A summit this week will put pressure on Washington to match China’s economic development support for Southeast Asia, a region of 680 million people, experts say.
Southeast Asian countries want to avert overdependence on Chinese trade and investment, analysts believe. But they say the region has found relatively little help from the United States. The prospect of more U.S. economic support could underpin a U.S.-ASEAN Special Summit set for Thursday and Friday.
“There has been a lot of emphasis on the political and security aspects, and the economic initiatives seem to be lagging behind,” said Aaron Rabena, research fellow at the Asia Pacific Pathways to Progress Foundation in Manila.
Leaders from ASEAN — the 10-member Association of Southeast Asian Nations bloc — will meet American business representatives, U.S. Trade Representative Katherine Tai and Department of Commerce Secretary Gina Raimondo at the summit Thursday to “discuss economic cooperation,” according to an agenda outline.
China key to trade, investment
China and the United States compete in much of the world for the support of smaller countries, as the government in Beijing expands overseas economically as well as militarily.
U.S. officials wary of China’s influence over Southeast Asia periodically send warships to the South China Sea and hold joint military exercises with countries such as the Philippines.
Foreign trade and direct investment represent income for the tens of millions of Southeast Asians living in poverty.
China has been ASEAN’s largest trading partner since 2008, and their trade totaled about $731.9 billion in 2020, the Chinese state-controlled news website Global Times reported.
U.S. goods and services trade with ASEAN came to about $362.2 billion in 2020, according to data from the Office of the U.S. Trade Representative.
ASEAN’s 2020-2021 investment report shows that the United States ranked as the top source of foreign direct investment in 2020 at $34.7 billion, ahead of China at $12 billion.
But Southeast Asian countries such as Cambodia and Malaysia benefit from the $4 trillion-plus Chinese Belt and Road Initiative, a 9-year-old development strategy that builds infrastructure throughout Eurasia to help open trade routes.
The United States lacks a global Belt-and-Road equivalent, though it launched a program in 2020 to help the five Mekong River ASEAN states ease rainfall droughts and provide COVID-19 relief.
As a command economy, China can step up trade and investment quickly, analysts say.
“China has all the levers,” said Shahriman Lockman, senior foreign policy and security studies analyst with the Institute of Strategic and International Studies in Malaysia. “Basically, the state is able to deploy those economic levers quite easily, whereas it’s not so straightforward for the United States.”
For Washington, he said, the levers “would need to make money.”
U.S. role in Southeast Asia
ASEAN is comprised of Southeast Asian countries Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. They accept Chinese trade and investment but don’t want to be “totally exposed” to China, Lockman said.
Brunei, Malaysia, the Philippines and Vietnam dispute tracts of the South China Sea with Beijing, which claims 90% of the resource-rich waterway and has a military lead over the other countries. The United States backs the Philippines and Vietnam in resisting Chinese expansion in the sea.
Southeast Asian factories depend on Chinese companies as a source of raw materials, while consumers look to China for shipments of inexpensive daily goods.
Southeast Asian countries hope the United States will do more to end its 4-year-old trade dispute with China before import tariffs on both sides spill into other parts of the economy, said Jayant Menon, visiting senior fellow with the ISEAS-Yusof Ishak Institute’s Regional Economic Studies Program in Singapore.
The U.S. Securities and Exchange Commission is now eyeing 80 Chinese firms for possible removal from American stock markets, a key source of capital.
“I guess ASEAN leaders would be keen to get some reassurance that there is a commitment towards resolving this trade war sometime down the track,” Menon said.
Liu Pengyu, spokesperson for the Chinese embassy in Washington, D.C., encouraged the United States to do more for Asia.
“China hopes that when participating in regional cooperation with East Asia countries, the U.S. will abandon the Cold War mentality and … do more things conducive to regional peace, development and prosperity,” he said.
Too early for deals?
The summit this week will not produce any formal economic-related agreements, experts predict. But language in any joint statements could signal where the ASEAN goes next with the United States, Rabena said.
Biden will meet ASEAN leaders on Friday to “recognize (an) ASEAN central role in delivering sustainable solutions to the region’s most pressing challenges,” White House press secretary Jen Psaki told reporters last week.
Statements from the summit will probably allude to avoidance of future health crises, measures to ease climate change and steps toward a “green” economy, Menon said.