South-East Asia Needs to Write a New Rule Book for the U.S. and China

Peter DRYSDALE
Emeritus Professor of economics and Head of the East Asian Bureau of Economic Research and East Asia Forum at the Crawford School of Public Policy, Australian National University

ARMSTRONG, Shiro
Visiting Fellow, RIETI

A region that depends on Chinese capital and Western markets has to take the lead in managing the superpower stand-off.

Australia’s Foreign Minister Penny Wong was on the money in her recent address to the National Press Club when she observed that the key goal of foreign policy was to build a regional order in which ‘no country dominates, and no country is dominated’.

It’s an interest Australia shares with other middle and smaller powers in the Asia-Pacific, as the geopolitical picture most of the region was accustomed to slips out of the frame.

Neither the bifurcation of Asia into geopolitical blocs, nor the wholesale retrenchment of the United States and the emergence of a Chinese sphere of influence, are acceptable outcomes for the region. But without renewed intellectual and political force behind a new vision of Asian regionalism, the winner-takes-all logic of great power competition is emerging as a fundamental geopolitical dynamic in Asia and the Pacific.

Missing from Wong’s address – and indeed, from the regional conversation more broadly – is a concrete strategy that acknowledges the futility of preserving the status quo and avoids the fatalism that would see the emergence of a hierarchical economic and political order emphasising countering or centring on China.

The challenge for regional middle powers is to co-opt China and the United States into writing a new rulebook for the region – one that preserves the prosperity, autonomy and resilience of all as China deepens its status as Asia’s economic centre of gravity and its dominant military power.

Confronting this challenge will require a new strategy and political leadership emerging collectively from the small and middle powers of the region, inevitably centred on South-East Asia.

Policymakers and politicians, such as Singapore’s Prime Minister, Lee Hsien Loong, have made abundantly clear the hunger for a new modus vivendi.

The reassertion of great power rivalry threatens the survival of our open, pluralistic and co-operative regional order. As the political economies of “decoupling” take on a life of their own, developing countries in the region will be denied the crucial economic benefits of participation in value chains that rely on Chinese investment and Western markets – notably in newly “strategic” green technologies.

For these reasons, upgrading and strengthening the existing ASEAN-based regional architecture and establishing new arrangements for emerging areas is essential for regional political stability and economic prosperity.

The region is not short of potential platforms through which this could be achieved, from the as-yet fledgling economic co-operation function embedded within the Regional Comprehensive Economic Partnership (RCEP) to longstanding dialogue mechanisms like the East Asia Summit.These bodies, in their current form, are inadequately empowered and insufficiently comprehensive to anchor a new regional security order.

Whatever institutional arrangement ultimately becomes the vehicle for writing a new regional rule book, the concept of regional security that underpins that effort needs to be a comprehensive one, in which economic, military and human security are seen as mutually reinforcing – not counterposed – goals. The logic of security needs to be a collective or positive-sum one, in which one country’s sense of security is seen to enhance that of others.

While they need not solve all Asia’s problems, more credible regional cooperation institutions will act as a diplomatic force multiplier. They will put new political momentum behind not only the intra-regional economic integration agenda, but also the preservation and reform of the global rules-based order.

With ASEAN immured at the centre of geopolitical tensions, its leadership and true centrality will ultimately define the forward trajectory of the region and its claims to agency in the international order. Simple lip service commitments to ASEAN centrality from its dialogue partners are no longer sufficient. Australia should consider whether it is content to rely entirely on being beholden to the dominant great power of the day, or whether it should embrace the possibilities of its immediate region.

The crisis of relevance that faces ASEAN is familiar to most South-East Asians – but there is now a gathering political will to do something about it. That will has been nurtured by Indonesia’s success in hosting the G20 summit last year, at a time when under any other presidency the premier global forum would have faltered.

Indonesia, as ASEAN chair this year, is ambitious to effect a major refocus on regional diplomacy that emphasises development and co-operation, set out new principles for ASEAN engagement globally, and lead the agenda with ASEAN as a central force in the international economy.

As the political momentum for action grows, Canberra needs to be ready to back in its regional partners and latch onto the opportunity to make an invigorated ASEAN the keystone of an open and pluralistic regional order.

In Canberra last week, Singapore’s Foreign Minister Vivian Balakrishnan reflected the widespread view in the region that South-East Asia does not want “to be captured and to be caught in the extremes or to be forced to make binary choices”. Instead, Balakrishnan says that ASEAN centrality means accepting “the great diversity within ASEAN” and standing firm anew for the organisation’s inclusive and multilateral principles.

A stabilisation in US-China relations would allow the breathing room for that collective agency to be exercised and encourage both great powers to engage with it in good faith.

South-East Asia has called for stabilisation and rejected the need for binary choices for years, but its voice must now resonate across and outside the region.

May 8, 2023 Financial Review

October 25, 2023

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