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Southeast Asia

Beijing’s secret weapon? Trade deals 

Construction work on the China-Laos railway. Taylor Weidman/Bloomberg/Getty Images

China and America are taking very different approaches in the battle for influence in southeast Asia, says Kishore Mahbubani in Foreign Policy. Whereas the US is concentrating on military alliances such as the Aukus pact with Australia, China is “betting on using trade to win over its neighbours”. And its strategy is the right one. Sure, big security deals make for great headlines. But they’re far easier to make and break than trade pacts – Australia scrapped a submarine contract with France in favour of Aukus, while Donald Trump couldn’t break up the North American Free Trade Agreement during his four years in office. “Submarines are stealthy, but trade is stealthier.”

The interdependence of trade tends to generate “peace and prosperity”. In 1971 I attended one of the first meetings of the Association of Southeast Asian Nations (Asean), an economic union that stretches from Indonesia to Myanmar. I could “smell the thick clouds of distrust” in the air. Fifty years later, that distrust has vanished. In 2000 the US traded more than three times as much with Asean as China did. Now China’s trade with the bloc is almost double America’s. Beijing is also building high-speed railways in Indonesia, Laos, Malaysia and Thailand. The US can certainly re-enter “Asia’s great economic game” – private American investment in Asean dwarfs that of China. But if Washington sticks with submarines, “Beijing will win”. 

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