Long gone are the halcyon days of Chimerica, when the US prides its relationship with China being a win-win partnership. Such optimism has faded, as geopolitical tensions intensify over pressing issues such as trade rules and regional leadership, wherein Washington and Beijing compete with one another for support from smaller states. One region that takes centre stage in the US-China geopolitical rivalry is Southeast Asia, which has been subjected to increasing economic engagement from both major powers over the years. However, while China has been able to bolster its economic presence, the US faces domestic and strategic hurdles which compromise its competitiveness vis-à-vis Beijing in Southeast Asia.
The American Lob-sided Engagement in Southeast Asia
Since President Biden took office in 2021, the US has taken accelerating steps to counter China’s burgeoning influence in Southeast Asia. Not only were there high-profile exchanges between top-ranking American officials and Southeast Asian host countries, but the first US-ASEAN Special Summit—where the US pledged USD$150 million to deepen relations with ASEAN states—was also held. Furthermore, the US has been strengthening its traditional security cooperation, as well as upgrading its bilateral relationships with key ASEAN partners. On the economic front, the US unveiled the Indo-Pacific Economic Framework (IPEF) in 2022, which focuses on strengthening cooperation primarily on governance, digital ecosystem, and climate change.
Despite the Biden administration’s increased efforts to engage Southeast Asia to counter China’s rapidly growing influence, pundits have pointed out what they perceive as the blind spot of the American strategy in Southeast Asia. Several have highlighted that the US places a premium on traditional security issues at the expense of economic engagement with Southeast Asia. Based on trade volume, they have argued not only that Washington’s current economic engagement in the region is insufficient to rival China’s, but also that it has steadily lost ground to its competitor. This is particularly salient given that China’s total trade with ASEAN rose to US$730.1 billion in 2022, which is nearly double that of the US—which stood at US$422.5 billion.
Furthermore, pundits have stressed that the IPEF is far from a traditional trade deal that incorporates explicit commitments towards reducing trade tariffs as well as preferential market access. This makes it inadequate to match the efforts of China—which has established deeper economic ties with Southeast Asia through the Regional Comprehensive Partnership (RCEP). Moreover, the Trump administration has also undermined US economic influence in Southeast Asia through its abrupt withdrawal from the TPP in 2017, which was purported to bring balance to China’s economic influence in the region. This essentially leaves the US devoid of a credible economic strategy to counter China’s increasing economic influence in Southeast Asia.
All-Out Economic Strategy: Easier Said than Done?
Against this backdrop, there are burgeoning calls emanating from policy analysts and retired diplomats—both from and outside of the US—that strongly advocate for the US to elevate its current economic engagement in Southeast Asia to a fully-fledged strategy focusing on trade, investments, and infrastructure. To counter China’s economic influence effectively, many have urged the US to adopt an all-out economic strategy that is competitive enough to match the Chinese one. Despite analysts emphasising the infeasibility of the US in crafting an economic strategy that aims to achieve total victory over China in Southeast Asia, they have staunchly argued that a sufficiently comprehensive economic strategy is still useful in strengthening economic relationships with neglected ASEAN states such as Cambodia and Laos. Doing so will possibly allow the US to advance its strategic goals throughout Southeast Asia to counter China.
However attractive such a strategy may seem, it is nonetheless unlikely that the US would chart its economic presence in Southeast Asia through an all-out economic strategy. The hefty political costs of implementing unpopular policies—amidst an increasingly protectionist domestic climate—stands as the main reason for this reserve.
The idea that the Biden administration would revive the TPP or construct a new regional trade deal similar to the TPP does not bode well among supporters of the Democrat Party, as they fear that such free trade deals would harm America’s economic interests by outsourcing jobs and businesses because of foreign competition.
Besides, the US is a strong supporter of human rights. According to the 2024 Critical Issues poll conducted by the University of Maryland, a majority of Americans supported the idea of a value-based foreign policy approach that rigorously defends human rights globally. This means that the Biden administration could face tough domestic pressures if it were to grant new market access through free-trade agreements to ASEAN, which is comprised mostly of non-democratic states that the US perceives as lacking sufficient human rights.
