Reshaping Economic Interdependence in the Indo-Pacific
Alison Szalwinski, The National Bureau of Asian Research
INTERDEPENDENCE IMPERILED? ECONOMIC DECOUPLING IN AN ERA OF STRATEGIC COMPETITION
Ashley J. Tellis, Carnegie Endowment for International Peace
PANEL: SHIFTS IN THE INDO-PACIFIC’S ECONOMIC LANDSCAPE
Michael Wills, The National Bureau of Asian Research
Kristin Vekasi, University of Maine
Syaru Shirley Lin, Center for Asia-Pacific Resilience and Innovation
Vikram Nehru, Johns Hopkins University
Benjamin Herscovitch, Australian National University
Roy Kamphausen, The National Bureau of Asian Research
To mark the release of Strategic Asia: Reshaping Economic Interdependence in the Indo-Pacific, the National Bureau of Asian Research convened a discussion on November 14, 2023 with contributing authors on shifts occurring in the global trading system and their strategic implications for key countries and regions across the Indo-Pacific.
NBR’s vice president of research and co-editor of Strategic Asia, Alison Szalwinski, celebrated the launch of the volume by discussing the significance of this year’s theme. Given the intensity of strategic competition within the U.S.-China trade relationship and growing talk of decoupling or de-risking from China, the 21st edition in the series investigates the perspectives of countries and regions that are undergoing strategic economic transformations.
Ashley J. Tellis (Carnegie Endowment for International Peace), research director of the Strategic Asia Program and co-editor of the volume, described the evolving economic dimensions of the system established through globalization, which is now being threatened by geopolitical forces. As China increasingly utilizes its economic successes to achieve its global political ambitions, U.S. allies and partners are reconsidering their economic dependence on China.
In a panel discussion moderated by NBR’s executive vice president and co-editor of Strategic Asia, Michael Wills, several contributors to the volume presented on their chapters. Kristin Vekasi (University of Maine) described Japan’s efforts to balance between its regional integration strategy, which requires close economic cooperation with China, and its de-risking attempts to address the perils of high economic dependence. Although Japan has implemented policies to diversify outside of Chinese supply chains, cutting all ties with China in line with U.S. interests would have grave economic consequences.
Syaru Shirley Lin (Center for Asia-Pacific Resilience and Innovation) explained the China dilemma that Taiwan has been struggling with for several decades. Despite facing an existential threat from China, Taiwan still developed into a vibrant democracy with the world’s most innovative companies and critical chip manufacturers. However, policies to increase resilience vis-à-vis China and Chinese supply chains could be impacted by the presidential election in January 2024. Taiwan needs to be integrated more with the world through trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Indo-Pacific Economic Framework.
Vikram Nehru (Johns Hopkins University) examined the different ways that Southeast Asian countries have benefited from the U.S.-China economic rivalry as the share of overall Southeast Asian trade in both China and the United States has increased due to the lengthening of global value chains. Vietnam has been the top beneficiary of both U.S. and Chinese trade and foreign direct investment. Indonesia, with a relatively protectionist trade stance (especially in the mineral sector), has been dominated solely by Chinese investments. On the surface this looks like a positive trend, yet it could lead to an economic slowdown in the long term. Most other countries in the region fall between the cases of these two countries. The exceptions are Myanmar, Laos, and Cambodia, which are heavily dependent on China and are left with no choice but to continue their integration with the Chinese economy.
Benjamin Herscovitch (Australian National University) described Australia’s approach in dealing with its trade dependence on China. Although there have been policies to de-risk through banning Chinese industries in ICT infrastructure and the critical minerals mining industry, there are no other notable signs that Australia is unwinding its export dependence on China. Even after it experienced economic coercion, there still is a bipartisan consensus that Australia’s future economic prosperity depends on sustaining a free and open global market that includes China.
Roy Kamphausen, president of NBR, concluded the event with closing remarks highlighting some of the most important insights from this year’s Strategic Asia volume. As the rhetoric of decoupling, de-risking, and shifting economic dependencies outpaces the actual progress toward those objectives, it is critical for policymakers to craft new mechanisms that could counter economic coercion as well as provide supply chain resiliency.
NBR’s vice president of research and co-editor of Strategic Asia, Alison Szalwinski, opened the event with a discussion of the significance of this year’s theme.
Ashley J. Tellis (Carnegie Endowment for International Peace), research director of the Strategic Asia Program and co-editor of the volume, described the evolving economic dimensions of the system established through globalization, which is now being threatened by geopolitical forces.
NBR executive vice president and volume co-editor Michael Wills moderated a panel discussion with Kristin Vekasi (University of Maine), Syaru Shirley Lin (Center for Asia-Pacific Resilience and Innovation), Vikram Nehru (Johns Hopkins University), and Benjamin Herscovitch (Australian National University).
NBR president Roy Kamphausen delivered closing remarks.