Over the past few months, the Biden administration has sought to demonstrate America’s renewed commitment to Southeast Asia, in an effort to counter China’s growing presence in the region. On May 23, the Biden administration unveiled the Indo-Pacific Economic Framework (IPEF), an initiative that includes the Southeast Asian countries of Indonesia, Malaysia, the Philippines, Thailand, Vietnam , Brunei Darussalam and Singapore. Earlier in the month, Biden also hosted most of the leaders of the Association of Southeast Asian Nations (ASEAN) in Washington for a special summit. ASEAN is a regional bloc comprising the aforementioned countries as well as Myanmar, Laos and Cambodia.
Given the geo-economic importance of the region, it is not surprising that China and the United States have sought to establish a presence there. Today, Southeast Asia is one of the most economically dynamic regions. According to the most recent estimates of the International Monetary Fund, the so-called ASEAN-5, comprising Indonesia, Malaysia, Thailand, the Philippines and Vietnam, is expected to grow by 5.32% in 2022 (in contrast, the average growth rate for emerging and developing economies is expected to be 3.82%). High commodity prices and the rebound in the tourism sector will also allow most major Southeast Asian economies to escape the stagflationary trend that is expected to hit other parts of the world.
Yet while the Biden administration has sought to demonstrate its internationalist credentials in contrast to Donald Trump’s, the inward-looking essence of Trump’s “America First” agenda has largely been maintained. A domestic backlash to the merits of free trade and economic openness has seen America stray from its traditional role as the world’s trade leader. This hijacking of globalization will be a major obstacle to building more meaningful ties with ASEAN member states, for whom globalization has always remained crucial to fostering development and raising the standard of living of its people.
Throughout history, Southeast Asia’s fortunes have been intertwined with global connections. Being strategically located on the sea routes connecting China, India and the Middle East heralded a global infusion of cultural influences, creating some of the most diverse societies on the planet. Exchanges with the subcontinent brought new religious and cultural ideas, while ties with China brought demographic changes in the form of a large Chinese diaspora.
Historians refer to an “era of commerce” between 1400 and 1650 where trade networks facilitated state building and urbanization throughout the region. Thus, for many Southeast Asians, the post-war turn to globalization was not a new and unsettling phenomenon, but rather a return to the historical norm, transcending the borders drawn by former colonizers.
Given Southeast Asia’s dependence on the global economy for its prosperity, it’s no surprise that China has been most successful in bolstering its regional influence. Trade ties between China and Southeast Asia have grown exponentially since the first opened in the 1980s, China’s percentage share of total Southeast Asian trade from 2.5% in 1996 to 17.2% in 2017.
Export-dependent Southeast Asian economies have positioned themselves as key supply nodes within China-centric global value chains, largely exporting intermediate goods and raw materials to the continent for transform into finished products. China is also the largest economy in the ASEAN-led Regional Comprehensive Economic Partnership (RCEP), a mega free trade agreement accounting for 29% of global GDP and 30% of the world’s population.
China has also provided an immediate source of investment, particularly through its Belt and Road Initiative (BRI). An ambitious global program launched in 2013 to connect China to new markets through an extensive network of infrastructure projects, the BRI has been welcomed by a region suffering from an acute infrastructure deficit. According to data collected by the American Enterprise Institute, BRI-related investment and construction projects in Southeast Asia between 2013 and 2021 totaled $197.8 billion, or 23.6% of the global total.
In contrast, the populist turn of the United States has seen it struggle to compete with China for regional influence. The Trump administration’s withdrawal from the Trans-Pacific Partnership (TPP) has dealt a blow to US regional interests. The Biden administration sought to salvage the day by unveiling the IPEF, an economic framework to deepen engagement among member countries on trade, supply chains, green transition and anti-corruption measures. . IPEF has received a lukewarm response from potential Asian partners, given that it lacks better access to the US market and major infrastructure investments, two crucial carrots for Southeast Asia. East.
