Power Influence in Southeast Asia - China on the Rise and America on the Wane?

Let me shake off my long stupor of not posting since February by elaborating on a discussion I had with my cousin-nephew who is presently studying international relations (plus Chinese and Arabic languages) at Georgetown University in Washington DC.

My contention is a contrarian argument to the prevailing view that China is on the rise and America is on the wane in Southeast Asia. This argument often confuses China's enormous trade links, free-trade agreements and high-level political exchanges with Southeast Asia for power and influence. My argument is that the view is impressionistic and is not entirely supported by a rigorous and sober examination of many other key matrices for power and influence. My hypothesis is that while America power and influence is no longer dominant in Southeast Asia, it is still probably the strongest power in a region where China's power and influence has expanded enormously.

My model for understanding power and influence rests on examining 4 different facets of power and influence, and in each case focus on aspects that are largely measurable as opposed to a lesser reliance on subjective considerations such as "soft power".

My 4 facets - and they are not intended to be equally important at all times - are: economic, political, strategic/military and social-civic links.

China has enormous heft as Southeast Asia's largest (and fast-growing) trading partner, well-spring of funding, bilateral and regional economic cooperation and growing institutionalised relationships (FTAs etc.).

But economic links are not limited to trade. At the very least we should also look at investments (both inwards and outwards), monetary policy and commercial links. In Southeast Asia, the amount of cumulative investments by USA, Japan and Europe remains enormous, and in most countries far dwarfs China's nascent investments. Japan has been Southeast Asia's largest investor for many decades and those Japanese companies remain major employers and exporters in many Southeast Asian countries. How easily people forget but they are a hidden giant that should not be overlooked. So size of investment is one key measure.

As far as commercial links, precisely because so many US and European MNCs have operated so long in Southeast Asia they have become "invisible". People forget that AIA, Citibank, Facebook, Visa card, P&G (Pampers, Pantene, Duracell, Gilette etc.), Colgate Palmolive, Esso, Yahoo!, FedEx, Boeing are American companies; while Shell, HSBC, BP, Prudential, Nestle are European. Of course, the lines are often blurred because such is globalization that Nike may be American but the product is often made in China by a Korean invested firm financed by the Japanese. But all else being equal, China still has some distance to go in terms of commercial influence. After all, what is the largest Chinese company operating in Southeast Asia?

All those are in the realms of influence, but none more than monetary policy. There are many Southeast Asian currencies that are either pegged or linked to the US Dollar and for that reason their central banks keep large portions of their hard currency reserves in US Dollar. The power to influence so many Southeast Asian currency gives the US Federal Reserves significant leverage over the monetary policies in Southeast Asia - such as interest rates - that the People's Bank of China will not have until the RMB becomes a full fledged international reserve currency. Even as China becomes an enormous trading power with Southeast Asia, the terms of trade are still mostly done on US Dollar terms. These are all important measures on the economic power and influence.

Another important measure is foreign reserves/foreign investments, which for Southeast Asian countries are still mainly held in American or European assets. And the same can be said for holdings of Southeast Asian debt, which if in foreign hands are still predominantly held by Western institutions and funds; although given the growth of China's investment funds this could soon change. This is a source of influence (verging on power) that is easily overlooked but in times of crisis, holders of debt provides enormous leverage over the governments of the day (e.g., currently in Greece, but seen recently with Dubai, Iceland, Estonia, or Latin American countries from time to time). In times of conflict and international sanctions, there have been precedence of foreign assets being seized e.g. Iran, Iraq (after invasion of Kuwait), North Korea and Yugoslavia (sanctions).

Moving on to political links. For Southeast Asian countries China presents a seemingly simple political equation: unquestionable support for China's policies on Taiwan/Tibet/Xinjiang etc., no overt critisism of China , and in return China will grant a lot of personal respect, not pose any awkward questions on one's own political legitimacy or messing about with the opposition party, etc. And then, everyone can get down to business of economic growth. that is easy to like. America has tended to present a less diffident, more self-interested and incoherent relationship even as the host nation feels ignored.

At the senior leadership level, China pays a lot of attention with frequent exchange of visits with regional heads of states and government. Likewise there are extensive links at the ministerial and official level as befitting a major (even dominant?) regional political power. China plays a deft hand in this very Asian form of influence. The level of attention simply far outdistanced anything America (which has a more global spread of interests) can possibly muster in the region.

On the otherhand, if we look at what has been invested in terms of long term institutional presence in the region a more balanced picture emerges. America maintains large multifaceted (with political, economic, military, consulate, cultural (tourism, education etc.), public diplomacy functions) embassies in most Southeast Asian countries often they are the largest embassy in town. Often the US maintains consular offices outside the capital as well. China maintains comparatively large but by comparison a more modest presence that in many cases are behind those of the UK, France and even Germany. Granted, the person-to-person relationship is perhaps the most important measure for most Southeast Asian cultures; but it is important to remember there are other measures of political ties.

And not least, there is developmental aid as a measure of power and influence, although I often question the effectiveness of aid as a form of political leverage. In some countries there are still US-aid projects, but the scale is unlike during the height of the Cold War. I recall there is a US funded FELDA development near Seremban called "LBJ" after the US President Johnson! Likewise, aid from Japan which boomed in the 80s and 90s but are now a thing of the past. On the otherhand, official aid from China especially on infrastructure is expanding. This is definately also a source of growing Chinese political influence.

