Way forward in Southeast Asia
In the face of containment efforts by the US, it makes sense for China to expand its presence in the ASEAN market
Donald Trump's return to the White House signifies that the world is entering a new phase, in which the United States is not only abandoning the neoliberalism it upheld over the past few decades, but also avoiding shouldering the responsibility of maintaining a liberal international order. The resulting rise of protectionism and isolationism is likely to leave the global economy in a more unfavorable space.
In terms of foreign relations, China's policies form a sharp contrast with those of the US, still emphasizing that the globalization trend will not be changed. China continues to strengthen all-round cooperation with neighboring countries. Reducing the trade deficit remains a priority of Trump's second term. On Feb 1, Trump signed an executive order imposing a 10 percent tariff on all goods imported from China. Additionally, a 25 percent tariff was imposed on goods from Canada and Mexico.
On Feb 13, Trump announced plans to implement reciprocal tariffs on various countries. According to this plan, the US will regard subsidies, value-added taxes, and trade barrier provisions, among others, as non-tariff barriers.
Previously, the US had imposed the most-favored-nation tariffs, treating all countries that received this status equally. If it fully implements "reciprocal tariffs" in the future, the rules of the global trade system established after World War II will be on the brink of collapse.
Asia remains the primary target region for the US in its efforts to reduce its trade deficit. Data from the US International Trade Commission show that economies with a trade surplus of over $10 billion include China, Vietnam, Japan, the Republic of Korea, India, Thailand, Malaysia, Indonesia and Cambodia.
As the Trump administration considers reciprocal tariffs, Southeast Asia may face a trade war with the US. According to data from the US International Trade Commission, the combined trade surplus of the Association of Southeast Asian Nations members with the US has reached about $227.7 billion, far exceeding those of Japan and the ROK.
Once the US imposes high tariffs on products imported from Southeast Asia, the economic order that it has established in the region over the past decades will collapse, and its reputation will further decline.
The development of Southeast Asia has stemmed from the trade and investment of major powers outside the region. After the Plaza Accord was signed between Japan and the US in the mid-1980s, Japanese enterprises leveraged their exchange rate advantages to accelerate their "going global" strategy and targeted low-income countries in Asia as destinations for industrial relocation. To a certain extent, the region's exports to the US saw a surge thanks to the Japanese businesses in Southeast Asia.
China's exports grew rapidly after it joined the World Trade Organization in 2001. It soon surpassed Japan to become the most important trading nation in East Asia. After the 2008 global financial crisis, the US became skeptical of an open regional economic order, while China embraced globalization and became the top trading partner for Southeast Asia.
The 2008 financial crisis was a turning point in regional economic and trade relations. Many countries in East Asia realized that relying on the US as the ultimate destination for exports was unsustainable. As a result, they placed greater emphasis on regional markets than they had in the 1990s. Among them, the fastest-growing economic and trade relationship within the region was between China and ASEAN.
As China-ASEAN relations flourished, some experts from the US recognized that neglecting Southeast Asia was detrimental to their strategic competition with China. Consequently, the US quickly strengthened its ties with Southeast Asia. US-ASEAN relations reached a new height during the Joe Biden administration. In 2022, the two sides established a comprehensive strategic partnership. According to US official data, the US is the largest source of foreign direct investment for Southeast Asia, with the total trade between the US and ASEAN countries reaching $520 billion in 2022. It was also during Biden's presidency that several Southeast Asian nations joined the "Indo-Pacific" Economic Framework for Prosperity.
However, Southeast Asian countries still seem to harbor concerns about the US. This worry is rooted in the fact that US' attention to Southeast Asia is often easily distracted by other factors. Moreover, many Southeast Asian countries are anxious that the Trump administration's excessive focus on the US trade deficits and emphasis on "America First" may make it difficult to fulfill the commitments made by the Biden administration. The Trump administration is likely to abandon the "Indo-Pacific" Economic Framework for Prosperity, reduce its aid to Southeast Asia, and more.
Southeast Asian countries do not wish to see an escalating strategic competition between the US and China. Maintaining stable relations with both major powers remains a key element of their foreign policy.
For China, in the face of the US' containment efforts, consolidating an external environment conducive to China's modernization remains an inherent obligation of its neighborhood diplomacy. In addition to the long-time friendship between ASEAN and China, ASEAN also boasts a huge potential market, since it is estimated its population will exceed 700 million by the end of the third decade of this century, with considerable consumer purchasing power. In the future, China may further expand its presence in the Southeast Asian market. For ASEAN, deepening ties with a stable and open China is also a foregone conclusion to reduce uncertainty.
The author is a researcher at the National Institute of International Strategy at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily.
