By Collins Chong Yew Keat

KUALA UMPUR, Malaysia: The 57th ASEAN Economic Ministers’ Meeting in Kuala Lumpur reflects the futility of the region’s entrapped dogma of economic and security hedging, without the intent to confront the truth.

ASEAN’s bold pledge to take a unified position on U.S. tariffs is not only foolish and risky, but is outright impossible, due to internal differences and national interests, and simply because of the fact of the U.S. economic importance to the region.

Each ASEAN member has a vast varying degree of foreign policy divergence and affiliation, to both Beijing and Washington, and despite the rhetoric, almost all of the ASEAN players will urgently and have historically depended on Washington for security and defence assurances and support, and economic and technological dependence.

All the talks of the projection of ASEAN synergy and strength and the intent to project centrality and economic solidarity to Washington as a form of protesting the tariff measures remain utopian, misplaced and foolish.

The region must not fall to the abyss of the economic power play by the anti-U.S. actions by Beijing to court the region in amplifying its economic pushback against Trump and Washington, at the expense of the region’s long term survival and interests.

The U.S. remains the region’s most important economic benefactor, far edging out China.

The myth of ASEAN’s unified economic influence

For decades, emerging markets ASEAN, have been touted as rising economic tigers powers poised to be the next global frontiers. In reality, ASEAN has yet to wield the synergised economic firepower that is in parallel with its size and potential. 

Collectively and as a bloc, it might look mighty and being the world’s fifth-largest economy, but internal fragility and fragmentation and the lack of institutional mechanism and the weak unified economic fundamentals crippled the prospect of ASEAN being European Union (EU) 2.0.

Emerging efforts to decouple and de-risk from Washington and Western influence have been overoptimistic and not grounded on reality.

The ASEAN and Asian markets remain tied to advanced economies, especially the U.S.

This mismatch between rhetoric and reality is evident in ASEAN’s inability to shape major global trade and economic shifts on its own terms. It is not a supranational bloc like the EU, with non-interference  and consensus decision-making dogma constraining any real efforts to synergise economies.

Each state guards its own turf and national interests, and distinct differences mean that as a whole, it offers little benefits in terms of streamlined market offerings, technologies or consuming power.

ASEAN’s internal market remains deeply fragmented, riddled with regulatory inconsistencies and non-tariff barriers and pulled back further by lack of political will and  vastly distinct political systems, from semi-democracies to junta regimes. 

Unlike the EU, ASEAN has no strong institution framework to enforce economic agreements or resolve disputes, what more in hard power conflicts especially Myanmar and the Cambodia-Thailand discord.

ASEAN as a whole offers little to each of its members, from economic benefit to security assurances. Hence, all members are forced to look outward. To convince each of the members otherwise, and to force them to pivot back to ASEAN as a unified voice to fight back against the tariff where little economic benefit is gained from ASEAN and even risks jeopardising the ever important ties and support from Washington, is the most futile and foolish of an effort.  

The unmatched economic supremacy of America

The American market is the biggest in the world by far, with a household consumption of labour US$14.5 trillion in 2022 which is around 28 percent of global consumption, powered by high per capita income and with unmatched purchasing power. Per annum demand for imports is around USD 3.2 trillion, almost the sum of the combined GDP of all ASEAN nations, USD 3.7 trillion.

This shows the unmatched tenacity and economic power gap of the US both in sheer size and the room to grow and to maintain that gap vis a vis China, who is now facing inevitable economic decline.

GDP per capita for Washington stands at roughly USD 76,000, with China at USD 12,700 and only USD 5,300 on average in ASEAN.

The purchasing power is unmatched for Washington, and Chinese consumption is on the decline, with a different economic structure. The U.S. runs a large trade deficit with almost USD 1 trillion in which U.S. President Donald Trump now is rightly trying to fix, and this deficit shows that the U.S. buys more from the world than it sells, and this deficit injects demands into the global economy, being the main propellor in fuelling growth in China and in ASEAN.

By contrast, China is still a middle income nation and an export driven and investment driven economy, not a consuming economy. Beijing’s trade surpluses, which was around USD 280 billion in 2023 portrayed that its growth relies on external markers, especially the U.S., to absorb its excess production. ASEAN is now being seen as another fallback option for China to circumvent Washington’s tariff measures, but Beijing is also cognisant that ASEAN as a whole still offers little in terms of consumption and purchasing power. 

