Contested Spaces

State of Play

Southeast Asia has emerged as the most contested space in the Indo-Pacific. The following observations, which are based on extensive field research,¹ capture the regional state of play:

• China has adopted a well-resourced and comprehensive approach to Southeast Asia that aims to draw large segments of the region into its sphere of influence.
• Beijing has sown enduring divisions among the members of the region’s premier multilateral organization, the Association of Southeast Asian Nations (ASEAN), while making more limited progress toward driving wedges in U.S. regional alliances.
• Countries in the region generally remain hesitant to align more overtly with the United States, even if the result is ultimately detrimental to their long-term freedom of choice.
• States in Southeast Asia currently do not perceive a comprehensive U.S. economic strategy that offers a meaningful alternative to China’s combined trade and investment.
• U.S. efforts to promote greater self-defense capabilities for many countries in Southeast Asia will, at best, yield meaningful dividends over the long term, potentially after 2030.
• Japan broadly shares a common vision with the United States for Southeast Asia: to empower countries to chart their own destinies while gradually becoming more economically open and democratic.

Introduction

With its rapidly growing economies, strategic geography, and diverse regime types, Southeast Asia is emerging as the most contested region of the Indo-Pacific. The United States and its allies – above all, Japan – are engaged in a competition with China to shape the development and governance pathways of countries in the region, as well as their overall strategic alignments. Beijing has adopted a well-resourced, whole-of-government approach to Southeast Asia that, over the long term, aims to draw large segments of the region into its sphere of influence.² As China’s already significant economic presence continues to grow due to its substantial infrastructure investments in Southeast Asia, so too has its ability to influence the region in the security and political domains.³

U.S. efforts in Southeast Asia, particularly in the aftermath of America’s withdrawal from the Trans-Pacific Partnership (TPP) in early 2017, have taken a lower profile and, at times, created openings for China to advance its objectives in the region. Moving forward, America’s ability to synchronize its priorities and regional initiatives with key allies, most notably Japan, will be critically determinative of Southeast Asia’s long-term strategic alignment.

With its fluid country orientations and geographic position as the hinge between the Indian and Pacific oceans, Southeast Asia has emerged as a key testing ground for the Free and Open Indo-Pacific (FOIP) Strategies that both the United States and Japan have championed. Beijing’s steady militarization of its artificial islands in the South China Sea is the most visible example of its attempts to probe the durability of the rules-based order in the region.⁴ Thus far, China’s tactics in the “gray zone” between peace and armed conflict have placed the United States, Japan, and other supporters of a free and open vision for the region into a largely reactive posture. The United States has undertaken more regular freedom of navigation operations (FONOPs) in the South China Sea, increasingly in concert with naval patrols by its allies and partners, including France and the United Kingdom.⁵ Yet these activities have not deterred China from further militarization of its outposts, a fact readily apparent to regional stakeholders.

Despite mounting concerns about China’s geopolitical ambitions, many countries in Southeast Asia remain reluctant to align overtly against Beijing, given their dependence on China for trade and investment and their concern about the geopolitical spillover of a revived great-power competition centered in the region. At the same time, they worry that new groupings – in particular, the quadrilateral dialogue that brings together the United States, Japan, Australia, and India (the “Quad”) – will diminish the role of the region’s premier multilateral organization, the Association of Southeast Asian Nations (ASEAN).⁶ Due to countries’ ambivalence about the Quad and their reluctance to aggravate Beijing, consensus within ASEAN on China policy has proved elusive, imposing sharp constraints on the association’s aspirations for centrality in the wider Indo-Pacific region.⁷ A well-calibrated U.S. approach to the region, therefore, requires that a vision for a free and open Indo-Pacific extends beyond the Quad and is founded on the belief that Southeast Asian nations must remain prosperous and independent.

Southeast Asia has also grown increasingly contested in the economic domain. While the United States and Japan remain leading economic actors in the region, in recent years China has emerged as the largest trading partner for ASEAN. The speed with which China has emerged as such is stunning; in 2000, its total trade in goods with ASEAN was only $40 billion, but now, this number has reached nearly $350 billion.⁸ Moreover, the region is a key focus of the Belt and Road – Beijing’s vision of a world connected by a web of Chinese-funded physical and digital infrastructure. Through its infra-structure investments, China has obtained leverage over some countries in Southeast Asia, while also generating blowback, as governments and publics become increasingly concerned about the debt, corruption, erosion of sovereignty, and environmental degradation associated with Belt and Road projects.⁹ The digital domain has become a key element of China’s Belt and Road in recent years, and here too, Southeast Asia has become an arena for competition. Countries in the region remain ambivalent about models of online governance. As China’s information technology companies become key players in the region, Beijing is increasingly positioned to nudge Southeast Asia toward a more statist vision of the internet, where governments curate content and other stakeholders in the digital space, such as civil society, are sidelined.¹⁰

Lastly, and relatedly, governance structures in many Southeast Asian countries remain pliable and therefore contested. After a remarkable period of democratic expansion in which the region’s most populous state – Indonesia – transitioned away from authoritarian rule and Myanmar embarked on a political opening, illiberal forms of government are now resurgent: A 2018 Freedom House report has shown a decline in democracy across Southeast Asia.¹¹ Finally, as previously noted, Southeast Asia’s digital domain is coming under pressure as governments seek to exert greater control over public political discourse, at the expense of freedom of expression and online privacy.¹²

This report proceeds in five main sections. The first explores the approaches of the major powers – the United States, Japan, and China – toward Southeast Asia. The remaining sections focus on how the United States can renew its approach to the region along four primary axes: economics, security, diplomacy, and its alliance with Japan. Each of these sections provides a more in-depth perspective on American policy and identifies concrete recommendations that, collectively, aim to enable Southeast Asia to chart a future on its own terms.

Read the full report.