As China faces off against the US over the punishment of a trade war, it is under pressure to strengthen friendships around the world, starting with its Southeast Asian neighbors. But the relationship is complicated.
Chinese leader Xi Jinping will be testing these ties this week by visiting Vietnam, Malaysia and Cambodia in hopes of blunting the effects of the enormous tariffs imposed by President Trump on exports to China to the United States.
XI could potentially cast China as a trusted global partner, in contrast to the unpredictable US President Trump. For example, while in Vietnam, XI is expected to oversee the signing of around 40 contracts, including transactions that encourage Vietnam to accept plans to accept China loans for a portion of the $8.3 billion railway linking northern Vietnam and China.
However, his visit also refers to a diplomatic tug of war that countries like Vietnam and Malaysia must walk as Southeast Asian countries try to negotiate with the Trump administration for reprieve from tariffs.
XI's tour begins in Vietnam on Monday, followed by a three-day visit to Malaysia, ending the week in Cambodia.
Trade on the frontline
Over the past decade, Beijing has had a great drive to expand its economic and political influence into Southeast Asia. Today, China is the region's most important trading partner. High-ranking officials, including Mr Xi, travel there regularly.
China is the main market for Vietnamese agricultural products, and Vietnam imports raw materials from China to promote exports at many factories. 60-90% of Vietnamese apparel raw materials heading towards the US market comes from China.
A complex issue, trade can be at the top of the agenda. Southeast Asia has found its options limited as the local economy is exposed to flooding between US tariffs and the risks of Chinese goods.
Trump imposed tariffs on Chinese goods in his first term, so these countries were alternative routes for those goods to reach the United States. As a result, Vietnam and Cambodia have become targets of Trump's sudden tariffs. He was suspended for 90 days.
These countries will also be concerned that as a result of the tariffs Trump maintains on Chinese products, a massive mass of cheap Chinese products that have been locked out of the US market could instead flow into Southeast Asia, where they could be overwhelmed there.
XI would like to know more about how other countries respond to the US-China trade war. According to Ja Ian Chong, a professor of political science at the National University of Singapore, he would also want to strengthen relations in the event of friction.
“It's a very realistic possibility that PRC products start flowing into these areas and questions about excess capacity begin. “So he has to fix those relationships.”
Sonalbalma, the chief economist in Asia, except Japan, in Nomura, said the local economy would likely introduce measures to prevent China from dumping goods into the local economy. “All countries are now trying to protect their turf,” she said.
Balancing China and the US
While seeking opportunities from China, Southeast Asian leaders may need to make sure they don't look too close.
For example, among some Vietnamese officials, there is fear that the language that underscores the well-known nature of Xi's travel and the Chinese partnership may make it difficult for Vietnam to obtain a long-term reprieve from Trump's tariffs.
Kanve, a visiting scholar at the Faculty of Political Science at Boston University, said: “But don't avoid the impression that Vietnam is heading towards China while negotiating tariff cuts with the Trump administration.”
Malaysian Prime Minister Anwar Ibrahim defended the region's ties with China at a recent gathering of officials.
“China is a very important player that we cannot ignore, and yes, some countries have a problem with that,” he said at the meeting. “We continue to navigate in the best possible way to ensure peace, security and get most profits in terms of economic and investment.”
Security and Territorial Disputes
Beijing also funds the reconstruction of Cambodia's major naval bases, giving China's military access to one of the world's most important sea lanes. While in Malaysia, XI is expected to provide support for existing contracts to build railway links and ports in the country.
Zuniara saied Contributed with a report from Kuala Lumpur, Malaysia. Sannarin From Phnom Penh, Cambodia Alexandra Stevenson From Hong Kong.
