Growing China:

Despite the Coronavirus pandemic, China enters 2021 as a stronger, more influential power. While countries worldwide are sliding into recession, China has bounced back to moderate economic growth. In November, exports increased by a record-breaking 21 percent year on year, showing that global demand for products ‘made in China’ even increased during the crisis. Increasing normality in everyday life in China post Covid-19 is appearing to encourage state and Communist Party member Xi Jingping to become more assertive. In the diplomatic arena China has started throwing economic punches towards states that have criticised its Hong Kong policy or its approach towards trade with Australia. This will likely continue into 2021 as the nation looks to further expand its influence in the south east Asia region

China’s Aggressive Approach:

The Lowly Institute’s Richard McGregor contends that rather than a self-assured poise, China’s international behaviour in 2021 will continue to veer in the direction of bullying, fuelled by insecurity. This is due to Xi’s view that China is an existential struggle against implacable foreign enemies set on destroying China. Australia will be one of the main states to face this treatment this year – dialogue on the leader and ministerial level have already been refused and more exports will be targeted (following on from coal and wine). Propaganda campaigns have also been deployed such as the controversial tweet by the Chinese foreign ministry displaying a provocative fake image of an Australian soldier, serving in Afghanistan.

ASEAN’s Approach Towards China:

The ASEAN members are likely to suffer more from the economic, strategic and military rivalry which will continue to play out between the United States and China. ASEAN members will carry on welcoming American military presence and dominance in the region to counter China’s growing influence. However, they know that conflict between the two superpowers would be disastrous for them. South East Asian diplomats will thus not openly support the anti-China rhetoric which would likely be continued by the new Joe Biden administration.  

Importantly, China is the geographic neighbour of most ASEAN countries and is too powerful to turn against. It is by far South East Asia’s biggest trading partner and its second biggest investor, after Japan. ASEAN’s future prosperity will consequently be as bound to China as its supply chains are.

The ASEAN members in 2021 will therefore carry on pursuing a hedge, balance and bandwagon approach towards the US and China. Bilihari Kausikan, Singapore’s top former diplomat, argues that ASEAN members have a knack of doing all three and that they would pursue this tactic despite the tough challenges it brings. For instance, in the Philippines, President Duterte will keep wooing Mr Xi over Chinese investment, while simultaneously attempt to improve military ties with the US. ASEAN members will likely do more to protect themselves from China’s aggressive diplomacy, by inviting Japan, South Korea, Australia and India to build greater resilience into supply chains that are currently heavily exposed to China, which would add greater regional security protection. Hedging, balancing and band wagoning rests on one big assumption: that neither America nor China actually intend on decoupling their two economies entirely and thus it comes with big risks (although this complete uncoupling is unlikely to occur).

Carrot and Stick?

There is some evidence that China is beginning to appreciate, in some instances, that its bully boy approach towards other states is counterproductive, and that making greater use of ‘carrots’ rather than ‘sticks’ can be more effective, could have interesting implications for 2021. An example of this new strategy is China’s new vaccine diplomacy in South Asia. Countries in this region, such as Indonesia, have been hit hard by COVID-19. But last week, Jakarta received 1.2 million doses of a vaccine manufactured by a Chinese pharmaceutical company, Sinovac. China is describing this effort as a “Health Silk Road”, with more pledges to provide billions in aid and loans to mostly developing countries to help them recover from the pandemic this year.  

However, China will continue to economically punish Australia, through higher tariffs to remind the greater southeast Asia region of the benefits of staying in Beijing’s good books, as well as costs of crossing it. Australia’s neighbours such as Indonesia and Malaysia have been notably quiet on this, and this will likely endure in 2021.

China will look to further disrupt ASEAN member solidarity by continuing to drive a wedge into the organisation by turning Cambodia and Laos into client states.

Finally, Mr Xi’s claims to speak for all ethnic overseas Chinese populations, including the 30 million South East Asians of Chinese ancestry, may increase the risk of nativist politicians using anti-China feelings to whip up racial hatred in countries with either significant or majority Han Chinese populations, such as Singapore or Malaysia. This could leave several ASEAN members such as these in a serious predicament and undermine their hedge, balance and bandwagon approach towards China and the US.

“The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.”