On January 10, 2019, the Centre on Asia and Globalisation (CAG) hosted Ms. Bonnie Glaser from the Center for Strategic and International Studies (CSIS), Dr. Malcolm Cook from the ISEAS-Yusof Ishak Institute; and Dr. Sinderpal Singh from the S. Rajaratnam School of International Studies (RSIS) to speak at a closed-door roundtable. Drew Thompson moderated the discussion with guests that included representatives from government, industry and academia. The speakers provided their perspectives of recent developments in Beijing, the US-China relationship, and South and Southeast Asian perspectives of China and its relations with the region, followed by a moderated discussion with the roundtable participants.
Bonnie Glaser remarked that ongoing trade negotiations between China and the United States (US) featured Chinese offers to increase American imports, though US negotiators continued to seek structural changes to China’s economy and industrial policy, including ending forced tech transfers, joint-venture requirements, and improved intellectual property protections. Stock market volatility in the United States motivates President Donald Trump to reach an agreement in the near term, as well the prospect that attempts to advance domestic issues through Congress will be much harder since the Republicans lost their majority in the House. Chinese President Xi Jinping also seeks to resolve the trade dispute, but not necessarily on the terms that the U.S. is offering. She noted that U.S. Trade Representative Robert Lighthizer has been the dominant voice on the U.S.-side, consistently pushing for tougher trade measures on China and structural changes to China’s economic and industrial policies. She assessed that Washington believes they have an advantage because they perceive weakness in the Chinese economy, while Beijing similarly believes that Washington is divided and the U.S. economy is weaker than it appears, increasing the difficulty of achieving a compromise. Even if a deal is reached, enforcement and compliance may become an issue, and a frustrated Trump may revert back to tariffs to compel China to level the playing field. Regardless of whether there is an agreement on trade, there remains a whole host of other issues in their relationship that will continue to drive competition.
Beijing sees the current international situation as favorable, believing that the U.S. is in decline and that multi-polarity is accelerating. The behavior of the Trump administration, such as withdrawing from the Trans-Pacific Partnership (TPP) and the Paris Climate Change Agreement has led many countries to question U.S. credibility and commitment, especially to Asia. America’s alliances with South Korea and the Philippines have also weakened due to distrust and diverging interests. In addition, Beijing’s outpouring of economic assistance under the Belt and Road Initiative (BRI) has made fewer countries willing to take positions that could put them in conflict with China and its interests.
China believes that it has a very good relationship with the Association of Southeast Asian Nations (ASEAN) and will continue to promote constructive engagement. It sees the ongoing negotiations for the Code of Conduct (COC) for the South China Sea as proceeding in its favour, while continuing to oppose Freedom of Navigation Operations (FONOPS) by the US, even though Beijing does not perceive them as a threat.
On Taiwan, Xi misjudged the audience in Taiwan when he insisted on the 1992 Consensus and One Country, Two Systems as the framework for China-Taiwan relations in a speech on January 2, 2019. The speech was publicly rejected by the incumbent Taiwanese President Tsai Ing-wen, and even by the more China-friendly opposition Kuomintang (KMT). Ironically, it allowed Tsai, who had been recently battered in local elections, to rally domestic support and regain some political ground.
Sinderpal Singh assessed that the Modi government has been more upfront about describing China as a long-term strategic threat to India, and unlike previous administrations, he has been willing to bring military cooperation with the US to unprecedented levels. The Doklam standoff during June-August 2017 however, showed India that its border with China remained a key vulnerable point, and that it should be cautious about antagonizing China. He described the thinking in New Delhi now as desiring to only react assertively on more vital issues, and cede space to China on less vital ones. For instance, India remained silent on Chinese island-building in the South China Sea, and banned a recent rally on Tibet from taking place in the capital.
India believes that the BRI potentially presents a challenge to India, and has therefore countered with its own infrastructure projects such as the India-Myanmar-Thailand Trilateral Highway (IMTTH). However, India remains unable to mobilise same level of resources as China. and the Chinese are perceived to be more efficient.
There are conflicting views in India on the US-China trade war. The first is that strained ties between the two powers would offer India more strategic space. During the Obama era, there were fears of a ‘G2’ scenario whereby China and the US would divide the world up into spheres of influence. Thus, current tensions have actually been welcomed by some in New Delhi. The second view is that this would lead to greater American retrenchment. India is concerned about US withdrawal from neighbouring regions like Afghanistan and how that would impact regional stability. The India-US relationship is stable, but India has its own disagreements with Washington over issues of trade, issuance of H1B visas, and its ties with Iran.
China has increasingly made the China-Pakistan Economic Corridor (CPEC) concept central to the bilateral relationship. Although the Pakistani government has fully supported the project, there is a perception among local populace that the CPEC will bring little benefit to the country. The lack of transparency over investment terms will increase corruption, reinforcing opinions that will not help the average Pakistani. Recent insurgent attacks on Chinese nationals and projects in Pakistan highlight just some of the problems that China will face. Rising concerns over China’s treatment of its Muslim population in Xinjiang, and questions over whether the Pakistani government should take a stronger stand on the issue will potentially cause strain in the bilateral relationship.
With Indian general elections scheduled for later this year, Modi is likely to increasingly focus on domestic issues since foreign policy is rarely an election issue. Pakistan however, is related to identity politics in India and is largely seen as a domestic issue, which may therefore inject China into domestic politicking, though the elections make policy changes improbable. Pro-Taliban statements by Pakistani Prime Minister Imran Khan have raised concerns in both India and China. At the moment however, it seems that Khan is focused mainly on solving the country’s economic problems. In India, both the Congress Party and Bharatiya Janata Party welcome stronger relations with the US – mainly as a counter to China. Both also agree on improving ties with ASEAN and on respecting ASEAN centrality.
