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[Analytics] ASEAN fights to stay neutral in the US–China contest

A man wears a t-shirt with the wording ‘America’ as he looks at surveillance cameras displayed at Huawei's booth at the security exhibition in Shanghai, China, 24 May 2019 (Photo: Reuters/Aly Song). Sketched by the Pan Pacific Agency.

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

Rising US–China tensions go beyond trade and involve a broad range of issues including strategy, security and values. It’s pertinent to also look at the choices that ASEAN and others are facing in the context of this great power contest, including decisions on economic development and technology. Simon Tay, Jessica Wau specially for the East Asia Forum.

Given the advanced technology it offers and its relatively low cost, the Shenzhen-based company Huawei is a competitive option for any country looking to adopt 5G technology. Yet the US government has accused the company of violating US laws and of being a ‘persistent national security and foreign policy threat’. These accusations manifested in December 2018 with the arrest of Huawei’s Chief Financial Officer, Meng Wanzhou.

When the US Commerce Department forbade US firms from selling equipment to Huawei — already the world’s second-largest smartphone maker — the industry’s entire supply chain was rattled. Now there is US pressure to convince other governments to ban Huawei from telecom infrastructure.

In economic terms, the question for developing countries is how to obtain the newest and best quality 5G technology at the most competitive price. 5G not only enables faster mobile telephony but can also transform many sectors of the economy.

But some read the US decision on Huawei as a microcosm of broader political choices and alignments. In China, some now buy Huawei products to display patriotism. In contrast, a clear decision to exclude Huawei has been made by a number of US allies — including Australia and New Zealand — which now face China’s displeasure.

A few countries in ASEAN have opened their doors to Huawei. The Cambodian government inked a memorandum of understanding in April for Huawei to develop its 5G network. Major telecommunications companies in the Philippines also tapped into Huawei’s services, while Malaysian Prime Minister Mahathir Mohamad quipped that his country would use Huawei’s technology ‘as much as possible’.

But this should not necessarily be read as siding with China. There are sound reasons to allow Huawei in for cost and quality. The Indonesian government, for example, plans to decide on its 5G spectrum by means of an auction in 2022. This presents the choice as purely a business decision.

In contrast, Vietnam has openly decided against Huawei. At one level this might seem like another example of strained politics between Hanoi and Beijing, but there are also national industrial policy reasons and business interests involved. Vietnam’s largest mobile carrier, Viettel Group, fosters ambitions to develop its own 5G network equipment and is already active in Myanmar’s telecommunications market.

US–China tensions put pressure on broader choices in technology, infrastructure and standards. Various blacklists and differentiated tariffs can lead to multiple confusing systems of trade. Decoupling from economic interdependence would increase inefficiencies and add time, cost and uncertainty for cross-border business.

But concerns about decoupling go beyond business. At a strategic level, ASEAN must respond to the US ‘Indo-Pacific’ concept and China’s Belt and Road Initiative (BRI).

The US Indo-Pacific push emphasises strategic and potentially military cooperation amid concerns that it is anti-China. Against this, ASEAN presented its own ‘ASEAN Outlook on the Indo-Pacific’, a consensus achieved during the 34th ASEAN Summit in June 2019. It offers a common script for each ASEAN member state to remain relevant, neutral and united.

China’s BRI has brought a welcome focus on infrastructure and connectivity, but there has been a chorus of criticism over the terms of some deals. One concern raised is that ‘debt traps’ are being created and that a host country might default and cede major assets to Beijing. That has not prevented most ASEAN member states from trying to work with institutions like the Asian Infrastructure Investment Bank and China’s SOEs. Infrastructure is essential for many countries and can multiply the value of diverse economic sectors.

Rather than judging these decisions chiefly in terms of siding with China or with the United States, it is more important to see these choices in terms of overall economic development.

ASEAN should not choose between one or the other but continue to engage both. In the short term, governments swaying between the United States and China should make choices on a case-by-case basis. This means taking a stance on an issue, not a country. Engaging both the United States and China is still the preferred policy for ASEAN.

Yet, increasing US–China tensions are putting new pressure on that policy. The emerging reality is that each stance will likely influence the next. In technology, interoperability will have to be a long-term consideration. Parameters such as building up infrastructure, advancing technology networks and protecting citizens seem neutral but may not lead to an effective balancing act.

Some say it is necessary for ASEAN to speak with one voice on divisive issues, but the more realistic option would be for ASEAN member states to have more dialogue with each other as they frame decisions.

Sometimes the biggest changes do not occur in a single bold decision, but arise from a series of smaller ones. Each of those smaller decisions might be taken on its own merits but cumulatively add up to a strategic shift. It is too soon to conclude whether a country is siding with China or the United States. But it is immediately necessary for governments in the region to think through stances taken on different policy decisions, monitor how the choices add up and work collectively to increase the space between the two competitors.

Simon Tay is Chairman of the Singapore Institute of International Affairs. Jessica Wau is Assistant Director (ASEAN) at the Singapore Institute of International Affairs. This article appears in the most recent edition of East Asia Forum Quarterly, ‘Economics and security’, Vol. 11 No. 4.

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