China and Taiwan conflict

ASEAN strives to stay neutral as US-China tension rises

The Association of South-East Asian Nations (ASEAN) held its foreign ministers’ meeting (and associated meetings) in the Cambodian capital, Phnom Penh, on August 2nd‑6th. The joint communique reiterated support for regional “community building” initiatives and voiced concern over several geopolitical hot spots. A separate statement was issued on the “cross-Strait development”, following an intensification of tension between China and Taiwan.

Why does it matter?

ASEAN members represent important “swing” votes for China and the US as their competition for influence deepens. The bloc is clearly concerned about the military action taken by China following the visit to Taiwan by a senior US parliamentarian, Nancy Pelosi, but is also confused about the motivation for the trip. The ASEAN statement, which appears intentionally vague, did not mention “Taiwan” and reiterated support for a “one-China policy”, leaving room for this to be defined by individual countries. 

The grouping is highly exposed to more intense geopolitical competition, which it fears will lead to a less efficient global supply chain. China is ASEAN’s largest bilateral partner in goods trade; its total trade value is 54% higher than ASEAN’s trade with the US. In particular, high imports from China suggest close supply-chain linkage. However, the US is a more significant source of foreign direct investment (FDI); it provided US$35bn (26% of total FDI inflows) to ASEAN in 2020, compared with US$11.6bn from China and Hong Kong (8.5% of total inflows).

Besides external challenges, ASEAN is growing more impatient with Myanmar’s junta government. Myanmar’s foreign minister was not invited, after the execution of pro‑democracy activists in late July. The meeting agreed to review progress on the implementation of the five-point consensus signed between ASEAN and Myanmar’s State Administration Council (SAC) government to guide its next action, in an apparent effort to pressure the regime to engage with the political opposition by November. A lack of progress will lead to cooler interaction with the SAC or even condemnation by ASEAN.

What next?

As a bloc, ASEAN will aim to maintain good relations with the US and China. If pressed to choose, we believe that Cambodia, Myanmar and Laos would support China. The rest would probably weigh in with the US. The Philippines and Thailand are already US treaty allies, and Singapore hosts a US naval base. Indonesia, Malaysia, Vietnam and Brunei have maritime territorial disputes with China.

Myanmar will remain the main obstacle to internal unity and cohesion ahead of the annual ASEAN summit due to take place in Cambodia on November 10th‑13th. Shortly after the summit, the Asia-Pacific Economic Co‑operation economic leaders’ meeting and G20 summit will also be hosted in South-east Asia, in Thailand and Indonesia respectively.

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