Headwinds and tailwinds

MA XUEJING/CHINA DAILY

China and ASEAN must navigate the challenges to their relations while seizing the opportunities of the partnership

Relations between China and the Association of Southeast Asian Nations are viewed as one of the most successful models of multilateral cooperation and regional economic integration across the Asia-Pacific region, if not the world.

To Beijing, the bilateral relations showcase its neighborhood diplomacy rooted in the spirit of amity, sincerity, symbiosis and inclusiveness. From the perspective of the 10-member bloc, China has not only been its largest trading partner since 2009, but also the trailblazer in promoting regional connectivity, alongside addressing the development finance gap through the mammoth Belt and Road Initiative.

Indeed, the bloc has the most number of mechanisms of cooperation with China, accounting for almost 20 percent of the total collaborative frameworks that ASEAN has with its 11 official dialogue partners. In short, the multi-dimensionality of their relations marks the China-ASEAN comprehensive strategic partnership.

In contrast, the recent tariff threats of Donald Trump against all economies that have a trade surplus with the United States are casting a long shadow on the ASEAN-US comprehensive strategic partnership.

Under the previous Joe Biden administration, the US had its trade-in-goods deficit with the bloc continuously on the rise — growing from $199.9 billion in 2022 to $204.1 billion in 2023, and subsequently soaring to $227.7 billion in 2024. This will likely give the Trump administration a good excuse to weaponize tariffs against ASEAN, given that the US is the largest source of cumulative foreign direct investment in ASEAN, with its total stock reaching nearly $480 billion in 2023 — almost double the combined US investments in China, Japan and the Republic of Korea. In early 2024, the US surpassed China to become the largest export market for ASEAN products, with 15 percent of ASEAN's exports destined for the US.

In addition, leading economies in the bloc, such as Indonesia, Thailand, Malaysia and Vietnam, which embrace "BRICS Plus", either as a full-fledged member or a partner nation, may risk being hit with a 100 percent tariff threat if they insist on pursuing local currency trade payment settlements — a move to ditch the greenback that is set to court retaliation from the Trump administration. It won't come as a surprise if ASEAN were therefore to be cowed into accepting certain trade-offs at the expense of its relations with China.

ASEAN, currently the fourth-largest trading partner of the US, is known to be the world's fastest growing trade area with a sizeable GDP of $3.6 trillion, alongside being viewed as a linchpin in the US "Indo-Pacific" strategy.

Amid the prevailing hype on sustainable economic development, the region's thriving digital economy is projected to have a vast potential of $1 trillion by 2030.Both the US and China, being comprehensive strategic partners of ASEAN, are set to scramble for the coveted turf to harness the huge market potential.

As the region is on the threshold of embarking on sustainable development, the China-initiated Global Development Initiative makes a perfect vehicle to foster a new dimension of ASEAN-China cooperation in sustainable development. This goes far beyond mere trade as intended in the Free Trade Agreement.

As this aligns with the United Nations 2030 Agenda for Sustainable Development, projects implemented under the Global Development Initiative framework are presumably more receptive to the host countries which might be caught in the entanglement of Sino-US geopolitical competition.

In this respect, noting that climate governance is taking a back seat on Trump's agenda, sustainable development will thus provide China with a window of opportunity to advance its Global Development Initiative in the Global South, notably in Southeast Asia.

Although ASEAN's development priorities have never been homogeneous, the region's quest for external assistance in mitigating common challenges such as poverty, climate change, food insecurity, cross-border crime and development finance remains real and increasingly pronounced. Individual ASEAN member states such as Indonesia, Thailand, Malaysia and Vietnam took the liberty to embrace "BRICS Plus" mainly to leverage the vast collective resources of the Global South, of which China is the key driving force.

In this context, China is not short of tools to facilitate the mitigation of insecurities confronting the region. It's time for China to prove the worth and relevance of the Global Security Initiative in addressing the non-conventional security concerns of its largest trading partner.

Given that these concerns may vary across the bloc, China should endeavor to do so in the form of minilaterals under the broad framework of the China-ASEAN cooperation mechanism, and not necessarily adherent to full participation of all member states at one go.

Of the various collaborative frameworks between the Southeast Asian bloc and the second-largest economy in the world, the ASEAN-China Free Trade Area remains the institutional cornerstone of their economic and trade relations. The substantial conclusion of the ASEAN-China FTA version 3.0 late last year witnessed the progression of the FTA upgrade with the inclusion of consumer protection and competition provisions, alongside significance attached to new drivers for sustainable economic growth in electronic commerce and green technology.

As the bilateral trade figures are all set to breach the $1-trillion mark, there has been a growing positive trend of promoting Track 2 diplomacy which encourages people-to-people engagement. China is flexing its tourism muscles astutely. Not only does it serve as a tool of soft power in its neighborhood diplomacy outreach, but more conspicuously it helps catalyze the post-COVID-19 economic recovery within the region.

While China-ASEAN relations are heading for a promising prospect with more non-economic pillars coming into play, existing unresolved issues cannot be taken for granted. The long-outstanding issue of overlapping territorial claims in the South China Sea shouldn't be left as an elephant in the room.

While China and ASEAN are expediting the negotiations on the Code of Conduct for the South China Sea, perhaps it's equally crucial for China to reach out to the respective claimant states for bilateral engagement on the disputes. After all, not all ASEAN member states are involved and the complexities of disputes vary from case to case.

All in all, it's in the long term interest of China-ASEAN relations to have the disputes resolved as soon as possible. The inconclusiveness of the territorial disputes impedes the constructive building of mutual trust, leaving rifts for external forces to drive wedges in.

The author is president of the Belt and Road Initiative Caucus for Asia Pacific. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.