Malcolm Cook noted uncertainties within Southeast Asia (SEA) about the US trajectory and over its continued commitment to the region. These uncertainties have been deepened both by Trump’s rhetoric and also the perceived chaos within the Trump Administration. This is paralleled by growing certainties over China’s trajectory as the future regional hegemon, and accelerated by Xi’s presidency, which has demonstrated its willingness to either lash out or provide benefits to countries depending on their behavior. Among the SEA states, it is increasingly a fundamental strategic maxim not to unnecessarily annoy China when conducting both foreign and domestic policies. Since China decides what annoys them, states are forced to shift their foreign policy to accommodate Beijing, giving it considerably more strategic space than it has had in the past.
There have been two shifts in SEA’s domestic politics in response to China’s growing economic clout and assertive foreign policies. The first is that relations with China have now become a common opposition issue to use against the incumbent government. This has been observed in Malaysia, Philippines, Indonesia, Myanmar, Laos and even Vietnam. The second is China creating tensions between political leadership in several countries and their respective bureaucracies. There have been cases of information being intentionally or unintentionally leaked greatly embarrassing political leaders. In the Philippines, information has consistently leaked over the trespassing of Chinese vessels into the Philippines exclusive economic zone (EEZ). The Philippines finance department, as well as other government bodies have also raised questions over the sustainability of certain Chinese projects within the country, complicating President Duterte’s desire to award more projects to Chinese companies. In Malaysia, photos were also leaked showing Chinese vessels and even a navy convoy passing through the country’s EEZ. These deliberate actions to expose Chinese actions or agreements with the incumbent government are a new development reflecting internal debates over the dilemma of developing closer relations with China.
China is not the only cause for concern. President Trump and his approach exacerbates fear of marginalization or entrapment in the region. The Trump administration’s Free and Open Indo-Pacific (FOIP) strategy potentially runs counter to SEA strategic preferences. The Administration’s direct rivalry with China, eschewing the long-established approach of balancing engagement with competition, increases fears that the region will have to choose between China or the US. The Trump administration’s emphasis on unilateralism and mini-lateralism competes with established regional groupings and challenges the notion of ASEAN centrality. Lastly, it is a long-standing concern in the region that the US may put Northeast Asian issues at the centre of their approach to SEA. One example is the recent request from Washington to ASEAN to exclude North Korea from the ASEAN Regional Forum (ARF) meetings.
Following the panelists’ presentations, the discussion with roundtable participants observed that Xi Jinping may be politically vulnerable due to China’s economic slowdown, with some economists advocating for using US pressure to deepen domestic economic reforms. However, there is no evidence that Xi’s grip on power has weakened, with his supporters sustaining domestic narrative asserting that America’s tough stance is intended to contain China and prevent its rise. Although the trade war and weakening economy initially diminished Beijing’s confidence in its ability to deal with Trump, it appears to have regained confidence and is more effectively engaging with the Administration.
In SEA, while many have resigned themselves to having China as the future regional hegemon, Beijing’s influence is not unopposed. New governments in the region are questioning the value and sustainability of Chinese investments, while incumbent governments are also coming under increasing scrutiny for their close relations with China. While states may fear retaliation by Beijing, smaller states are predicted to continue to assert themselves and have a degree of tolerance for friction with China. The question remains how far each country is willing to go to protect their national interests.
Discussants noted that the influence gap between China and the US is becoming narrower, with Beijing increasingly in a position to dictate new rules and norms. It has demanded respect and deference from regional states, reflecting a type of ‘Chinese exceptionalism’. For example, it insisted that regional states remain silent on the 2016 South China Sea arbitration ruling, defining support for the verdict not as supporting international order, but rather, supporting the US containment of China. SEA also feels that it faces increasing demands from Washington to make difficult choices, such as not using Huawei products. States in SEA have made clear their desire to avoid choosing between the US or China and are expected to hedge and find ways to cooperate with both as their interests dictate.
Participants considered China’s growing regional interests, contending that China had made considerable mistakes implementing the Belt and Road Initiative, but there are indications that it is willing learn from its mistakes and refine its approaches. Growing interest in India, Japan, Australia and the US to contribute to infrastructure development in the region benefits SEA countries so long as the competition is healthy. In the Indian Ocean, it was noted that while China was not a littoral state, it has a growing economic stake in the region. Although it has ‘observer’ status in the Indian Ocean Naval Symposium (IONS), its influence is greater than a mere observer. On the Indian side, Modi seems to have returned the country back to ‘non-alignment’. He has sought an easing of tensions with China, which has been partially brought about by problems with the US.
The discussion considered the risk of ASEAN becoming increasingly irrelevant. ASEAN has done little to manage strategic shifts in the region, and the grouping is less important than the bilateral relationships that the members have with each other, and external powers. The Trump administration has focused its effort on strengthening relations with the individual members, relegating ASEAN to a lower priority. The challenge ASEAN faces is developing a narrative that asserts how much, and in what ways it continues to matter.
It was noted that states in SEA are shrewd – often more shrewd than both the US and China realize. SEA countries have demonstrated the ability to hedge freely and quickly, particularly those countries which are not treaty allies. In general, SEA countries prefer a multipolar world, albeit with a preference for the US and the global architecture of rules and norms that it has championed. While the US is believed to seek unchallenged hegemony in the region, SEA countries believe that is no longer feasible. SEA countries will seek to maintain their current advantages, and manage a Chinese world order should it emerge by seeking to continue to apply existing rules and norms. However, the question remains the degree to which existing rules that benefit the region can be preserved.
This event summary was prepared by Byron Chong and Xu Shengwei from the Centre on Asia and Globalisation.