Addressing a conference on Indo-Pacific Security (a newly minted American term reflecting the military sphere, instead of the previously favored Asia-Pacific) last month at Sydney’s Lowy Institute, Kurt Campbell - the Biden administration’s coordinator for the region - spoke of the usual American policies of the importance of alliances, weapons sales to counter China, and the centrality of ASEAN. He acknowledged that military partnerships were not enough, and yet he barely mentioned economic development - an arena of policy that China has done more to displace the U.S. than any other. Going forward he predicted that China-U.S. relations could be simultaneously competitive and stable.
The fact that the U.S. has little economic policy to engage with Southeast Asia, the region that also comprises the Association of Southeast Asian Nations (ASEAN), is precisely why the U.S. is ceding ground to China. Beijing realized much earlier that economic engagement is the foundation of regional stability and durable peace through interdependence. At $680 billion trade in 2021 China is the biggest trading partner for the ASEAN. The U.S. under Trump not only withdrew from the Trans-Pacific Partnership but declared the now notorious “Trade War” against China.
ASEAN nations have long accommodated the U.S. as a resident power, which has enabled maritime security in the post war era allowing the region to prosper. But they also know that it is their economic engagement with neighboring China that has fueled their phenomenal rise and offers the most attractive partnership moving forward into their next era of growth. Many states in the region, as in other regions, are establishing closer relations with China.
ASEAN’s cumulative output is the equivalent of the sixth largest economy in the world. The Straits of Malacca and South China Sea are the busiest sea lanes carrying 40 percent of global trade and a quarter of oil supplies, which also makes the region one of the most strategically valuable on the planet. This explains the growing security sensitivities in the region and why the U.S. is reaching out to seek partners to contain China’s natural progression.
China’s emphasis remains on promoting frameworks for trade and economics. China has joined the Regional Comprehensive Economic Partnership (RCEP) forming one of the biggest trade blocs in the world and has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which evolved out of the U.S.-driven Trans-Pacific Partnership negotiations. Trump pulled the U.S. out of the Obama-led pact on his first day in office.
That’s not to say that America lacks a significant presence in the region. There are thousands of U.S. companies operating within ASEAN’s member-states, making the U.S. its fourth largest trading partner. Foreign direct investment from the U.S. totals to over $330 billion, more than China, Japan and South Korea combined.
The region, therefore, faces a dilemma for it is the battleground of a competition between China and the U.S., which is increasingly taking military overtones.
The U.S. answer to China’s economic reach in the region has taken shape in the form of the Quad – comprised of the U.S., Australia, Japan and India – followed by AUKUS, an alliance between Australia, UK and the U.S. While the Americans deny any military purpose behind the Quad, it certainly has military undertones, beginning with the Malabar Exercises, named after the Indian coastal area Malabar where these four-nation exercises take place. By convening the Quad’s top leaders for the first time (albeit virtually) so early in his administration, U.S. President Joe Biden signaled that the group would be central to his counter China strategy in the region.
AUKUS, the other pact announced between the U.S., UK and Australia in September 2021 which will provide Australia with nuclear powered submarines, also has blatant military implications. The announcement of a new military pact removes all doubt of the U.S.’s consideration of a new Cold War, according to Sam Roggeveen of the Lowy Institute.
The U.S.’s eagerness to prop up alliances like the Quad and AUKUS are a consequence of the growing power imbalance brought about by China’s economic rise. In this endeavor, the U.S. finds ready partners in Japan and India – countries with whom China has disputes on land and sea. And while Australia has benefitted most from China’s economic rise, the Oceanic nation has demonstrated to be an American surrogate in East Asian and Western Pacific regions, especially when Liberals are in power in Canberra. But history tells us that military alliances created in defense of a region without great regional participation generally do not take off, or just wither away, writes Professor Amitav Acharya of American University.
The Quad and AUKUS have put the ASEAN states, lying at the center of the region, in a quandary. ASEAN has grown on the back of China’s phenomenal rise. America clearly wants ASEAN to join these alliances. Military partnerships with external powers are likely to dilute ASEAN’s self-proclaimed ‘centrality.’ Forcing a choice, as the U.S. often wants, could crack the consensual basis on which ASEAN works and threaten ASEAN’s existence.
The pull of the Chinese economy will nonetheless remain the strongest draw card in favor of China and weakening of any military or quasi-military arrangement the U.S. may be able to stitch together. Beijing thus hopes to marginalize the two alliances by sustained multi-dimensional economic cooperation with the region, which now has a new driver in the shape of China’s Belt and Road Initiative (BRI).
While China is poised to be the world’s top economy by the end of the decade, America will retain the threatening military edge, which will itself become unsustainable in the medium and longer term. Asia, therefore, needs a new source of stability and peace in the region resting upon economic interdependence.