China Is Beating the U.S. in the Battle for Influence in Asia

Originally published in The New York Times.

By Susannah Patton  6 June 2022

 

 

President Biden has said the United States won’t stand by and let China “win the 21st century,” and his first trip to Asia was meant to match words with action.

Mr. Biden huddled last week with leaders of the four-nation “Quad” group formed to counter Beijing, vowed to defend Taiwan against China and introduced a new economic pact involving a dozen nations to shore up U.S. economic influence in the region.

Yet China is already winning throughout much of Asia on both the economic and diplomatic fronts, and nothing the United States is doing seems likely to change that.

The Lowy Institute’s Asia Power Index, which tracks economic data to assess regional power dynamics, shows that U.S. leverage has declined precipitously since as recently as 2018, while China has surged ahead.

Twenty years ago, just 5 percent of exports from Southeast Asia went to China, and 16 percent to the United States. By 2020, they were even at around 15 percent. China’s increasing clout becomes clearer when considering total trade: It does around two and a half times more volume in the region than the United States. China is now the largest trading partner of almost every Asian country.

Investment — driven by a vibrant U.S. private sector — has long been an American advantage in Asia. But that edge is rapidly eroding, too. In 2018, 10-year cumulative flows of investment from China to other countries in the region were half those of the United States. They are now 75 percent of the U.S. total and rising.

Competing robustly in the region is essential for America. The Obama administration recognized this with its proposed Trans-Pacific Partnership (TPP), which would have been the largest trade bloc ever. But President Donald Trump withdrew over concerns that it would erode U.S. competitiveness and ship American jobs overseas.

That was a gift to Beijing. China is already the largest economy in a separate trade grouping called the Regional Comprehensive Economic Partnership and last year applied to join the TPP’s successor agreement, which retains many of the original pact’s core provisions. The United States is out of both.

The Biden administration’s answer, unveiled last week in Tokyo, is its Indo-Pacific Economic Framework. It falls far short.

The plan calls for cooperation on trade, supply chains, infrastructure and fighting corruption. But it does not include better access to the huge U.S. import market, a crucial carrot that normally underpins trade agreements.

U.S. officials counter that the plan is more suited to the 21st century than “past models.” But potential Asian partners have trouble seeing what’s in it for them. A lack of buy-in could undermine the United States’ ability to set the rules on emerging issues like the digital economy, which would give American firms a leg up.

Meanwhile, China has forged ahead. State-owned companies have locked up big projects around the region, often under the umbrella of China’s sprawling Belt and Road Initiative.

China also practices persistent diplomacy. Foreign Minister Wang Yi’s travels in Southeast Asia and the Pacific have far outstripped the pace of his U.S. counterpart, Antony Blinken. Despite the fanfare of Mr. Biden’s recent trip to Asia, it was his first to the region since taking office 16 months ago and included visits only to close allies South Korea and Japan.

China also cultivates powerful elites. In the Philippines, its newly elected president and vice president have both politically benefited from China’s investments in their home constituencies. In Cambodia and the Solomon Islands, China has opened pathways for expanding its military presence far from home. In Indonesia, a strong relationship with the coordinating minister for maritime affairs and investment gives Beijing the access needed to pursue objectives such as deals for Huawei in the country’s 5G network.

The United States does have something China lacks: time-tested alliances with what the Biden administration calls “like-minded” democracies such as its fellow members of the “Quad” grouping — Japan, Australia and India — as well as South Korea. The Quad is meant to demonstrate that the United States and its partners can provide an alternative to China on, for example, vaccines and infrastructure.

But the Quad is yet to have much real impact. An ambitious pledge to deliver one billion vaccines to Indo-Pacific countries by the end of this year has run into manufacturing obstacles in India.

The Quad, in fact, highlights an American weakness: The United States is strong in the democracies fringing the region but weak at the center in Southeast Asia. Over time, a more dominant China could impede U.S. military access to regional bases during crises, pose challenges for American companies doing business and force U.S. diplomats to work harder to make their voices heard.

Unless Washington’s economic statecraft improves, its influence in Asia will continue to ebb. Its uninspiring new regional economic plan aside, the Biden administration should summon the political courage to join the TPP’s successor pact, making clear to U.S. domestic opponents that it would be an important tool in countering China. It also needs to more aggressively engage with smaller but still important non-aligned countries of Southeast Asia and the Pacific that China is steadily winning over.

Competing with China in Asia will not be easy. But it starts with recognizing that right now the United States is losing.