On the military/stretegic level, the starkest measure is obviously military presence by either China or the US in Southeast Asia. America clearly has a historic head-start: even with the closure of US bases in the Philippines it now has (official) access to bases in Singapore, Thailand and the Philippines, in addition to military advisors/liaison in other locations especially on counter-terrorism. That is before one considers the US Navy Seventh Fleet based in Japan and Guam which is present in the South China Sea at any one time.

China on the otherhand claim a policy against the stationing of any foreign military forces, hence precluding the stationing of the PLA outside Chinese territory - outside of UN peacekeeping or naval expeditions.

The US also has long term military alliances or mutual defence treaties with Philippines and Thailand (both are regarded as Major Non-NATO Ally) and use of military bases in Singapore. On another note, Singapore and Malaysia are part of the FPDA (Five Forces Defence Arrangement) which allows for Australia, New Zealand and the UK to come to be defence of Malaysia and Singapore. Brunei also has its own defence arrangements with the UK, British bases and military personnel. China's closest military partners in Southeast Asia are probably Cambodia and Myanmar.

In my view, another key measurement is the choice of supplies of armaments. When it comes to making significant long term investments (both in money and reliance on continuing training and technical support), Southeast Asian countries are still predominantly choose to be armed with US or European weapon systems. The US which supplied the backbone of the airforces of Singapore, Thailand, Indonesia, Philippines and Malaysia (apart from its Russian made the MIG-29s), France also has a strong position as an alternative supplier of choice especially for naval vessels and helicopters.

Taken together the above reality are very clear and unequivocal measures of US (and British) hard power in Southeast Asia.

Overall, regional sensitivities over China's role, historic enemities (such as with Vietnam), common borders with Myanmar, Laos and Vietnam - and lingering disputes such as over the Spartly Islands - is probably the biggest weakness in China's strategic influence in Southeast Asia. It is arguable if any Southeast Asian countries will tolerate very much Chinese military influence or presence, if ever, at all!

And the final facet is the social-civil aspect. A lot of this are sometimes characterised as "soft-power". I prefer to see this from the narrower prism of intellectual orientation of the ruling elite. Put simply, while everything from as mundane as baseball and hollywood movies or Korean soap operas - to ideas and ideals like capitalism, democracy and the rule of law - all exerts a pull on the public imagination; a more profound and immediate influence could be found in whatever that form the intellectual grounding of a country's governing elite and policy makers.

For decades, the elites of Taiwanese and Philippines are educated in the US and they bring about a distinctly American intellectual influence and extend America's influence into those countries via those personal networks. The same is true for the Singaporean and Malaysian elites and policy makers and their British influence. The modernisation of the Indonesian economy in the 1960s and 70s was led by what was called the "Berkeley mafia" of US trained economists. German-educated former President Habibie sought to orientate Indonesia to German technical experts.

Hence, for me an important indicator of China or America's influence is the where were Southeast Asia's leaders and elite educated? And almost as importantly: where do they send their children to be educated? Because that shows who they really admire. Right now, not many are sending their children for higher education in China. More esoterically, one can even look to where do Southeast Asian leaders and their family go for a holiday or buy private property as an indicator? That actually makes a difference when one considers that the leaders of Myanmar and Cambodia used to holiday or go for medical treatment in China a lot. Not any more one may assume?

More directly, another measure could be to look at the source of the society's intellectual input = its "mindshare". What is going into the minds of the country's leaders and policy makers? Where do they buy their books? And where are the authors of those books they are reading from? Who are the experts they get advise from? Countries look to those they wish to emulate for advise: economic and policy experts used to come from the old colonial masters, then in the 50s and 60s some got (ill)advisers from the Soviet Union or China, while others turn to American experts (including from NGOs like Ford Foundation or Rockerfeller Foundation). The strategic importance of the export of advisers is such that even Taiwan used to export agricultural experts as a diplomatic tool. And more recently there was a time when experts from Japanese were popular. It may not be as obvious now, but if Southeast Asian countries are hiring Arup for city planning, Goldman Sachs to advise on privatization or McKinsey to develop an economic strategy or even the World Bank/IMF, it simply reflects the reality of the continuing influence of the West, especially America in shaping Southeast Asia's thinking on the level fo government policy.

Even on the casual level, the media and news channel that currently dominate the mindshare of the educated middle class in Southeast Asia tend to be cable/satellite television and the internet that mainly of a Western (or American) origin. Rubbish or not, that is a measure of influence on the default world view and intellectual orientation of Southeast Asia. In this regard, take the example of the BBC which allows the UK to punch above its weight and Japan which has little influence relative to its importance in the region. It has been remarked that China is a world-to-itself in cyberspace and in its media (not only due to censorship but because of language and size that made it self-contained) but it has still little mindshare outside of Greater China. And even if language ceases to be a barrier, it has a steep hill to climb when competing for mindshare with the open uncensored media that Southeast Asia long has access.

In conclusion, I would like to submit that there is much more to America's power and influence in Southeast Asia than meets the eye. And plainly because we have taken them for granted we forget how pervasive and powerful America still is. China is the shiny new thing that seized our attention because its power and influence have been growing so quickly and so overtly that many have mistaken rate of change for size. I hope for a more emperical study that compare their power and influence both in real terms and in relative terms; for power and influence is not a zero sum game between the two powers: both could be growing or both could be waning because we should not forget that as the nations of Southeast Asia grows they also become less susceptable to being influenced and are regional powers in their own right.