US-China Strategic Competition and Southeast Asia

Abstract

There has been a pronounced shift in dynamics between China and the USA, towards one where competition is now the defining character of their relationship. Yet, growing great power competition does not mean that other international actors do not have agency to shape their strategic circumstances. With a focus on Southeast Asia, we highlight two cases of this agency. The first is ASEAN-China cooperation in COVID-19 pandemic recovery, while the second looks at China-Singapore cooperation to build a more secure regional order. Both ASEAN and Singapore have well-known, robust partnerships with the USA. Yet their relationship with the USA has not stopped ASEAN and Singapore from exercising their prerogative to work with China—when it suits—to improve the circumstances of the region. The cases show that the choices of Southeast Asian states are not necessarily defined by the US-China competition.

The international order is undergoing a marked recalibration. This state of affairs—“transitional polycentrism” or “between orders” as some have described it—reflects a global context where several of its existing features are under increasing stress from new, emerging forces.¹ These changing dynamics include rising protectionism and nativist sentiments; deglobalization and reshoring; rising non-traditional security threats; and the challenges associated with post-pandemic recovery. This is a global phenomenon and the Asia-Pacific region is by no means isolated or insulated from wider global pressures and forces.

But arguably, the most important strategic development, one with widespread ramifications, is the shift in dynamics between China and the USA.² It is evident that in recent years, the competition between the two has intensified. This is not to say both powers are in a new “Cold War”—at least not yet. Or that they will not cooperate when it suits them. More fundamentally, competition is now the “new normal” of US-China relations, with their competition spanning the key contours of the international system: economics, ideology, politics, military, and technology.

Some have depicted this development as marking the “age” or “return” of great power competition in the international system.³ Such characterizations belie the point that there has always been varying degrees of contestation among the great powers of the day and that such competition is normal from a historical perspective. Notwithstanding America’s relative unipolar moment after the end of the Cold War, the history of the past 200 years is essentially one dotted by conflicts among the great powers. From that perspective, the international system is in fact reverting to a more normal state of affairs.

Enduring Great Power Competition

Several persistent conditions mean that a fundamental reset in US-China relations—akin to the 1970s rapprochement—will be difficult. First and foremost, the strategic foundation between the two powers is essentially fragile. The key factor that bonded China and the USA during their 1970s rapprochement was a shared perception of the security threat of the Soviet Union. That raison d’etre receded with the end of the Cold War and the latter’s dissolution. Ever since then, both sides have struggled to locate a common strategic motive to underpin relations.

Initially, economics was a key logic and glue sustaining American efforts to engage and integrate China into the US-led global order. Today it is increasingly a source of fracture, as exemplified by the ongoing bilateral trade and technological conflict that shows little sign of abating. Rightly or wrongly, perceptions in the USA that China’s rise has come at the expense of the American economy remain pervasive. What is more, economic motivations are being superseded by political logics in the USA that prioritize national security over costs and efficiencies. At the political level, many American elites had held the tacit belief that China became more capitalistic, sooner or later, this would be followed by greater political freedoms. When that did not happen—and even worse in the American view, a more tightly controlled and globally assertive China⁴ emerged under Xi Jinping—many Americans started wondering whether it was in their country’s interests to continue engaging China in ways that meant supporting the economic rise of a political and ideological rival.

A key inflexion point was the advent of the Trump administration. Beginning with the Trump administration, the USA set in motion a series of policy shifts that signalled a more muscular approach towards China. These included the imposition of tariffs on a broad range of Chinese imports, sanctions on a number of Chinese companies, and restriction on Chinese access to American technological components.

The Biden administration has largely maintained its predecessor’s competitive approach, with Washington pitching its rivalry with China in terms of a longer-term contest between democracies and autocracies in which latter governments cannot be allowed to prevail. To shape China’s strategic environment, the Biden administration also made strategic adjustments that have seen a greater incorporation of multilateralism and alliances including inaugurating new mechanisms such as AUKUS and the Indo-Pacific Economic Framework (IPEF). At the same time, the Biden administration has not only continued with Trump’s economic and technological curbs on China, but also upped the ante by expanding the list of sanctioned Chinese companies/individuals and introducing new restrictions that aim to deny Chinese access to the tools needed to make advanced tech. Semi-conductors are a case in point. In October 2022, for example, the USA introduced additional rules restricting exports to China covering both semi-conductor components and the equipment to produce them. The rules also covered restrictions on US technological talent.⁵ At the time of writing, the USA was seeking to induct allies such as Japan and the Netherlands in its technological curbs on China.⁶

