Bilahari Kausikan: Confident Asean can carefully navigate US & China trade war
Pick a side.
The US and China are embroiled in a trade war.
The two global superpowers have fired opening salvos, with President Donald Trump slapping tariffs on more than US$250 billion worth of Chinese goods, and President Xi Jinping replying by imposing tariffs of US$110 billion worth of American goods.
While there were positive signs from the concluded talks on Jan. 10 (Singapore time), there was no announcement of a deal to end the trade war.
So if the trade war is set to continue for a little while longer, where should Asean stand?
Bilahari Kausikan, Chairman of the Middle East Institute and the former Permanent Secretary of the Ministry of Foreign Affairs, believes that following the path charted by the Americans is the likelier of the two sides, especially with regards to defense technologies.
From engagement to competition
Writing in the January 2019 AseanFocus Issue for the ISEAS-Yusof Ishak Institute, Kausikan said that American policy has shifted from “engagement” with China to “strategic competition”.
He said: “Beijing seems to have over-estimated its own capabilities and began to believe its own propaganda about the US being in inevitable decline. Asean should not make the same mistake. The new US approach of robust competition will not end with the Trump Administration.”
In the former senior diplomat’s view, the confrontational approach has seen some effects.
China has made certain gestures, such as introducing a new foreign investment law with better intellectual property protection.
In the interest of transparency, it has released a list of sectors that are off-limits to foreign investment.
Without compromise, conflict will continue
But Bilahari is skeptical as to how much reform the Chinese economy can realistically achieve.
In his view, the reason for this lies in the Chinese Communist political structure.
Chinese businesses connected to the ruling Communist Party naturally receive preferential treatment, which is unacceptable to the US.
Furthermore, Xi’s conciliatory approach is likely to be abandoned if there are no substantive results, at least in the short term.
Therefore, Bilahari foresees that there will no easy end to the stand-off due to the inability of both sides to compromise.
“No Chinese leadership will ever compromise on the dominance of the CCP, and Xi Jinping has placed greater emphasis on CCP control. The probability therefore is that whatever China is willing or able to do to assuage US concerns will fall short of US expectations and that after this pause, US pressures on China will resume,” he said.
Asean will come under pressure
If the US and China are on an inevitable collision course, what should Asean do about it?
Bilahari notes that the US has thus far successfully pressured its allies like South Korea, Canada and Japan to re-examine their trade relationships with both the US and China.
He said: “There is thus no incentive for the US to change tack, and every reason for the US to pressure its partners to follow its approach towards China. Why should Asean be exempted?”
Since no economy can afford to ignore China completely, Asean countries can expect “greater scrutiny” from the US as they continue to engage with China.
Play by US’s rules
If the Asean countries wish to benefit from sensitive trading partnerships, such as high-technology transfers, then they have little choice but to cooperate with the U.S.
Said Bilahari: “This is particularly so with regard to defence technologies, which are crucial to Singapore. There is no viable alternative to American (and more generally, western) defence technology.”
However, Bilahari is confident that Asean will be able to weather these new complexities, but only if it shows the same bold leadership and courage it did during the Cold War era.
Top image adapted from Wikimedia Commons, CRW Flags and photo taken by Goh Wei Choon.