Both China and ASEAN are still trapped in the dogma of being middle income powers and with relatively low per capita income and purchasing strength. Both parties rely on the U.S. as the primary economic dependence not only in market, but in inflow of foreign direct intvestment (FDI) and tech expertise.

ASEAN nations are heavily dependent on FDI and tech transfer for job growth to drive economic and energy transitions, and only the U.S. has the capacity to fuel both.

Although the Chinese consumer market is second only to the US, it still has a much lower income and purchasing level, and hundreds of millions of Chinese are still entering the middle class. Chinese consumption has been restricted by weakening confidence levels in the economy, rising debt and unemployment rate, and more outflow of tech and investment and capital from foreign enterprises.

Chinese consumption share of gross domestic product (GDP) is also much lower, at around 38 percent compared to the U.S. at 68 percent, and this implies that China’s growth has been largely driven by being an investment and export driven economy. Coupled with the slower growth rate as opposed to its boom two decades ago, with  GDP growth now slowing to 5 percent on average, down from the rapid expansion of 7-10 percent annually in the 2000s, China will simply not be the source of economic strength and dependence that will provide the market and export need and FDI and tech dependence and need of ASEAN.

The U.S. growth is expected to outpace China in the decades to come with 1.4 percent to 1.1 percent annual real growth, as Beijing’s expansion slows. 

China’s debt level  to GDP of around 300 percent is extremely high, further weighed down by the long term prospect of high youth unemployment and the tang-ping (lie flat) movement where the youth practically give up chasing the capitalist dream of getting the desired jobs and income levels due to reduced openings.

The projection of China overtaking the U.S. as the biggest economy in the world has been constantly revised and delayed, and this might not even happen at all, looking into the indicators.

Demographically and by projection of workforce advantage, among the three powers of ASEAN, the U.S. and China, only Washington will have a growing workforce by 2050, whereas China will have lost over 100 million working age people while ASEAN’s labour force will plateau.

China is facing the prospect of its population growing old before getting rich, while the U.S. population will grow younger and with a higher volume of workforce, all while keeping the advantage as a long term buying power.

This economic dynamic and advantage is the key reason why the U.S. will continue to retain its economic primacy and the U.S. market will remain irreplaceable for global growth, especially for ASEAN’s growth.

China’s consuming power and demand growth will fall, while U.S. productivity and innovation and new growth sectors will rise, and this rise will keep the gap with the so-called alternative economic order now being championed by China, from BRICS to Regional Comprehensive Economic Partnership (RCEP).

China will no longer be able to meet the demand of the export driven economy structure  of ASEAN, with lower consumption power domestically and an older demographic, and the still stagnant economic model of being investment and export driven and not a consuming economy like the U.S. 

In decades to come, the U.S. will maintain its consumption driven economic power, and this will both fuel the export driven ASEAN model and also help the region in its transition from middle income and export driven economy to a high income and digital and technology driven trajectory. 

ASEAN is hence now at a critical crossroads. It has to be bold to jettison its long held dogma of security and economic hedging, and the long held economic overdependence on China, in foreseeing its future growth and resilience trajectory.

It must not  jump on the Chinese bandwagon of economic friendshoring and capacity building to court regional buy-in to oppose Trump, at the expense of the region’s security and sending a very wrong message to Trump.

This is the time to confront the reality with real audacity and conviction to state the plain truth, that ASEAN is better off with Washington at the highest level of a nation’s foremost needs, security and survival, and also for economic prosperity now and for decades to come. 

To admit this truth and to break free from the past trap of continuous ASEAN hedging and balancing, and to avoid being sucked deeper into the self-induced delusion of ASEAN being better off by continuing with its fallback option on the anti-U.S. alternative system, will be the single biggest step to take for ASEAN to avoid irrelevance, security danger and  economic decline.

China’s growth story is no longer about strength, it’s about survival. The region’s peace and stability based on the rules based order remain at stake. Only the U.S. has the proven power to keep peace — history shows this, and the future will be.

*Collins Chong Yew Keat is a foreign affairs and strategy analyst and author in University of Malaya.*