The United States has also sought to boost its regional profile through the so-called “Quad”, a grouping of “like-minded” democracies, including Japan, India and Australia. Intended to demonstrate an alternative set of partners to China, the Quad nonetheless struggled to match Chinese economic governance in the region. As Susannah Patton of the Lowy Institute noted in a recent article for the New York Times“The Quad, in fact, highlights an American weakness: the United States is strong in the democracies bordering the region but weak at the center in Southeast Asia.”
Any meaningful re-engagement with the region would mean Biden would have to grapple with the isolationist impulses now prevalent among the political left and right at home. Indeed, these impulses are not new but have a historical precedent. Postwar American attitudes toward Asia have always been colored on some level by economic anxiety. After Japan’s post-war economic takeoff, Americans feared that their auto market would be flooded with superior Japanese-made cars, with Reagan imposing protectionist barriers against the Japanese auto industry in response.
Following India’s economic opening in the late 1990s, US politicians warned of ‘Bangalorization’ as companies began to outsource IT operations to India. More recently, US business interests in China have drawn ire from Trump and the MAGA movement, who believe it has hurt US jobs and manufacturing. For observers, there is little reason to believe that closer economic ties between Southeast Asia and the United States would not encounter similar hostility.
If not the United States, then who? India, another major Asian power and regional rival for influence vis-à-vis China, has also made little progress in ASEAN. The Modi government has struggled to overcome economic populism in favor of serious reforms, with much of India’s economy still caught in the legacy of Jawaharlal Nehru’s socialist-era Raj licensing system (this has been most egregious in the government’s failure to liberalize its agricultural sector after massive farmer protests erupted in 2020 and 2021).
In November 2019, India pulled out of the RCEP deal, citing threats to India’s manufacturing sector. In one piece for Foreign Police Writing in November 2020, columnist Surupa Gupta and political scientist Sumit Ganguly argued that New Delhi’s decision was ultimately influenced by India’s political class’ traditional aversion to the free market economy in favor of protectionism and self-reliance, and warned that it had cost India the potential to play a bigger role in setting standards in new areas within the evolving Asia-Pacific regional trade architecture.
While US and Indian foreign policy remains tied to populist pressures, its Quad partner Japan provides a blueprint on how to engage Southeast Asia more effectively and build regional goodwill. Following the departure of the United States from the TPP, Japan proved indispensable in resuscitating the agreement in the CPTPP. Japan was also a signatory to RCEP despite differences with China.
Meanwhile, while Chinese overseas investment projects (notably the BRI) often receive the most attention, by some measures Japan has actually overtaken China in financing and building investment projects. infrastructure in some Southeast Asian countries. Analysis by data provider Fitch Solutions in 2021 found that Japan had a combined $259 billion invested in unfinished projects in Indonesia, Malaysia, the Philippines, Thailand and Vietnam, compared to $157 billion. in China.
So it’s no surprise that Japan was the most well-received Quad member in Southeast Asia. In a regional survey conducted in January 2022 by the Singapore-based ISEAS-Yusof Ishak Institute, Japan was ranked as the most trustworthy major power in Southeast Asia, with 54.2% of respondents expressing their confidence that Japan is “doing the right thing” in world affairs. (the United States came second while India was ranked the second least trustworthy country just after China).
Japan serves as a model for how the United States can engage more proactively with Southeast Asia. The Biden administration is expected to seek increased infrastructure investment in the region, as well as joining the TPP to give Southeast Asian countries greater access to the huge US market.
As columnist Noah Smith argues, such a course of action would have historic precedent, with the United States opening its markets to key Asian allies at the height of the Cold War, including Japan, South Korea and Taiwan. , thus facilitating the development of East Asia. rapid development.
Smith argues that similarly opening U.S. markets to Southeast Asian partners would help achieve the trifecta of closer relations between Washington and the region, help Southeast Asian countries enrich themselves and would push the United States to relocate production from China to perhaps more friendly countries, creating more resilient supply chains in the future (known as “friend-shoring”).