Somewhere Beyond the (South China) Sea: Navigating U.S.-China Competition in Southeast Asia

Coauthored with Daniel Chardell, research associate in the International Institutions and Global Governance program at the Council on Foreign Relations.

As the international tribunal at The Hague prepares to issue its much-anticipated ruling on the legality of China’s claims to nearly the entire South China Sea, Beijing and Washington have already begun lobbing rhetorical shots across the bow. “We do not make trouble but we have no fear of trouble,” warned a senior People’s Liberation Army official at the Shangri-La Dialogue earlier this month, in reference to U.S. freedom of navigation operations (FONOPS). U.S. Secretary of Defense Ash Carter, for his part, cautioned China against “erecting a great wall of self-isolation” as it continues to construct, expand, and militarize artificial islands in the disputed waters over the objections of its Southeast Asian neighbors.

Clashes in the South China Sea have captured the world’s attention for good reason. Whether through miscommunication, accidental escalation, or outright provocation, these disputes could spark a devastating regional conflict.

Yet U.S.-China regional competition extends well beyond the South China Sea, permeating everything from trade and investment to the politics of the Association of Southeast Asian Nations (ASEAN), the region’s premier intergovernmental organization. To acquire a more nuanced understanding of Southeast Asian views of U.S.-China regional competition, the International Institutions and Global Governance program at the Council on Foreign Relations joined with the Australia-based Lowy Institute for International Policy in convening a workshop in Singapore. Here are four major takeaways.

1. Disputes in the South China Sea present a quandary for Southeast Asian countries, as they seek to shape Chinese behavior while maintaining ASEAN solidarity and centrality.

ASEAN has long been predicated on cohesion and solidarity among its ten member states. The grouping operates by consensus and advances the principle of “centrality,” according to which ASEAN, not external powers, should play the primary convening role in regional diplomacy. For decades, these principles have enabled ASEAN members to preserve their autonomy while reaping the benefits of relations with great powers.

South China Sea disputes have exposed rifts within ASEAN, threatening to upset this delicate balance. ASEAN’s failure to adopt a robust, unified position against China’s aggressive behavior has infuriated the Philippines and Vietnam, the most vocal of the group’s five claimants to the disputed waters. Meanwhile, China’s large-scale reclamation in the Spratly Islands and fishing activities in the maritime jurisdiction of Malaysia and Indonesia have made it increasingly difficult for Kuala Lumpur and Jakarta to ignore Chinese assertiveness. And yet Cambodia and Laos continue to lean toward China, precluding the adoption of a tougher collective stance. Singapore, which has long sought to play a bridging role among China, Southeast Asian claimants, and the United States, remains reluctant to assume an overly critical stance vis-à-vis Beijing.

Divisions within ASEAN have only invited further incursions by China in the South China Sea—and countermoves by the United States—threatening ASEAN centrality. Concerned that leaving Chinese claims unchallenged will set a troubling precedent, Washington has undertaken several FONOPS and doubled down on its security commitments to the Philippines, which filed the case against China in Permanent Court of Arbitration at The Hague in 2013. If the arbitral tribunal rules that China’s so-called “nine-dash line” has no basis in international law, Beijing could react defiantly, accelerating its land reclamation and declaring an air defense identification zone over the South China Sea (as it did over the East China Sea in 2013). Such moves could increase the likelihood of a clash between China and the Philippines, raising the specter of a broader regional conflagration involving the United States.

2. The reputational cost of not approving the Trans-Pacific Partnership (TPP) would be extremely high for the United States, since many Southeast Asian policymakers regard the trade deal as a symbol of U.S. commitment to the region.

A pillar of the U.S. rebalance to Asia is the Trans-Pacific Partnership, an ambitious free-trade agreement encompassing twelve major economies along the Pacific Rim, including ASEAN members Brunei, Malaysia, Singapore, and Vietnam. Although the ultimate economic benefits of the agreement for Southeast Asia are uncertain, the TPP has become symbolic of Washington’s commitment to the region. Given how much political capital Southeast Asian participants have invested in the agreement’s success, its rejection by Congress will carry high reputational costs to the United States, reinforcing the widespread perception that its commitment to Southeast Asia is waning.

Beijing is well-positioned economically to profit from this scenario. Beyond championing the Regional Comprehensive Economic Partnership—a trade agreement encompassing all ten ASEAN members plus Australia, China, India, Japan, New Zealand, and South Korea—Chinese President Xi Jinping has personally spearheaded the One Belt, One Road initiative, which aims to channel hundreds of billions of dollars into infrastructure projects spanning Eurasia. President Xi has also overseen the launch of the Asian Infrastructure Investment Bank, a new regional development bank that many regard as a rival to the U.S.-dominated World Bank and the Japan-dominated Asian Development Bank.

3. Southeast Asian borders are porous, and Southeast Asian states’ capacity to police the illicit flow of goods and people—including terrorists—across them presents governance and security challenges. Assistance from Washington and Beijing could help close these gaps.

Many of Southeast Asia’s security challenges are transnational, thanks to the region’s intricate network of land and maritime borders. A number of governments struggle to manage the cross-border flow of terrorists, migrants, illicit goods, and victims of human trafficking. The regional terrorist threat has grown acute recently due to the advent of the self-declared Islamic State, its sophisticated propaganda, and its aggressive use of social media for recruitment. Hundreds of fighters from Indonesia, Malaysia, Singapore, and other Southeast Asian nations have traveled to the Middle East to join the Islamic State and other jihadist groups. The January 2016 terrorist attacks in Jakarta, though modest in scope, evince the desire of Islamic State affiliates to launch attacks in the region itself.

There is an obvious opportunity for ASEAN, the United States, and China to cooperate on counterterrorism, since the Islamic State and its ilk provides them with a common enemy. When providing capacity-building assistance, however, the United States and China must not unwittingly exacerbate weak local governance. Worse still, the threat of Islamic State terrorism has already compelled some Southeast Asian governments to further entrench draconian counterterrorism laws, which are counterproductive for human rights and governance.

4. Rather than choose between the United States and China, ASEAN members should wield their collective influence to constrain the U.S.-China rivalry through regional rules and institutions, and to channel competition toward productive ends.

ASEAN should not only maintain its “strategic autonomy” amid U.S.-China competition, but also leverage its centrality in efforts to steer Washington and Beijing away from confrontation. To realize these objectives, ASEAN needs bold ideas and reinvigorated leadership. ASEAN might start by rethinking its commitment to “egalitarian multilateralism”—the notion that all members are on equal footing—since the absence of decisive leadership within the group will only invite China or the United States to fill the power vacuum. In practice as opposed to rhetoric, ASEAN has always been hierarchical, as might be expected given the yawning economic gap between its most developed (Singapore and Brunei) and least developed (Laos and Myanmar) members.

For ASEAN, the imminent ruling of the arbitral tribunal is a double-edged sword. It could offer an opportunity for the group to demonstrate unity in the face of great power competition. Or, if its members fail to adopt a common position on the court’s ruling, its fissures could deepen. How ASEAN responds to the ruling, and whether it proves capable of navigating a potentially defiant Chinese response, could determine the course of regional peace and security for years to come.

To learn more, read the full report: “Southeast Asian Perspectives on U.S.-China Competition”