In Asia, China’s Long Game Beats America’s Short Game
Beijing’s focus on economic ties will outlast Washington’s on military alliances.
By Kishore Mahbubani
Published by Foreign Policy on 12th December 2021
Submarines
are stealthy, but trade is stealthier. Both generate security—the
former by deterrence, the latter by interdependence. But the kind of
security created by trade lasts longer.
Submarine
deals are easy to walk away from. Just ask France, which this year lost
a long-standing contract to provide attack submarines to Australia.
Economic interdependence created by trade deals is harder to unravel.
Just ask Trump, who couldn’t break up the North American Free Trade
Agreement and had to settle for a cosmetically renegotiated pact.
This
contrast highlights the difference between the short-term game
Washington is playing in the Indo-Pacific and the long-term one played
by Beijing. The United States is betting on the AUKUS security pact it
signed with Australia and the United Kingdom, the main feature of which
is a promise to deliver submarines to Australia. China is betting on
using trade to win over its neighbors, particularly the members of the
Association of Southeast Asian Nations (ASEAN), the most successful
Asian bloc.
Washington
is right on one point. Superficially, the three AUKUS members have
strong connections and largely see eye to eye. ASEAN, on the other hand,
looks like a ramshackle outfit barely able to manage errant member
states such as Myanmar. The bloc is also struggling to generate a
coherent regional response to the growing U.S.-China rivalry. Nor can it
calm the troubled waters of the South China Sea. But if ASEAN is too
weak to impose its will on its own members, let alone on others, that
unimposing weakness is also its strength, allowing the bloc to build
trust in the region and beyond.
I
first attended an ASEAN meeting as a Singaporean official exactly 50
years ago, in 1971. As soon as I walked into the conference room, I
could smell the thick clouds of distrust among the five founding
members. Two decades later, when I attended similar ASEAN meetings as
the senior official from Singapore, the clouds of distrust had
disappeared. Instead, the Indonesian culture of musyawarah and mufakat—consultations
and consensus—had infected ASEAN. Gradually, this culture of
consultations and consensus generated geopolitical miracles, some so
stealthy that few outside the region have noticed them.
Following
the end of the Vietnam War, during which ASEAN supported the United
States, hostility and distrust between Vietnam and ASEAN were palpable.
But when the Cold War ended, ASEAN integrated Vietnam into the region’s
economy, helping the country emerge as another East Asian economic
miracle. The most important lesson Vietnam learned from ASEAN was to
trade even with one’s adversaries, just like the original members of
ASEAN overcame their distrust of one another through trade. That’s why
trade between India and Pakistan only tripled from 1991 to 2021, while
trade between Vietnam and China—which had fought a war against each
other in 1979—grew 6,000 times over. In short, ASEAN’s culture generated
peace and prosperity.
Another
major ASEAN breakthrough was to generate greater economic engagement
between Japan and South Korea. Although the two countries are both U.S.
allies, Washington can barely persuade them to talk to each other.
Indeed, in recent years, there was neither consultation nor consensus
between Seoul and Tokyo. And yet, despite this, ASEAN has persuaded the
two East Asian neighbors to sign a free trade agreement among themselves
(and with China too): the ASEAN-initiated Regional Comprehensive
Economic Partnership (RCEP), signed in 2020 by the ten ASEAN member
states, Australia, New Zealand, China, Japan, and South Korea. Indeed,
the economic integration of the powerful Chinese, Japanese, and South
Korean economies will generate most of the RCEP’s economic boost. It was
ASEAN that accomplished this little-noticed miracle.
Here’s
a simple word test Washington should carry out. Count which words
appears more in the speeches of U.S. President Joe Biden, U.S. Secretary
of State Antony Blinken, U.S. Secretary of Defense Llloyd Austin, and
White House National Security Advisor Jake Sullivan (the four custodians
of the United States’ Indo-Pacific policies): ASEAN and the names of
its member states, or Australia.
The
answer will be Australia. Washington’s affection for Australia is
genuine and its concern heartfelt, which goes a long way toward
explaining AUKUS. Yet geopolitics is also a cruel business, where
emotions create a competitive disadvantage. If Beijing focuses on ASEAN
and the RCEP and Washington focuses on Australia and AUKUS, Beijing will
win.
Here’s why. The big game is economic, not military. In 2000, total U.S. trade with ASEAN was $135 billion, more than three times China’s trade of $40 billion. By 2020, China’s trade of $685 billion was almost double the United States’ trade of $362 billion.
Washington still sees Japan as an economic superpower. And in 2000,
Japan’s economy was eight times larger than ASEAN’s. But by 2020, it was
only 1.5 times larger. By 2030, Japan’s economy will be smaller than
ASEAN’s.
China’s
engagement with ASEAN is deep and broad. High speed railways are being
built by China in Indonesia, Laos, Malaysia, and Thailand. Amazingly,
despite the patent distrust between Hanoi and Beijing, the metro system
in Hanoi is being built by China too. And when Southeast Asia was
looking for vaccines, Chinese vaccines came first. Indonesian President
Joko Widodo, a key regional leader, was happily vaccinated with Chinese
vaccines. There’s no doubt that relations between China and several
ASEAN states are complicated and face challenges. Yet the range and
depth of cooperative endeavors cannot be denied.
And
economic ties will grow stronger as the economic miracle growth story
of ASEAN is just beginning. Many of the regional economies are at the
tipping point of becoming middle-class societies. Australia has 25
million in its middle class. ASEAN will soon have several hundred
million. Here’s a leading indicator: In 2020, ASEAN’s digital economy
valued around $170 billion. By 2030, it could reach $1 trillion.
This massive explosion of the region’s digital economy will in turn
generate new webs of interdependence, strengthening even more the
massive ecosystem of interdependence developing in the region.
So,
ultimately, this is the strategic choice Washington must face. Focus on
selling submarines to Australia—or cross the Rubicon and sign free
trade agreements with East and Southeast Asia. And here’s the real
kicker: At the end of the day, the Trans-Pacific Partnership was
essentially a product of Washington’s talented negotiators, who produced
a truly blue-chip trade agreement. After the United States withdrew
from the agreement in 2017, the revised Comprehensive and Progressive
Agreement for Trans-Pacific Partnership remained modeled on the
original. But the United States cannot even dream of the possibility of
rejoining it; by contrast, China has applied to join.
The
final question is this: Can Washington reenter Asia’s great economic
game? Yes, it can. It still has some assets. Even though China trades
far more with ASEAN, U.S. private investment in ASEAN dwarfs that of
China. The total stock of U.S.-held foreign direct investment in ASEAN
was about $318 billion in 2019; Chinese investment accounted for only
about $110 billion. Given the explosive growth potential of the ASEAN
region, Washington should find creative ways of driving even more U.S.
investment in ASEAN, taking advantage of the huge reservoirs of goodwill
toward the United States that still exist in the region.
In
short, don’t focus on selling submarines. Focus on encouraging U.S.
investment and trade in the Indo-Pacific. It’s the economy, stupid.
Kishore
Mahbubani, a distinguished fellow at the National University of
Singapore’s Asia Research Institute, is the author of Has China Won? The
Chinese Challenge to American Primacy. Twitter: @mahbubani_k