From China’s perspective, it sees itself as being drawn into a “reluctant rivalry.”⁷ Beijing resists using a “competition” narrative to characterize US-China relations, with Xi reportedly telling Biden that “the so-called ‘democracy versus authoritarianism’ narrative is not the defining feature of today’s world.”⁸ The Chinese perception is that China is being compelled to defend its legitimate rights and interests in the face of “unreasonable [American] suppression” and that while it does not seek confrontation, it is also “not afraid” of one.⁹ In this view, China is being “forced” to become the US’s rival. Beijing’s strategic dilemma is that Washington has already determined that China’s rise is antithetical to US and Western interests.

China’s response to American moves has been to push for the acceleration of homegrown innovation and greater self-reliance in key technologies and industries. Strategic “self-reliance” is seen and pitched as the only sustainable way to ensure that the country’s supply chain security and technological development remain “firmly grasped” in Chinese hands.¹⁰ In 2022, the 20th Party Congress of the Chinese Communist Party (CCP) basically confirmed that China will double-down on its existing approach towards this contest. Beijing will continue to emphasize the urgency for greater self-sufficiency in science and technology. It will also maintain the primacy of technology and innovation as primary source of growth and the need for state-led policies to foster it, including enhancing the national scientific infrastructure.

Southeast Asia: Agency (Still) amid Great Power Competition

Great power competition is not new to Southeast Asia. Throughout its history, the region has been a crucible of contestation among the powers of the day. In the twenty-first-century version, how the contest between China and the USA evolves will have a major bearing for people living in Southeast Asia.

It has been suggested that ASEAN states could be an inadvertent beneficiary of the ongoing China-US trade and technological war if more multinational companies shift production from China to Southeast Asia due to American tariffs and curbs. While that may be true to an extent, in the longer term, a prolonged China-US economic war could re-configure the global supply chain in ways that may not be good for the region’s ambitions to move up the value chain or become more economically integrated. What is more, a full-blown China-US conflict would have dire consequences for Southeast Asia. In particular, if this conflict leads to pressure that compels ASEAN countries to choose sides, the region will bear inevitable costs (such as the undermining of its unity). A serious conflict would also destabilize the wider regional and global environment, leading to conditions that would not be conducive for the region’s long-term economic development.

These potential repercussions mean that even as most ASEAN states have their own preferences (and grievances) towards China and the USA based on issue areas and their respective national interests, they do not want to choose, or be placed in situations where they could be compelled to choose, between the two powers. The reality is that, to varying degrees, most ASEAN states have considerable and enduring economic and/or security linkages with both powers. This explains why strategic neutrality is the preferred position for most ASEAN states when it comes to Beijing and Washington.¹¹ This strategic preference, however, does not mean that ASEAN countries do not face pressure (overt or otherwise) from the great powers. As great power rivalry heats up, it could become more difficult for Southeast Asian countries to find a “sweet spot” between the two.¹²

Institutionally, while ASEAN is not always unified on issues, it has so far done relatively well to navigate this more complicated strategic landscape. Yet it should not rest on its laurels and can do more. Because of the greater uncertainty generated by US-China frictions, ASEAN has to be more pro-active in shaping strategic currents. It must be in the driver’s seat more, including accelerating ASEAN community building and consolidating the economic integration of ASEAN member states.

This brings us to an observation often taken for granted: ASEAN countries are co-drivers too and have agency. Although ASEAN has its institutional weaknesses and Southeast Asian countries face their respective domestic challenges, they are not without agency to shape the strategic circumstances of the region. Strategic agency is not only in the hands of the big powers.¹³ In this paper, we highlight two under-appreciated cases of this agency. The first is ASEAN-China cooperation in COVID-19 pandemic recovery, while the second looks at China-Singapore cooperation to build a more secure regional order. Both actors (ASEAN and Singapore) have well-known and robust partnerships with the USA. Yet their relationship with the USA has not stopped ASEAN and Singapore from exercising their prerogative to work with China—when it suits—to improve the circumstances of the region. This is what we mean by agency: the choices of Southeast Asian states are not necessarily defined by the US-China competition.

ASEAN-China Cooperation in Pandemic Recovery

There are two principal aspects to pandemic recovery: pandemic control and socio-economic recovery. On the first (pandemic control), even as ASEAN member states have each embarked on their own focused programs of national vaccination, China is a primary partner for ASEAN in the fight against COVID-19.

