17 February 2020 (closed)
USD/IDR (13,777) +42.00 +0.31%
EUR/IDR (14,865) +32.28 +0.22%
Jakarta Composite Index (5,867.52) +0.58 +0.01%
Now the United States - under the Donald Trump administration - are focused on their "America First" policy, China is able to increase its influence in the Asian region. This was apparent at the 30th Association of Southeast Asian Nations (ASEAN) summit on April 26-29 at the Philippine International Convention Center in Pasay City where regional leaders expressed their support for the denuclearization of North Korea but were reluctant to discuss the tensions around the South China Sea.
ASEAN members called for an international dialogue regarding developments on the Korean Peninsula where tensions have risen due to two nuclear tests (in 2016) and various (ballistic) missile test launches over the past couple of weeks. ASEAN strongly urges North Korea to comply fully with its obligations to maintain cross-border peace and security (referring to the existing United Nations Security Council resolutions).
Over the weekend US President Donald Trump had telephone conversations with various Southeast Asian leaders but also in these cases the topic of conversation was merely North Korea, not China.
Contrary to some people's hopes the telephone calls were not a sign that the Trump administration is continuing Barack Obama's "pivot to Asia". Former US president Obama was eager to shift America's focus from intervening in the Middle East to enhancing (trade) relations with Asian nations (as these nations' economic roles in the world economy are increasingly growing).
Trump has taken a different direction. Shortly after being inaugurated he pulled the United States out of the Trans-Pacific Partnership (TPP), an ambitious free trade deal that was signed in October 2015 (after five years of negotiating) and had created the world's largest free trade area (covering 12 countries and 40 percent of global trade). Trump's move to withdraw the USA from the TPP implies that he distances the USA from its Asian allies and gives China the opportunity to fill in the empty space that is left by America.
In fact, the meeting between Trump and his Chinese counterpart Xi Jinping in April 2017 contributed to the recovering relationship between the world's two largest economies. Trump ditched his trademark anti-China bashing and emphasized he has an "outstanding" relationship with counterpart Xi Jinping. The improving relationship between the USA and China only makes it more appealing for ASEAN nations not to offend China regarding the South China Sea issue.
Meanwhile, tensions in the South China Sea were not on the agenda at the ASEAN summit nor in Trump's telephone conversations. The South China Sea is a lucrative area as it contains ample oil, gas and fishery resources, while also facilitating some USD $5 trillion worth of trade each year (hence being one of the world's key seaborne trade routes). Over the past couple of years China has been gradually expanding in the South China Sea in terms of military operations and fishing activities. This has caused a series of incidents related to territorial disputes in the area between China and several of the 10-nation ASEAN group as well as Japan.
Last year the Hague-based Permanent Court of Arbitration ruled that China has no legal claims on most areas of the South China Sea (after the Philippines successfully filed for arbitration). China, however, does not recognize this ruling. Hence, through its nine-dash line, China continues to claim that over 80 percent of the sea is part of the nation's "historically traditional fishing grounds".
Over the past year, however, we have heard few criticism from ASEAN member nations toward China's policies in the South China Sea. This is probably related to the fact that China is committed to invest heavily in several ASEAN member nations. For example, China pledged USD $15 billion in investment in the Philippines and financing for 15 infrastructure projects, including two railways, a hydroelectric dam and an irrigation system.
Thus, with the USA expected to stay away from the South China Sea issue, while China is ready to invest heavily in the economies of ASEAN member nations, we expect China to remain committed to its nine-dash line and few regional leaders will dare to ventilate criticism.