On May 23, President Biden declared the official start of the Indo-Pacific Economic Framework in Japan, ushering in a new phase in the Asia-Pacific conflict between the United States and China. China’s policy has taken on two distinct aspects since the Biden administration took office.
One example is Trump’s gradual shift from a full-fledged trade war with China to “precise decoupling” in crucial areas such as high technology. The economic conflict between China and the United States appears to be escalating. The temperature has dropped, but the trend of decoupling continues to increase; the second is to actively court European and Asia-Pacific friends and partners, and strive to construct a global supply chain, industrial chain, and value chain system that excludes China by enacting new international norms.
In the Atlantic, the United States and Europe announced the formation of the United States-EU Trade and Technology Committee (TTC) on June 25, 2021; in the Asia-Pacific, the Biden administration can abandon efforts to contain China by returning to the TPP (later renamed the CPTPP) and instead seek an alternative that requires only an executive order to take effect.
In this regard, President Biden initially floated the concept of establishing an Indo-Pacific Economic Framework (IPEF) during the East Asia Annual Summit in October 2021, and then disclosed further specifics in February 2022 until his visit to Japan in May to make the formal announcement. Begin the initiative. The establishment of the Biden administration’s Indo-Pacific economic framework is not only a legacy of Obama’s return to the Asia-Pacific strategic heritage, but also the first step toward establishing a global geoeconomic framework to constrain China.
Regarding the potential impact of IPEF on the economy and cooperation in the Asia-Pacific region, I believe it may be sensibly regarded from two perspectives. First, while IPEF’s negative impact should not be understated, its dividing effect on the Asia-Pacific region should not be overstated. On the day of the IPEF’s launch, Biden announced that seven ASEAN countries will join as founding members at the same time, which may exceed the expectations of many scholars and politicians, some of whom believe that ASEAN is shifting the traditional strategy of great power balance in favor of the US.
As a result, IPEF will hasten the fragmentation of the Asia-Pacific area. This point of view has merit, and it implies, to some extent, that ASEAN is willing to support the US’s efforts to create new international rules and so-called safer and more resilient global supply chains against China, thereby strengthening its relationship with the US. economic linkages and cooperation, and seize the opportunities that the decoupling of the US and Chinese value chains may bring to itself.
However, it would be premature to claim that ASEAN has entirely shifted in favor of the US. In reality, ASEAN’s option is still a classic great power balance approach. Since the beginning of the Asia-Pacific regional cooperation process in 1997, following the East Asian financial crisis, ASEAN has made full use of its geoeconomic and political strategic position, historically assuming the “centrality” of regional cooperation under the international pattern of competition between China, the United States, and Japan,” and becoming the “driver” to promote the final establishment of regional economic groups such as RCEP.
ASEAN is able to pursue a policy of great power balance in international and regional affairs because of its unique status and character. The seven ASEAN nations elected to join the IPEF, which appears to benefit the US, but it is more likely that the rapid nature of the construction of the Indo-Pacific economic framework, the ambiguity of the substance, and the optionality of the negotiating agenda have given countries a lot of leeway.
If it is totally devoted to the United States, ASEAN would lose its “central position” in regional cooperation and regional issues, as well as its current international stature. ASEAN countries will most likely have a firm grasp on this.
Second, the eventual impact of the IPEF on the Asia-Pacific economy and cooperation is dependent on China’s realistic policy decisions rather than the United States’ strategic plan, which is full of political calculations. The IPEF has established four pillars of trade, supply chain, clean energy infrastructure, and taxes and anti-corruption, but its essence is merely a “lack of a market” fundamental hollow endeavor, and the US market opening pledge is precisely what ASEAN nations are most concerned about.
As a result, unless the Biden administration addresses domestic anti-globalization sentiment and economic concerns, and then merges IPEF with existing free trade accords (such as the CPTPP led by Japan), it will be difficult for the US to create long-term collaboration with ASEAN nations. excitement. However, given the present political ecosystem in the United States, this is nearly impossible.
On the contrary, after decades of economic and trade cooperation and value chain integration, China, ASEAN, and other Asia-Pacific countries have formed a regional production and division of labor network with the world’s most complete industrial structure, most complex supply chain, and deepest interdependence. In comparison to the United States and Japan, China’s relevance to the ASEAN economy has steadily increased.
China surpassed Japan to become ASEAN’s top commercial partner in 2009. In that year, the three nations contributed for 11.6 percent, 9.7 percent, and 10.5 percent of ASEAN’s total import and export trade. Since then, the distance between China, the United States, and Japan has significantly expanded.
The entire trade volume between China and ASEAN will reach US$518.1 billion in 2020, significantly above the US$204.6 billion and US$308.9 billion between the US and ASEAN. As a result of this modification, the aforesaid proportions are now 19.4 percent, 7.7 percent, and 11.6 percent, respectively. The ever-expanding trade scale inevitably reflects into China’s enormous influence over ASEAN.
According to the Institute of Southeast Asian Studies (ISEAS) in Singapore’s 2019-2022 State of Southeast Asia Survey, China has significantly greater influence in the area than the United States, both economically and politically. In the four surveys, for example, more than 70% of respondents believe China has the greatest economic influence, while less than 10% agree with the United States; more than 45 percent believe China has the greatest political and strategic influence, while only about 30% agree with the United States.
As a conclusion, in the face of IPEF competition from the United States, China may relax. China should have confidence in stabilizing cooperation with ASEAN as long as China continues to adhere to the policy of opening up to bring greater dividends to ASEAN, adhere to ASEAN’s “centrality” in regional cooperation in the Asia-Pacific region, and firmly implement the principle of peaceful coexistence and joint building of a community of shared destiny with ASEAN countries.
As the two most dynamic countries in the Asia-Pacific area, the dynamic Asia-Pacific supply chain and value chain will not break, and the process of economic cooperation in the Asia-Pacific region will not stagnate, as long as the industrial ties between China and ASEAN are not severed.
