{"id":276320,"date":"2025-11-22T00:06:04","date_gmt":"2025-11-22T00:06:04","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/276320\/"},"modified":"2025-11-22T00:06:04","modified_gmt":"2025-11-22T00:06:04","slug":"the-economic-coercion-risk-in-aseans-growing-dependence-on-china","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/276320\/","title":{"rendered":"The economic coercion risk in ASEAN\u2019s growing dependence on China"},"content":{"rendered":"

This article was originally published by Pacific Forum<\/a>. It is republished with permission.<\/p>\n

The geoeconomic shock from the United States\u2019 \u201cLiberation Day\u201d tariffs has pushed members of ASEAN closer to China\u2019s economic orbit. While deeper economic integration helps mitigate the growing uncertainty of international trade, it also makes ASEAN an increasingly vulnerable target for Beijing\u2019s economic coercion.<\/p>\n

Countries in the region must actively maintain open and diversified economic partnerships, while improving their management of diplomatic crises to mitigate the weaponization of their economic dependence.<\/p>\n

Southeast Asia remains among the regions hardest hit by US tariffs. Despite concessions during negotiations, the latest\u00a0agreements on reciprocal tariffs<\/a>\u00a0that US President Donald Trump signed with Malaysia and Cambodia on October 26 failed to reduce the 19% tariff rate imposed on both countries.<\/p>\n

With ASEAN\u2019s dependence on the US as its number one export market, it is no surprise that the highly trade-dependent bloc\u2019s first collective response was\u00a0not to retaliate<\/a>\u00a0against the tariff but to deepen integration with alternative partners. China, the region\u2019s biggest two-way trading partner since 2020, is among the top priorities<\/p>\n

China-ASEAN bilateral trade has experienced a record-high increase of over\u00a09.7%<\/a>\u00a0in the first eight months of 2025, compared with the same period last year. Nearly\u00a020% of China\u2019s exports go to ASEAN<\/a>\u00a0during this period as China seek alternative markets due the tariff restriction to the US market.<\/p>\n

On the sidelines of the 27th\u00a0ASEAN summit in Kuala Lumpur in October 26-28, which President Trump also attended, Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim, as chair of ASEAN, oversaw the third upgrade of the\u00a0ASEAN-China Free Trade Agreement<\/a>. This agreement will further strengthen China\u2019s economic links with Southeast Asia.<\/p>\n

To mitigate the mounting uncertainty in global trade, deeper regional economic integration has become a strategic imperative.<\/p>\n

Between 2019 and 2022, around\u00a074.2% of ASEAN\u2019s imports from China<\/a>\u00a0consisted of capital and intermediate goods that ASEAN countries depend on to produce competitive exports in the global market.<\/p>\n

While reducing dependence on the US market is crucial, furthering dependence on China can be equally risky for ASEAN. Overdependence on any single country gives the bigger country leverage to use its monopoly of the economic network against the other country for security motives, a phenomenon called\u00a0weaponized interdependence<\/a>.<\/p>\n

Records of economic coercion<\/p>\n

Weaponized interdependence is not a new development. To date, the\u00a0Chinese Economic Sanctions Dataset<\/a>\u00a0suggests that Southeast Asian countries have become the targets of at least nine cases of Beijing\u2019s economic sanctions, which have increased with China\u2019s growing assertiveness under Xi Jinping.<\/p>\n

In the same way that the US leverages its monopoly of the economic network, China\u2019s ability to coerce comes from its monopoly as the number one market for Southeast Asian products.<\/p>\n

In 2012, for instance, Beijing imposed restrictions on the Philippines\u2019 banana exports to China during their standoff over the disputed Scarborough Shoal in the South China Sea.<\/p>\n

Similarly, China also halted Vietnam\u2019s lychee exports from entering its market during the diplomatic crisis over oil rig exploration near the disputed Paracel Islands in 2014.<\/p>\n

On the import side, dependence on China\u2019s goods can also turn into a tool of coercion, as exemplified in China\u2019s restriction of rare earth elements to Japan in 2010.<\/p>\n

Beyond lychees and bananas, analysis from the\u00a0Asia Competitiveness Institute<\/a>\u00a0suggests that the origins of over 1,000 types of products imported by all 10 Southeast Asian countries between 2000 and 2022 are \u201chighly concentrated\u201d in China, meaning that over 50% of imports from each of these products come from China. These highly concentrated products roughly consisted of 30% consumer goods, 40% intermediate goods, and 30% capital goods.<\/p>\n

