The Indo-Pacific has prospered under American hegemony for the previous 40 years not just because of their huge investments — $328.8 billion in the Association of Southeast Asian Nations alone and a further $107 billion in China — but also because of the security blanket that it provides. China might have replaced the US as the primary engine of growth in the last decade, but it has come with a cost — the assertion of Chinese power.
Asia has prospered because Pax Americana, which has held since the end of World War II, provided a favorable strategic context. But now, the troubled U.S.-Chinese relationship raises profound questions about Asia’s future and the shape of the emerging international order.
The US president’s threat of totally “cutting off” relations with China to save $500 billion a year is bad economics. Over the past two years of the trade conflict, China has been steadily reducing the US’ share in bilateral trade. From January to April of 2020, the US share in China’s total trade fell to 10.6 percent, compared with 14.2 percent in 2017.
The Trump administration’s declaration that the United States no longer considers Hong Kong autonomous from China, given Beijing’s increasingly aggressive policies there, could pave the way for reprisals from Washington and a potentially dramatic reshaping of Asia’s economic geography. The U.S. announcement was made a day before China’s parliament approved a new security law for the semi-autonomous region that gave Beijing broad powers to crush dissent there.
Also Read: ASEAN, India Unlikely To Pressure Beijing Over Hong Kong National Security Law
Rising US–China tensions go beyond trade and involve a broad range of issues including strategy, security and values. It’s pertinent to also look at the choices that ASEAN and others are facing in the context of this great power contest, including decisions on economic development and technology.
China is reshaping the approach of its flagship “Belt and Road Initiative” in Southeast Asia, as Chinese projects in the region plunged last year amid growing global scrutiny of Beijing’s development strategy. The value of newly announced big-ticket deals in the region – investment commitments and construction contracts worth more than US$100 million – dropped 49.7 per cent in 2018 to US$19.2 billion, its lowest in four years, according to analysis by Citi Economics, using data amassed by the US think tank American Enterprise Institute.
The annual Asia-Pacific Economic Cooperation summit ended without agreement on a joint communique for the first time in its history as the escalating rivalry between the United States and China dominated proceedings. The impasse emerged a day after Chinese President Xi Jinping and the US Vice-President Mike Pence had blamed their rivals in the ongoing trade war in back-to-back speeches.
The Singapore meeting starting Monday – the second Asean summit this year – will be Mahathir’s first since he stunned Asia by defeating his protégé Najib Razak in May elections to reoccupy the political hot seat he held from 1981 to 2003. Diplomatic observers are hoping the firebrand nonagenarian, a self-professed regionalist, will inject some vigour into the bloc…And with Asean nations facing rising pressure to take sides in the escalating US-China rivalry, some insiders in the grouping are hoping for lessons from the elder statesman on how to balance the two powers without being dragged into their respective orbits.
Cambodian Prime Minister Hun Sen is continuing to push the limits of personal power consolidation. While his strategies have been highly successful so far, they are likely to result in greater political insecurity in Cambodia. Several concerning developments have emerged in 2018. Since the Supreme Court banned the main opposition party — the Cambodia National Rescue Party, or CNRP — in November 2017, Hun Sen has further consolidated his power by appointing family members to top government positions.
Is US President Donald Trump really going to amp up trade tariffs against China? And with its back against the wall, will Asia’s biggest, most influential economy use a sharp currency devaluation as a form of retaliation? In Southeast Asia, home to some of the world’s most China-dependent economies, astute market watchers say they are as clueless as the man on the street when it comes to these two questions. But one thing is certain, they say: in the financial markets, bearish “animal spirits” have taken hold…
