ECONOMIC POWER, POLITICAL CLOUT, AND REGIONAL CHALLENGES

China’s rise over the past few decades – manifested in its economic performance, on-going military modernization, and the extension of its diplomatic influence – has had a crucial impact on its policies with regards to its engagements across different regions. China in a post-Cold War period has also sought a more multipolar world by engaging as well as building various cooperative multilateral institutions and bilateral partnerships with its neighboring countries. In this regard, China’s geographical proximity to Southeast Asia, which in concert with the fact that every Southeast Asian nation has a sizable ethnic Chinese population, aids in deepening China’s influence in the region. 

The widespread perception in Southeast Asia in the post-Cold war and in the aftermath of the 1997 Asian financial crisis was that China’s influence in the region had increased, surpassing that of Japan and traditional partners like the US. These gains can be attributed to Beijing’s skillful economic and political diplomacy based on long-term strategic thinking and systematic execution. It has been widely noted that the 1997 economic crisis was a turning point in relations between China and Southeast Asia, wherein the former came forward with timely assistance that included bilateral loans to help Southeast Asian countries avoid devaluing their currency. Such a policy enabled China to reap tremendous goodwill with ASEAN countries. Since then China’s economic reach in the region has grown enormously to become the biggest trading partner of all ten ASEAN countries with total trade of $ 975.3 billion USD in 2022 and the largest provider of developmental aid to the region, dispersing an annual $5.5 billion USD since 2015. China is emerging as the region’s largest development partner and this is significant because being a development partner represents a higher level of commitment to the region.

China’s more aggressive push in Southeast Asia by joining and initiating massive regional trade pacts and engaging in programs that including infrastructure investments under the Belt and Road Initiative have paid dividends. Beyond the economic inter-linkages exiting between China and Southeast Asia today, Beijing is attempting to also deepen its growing political influence by embedding an indisputable cultural narrative into its regional relationships. However, by enhancing its already enormous economic clout as well as further deepening its political influence in Southeast Asia, China’s immediate neighborhood would become more contested in the context of the emerging geo-political and geo-economic environment. While the US is playing catch up to China’s economic and growing political influence in Southeast Asia, other regional powers such as Japan, Australia, South Korean and India are also stepping up their engagement in the region. Two key factors which will challenge China’s domination in the region:

First, Southeast Asia is the cockpit of a geopolitical rivalry between China and the U.S. and while Beijing considers Southeast Asia to be its backyard and natural sphere of influence, Washington, along with other regional powers, is determined to contest. The sharper focus or re-focus on the region from the U.S., will ensure competition for regional cooperation and partnerships. For instance, IPEF, which is a US-lead initiative was announced at the Quad Summit in Tokyo on May 24, 2022, and has been welcomed by most ASEAN countries, as they see it as a sign of Washington’s renewed economic engagement in the region. While IPEF could be perceived as an economic initiative it has strong strategic undertone that will allow the US to better compete with China in the region.

Second, Beijing is embroiled in multiple, seemingly intractable sovereignty disputes with surrounding countries, mainly over land and maritime boundaries. The ongoing tension in the South China Sea has been ongoing for decades, but it has escalated with China’s illicit activities in disputed territory and its aggressive posturing which makes China appear like an aggressor to most of the countries in Southeast Asia. There are also charges that implicate China in political meddling through its ethnic Chinese communities in the internal politics of states, as well as assertions of Beijing's mistreatment of its Uyghur Muslim minority in Xinjiang that have raised serious concerns in Indonesia and Malaysia.

Southeast Asia today seems to be struggling to manage its relations with China wherein it finds itself in a goldilocks zone – bound by its economic partnership and strong interlinkages while at the same time forced to manage Beijing’s bullying tactics at times, especially in disputed waters. Therefore, Southeast Asia will in the near future have to manage the jostling for power and influence in the region by major regional and extra-regional powers. This would help re-impose as well as strengthen the region’s resolve of its long-standing position of an independent policy based on friend-to-all and enemy-to-none approach.