As the United States continues to hold the title of the most powerful country in the world, there is no doubt that the impact of the upcoming US elections will be felt all across the globe.
But what does this mean for Asia? How are businesses preparing for this? And how will the elections affect the US-China relationship?
In this instalment of the Asia Thinker Series moderated by Niharika Mandhana, South East Asia Bureau Chief of The Wall Street Journal, panellists Ms Angela Mancini, Partner and Head of Control Risks; Dr Taimur Baig, Managing Director and Chief Economist, Group Research at DBS Bank; Mr Drew Thompson, Visiting Senior Research Fellow at the Lee Kuan Yew School of Public Policy, seek to answer these questions and discuss the possible consequences of the elections.
Elections and the pandemic
According to Ms Mancini, the COVID-19 pandemic has upended the election and eroded Trump's incumbent advantage.
The Trump administration's response to the virus — shirking responsibility and leaving it to the states and the counties, as well as sowing disinformation — has been less than ideal. In fact, it is his lacklustre approach that has turned certain constituencies more against Trump than they would have been had the virus been dealt with properly or not existed at all.
"The election will also determine the pandemic management, because it has been so politicised over the last couple of months," said Dr Baig.
According to him, this is because of the fundamentally different approaches of both the Biden and Trump administration to the COVID-19 pandemic. As opposed to the current destructive political narrative, where wearing a mask becomes a sign of your political affiliation, a Biden win would see a science-based approach becoming the norm. Such an approach would bode well for the recovery of the US.
Asia's perceptions of the US
According to the Asia Power Index 2020 by Lowy Institute, the US recorded the biggest decline in relative power in the region. For Mr Thompson, the US is suffering from a deficit of the perceptions of its power and influence in the region.
However, he emphasised that the notion that China is dominant and the US is in decline is an echo of a Chinese narrative that is only receptive in small pockets of Southeast Asia which remain enthralled by China's rise. For him, this narrative is simply a "reflection of the effectiveness of Chinese propaganda and ineffectiveness of US strategic communication."
Indeed, numbers disprove the notion that the US is becoming less invested in Asia and China. In fact, US has been strengthening and deepening relations with key SEA nations, and foreign direct investments (FDI) from the US into China and Asia have remained on an upward trend until 2019.
At the same time, Mr. Thompson acknowledges that the Trump administration has fallen short on Asia policy as a whole in terms of his over-fixation on China at the expense of the rest of the region, a lack of a coherent trade agenda, trade fights, and numerous missed opportunities.
So how will the elections impact the perception of the US in the region?
In the case of a Trump re-election, Dr Baig predicts that there would be greater volatility, and that the unpredictability of the last few years would continue. "Don't buy into the narrative that a [second] Trump term would be more pragmatic and less dogmatic," he warned.
While Biden may be more predictable and dignified than Trump, there are concerns regarding the passivity of his administration when it comes to foreign policy. He may be less likely to lean hard on allies and push hard on issues such as trade and burden sharing.
"There are concerns about it becoming an administration of half-measures in foreign policy", said Mr Thompson. In addition to that, Dr Baig highlights the difficulty that the Biden administration would face in reversing trends that had been accentuated by the Trump administration, such as raised tariffs and restrictions on supply chains.
The impact on US-China relations
Ms Mandhana highlighted the increasing animosity between the US and China under the Trump administration. The whole-of-government approach that the Trump administration has been taking to address all aspects of competition against China has generated greater tension throughout the US government.
Furthermore, the US under Trump has also built resilience against China, given the latter's history of using their trade relationships as diplomatic coercion. "The Trump administration officials have a very acute sense of the vulnerability that trade with China brings," said Mr Thompson. "It's a trade trap in their minds."
Additionally, public opinion polls have shown that Americans, both Conservatives and Democrats, have less positive sentiments towards China as a nation.
In light of all of this, he surmises that it will be difficult, if not impossible, for Biden to return to an "Obama-era status quo". Biden will also be put in a position where he will have to deal with, in some cases, a very broken bilateral relationship.
There is hope, however, that Biden can bring some structure and engagement to this relationship in order to achieve clear objectives for the US. "If Biden takes elements of both the previous two administrations' approach and makes a hybrid where he engages for measurable outcomes, then that would be very positive," said Mr Thompson.
Regardless of who wins, a choice will have to be made about how to engage with China, a country that is so inherently distrustful and that sees the rest of the world as a potential threat.
With regards to this, there will be two options presented to whoever becomes President. The first is to take on an isolationist approach, which is what the current US administration is doing with its "America First" policy. The other is to go with an accommodationist approach, which involves isolating the threat of China and then working with others to mitigate that threat.
Impact on businesses and trade
According to Ms Mancini, there is concern among the business community regarding security issues if it were to become a heavily-contested election, or if there will be a rocky transition period between the two administrations.
Different sectors will also be affected differently by the results of the election. Oil and gas sectors, for example, have put a lot of money into the Trump campaign, while clean energy and new tech sectors will be beneficiaries of the Biden campaign.
In all, a Biden administration — which has been branded as some as "Make American Boring Again" — would bring about certainty that many businesses have been craving. "I think everybody is hoping for more certainty in the next 4 years than we've had in the last 4 years," said Ms Mancini.
Biden's improved approach to the COVID-19 pandemic would also grant the US a faster recovery which would bode well for global economic growth and underpins what a lot of businesses are looking for.
The topic of the US-China relationship arises yet again as its trajectory has a huge impact on the decisions that businesses make, especially since almost every single multinational investor has a big footprint in China, according to Ms Mancini.
In the event of a Biden presidency, value would be put front-and-centre on foreign policy, including labour rights and supply chains, and this could impact businesses in China greatly. This then stirs up questions about whether China will become "less measured and more punchy" than they are now with the Trump administration, and how this could potentially affect businesses.
In addition, Dr Baig foresees that a Biden presidency would bring about some degree of re-energisation of the World Trade Organisation (WTO) and a re-visitation of the Trans-Pacific Partnership (TPP), since Biden himself has expressed that while the TPP was not perfect, the concept behind it was a good idea. Furthermore, the people around him see it as a great way to have more economic engagement in Asia. However, pushback from the left-wing may make this difficult to achieve, warned Ms. Macini.
The Southeast Asian outlook
Regardless of the results of the election, either President will have to deal with a hedging region in SEA.
As reluctant as SEA nations are in choosing a side between the US and China, they crave clarity and leadership from the US. The SEA region has, after all, been a massive beneficiary of access to the US market, as well as received security and cooperation from the US for the last half of the century.
"Every single country in Asia wants checks and balances, is not looking for a unipolar world, would like to see the US play a leading role and remain engaged with the region," said Dr Baig. As such, the notion that the nation would become inward-looking is worrisome for Asian policy makers, no matter how tight their relationship with China is.
Furthermore, the existing zero-sum rhetoric in regards to the US-China relationship comes with the notion that someone has to lose, and this is incredibly disconcerting for the region. Ultimately, none of the countries would want to belong to the losing camp.
"It would help a lot to change the rhetoric to one that is lower-decibel, more engaging, useful, and more akin to a win-win narrative," concluded Dr Baig.