Southeast Asia, much of it in the shape of 10 nation Association of Southeast Asian Nations (ASEAN), one of the fastest growing economies, is drawing increasing attention as competition heats up between China and the U.S. 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 the world. Its 700 million people and dynamic economic policies give the area tremendous growth potential.
It is no coincidence that important summits– ASEAN (plus its two partner summits), the G-20, and the 21-member Asia-Pacific Economic Community (APEC) were all held in November in Southeast Asia and within 10 days.
ASEAN faces a dilemma on how to engage with the two big powers. Its claim of ‘centrality’ necessitates equidistance from the two. It continues to benefit from China’s economic rise while letting the U.S. 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.
ASEAN Summits are consistently confronted with disagreements that thwart its consensual working. For example, ten years back when Cambodia was the chair, the Summit was unable to agree on the Chairman’s Statement due to differences over the South China Sea (SCS) formulation. Though the statement noted concerns “expressed by some Member States” over various alleged actions in the SCS, the statement only “reaffirmed the need to pursue peaceful resolution of disputes in accordance with the universally recognized principles of international law, including the 1982 UNCLOS.” During this year’s summit, ASEAN toed a fine line on Ukraine, only calling for cessation of hostilities, dialogue for peaceful resolution, and respect for sovereignty. ASEAN also emphasized the importance of the Treaty of Southeast Asia Nuclear Weapon-Free Zone (SEANWFZ Treaty) and the ASEAN Charter to keep it free of nuclear weapons.
Outside of ASEAN’s intraregional workings, China also has a quiet but creeping influence over the region. In 2021, trade between China and ASEAN reached $878.2 billion, about twice the value of trade between the U.S. 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 U.S. and EU.
With growing China-U.S. tensions over Taiwan, China is eager to line up diplomatic support from its Asian neighbors. All ASEAN members support the “one China policy” and yet almost all ASEAN states maintain fairly normal economic relations with Taiwan. Several of them provide manpower to Taiwan; its Ministry tallied 669,922 migrant workers from Indonesia, Vietnam, the Philippines and Thailand at the end of 2021.
China has both the advantages and disadvantages of neighborhood to ASEAN. But it is China’s claim over much of South China Sea, which puts it in direct conflict with the Philippines, Vietnam, Brunei, Indonesia, Malaysia and Taiwan. Playing big power politics, China has for years attempted to engage with individual ASEAN members to deal with their disputed claims bilaterally, but with little success. While some states that do not have conflicting claims with China may be soft on the issue, ASEAN has stood united to deal with China as an alliance. This demonstration of numbers has often compelled China to remain cautious. Negotiations between ASEAN and China on the Code of Conduct of the South China Sea have dragged on for years to ASEAN’s chagrin. Seeing an opportunity, America understandably supports ASEAN’s position to earn brownie points amongst some states.
The U.S. made an early entry into ASEAN during the times when China was itself a developing economy. Today, U.S. FDI into the region still remains above China’s. Nonetheless, Washington’s actions in the region demonstrate American leaders’ worries about China as a rising power. As Professor Graham Allison of Harvard University observes in his book, Destined for War, “both China’s rising power and the fear it instills in the dominant power are driving the [American] strategic and foreign policy narrative.” Trade is missing in the American policy platform. This is an element on which China owes its rise, according to Professor Allison, and thus its close relations with ASEAN.
The U.S.-sponsored Indo-Pacific Economic Framework for Prosperity (IPEF) is of doubtful value as it does not involve lowering of tariff barriers or provide 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 percent of trade in goods to be reduced to zero in 1o years amongst 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 which the U.S. walked away under President Donald Trump.
Under these conditions the IPEF will do little to change the balance between China and the U.S. in Southeast Asia. Constrained by the domestic politics the U.S. is unable to offer more.
ASEAN has no appetite for alliances with military undertones such as the “Quad,” especially when it partners – the U.S., Japan, Australia and India – countries that are skeptical of China’s rise and are in military alliances with the U.S. ASEAN’s main focus remains peace and stability through which has made it into one of the most dynamic regions.
ASEAN’s 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 against pressures from both U.S. and China to take their side in the power game. His sentiments were reinforced by the incoming Chairman President Joko Widodo who vowed not to let Southeast Asia become the frontlines of a new cold war amid increasing tensions between the U.S. and China and would not become “a proxy to any powers.”