The United States’ move away from support for a global free market system to one where it takes a more protectionist economic policy approach has major economic implications for export-oriented Asian economies, especially China. Beijing has been engaged in a trade war with Washington since 2018, driven by U.S. complaints about China’s allegedly unfair trading practices. Washington’s fears about Beijing’s growing economic, technological and military capabilities and ambitions have also led it to increase trade restrictions on China in the name of national security and protecting human rights.
Under the current Trump administration however, Washington has also targeted countries that run a trade surplus with the U.S. with tariffs and other trade restrictions. This has provided China with an opportunity to present itself to states impacted by U.S. tariffs as a defender of the post-Cold War era of globalization and free markets, and a more reliable trading partner than the United States. While still wary of Chinese foreign policy ambitions, some Asian states are exploring the possibility of tightening their economic links to Beijing as a result.
Malaysia’s Trilateral Trade Summit
One result of this geopolitical shift in global affairs has been Asian states’ announcement of the first ever trilateral meeting between the Association of Southeast Asian Nations (ASEAN), the Gulf Cooperation Council (GCC), and China. The host Malaysia has pitched itself as a bridge between the Islamic GCC countries, China, and its regional Southeast Asian neighbors. Malaysian Prime Minister Anwar Ibrahim is hoping for a trade alliance between export-oriented ASEAN member states, GCC members looking to diversify their economies and make lucrative overseas investments, and Beijing.
China is also looking to deepen its trade links overseas as it seeks to revive a sluggish economy still reeling from internal problems. These include indebted local governments targeting firms using profit-driven law enforcement and a chronic slump in the important real estate sector. The potential that a trilateral trade alliance could protect their economies against U.S. tariffs is another incentive for the governments meeting at the summit from May 26 to 28 to hammer out some kind of agreement in Kuala Lumpur. Beijing also sees the chance for a valuable diplomatic and propaganda victory over Washington, even if nothing substantial is agreed upon at the summit itself.
ASEAN Is Wary as China Doubles Down at Sea
China’s Xi Jinping will not attend the upcoming summit in Malaysia, but Beijing is sending Chinese Premier Li Qiang to signal it is taking the event seriously. Li’s trip will dovetail neatly with Chinese efforts to improve commercial and technological ties with GCC countries. However, he will likely face greater obstacles in persuading ASEAN countries to rely too heavily upon Chinese companies and technology in their infrastructure or economies.
Partially this is due to the region’s traditional efforts to remain on good terms with all rival great powers operating in Southeast Asia. Malaysia’s Anwar has previously told press that the bloc is not “choosing sides” at the summit. Meanwhile, the attendance of the GCC states gives ASEAN countries an alternative to China when it comes to seeking investment and trade agreements.
However, China’s efforts to forge new trade ties and perhaps use the summit as a platform to criticize U.S. tariffs faces a self-inflicted obstacle as well. On May 12, China’s government published a new white paper called “China’s National Security in the New Era.” The paper updated Chinese national security goals from an earlier 2019 paper, prior to the intensification of China’s struggle with the U.S. and the stagnation of its economy. The new document is more in line with Chinese President Xi Jinping’s “Comprehensive National Security” approach, which aims at keeping China safe from external and internal security threats.
Safeguarding China’s rights and interests in maritime regions, including Taiwan and the South China Sea, featured prominently in the white paper. The document moves away from a security-led narrative focused on stability toward a more dynamic one about exercising Chinese rights at sea. Per Mengzhen Liu of China’s Huayang Center for Maritime Cooperation and Ocean Governance, the paper shows that China is increasingly seeking to portray itself as engaging in the lawful exercise of longstanding claims in disputed maritime regions, backed by international law and historical agreements.
This new approach to its maritime territorial disputes echoes Beijing’s current efforts to manage global narratives around its trade war with the United States. Those portray China as a defender of the previous post-Cold War era of economic globalization; one that the U.S. is now allegedly disrupting to maintain its own global leadership and keep developing or emerging economies like China down.
Maritime Disputes Divide ASEAN
China’s efforts to manage global perceptions regarding its claims in the South China Sea are unlikely to convince Southeast Asian nationalists. However, not all ASEAN states involved in maritime disputes with Beijing are keen to take a confrontational approach toward China, despite disputing its legal claims. Prior to his arrival in Kuala Lumpur, Li Qiang will visit Indonesia from May 24-26 at the invitation of its president, Prabowo Subianto. Prabowo’s government has taken a contradictory and ambiguous approach to Indonesia’s South China Sea policy, signing a treaty with Vietnam to delineate their exclusive economic zones (EEZs) but avoiding any public confrontation with China about its overlapping claims with Indonesia’s EEZ. Prabowo has called for Chinese investment in Indonesia, and his invitation to Li indicates his government is keen to secure more.
Nevertheless, the white paper’s publication just prior to the summit will remind the ASEAN participants – if not the GCC attendees – that any Chinese offer to support them against U.S. tariffs comes with strings attached.
Chinese assertiveness in the South China Sea has escalated in recent years, even with U.S. and other Western countries pushing back. The China Coast Guard fired water cannons at two Philippines ships in separate incidents near Subi Reef and Sandy Cay and allegedly sideswiped one on May 21. The two sides are locked in an escalating dispute over overlapping claims in the South China Sea, and tensions have worsened under the Philippines’ President Ferdinand Marcos Jr., who has moved his country closer to the United States.
The Philippines leader has taken a more confrontational stance than Indonesia over the South China Sea issue. However, other ASEAN states like Vietnam also remain keen to defend their territorial claims against China’s new narrative that it is merely exercising its legal and historical rights in the region. China has opposed recent Vietnamese construction efforts near one disputed reef, perhaps because this approach mirrors China’s own construction efforts to create “facts on the ground.”
Their conflict is unlikely to be mentioned at the GCC-ASEAN-China summit, but Vietnam will continue to balance any move toward China with efforts to bridge the gap with the U.S. on trade. One example of this is Hanoi’s efforts to boost its enforcement of product origin rules, in part to prevent Chinese products from entering the U.S. via Vietnam.
Conclusion
The summit is likely to see its participants announce various trade and investment agreements and sets a useful precedent for future engagements between the states invited. Nevertheless, while China will try to steer some of the language in the official announcements in directions critical of the United States, the GCC and ASEAN states will likely be reluctant to do so openly. This is both because many will wish to avoid antagonizing the White House on trade, but also because some states will seek U.S. backing against Chinese encroachment in the South China Sea.
Beijing’s maritime objectives continue to exercise a high degree of importance to the Chinese regime, even if it seeks to couch them in the language of historical precedent and international law. These territorial disputes will continue to impede Chinese efforts to develop better trading and diplomatic relations in 2025. However, this fact is unlikely to cause Beijing to moderate its behavior in the hope of quick economic gains. Under Xi, China continues to prioritize the need to combat external and internal challenges over development.