Regional Bodies Admonished to Contemplate Consequences of Allying with U.S. in Trade Dispute Against China
Navigating the Tumult: ASEAN's Economic Challenges Amid the US-China Trade War
Zheng Yongnian, dean of the school of public policy at Chinese University of Hong Kong, Shenzhen, emphasized that supporting ASEAN's re-industrialization wasn't the United States' main aim. His remarks came during the 3rd China-ASEAN Economic Relations Seminar, hosted by the university's Institute for International Affairs.
Be Wary of Economic and Trade Relations with China"ASEAN member states could face significant hurdles if their economic and trade ties with China aren't managed properly," Zheng warned the South China Morning Post. He highlighted that some ASEAN countries could encounter industrial stagnation and isolation if they align more with the U.S. in the trade war, with minimal assistance from the U.S. in their efforts to industrialize.
Geopolitical Rivalry and Secondary SanctionsThe escalating competition between the U.S. and China poses a risk of dragging ASEAN into conflicts, particularly due to U.S. proposals for secondary sanctions and stricter regulations targeting Chinese-linked supply chains. Such measures could disrupt ASEAN's export-oriented industries, particularly in manufacturing hubs that rely on Chinese inputs but export to the U.S.
Economic Asymmetry and Negotiation BalanceChina's projected 2024 GDP of $18 trillion towers over ASEAN's $3.8 trillion (2023), creating an imbalance in negotiations over trade terms and investment conditions. This imbalance raises concerns about the equitable distribution of benefits, especially in sectors like digital infrastructure and green technology, where China holds significant leverage.
Supply Chain Disruptions from US TariffsASEAN's role as a "China+1" manufacturing hub faces threats from proposed U.S. tariffs exceeding 30%. These tariffs could jeopardize recent foreign direct investment (FDI) growth driven by Chinese firms relocating production. ASEAN states aim to negotiate separately with the U.S., but this fragmented approach risks weakening their collective bargaining power against tariff pressures.
Overreliance on Chinese Investment and Debt RisksChina's cautious funding approach for Belt and Road projects, as seen in Cambodia, indicates tighter financial scrutiny amid domestic economic challenges. This could limit capital for critical infrastructure and increase debt sustainability concerns for ASEAN partners.
South China Sea Tensions and Strategic DistrustWhile economic collaboration expands, unresolved maritime disputes with China—particularly regarding energy resources and fisheries—continue to erode strategic trust. The delayed Code of Conduct (now projected for 2026) exemplifies ongoing friction.
Digital Economy VulnerabilitiesDespite a 20% surge in ASEAN-China digital commerce, cybersecurity gaps and regulatory fragmentation persist. ASEAN's heavy reliance on Chinese AI and 5G infrastructure exposes them to potential technological dependencies and governance conflicts.
Key Risks Summary| Challenge | Impact | Source ||-----------|--------|--------|| US secondary sanctions | Supply chain disruptions | [2][3] || Trade deficit management | Pressure to limit Chinese inputs in exports | [3][5] || FDI volatility | Chinese firms’ rapid recalibration of ASEAN investments | [3][4] || Debt sustainability | Reduced BRI funding amid Chinese financial caution | [4] |
ASEAN's capacity to maintain neutrality while addressing these competing pressures will test its economic resilience through 2025 and beyond.
- In the face of the U.S.-China trade war, Zheng Yongnian, the dean of the school of public policy at Chinese University of Hong Kong, Shenzhen, has warned that ASEAN member states could face significant challenges if their economic and trade relations with China aren't managed properly.
- The escalating competition between the U.S. and China poses a risk of dragging ASEAN into conflicts, particularly due to U.S. proposals for secondary sanctions and stricter regulations targeting Chinese-linked supply chains.
- China's projected 2024 GDP of $18 trillion towers over ASEAN's $3.8 trillion (2023), creating an imbalance in negotiations over trade terms and investment conditions that raises concerns about the equitable distribution of benefits.
- Proposed U.S. tariffs exceeding 30% could jeopardize recent foreign direct investment growth driven by Chinese firms relocating production and disrupt ASEAN's role as a "China+1" manufacturing hub.
- ASEAN's heavy reliance on Chinese AI and 5G infrastructure exposes them to potential technological dependencies and governance conflicts, particularly in the digital economy, despite a 20% surge in ASEAN-China digital commerce.
