China’s lead in Southeast Asia appears fragile

Sea change. Xi Jinping is reinforcing friendships as fast as he’s letting ors slide. China’s president visited Vietnam this week and lauded his country’s relationship with its largest tring partner in Souast Asia. Days before, Philippines accused Chinese coast guard and maritime militia vessels of repeatedly firing water cannons at its supply boats and deliberately ramming anor ship. As Beijing presses its sovereignty claims more assertively in South China Sea, its ability to find new markets and open new factories for its companies will become more complicated.

Squabbles between China and Souast Asian countries over contested waters, a conduit for more than $3 trillion of annual ship-borne commerce, are not new. But recent incidents are hard to separate from China’s deteriorating relationship with United States and ir disagreements over Taiwan. Yet People’s Republic is also flirting with deflation, potentially making it necessary rar than nice-to-have for Chinese companies like white-goods champion Midea, electric vehicle battery giant CATL and Huawei to push furr overseas. That will only be possible if re is a welcome mat.

China has struggled to separate its security and investment priorities in U.S., Europe and in India, and it could prove increasingly tricky in Souast Asia too. latest escalation with Philippines follows newish President Ferdinand Marcos Jr’s visit to White House in May, first by a Philippines leer in a dece, just after he granted American troops greater access to its military bases; and it follows his decision not to pursue three China-funded infrastructure projects after promised investments did not materialise. Elsewhere, Xi’s visit this week to Vietnam follows hot on heels of President Joe Biden’s jaunt in September to country that is favoured by global companies seeking to reduce ir supply chain dependence on China.

China still les in obvious ways. Tre volume between Association of Souast Asian Nations (ASEAN) and China reached a new record of $722 billion in 2022, making it bloc’s largest tring partner for 14 consecutive years, while U.S. relationship is worth $520 billion. But if long game is all about influence, outlook for China is fragile. Only 39% of people think ASEAN should pick Middle Kingdom over United States if it were forced to choose a side, an annual survey by Singapore-based think tank ISEAS-Yusof Ishak Institute found, down from 46% in 2020. A majority of respondents from Indonesia preferred China, but as country hes to polls next year, its political leaning also could change. struggle by world’s second-largest economy to thre geopolitical needle is getting tougher, and not just with West.

Context News

China and Vietnam announced 37 deals, including on diplomatic ties, railways and telecommunications, during Chinese President Xi Jinping's first visit to Hanoi in six years, Reuters reported on Dec. 12. Philippines on Dec. 11 accused Chinese coast guard and maritime militia of repeatedly firing water cannons at its resupply boats and “deliberately” ramming one when its vessels were carrying out South China Sea resupply missions over weekend. China's foreign ministry lodged a strong protest with Philippine government over what it said was a collision.

Author: Anshuman Daga