At any rate, the challenges for the US to construct an all-out economic strategy to counter China are compounded by Beijing’s significant leverage in exerting its economic influence within Southeast Asia. China boasts a mega-regional trade pact, the Regional Comprehensive Economic Partnership (RCEP) with all ten ASEAN states, whereas the US has none under its belt since its TPP withdrawal in 2017. Similarly, China’s global infrastructure projects, under the Belt and Road Initiative (BRI), have huge advantages over the US-led Partnership for Global Infrastructure and Investment—namely a fast approval process, minimal preconditions, and full financing aid. For the US to match China in such domains to retain economic competitiveness in Southeast Asia is highly costly, as the US would be hard-pressed to modify its long-standing approach to business radically. With both hands tied in rolling out competitive trade deals, it would be challenging for the US to conceive of a coherent economic strategy to counter China’s presence in Southeast Asia.
An all-out economic strategy would remain especially difficult to implement due to the numerous technical complexities involved. Unlike autocracies such as China, whose centralised decision-making apparatus could leverage huge sums of resources in pursuit of its intended policy, the more democratic nature of the American political system requires Washington to gather support from various congressional and interest groups laboriously. The cumbersome processes involved in a comprehensive approach would render it an unattractive instrument for the US to address its challenges in a timely manner.
ASEAN’s Persistent Hedging Culture: A Disincentive?
Beyond these economic and policy matters, Southeast Asian states’ enduring hedging postures in geopolitical alignment constitutes a largely overlooked source of disincentive for deeper US-led economic involvement in the region.
To elaborate, many analysts have cautioned against the ‘hegemonic bargain’, whereby Southeast Asian states would support China’s bid for regional hegemony in return for economic profits. Concerns have surfaced regarding how China’s increasing economic influence would place ASEAN states into Beijing’s orbit. Nevertheless, the aforementioned scenario has yet to materialise. Nearly all ASEAN member states have continued hedging by diversifying their foreign policies as well as voicing their collective support for non-alignment, despite having forged and benefitted from the increasingly strong economic ties with China. Even Cambodia, one of the staunchest supporters of China, has repeatedly iterated its unwillingness to choose sides and its keen interest in inclusivity instead of hegemony. With an embedded growth-centric mindset, close to every ASEAN state has resiliently rejected all forms of unilateral alignment with a single major power; such a policy may stymie their freedom to work with various like-minded partners to better develop their nation.
Over the years, China has exploited its strong economic linkages with ASEAN states to exert strong coercive pressures against some ASEAN states with regard to the unresolved South China Sea disputes. For instance, China imposed economic sanctions on the Philippines and Vietnam during the 2012 Scarborough Shoal and the 2014 Haiyang Shiyou incidents respectively to signal its resolve to defend its territorial rights. But, so far, China has experienced little success in leveraging its punitive economic measures to coerce both the Philippines and Vietnam into yielding to Beijing’s demands in the South China Sea. The latter would be especially alarming to the US, which seeks to contain China’s growing dominance in the disputed waterways.
Despite being ASEAN’s largest economic benefactor for more than one decade, China has not been able to pressure ASEAN states to conform to its bidding, let alone to convince them to side with Beijing over Washington. Under such circumstances, why would the US be overly concerned? The urgency of a US-led comprehensive economic strategy to counter China in Southeast Asia is therefore overstated.
Betting on Engagement, Not All-Out Strategy
In the foreseeable future, Washington will probably continue its limited economic engagement in Southeast Asia even as the cries for greater economic involvement loom ever larger. With an increasingly polarised political climate surrounding domestic issues such as immigration borders and employment rate, the US may not feel obliged at the moment to counter China’s overseas presence in every sphere and with the same intensity. Such an approach would incur costs and require resources which could be directed at other areas that need more attention. Instead, the US is likely to discount the economic dimension while strategically concentrating on specific areas such as traditional security and bilateral relations that could bolster its relevance in Southeast Asia. After all, ASEAN states have regarded Washington’s security engagement as necessary vis-à-vis an increasingly assertive China. With the current balance of power, greater US economic engagement is unlikely to become a reality.