China gets head start on United States in contest for Southeast Asian money

SINGAPORE — As the world’s two largest economies jockey for influence in Southeast Asia, one appears to be making more headway than the other.

China’s presence is looming large in the region as President Xi Jinping pushes ahead with negotiating a free trade agreement and makes inroads for massive infrastructure projects as part of his ambitious Belt and Road Initiative.

In the other corner: Donald Trump. The U.S. president’s Asian tour through mid-November will mark the longest by any U.S. leader to the region in 25 years. But governments are scrambling to re-jig the trade framework after Trump’s withdrawal from the Trans-Pacific Partnership in favour of an “America First” approach via bilateral deals.

After initially saying he’d skip this week’s East Asia summit in the Philippines, Trump is now set to attend the event Tuesday that hosts the 10-member crew of the Association of Southeast Asian Nations and other world leaders. Since the start of his tenure, he’s met bilaterally with the leaders of Singapore, Malaysia, Thailand, Vietnam and Indonesia.

Money talks, and this is what it’s saying about how the U.S. and China stack up against each other in Southeast Asia:


Trade negotiations remain the elephant in the room at the Asia-Pacific Economic Cooperation and Asean leaders’ meetings.

While global trade has accelerated this year, frameworks are fragile with the TPP and the Regional Comprehensive Economic Partnership pacts both incomplete. There’s also talk of the U.S. renegotiating multiple bilateral deals, particularly for nations with which it has large trade deficits.

China has significantly widened its lead over the U.S. in trade with Southeast Asia; a decade ago, their tallies were almost equal.


The investment contest has been much more choppy. Firms from each country have shown swings in spending in Southeast Asia, though the U.S. has regularly beaten China since 2010, Asean data show. That lead slimmed last year, with just US$2.4 billion separating the two nations’ foreign direct investment totals, the smallest gap in five years.

One caveat: Some of China’s FDI might be funneled through Hong Kong, which masks the Chinese impact in Asean, according to a report from the ISEAS-Yusof Ishak Institute in Singapore. Hong Kong investment has largely been on par with the mainland’s over the past seven years, Asean data show.

Look for China’s numbers to pick up amid plans to boost spending on Belt and Road projects throughout Southeast Asia and beyond. While a US$3.6 billion dam in Myanmar was canceled due to protests over environmental concerns, a China-to-Myanmar crude oil pipeline costing US$24.5 billion is now operational. Construction of a China-Laos railway is also in the works.


Chinese tourists have poured into neighboring Southeast Asia in greater numbers, boosting their share of arrivals in the region to 17 per cent in 2015 from 9 per cent four years earlier, Asean figures show. At the same time, U.S. visitors were very little changed over the same period and accounted for 3 per cent in the latest data.


There’s at least one category in Southeast Asia that the U.S. easily dominates. Southeast Asians living in the U.S. sent more than US$19 billion home last year, including US$10.5 billion to the Philippines and US$6.7 billion to Vietnam, according to data compiled by the World Bank.

By comparison, Asean-native residents in China sent back just US$892 million of remittances in 2016. The Philippines again led recipients, while Indonesia, Thailand and Vietnam enjoyed a fairly equal take.

Money aside, Trump and Xi may both have an uphill battle in winning Southeast Asians’ affection.

Thirty-eight per cent of people in the Asia-Pacific region think relations with the U.S. will get worse during Trump’s presidency, according to a Pew Research Center poll. That was the most pessimistic among five world regions in the yearly Global Attitudes Survey, which was conducted in 38 countries during the first half of this year.

It’s no cake walk for China, though. The world’s No. 2 economy has mixed reviews from Southeast Asian countries, according to the poll. While just over half of respondents in Philippines and Indonesia viewed China favorably, 88 per cent in Vietnam reported unfavorable views.

Leave a Reply

Read the original at News – Financial Post.