China and Japan compete for influence over Asean

COMMENT

There are many rapidly changing dynamics in play in East Asia. The options for monitoring range from the stumbling American “pivot” to flashpoint maritime security spats between almost every nation in the region.

But one of the more interesting – and ultimately important – interactions is the competition for influence by Japan and China on the Association of Southeast Asian Nations (Asean).

In a very real way, the member states are a collection of some of the world’s fastest-growing economies. According to a recent report, intra-regional trade between the Asean nations more than doubled from $NZ177 billion in 2004 to just over $NZ410 billion in 2011.

There are still significant trade barriers to be smoothed over, but the combining thread points to a region growing in riches and increasing its standards of living.

Asean is now Japan’s second largest trading partner, worth more than $NZ311 billion in 2011. The group of nations also gets the most investment from Japan, spurred on by new Prime Minister Shinzo Abe’s drive for fuller economic integration in East Asia.

Opportunities abound
China and Japan are aware of the opportunities in the region. Mr Abe has just finished a tour of three of the organisation’s heavyweights: Malaysia, the Philippines and Singapore.

His goal was to strengthen existing trade while stressing their mutual strategic relationships – and also to leverage a regional distrust of China.

Mr Abe’s recent diplomatic exploration in the Asean countries comes on the back of China’s slowdown from the giddy heights of double-digit growth throughout the early 21^st century.

Beijing still has plenty of cash lying around for investment in the Asia Pacific and there are few sane countries which would refuse an offer.

But the continuing clashes in the crowded East Asian sea lanes are pushing Asean nations away from co-operation with China and further into the welcoming arms of Japan if Beijing is not careful.

This is a microcosm of a larger picture emerging in the region. As China slows, it is Japan which is looking stronger by the year, and that is a fascinating development. It would have been a brave soul to venture such a forecast 20 years ago.

Japan still has a laundry list of economic and political problems it needs to address, but its economy is well placed for a return to economic dynamism in the next few decades.

But it is not just the potential for a continued rise in trade between Asean states and Japan which is catching the eye of many of those smaller Asian nations.

After all, Asean trade with China still reached an enormous $NZ500 billion record in 2012. And the last thing states need is to alienate or frustrate their Chinese trading partner.

From an Asean perspective, courting both nations will benefit the trading bloc, but they will need to tread a fine line. Some members are cautioning against turning entirely away from China despite the security tensions, but this mindset is becoming more difficult to foster.

Those security issues are the very reason the Asean nations were happy to meet Mr Abe last month.

A growing Japanese strategic capability
Japan’s navy is modernising faster than almost any other maritime nation on earth and offers the trading group an alternative strategic benefactor to counter Chinese movements, especially since the United States is increasingly unwilling to involve itself in such security issues.

Mr Abe even mentioned during his tour that he was “delighted” Japan could participate in ensuring the “freedom of navigation on the seas”. Given the relative success of his trip there appears to be growing support in East Asia for Tokyo to provide the muscle in countering growing Chinese capabilities.

China, for its part, also recognises the need to talk to the Asean states, rather than relying on its coast guard and navy to intimidate its neighbours and leverage trade advantages.

While these smaller nations do not want to scare China away, at the same time are worried about its expansion.

To go some way towards rectifying this, the Philippines and Vietnam met Chinese officials last week to negotiate a different method of interaction, but the talks were frosty at best.

In recent years, China has played individual Asean states against each other. This has distracted them from organising a coherent response to the issue and Japan is moving in to bring some semblance of connection.

As things stand, China – despite its size – is falling behind Japan in the race for influence.

Tokyo offers less in the way of trade perks for Asean (although still significant) compared to China, but the trade-off benefit of a strong military presence to counter Chinese expansion is an important reason for these smaller nations to balance their interests with both countries.

Nathan Smith has studied international relations and conflict at Massey University. He blogs at INTELL and Analysis