Initially, during the early stages when China was facing intense challenges in its fight against the COVID-19 pandemic, ASEAN states supported China by contributing medical supplies. Then as the pandemic started spreading globally, especially with the advent of new variants, China acted as a responsible regional player and helped support ASEAN countries in their pandemic response. For example, by 2021, China has provided more than 190 million vaccine doses to ASEAN countries, as well as other critical health and medical supplies.¹⁴

Both sides also launched the China-ASEAN Public Health Cooperation Initiative and have continued to advance the “China-ASEAN vaccine friends” platform to promote policy communication and information sharing on vaccines.¹⁵ According to The State of Southeast Asia: 2021 Survey by ISEAS, China is seen as the dialogue partner that “provided the most help” to the ASEAN region during the pandemic.¹⁶

But pandemic recovery is not only about controlling the pandemic; it is also about regional recovery on a socio-economic level. Here, we want to highlight the significance of the ASEAN Comprehensive Recovery Framework endorsed at the 37^th ASEAN Summit. The framework represents not only ASEAN’s exit strategy from COVID-19, but also a coordinated roadmap for the region to bounce back, both intra-regionally and together with its partners. Five key strategies have been proposed, including: (i) enhancing health systems; (ii) strengthening human security; (iii) maximizing the potential of intra-ASEAN market and broader economic integration; (iv) accelerating inclusive digital transformation; and (v) advancing towards a more sustainable and resilient future.¹⁷

On these strategies, China has proven to be a vital partner for ASEAN states. Indeed, China’s then foreign minister and now State Councillor Wang Yi stated that “China would like to work with ASEAN to implement the ASEAN Comprehensive Recovery Framework.”¹⁸ China’s support and cooperation have been welcomed by regional states. On economic recovery, for example, despite the pandemic, trade grew between both sides in 2020, and ASEAN in fact became China’s largest trading partner, overtaking the EU.¹⁹ And given that the 15-nation Regional Comprehensive Economic Partnership (RCEP) entered into force for the majority of participating countries by 2022, the trade pact’s implementation will continue to enhance and consolidate trade flows and supply chain networks in the Asia-Pacific region, helping the economic re-opening and recovery of both the ASEAN region and China.

But economic recovery is not the only aspect. It is also about healthy societies at a socio-psychological level. Here, there is room for both China and ASEAN countries to boost people-to-people exchanges or pursue new initiatives to help enhance societal resilience on both sides. It is important to develop mentally resilient nations because COVID-19 may not be the last pandemic the world will face.

Singapore-China Cooperation to Build a More Secure Regional Order

At a broader level, while China and Singapore have their respective national interests, there are no fundamental strategic disagreements between them. Indeed, both countries share and support many of the strategic ideas that underpin global order today: peace and stability, free trade, globalization, and economic inclusivity.

For instance, China and Singapore are like-minded partners in their belief in, and support for, globalization and free trade. Both countries actively worked and pushed for the signing of the RCEP, which constitutes 30% of global GDP and forms the world’s largest trade bloc. Singapore is also a firm supporter of China’s Belt and Road Initiative (BRI) and is working with China on jointly developing projects under the BRI. A prime example of this is the Chongqing Connectivity Initiative (CCI), the third government-to-government project between the two countries, which aims to develop Chongqing into a key node connecting the Silk Road Economic Belt (“Belt”) and Maritime Silk Road (“Road”). In Southeast Asia, Singapore’s strategic position as a regional hub serves as a “gateway for Chinese investors to access ASEAN markets and opportunities, as well as a key node to channel investments into China from the rest of the world.” Up to a quarter of Chinese outward BRI investments moved through Singapore, with the city-state playing an important role in the “external circulation” of China’s “dual circulation” economic strategy.²⁰

Convergence in the fundamental ideas that undergird the global order is not the only anchor in the “all round cooperative partnership” between China and Singapore.²¹ Most people are aware of the deepening economic ties between the two countries. Equally important is the burgeoning security partnership between China and Singapore. Bilateral defence cooperation and coordination have grown from strength to strength over the years.

