China’s geopolitical ambitions and growing military capabilities and the Southeast Asian states1 perceptions of a rising China will play a crucial role in shaping the future of Southeast Asia and the U.S. military posture in the region. The authors examine the role of regional states in developing a hedge against the possible threat of an overly aggressive China. They find that rather than confronting a conventional attack, the United States and the Southeast Asian countries are likely to find a continuation of China’s creeping irredentism and threats. Southeast Asia is likely to prove a critical testing ground for a third way of dealing with China’s rising power called a policy of congagement international system while both deterring and preparing for a possible Chinese challenge. The report recommends that the United States adopt an incremental approach to this hedging strategy, focusing on peacetime military engagement with Southeast Asian states, development of a more robust and diversified network of access arrangements, and strengthened military ties with the Philippines, Singapore, Thailand, Malaysia, Indonesia, and Vietnam.