversely, if such cases remain limited experiments, the “our own way” declaration is likely to remain mere political rhetoric.