The intensifying geopolitical tensions between China and the West have put ASEAN countries, which cannot decouple from either side, in an unenviable position. To build resilience at a time of great-power rivalries, Southeast Asian countries must strengthen regional cooperation.
JAKARTA – The recent G7 summit in Hiroshima and the subsequent G20 tourism meeting in Kashmir underscored the stark contrast between the two groups’ rhetoric. While the G20 emphasized its “one Earth, one family, one future” motto, the G7’s combative attitude could be summarized as “We must divorce China.”
For the member states of the Association of Southeast Asian Nations (ASEAN), decoupling is not an option. While the region could benefit from production and investment shifting away from China to ASEAN countries, a full economic decoupling between the Chinese economy and the West could also result in trade diversion, higher production costs, and reduced welfare over the long term.
The push to decouple the American and European economies from China currently seems to be limited to sectors such as energy, semiconductors, information and communication technology, mining, and minerals. But decoupling is expected to affect nearly every industry, including machinery, mechanical appliances, electrical components, and automobiles.
JAKARTA – The recent G7 summit in Hiroshima and the subsequent G20 tourism meeting in Kashmir underscored the stark contrast between the two groups’ rhetoric. While the G20 emphasized its “one Earth, one family, one future” motto, the G7’s combative attitude could be summarized as “We must divorce China.”
For the member states of the Association of Southeast Asian Nations (ASEAN), decoupling is not an option. While the region could benefit from production and investment shifting away from China to ASEAN countries, a full economic decoupling between the Chinese economy and the West could also result in trade diversion, higher production costs, and reduced welfare over the long term.
The push to decouple the American and European economies from China currently seems to be limited to sectors such as energy, semiconductors, information and communication technology, mining, and minerals. But decoupling is expected to affect nearly every industry, including machinery, mechanical appliances, electrical components, and automobiles.