US China Trade
In the recent past US has doubled down on ASEAN aid to counter China Image Credit: Gulf News

Southeast Asia — much of it in the shape of 10 nation Association of Southeast Asian Nations (ASEAN) — is drawing increasing attention as competition heats up between China and the US.

The diverse region, because of its location and its economic potential is becoming a key geopolitical and economic battleground between these two powers. The grouping is now the third biggest economy in Asia and fifth biggest in world. Its dynamic economic policies affords the area a tremendous growth potential.

It is therefore, no coincidence that important summits — ASEAN (plus its two partner summits), the G20 comprising of 20 leading economies and the 21-member Asia — Pacific Economic Community (APEC) were all held in November within Southeast Asia and that too within 10 days.

ASEAN’s claim of ‘centrality’ necessitates equidistance from two super powers. It continues to benefit from China’s economic rise while letting the US provide stability. ASEAN does not want to be a part of a military alliance system and does not want to be forced into a situation where it needs to take sides between the two big powers.

Foreign ministers of the Association of Southeast Asian Nations (ASEAN), from left, pose for a photo during a photo session in Phnom Penh, Cambodia, Thursday, Feb. 17, 2022. From left are Malasian Saifudin Abdulash, Philippine Teodoro Locsin, Singaporean Vivian Balakrishnan, Cambodian Prak Sokhonn, Bruneian Erywan Yusof, Laotian Saleumxay Kommasith and ASEAN Secretary General Lim Jock Hoi. Image Credit: AP

Growing US China competition

China has a quiet creeping influence over ASEAN. In 2021, trade between China and ASEAN reached $878.2 billion, about twice the value of trade between the US and ASEAN. China has been the bloc’s largest trading partner since 2009, and in 2020 ASEAN surpassed the European Union to become China’s top trading partner. Chinese direct investment into ASEAN has also surged, but still trails behind the US and EU.

With growing China — US tensions over Taiwan, China is eager to line up diplomatic support from its Asian neighbours. All ASEAN members support “One China policy” and yet almost all ASEAN states maintain fairly normal economic relations with Taiwan.

Playing big power, China has for years attempted to engage with individual ASEAN members to deal with their disputed claims bilaterally. ASEAN — China negotiations on Code of Conduct in South China Sea have dragged on for years.

The US made an early entry into the ASEAN during the times when China was itself a developing economy. The US FDI into the region still remains above China’s.

As Prof. Graham Allison of Harvard University observes in his Thucydides Trap thesis, “both China’s rising power and the fear it instills in the dominant power are driving the (American) strategic and foreign policy narrative.”

Missing trade link?

Trade is missing in the American policy platform. This is an element on which China owes its rise, according to Prof Allison, and thus its close relations with the ASEAN.

The US sponsored Indo-Pacific Economic Framework for Prosperity (IPEF) is of doubtful value as it does not involve lowering of tariff barriers or providing market access.

By contrast the 15-member Regional Comprehensive Economic Partnership (RCEP), the world’s biggest trade deal, of which China is a member, promises tariff cuts on 90 per cent of trade in goods to be reduced to zero in 10 years among its member states.

China has also applied to join Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which comprises of 10 Asia-Pacific states. It is the successor to the Trans-Pacific Partnership (TPP) from the which the US walked away under President Donald Trump.

Under these conditions the IPEF will do little to change the balance between China and the US in Southeast Asia. Constrained by domestic politics the US is unable to offer more.

ASEAN has no appetite for alliances with military undertones such as “Quad” especially when it partners — the US, Japan, Australia and India — countries that are sceptical of China’s rise and are in military alliances with the US.

ASEAN’s main focus remains peace and stability through which has made it into one of the most dynamic regions. This mood is well reflected in the closing statement of Cambodian Prime Minister Hun Sen who said, “we must maintain ASEAN unity regardless of circumstances for the best interests of the whole region.”

And this unity is the strength of ASEAN. His sentiments were reinforced by the incoming Chairman President Joko Widodo who vowed not to let Southeast Asia become the front lines of a new cold war or “a proxy to any powers.”

Sajjad Ashraf served as an adjunct professor at the Lee Kuan Yew School of Public Policy, National University of Singapore from 2009 to 2017. He was a member of Pakistan Foreign Service from 1973 to 2008 and served as ambassador to several countries.