U.S.-China rivalry has intensified significantly in Southeast Asia over the past year. This report chronicles the unfolding drama as it stretched across the major Asian summits in late 2018, the Second Belt and Road Forum in April 2019, the Shangri-La Dialogue in May-June, and the 34th summit of the Association of Southeast Asian Nations (ASEAN) in August. Focusing especially on geoeconomic aspects of U.S.-China competition, the report investigates the contending strategic visions of Washington and Beijing and closely examines the region’s response. In particular, it examines regional reactions to the Trump administration’s Free and Open Indo-Pacific (FOIP) strategy. FOIP singles out China for pursuing regional hegemony, says Beijing is leveraging “predatory economics” to coerce other nations, and poses a clear choice between “free” and “repressive” visions of world order in the Indo-Pacific region.
China also presents a binary choice to Southeast Asia and almost certainly aims to create a sphere of influence through economic statecraft and military modernization. Many Southeast Asians are deeply worried about this possibility. Yet, what they are currently talking about isn’t China’s rising influence in the region, which they see as an inexorable trend that needs to be managed carefully, but the hard-edged rhetoric of the Trump administration that is casting the perception of a choice, even if that may not be the intent. In Southeast Asia, this approach is likely to be self-defeating for U.S. interests as countries look to the future, estimate China’s economic footprint in 20 or 30 years, and calculate their likely interdependencies and opportunities with Beijing. Ultimately, U.S. allies and regional partners prefer to have constructive relations with both the United States and China. They are also resisting U.S. pressure to distance themselves from Beijing.
Remarks by regional leaders are instructive on these points. In a bold keynote address at the Shangri-La Dialogue, Singapore Prime Minister Lee Hsien Loong cautioned that the “world is at turning point” as U.S.-China tensions continue to grow. He said proposals for “Indo-Pacific cooperation” are welcome if they are inclusive and deepen regional integration, but they shouldn’t undermine ASEAN arrangements or “create rival blocs, deepen fault lines or force countries to take sides.” For his part, Indonesian President Joko Widodo has called for a vision of the Indo-Pacific that includes China, declaring that ASEAN and China have no choice but to collaborate. Even Australia, the staunchest of U.S. allies, has said it won’t take sides between Washington and Beijing: “Our relationships with each of these major partners are different, and they’re both successful,” Prime Minister Scott Morrison said when visiting Singapore in November 2018. “Australia doesn’t have to choose and we won’t choose.”
Given these realities and regional reactions, this report argues that the Trump administration should tone down the rhetoric and recalibrate its strategic and diplomatic approach to Southeast Asia — lest the region responds in ways that marginalizes the United States over time. In the area of infrastructure, for instance, the administration should accelerate and operationalize plans to coordinate with longstanding partners to foster a sustainable economic model based on transparency and high environmental standards. Yet, the objective shouldn’t be to confront China’s Belt and Road Initiative, but rather to develop a compelling alternative and then re-engage China from a position of strength. The report outlines a series of additional policy recommendations, ranging from support for homegrown regional initiatives to engaging China directly on select issues like climate change.
Finally, at a broader level, the report asks what Southeast Asia can tell us about U.S. China policy and U.S.-China relations in the world more generally. While Southeast Asia isn’t unique in having to navigate U.S.-China competition, it is instructive because it is experiencing China’s rise more acutely than other regions, and is seen by Beijing as a testing ground for its role as a major power in the wider world. In this evolving geopolitical context, the United States needs to be tough with China when it defies international law, violates human rights, or carries out unfair trade practices. U.S. policy should also recognize, however, that some level of cooperation is in America’s interest as we confront existential global challenges. At the same time, Washington should engage other nations on their own terms based on a positive economic and political agenda, rather than approaching them as derivative of U.S. competition with Beijing. That is the best way for the United States to remain a Pacific power that is respected and influential in Southeast Asia and beyond.