Reliable reports since the start of this year indicate the economic competition between China and the US (and its allies) for global supremacy has intensified and will, of course, be expected to escalate in the next five years.

Certainly, this rivalry will affect in so many ways the developing ASEAN region—and the individual member countries—generally predicted by international financial institutions to be growing at the combined rates beyond seven percent annually for the next couple of decades.

Read also: Collective Action Problem in Southeast Asia

Looking back, the US under President Donald Trump withdrew from the Trans-Pacific Partnership which was engineered by Trump’s immediate predecessor Democrat former President Barack Obama to increase trade between the US and the Asia-Pacific countries, excluding China. Consistent with its policy (since the regime of President Deng Xioaping) to expand its geopolitical influence as a result of its economic success in less than 25 years, China’s President Xi Jinping launched his diplomatic campaign with offers of infrastructure networks with Southeast Asia and the rest of Asia.

Xi had also hosted a summit meeting of world leaders and urged them to increase technical and financial assistance to the less developed or developing economies/countries for global progress, obviously to dispel some “mistrust” or “suspicions of China’s peaceful” trade initiatives. He omitted to say that distrust comes from more UN members and the ASEAN 10 because of China’s increased reclamation of reefs and atolls, plus military installation works, in the South China Sea since mid-2000. Beijing claims the entire South China Sea is its territory (in violation of the internationally recognized territorial limits, and the United Nations Convention on the Law of the Seas it signed) and its military claims the military buildup is for its “defense.”

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Both Beijing and Washington profess to champion the freedom of navigation in international waters, including that part of the South China Sea. However, they differ diametrically in interpreting that “freedom.” China says it does not include the US and other sovereign nations’ military aircraft and naval vessels because it is limited to “commercial shipping and trade.” Washington says otherwise. Thus, the military tension in the Asia-Pacific region (worsened by the North Korean nuclear missile tests) has gone up; and the potential for a third world war comes up but nobody seems to think the flashpoint is immediate.

The US has replied to all these: China must honor international laws.

In his diplomatic offensive moves, Xi has taken digs at the US to honor its international trade agreements and encourage exchanges of information and technologies. And during the 19th National Assembly of the Chinese Communist Party, Xi repeatedly stressed the role of China as a world economic leader for “inclusive growth” in an obvious reference to Trump’s inaugural speech of “America First Policy” to resuscitate the slowed US growth. Trump wants to attract American investments/business operations in China back home. China says this is “protectionism.”

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In Southeast China’s Guangzhou (a special economic city) recently where Fortune magazine organized in the Shangri-La Hotel a global forum of world political and business leaders, Xi’s message read by Vice Premier Wang Yang was: “China’s door will not close to the world but open wide.” Wang himself said China is “committed to a non-discriminatory environment for foreign companies.”

Other Chinese officials in that forum said China wants to be a leader in artificial intelligence and innovation technologies but US firms have openly said China must observe the international agreement on protection of intellectual property rights—patents of inventions—in an indirect reference to “pirating” information and communication programs. Americans insist China must lift its ban on Facebook so Chinese users can avail of it. In short, the perception is China’s words do not match its actions on the ground.

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Australia has urged the US to maintain its total (political, economic and security) presence and leadership in the Asia-Pacific area because, otherwise, dominance will be taken by China; and Canberra will have to take on an expanded role in the region’s development. Prime Minister Malcolm Turnbull was quoted to say: “This is the first time in our history that our dominant trading partner is not also a dominant security partner.” (China is the top importer of Australian iron ore and coal.)

The Australian statement was reportedly a reaction to Trump’s withdrawal of American membership in the Trans-Pacific Partnership.

More recently, Washington has turned the heat on China in the World Trade Organization, which can hurt Beijing most. In an announcement, the US said it voted against China’s move in the WTO to be classified as a “market economy,” thus rendering it to pay penalties for protectionism, in violation of the WTO agreement’s provisions.

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The latest American move came in support of the negative votes of the European Union and Japan. All of them accuse China of cut-throat competition or of dumping manufactured goods in the world market way below the international market standard. A final ruling against China will entail sanctions and penalties—at this time when the Chinese growth rate is slowing down and will slow down more behind Asean’s in the next decades.

China of course retorted: “China urges the United States to earnestly fulfill its international obligations and take practical actions to correct its wrongdoings.”

These words of course will not merit any second look in Washington because the Trump administration maintains that the Chinese state-owned and managed economy does not operate on the internationally accepted market principles and rules. The Americans say: China has instituted domestic reforms and violated the WTO agreement China signed 15 years ago.

Read also: The Biggest Challenges for ASEAN in 2018

With all the above as the global backdrop, the ASEAN 10 must speed up their efforts for economic integration to prevent any collateral damage among its members (in the near future) and monitor the related and relevant geopolitical and economic developments among the superpowers.

At the same time they must see how they can use the infrastructure fever now raging in ASEAN. At least between Singapore, Vietnam, Thailand, Malaysia, Indonesia and the Philippines, they will most probably benefit from the $323 billion windfall of the construction boom. The individual Asean members should encourage domestic savings and investments and attract external sources to modernize their agricultural and fisheries manufacturing for export.

Read also: ASEAN: The Quest For Economic Integration

Explore with a fine-tooth comb the European market for export diversification. Accept the new production-booster technologies and network further more with Japan, India, South Africa; increase trade exchanges with their Summit dialogue partners.

They must pursue the agreements of this year’s 31st ASEAN summit agreements and speed up specific reforms and trade liberalization for the next year’s summit under Singapore’s chairmanship. Be informed—accurately and in real time, to act for a better regional future.

Some sage once said: When the elephants make love, the small ants get trampled and crushed!

 


Guillermo (or Gil) H. A. Santos writes for the Manila Times. He was previously the Executive Director of the Philippine Press Institute and a desk editor and news correspondent for the Associated Press. He also worked as a Philippine presidential campaign consultant on geopolitics and economics.

This article is published in collaboration with The Manila Times. It is also published here.

Disclaimer: All opinions expressed in this article are the author’s own and do not necessarily reflect the views of the ASEAN Economic Forum.