For example, since 2009, the armed forces of both countries have engaged and trained with each other professionally through the platform of Exercise Cooperation. In 2019, the fourth edition of Exercise Cooperation was successfully conducted and soldiers from the Singapore Armed Forces (SAF) and the People’s Liberation Army (PLA) trained together in various combat functions, culminating in a counter-terrorist urban raid in the final mission exercise.²²

A recent high point of this security relationship is the Enhanced Agreement on Defence Exchanges and Security Cooperation (ADESC). First formalized in 2008, the ADESC provides a framework for the development of defence relations between China and Singapore. In 2019, both sides agreed to upgrade the ADESC, to include new areas of defence collaboration and exchanges. These areas include, among others: (i) establishing a regular Singapore-China Ministerial-level dialogue mechanism; (ii) continuing high-level cross-attendance in multilateral conferences of both countries (such as the Shangri-La Dialogue and the Beijing Xiangshan Forum); (iii) committing to regularize and scale up exercises and exchanges between the services of both armed forces; (iv) inaugurating a Visiting Forces Agreement for troops in bilateral exercises; (v) starting a mutual logistics support mechanism; (vi) setting up of a bilateral hotline; and (vii) conducting academic exchanges among the military academies and think tanks of both countries.²³

Even amidst the challenges of the COVID-19 pandemic, in 2021, the navies of China and Singapore conducted a joint maritime exercise in international waters of the South China Sea, a collaboration that incorporated communication operations, formation movements, and search and rescue operations.²⁴

On a multilateral basis, both countries have been contributing to regional security through their active engagement of and involvement in ASEAN-centric security processes. One such mechanism is the ASEAN Defence Ministers’ Meeting Plus (ADMM-Plus), through which China and Singapore have been active “security contributors” since the forum’s establishment in 2010. While the ADMM-Plus is not perfect, it represents the regularization of high-level communication among the defence ministers of ASEAN countries and key regional players including China, the USA, Russia, India, Japan, ROK, Australia, and New Zealand. The process helps foster a degree of baseline understanding and confidence-building among participating countries.

But the ADMM-Plus is more than just a regional “talk-shop.” Through its respective Experts’ Working Groups (EWGs), the forum helps to increase regional capacity-building in practical domains such as maritime security, counterterrorism, humanitarian assistance and disaster relief, peacekeeping, military medicine, humanitarian mine (clearance) action, and cyber security.

China and Singapore have also actively contributed in their own respective ways to the process of regional technical and operational cooperation. A notable example of regional capacity-building came in 2018 when the first ASEAN-China Maritime Exercise was successfully conducted in Zhanjiang, Guangdong. Co-organized by Singapore and China, the multinational exercise involved all the ASEAN countries and more than 1000 personnel. The regional exercise also enabled the participating navies to implement Code for Unplanned Encounters at Sea (CUES), improving operational communication and coordination in the maritime space. It is “not a given” that militaries will naturally work together, so the 11-country ASEAN-China Maritime Exercise should be seen as a notable milestone, especially in terms of developing trust and confidence among regional actors.²⁵

Conclusion

It is often said that the rise of Asia is the central story of the twenty-first century. This is certainly true, but there is also another important sub-narrative that is often less appreciated: Asia’s rise is also about the rise of Southeast Asia and the important role played by ASEAN to facilitate this. The facts speak for themselves. Southeast Asia is currently the fifth largest economy in the world. It has a combined GDP of more than US$3 trillion, accounting for 7.8% of worldwide trade. Intra-ASEAN trade is among the world’s densest.²⁶ And with RCEP coming in force, the region is set to grow even further, becoming even more connected and prosperous.

Yet continued progress is not a given. As Singapore’s Prime Minister Lee Hsien Loong has noted, the stars may not “always be so neatly aligned” in the future.²⁷ A concerning trend that could well result in less favourable conditions for Southeast Asia’s growth is the escalating great power competition between China and the USA. Unbridled strategic rivalry and economic decoupling between two global heavy weights could lead to poorer overall international economic collaboration and a climate of mistrust, resulting in negative externalities for Southeast Asia. Repercussions will be keenly felt in countries like Singapore which are especially dependent on trade and a dynamic international economic system.

The current uncertainties underscore the need for greater strategic understanding and clarity. Although tensions between the USA and China are a deep concern, competition between the two countries need not result in conflict. Both sides should find ways to forge a more stable and sustainable path, for themselves and the rest of the world.

No country can fully insulate themselves from the effects of US-China competition, an entrenched issue that is quickly becoming a structural component of the international system in the twenty-first century. Yet, strategic agency is not the sole preserve of the great powers and Southeast Asian countries need not be passive players in their own region. At the very least, they can develop better understanding and clarity of their evolving strategic landscape and develop policy options that are not delimited by great power competition. As the two cases in this paper show, they can also exercise their own prerogative to make choices that help improve the circumstances of their external environment.