China stepped up its diplomatic charm offensive in South East Asia this month as U.S. President Barack Obama canceled his visit to the region amid U.S. paralysis over government funding and debt.
In Obama’s absence, China’s leaders offered trade and investment deals to boost the country’s presence across Southeast Asia. Regional enthusiasm for the U.S.-led Trans-Pacific Partnership (TPP) trade agreement – already patchy – was further eroded by Obama’s cancellation and Beijing’s initiatives to push the rival Regional Cooperative Economic Partnership (RCEP), a proposed bloc that does not include the U.S. Some Asian leaders are now wondering whether Washington has the will to work through the difficult negotiations over the TPP, which does not include China.
The U.S. government shutdown forced Obama to abruptly cancel his trip to the annual Asia Pacific Economic Cooperation (APEC) conference in Bali. Planned side trips to Brunei for the first U.S. summit with the Association of South East Asian Nations (ASEAN) and to Malaysia and the Philippines were also canceled.
China’s President Xi Jinping, meanwhile, on Oct. 3 became the first foreign leader to address Indonesia’s democratically elected parliament. It was his first official visit to Indonesia.
Amid growing competition between the world’s two biggest economies for influence in the Asia-Pacific region, Xi and Chinese Premier Li Keqiang had the regional stage to themselves for APEC, the annual ASEAN meeting and the East Asia Summit in Brunei.
Xi used the opportunity to push for major regional benefits for China. To pave the way, he brought a dazzling array of gifts. None was as lucrative, or as welcome, as his offer to potentially put billions of dollars into a new Asian infrastructure bank.
There was plenty more. Xi spent time in Indonesia – ASEAN’s biggest and arguably most important member. He also had Malaysia to himself thanks to Obama’s cancellation. Xi promised to triple Chinese-Malaysian trade within four years and invest over $32 billion in Indonesia.
Malaysia, ASEAN’s No. 3 economy, is among the 12 countries in various stages of talks to join the U.S.-sponsored TPP. Indonesia is not part of the TPP negotiations.
Li also visited Thailand, ASEAN’s second-largest economy, after the East Asia Summit. There he offered to buy some of the country’s soaring rice surplus, provide new military and university scholarships, and set up a trading center for the Chinese yuan. He then stopped in Hanoi in an effort to ease simmering tensions over competing territorial claims in the South China Sea.
China’s leaders used their travels to channel momentum away from the nascent TPP and toward the proposed RCEP. The rival agreement is being negotiated by the 10 ASEAN countries plus China, India, Japan, South Korea, Australia and New Zealand. Indeed, noted one ASEAN diplomat, the mood was distinctly less enthusiastic about the TPP, particularly in Malaysia and South Korea.
“The real problem is not Obama’s no-show in Asia itself but what it says about the state of American governance,” said Peter Drysdale, head of Australian National University’s East Asia Forum. “The goings-on in Washington make the TPP look more and more like a dead cat that no one in Congress will want to pick up anytime soon.”
As Xi basked in the limelight it became clear that China had mapped out its charm campaign with a genuine – and to most observers, unexpected – ring of leadership. Xi and his superstar singer wife Peng Liyuan looked for all the world like the First Couple of Asia, not just of China. Xi’s deft touch has seen him emerge in his first year in power as China’s best political operator since Deng Xiaoping.
While Obama’s absence played neatly into China’s hands, it triggered fresh fears among Southeast Asia’s governments that had broadly welcomed last year’s news of a U.S. “pivot” to Asia as a way of balancing China’s military rise. Some had hoped greater U.S. involvement would help offset Beijing’s economic bullying over issues such as territorial disputes in regional waters and Chinese investment in dam projects on the upper Mekong River.
The push and pull of the U.S.-China regional rivalry also influences the complex processes needed to maintain Southeast Asia’s accelerating rise.
“America has to continue to be engaged in this region because it plays a very important role that no other country can replace – not China, not Japan, not any other power,” Singaporean Prime Minister Lee Hsien Loong said last week, echoing the view of many ASEAN counterparts. “That is something which we continue to encourage at every opportunity.”
Thitinan Pongsudhirak, a professor of international relations at Bangkok’s Chulalongkorn University, noted that China’s new leadership has “reinforced the sense of the U.S. being out-maneuvered.” Yet, he warned, “the U.S.-China rivalry for influence and competing interests in Southeast Asia is nuanced and not zero-sum. It is a mistake to read too much into Mr. Obama’s absence.”
Ultimately, he predicted, “it will be clear that Southeast Asia is not about all China and no America or all America and no China. It is about some of both in a moving balance.”
Xi and his colleagues know there is much more work to do with their neighbors to the south. ASEAN, meanwhile, is concerned that Obama’s pivot to Asia will not materialize in the forceful way it was originally planned – and that the TPP will not fill the gap.
This story was originally published in Nikkei Asian Review, 16 October 2013