Records<\/a>\u00a0from the Mercator Institute for China Studies suggest that China\u2019s coercion often deliberately avoided targeting capital and intermediate goods, which constitute most of ASEAN\u2019s trade with China, to minimize the economic costs.<\/p>\n

However, the damage to consumer goods must not be downplayed. From 2020 to 2022, the total loss from China\u2019s coercion against Australia\u2019s top exports \u2013 such as coal, barley and wine \u2013 amid their diplomatic tension reached as high as\u00a0AU$31 billion<\/a>\u00a0(US$20 billion).<\/p>\n

Beyond the direct economic cost, the strategic value of economic coercion lies in its deterrence effect.<\/p>\n

The success of China\u2019s weaponized interdependence can be observed in the unwillingness of Southeast Asian countries, wishing to prevent economic loss, to take tougher stances against China. The Philippines and Vietnam, for instance, never retaliated against Chinese economic coercion amid their standoff in the South China Sea in 2012 and 2014, respectively.<\/p>\n

The potential economic benefits also become an allure pushing some ASEAN countries closer to Beijing, as in the case of Indonesia implicitly acknowledging Beijing\u2019s illegal South China Sea claim in exchange for securing\u00a0joint development<\/a>\u00a0in the area, followed by China\u2019s support for Indonesia\u2019s entry into the\u00a0BRICS<\/a>\u00a0grouping as a full member last year.<\/p>\n

Pathway toward economic resilience<\/p>\n

Admittedly, sharply reducing trade with China is not a wise option given the political and economic cost. The\u00a0economic openness<\/a>\u00a0that Southeast Asian countries promote has previously contributed to regional stability that the bloc enjoyed. However, countries in the region can take steps to minimize the likelihood and cost of coercion.<\/p>\n

First, ASEAN must actively diversify economic partnerships. Maximizing trade with partners beyond China will help reduce the range of goods that Beijing can weaponize. Indonesia\u2019s recent success in concluding\u00a0free trade agreement<\/a>\u00a0negotiations with the European Union is a great example.<\/p>\n

Further substantiating the call to upgrade the Regional Comprehensive Economic Partnership (RCEP<\/a>), the region\u2019s largest free trade agreement, is also vital to maintain the economic openness in the region.<\/p>\n

Second, countries in Southeast Asia, individually and collectively, must maintain open diplomatic channels to manage geopolitical tension with China.<\/p>\n

China\u2019s economic coercion<\/a>\u00a0often occurs when Beijing\u2019s political stakes are high, particularly during events such as diplomatic crises and territorial disputes. The ability of countries to exercise self-restraint and defuse tensions \u2013 as exemplified in the collaborative efforts to manage the recent Thailand-Cambodia border conflict that concluded with the signing of the\u00a0Kuala Lumpur Accord<\/a>\u00a0during the latest ASEAN Summit \u2013 will be crucial in responding to similar conflicts with China in the future.<\/p>\n

Collectively, ASEAN also bears responsibility for harnessing its ability to mitigate potential crises. ASEAN\u2019s ability to actively manage regional tension becomes key to avoidance of economic coercion. This is particularly true regarding the South China Sea disputes. Here, again, ASEAN\u2019s so-called \u201ccentrality<\/a>\u201d is being tested.<\/p>\n

The bottom line<\/p>\n

The impact of US tariffs has put ASEAN countries in a tight spot. While the tariff shocks offered momentum to deepen regional economic integration, they also complicated ASEAN\u2019s effort to make its supply chains resilient against weaponization. Countries in the region must actively manage regional tensions and internal divisions, as well as cultivate economic relations with partners beyond China to keep their trade relations resilient. Otherwise, they risk facing two-front economic pressure from Beijing\u2019s future economic coercion, plus Washington\u2019s tariffs.<\/p>\n

Arrizal Jaknanihan (arrizalanugerah.jaknanihan@anu.edu.au<\/a>)\u00a0is a Pacific Forum Young Leader member and currently a master of international relations candidate at the Coral Bell School of Asia Pacific Affairs, The Australian National University. He formerly served as an analytics partnership officer at Indonesia\u2019s Ministry of National Development Planning. His research focuses on the intersection of regional security and international trade in Southeast Asia, with a particular focus on Indonesia and ASEAN.<\/p>\n","protected":false},"excerpt":{"rendered":"This article was originally published by Pacific Forum. It is republished with permission. The geoeconomic shock from the…\n","protected":false},"author":2,"featured_media":276321,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[113165,113166,18341,84,14448,1294,2183,8626,113167,113168,87388,1186,56,54,55,5673],"class_list":["post-276320","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-asean-china-trade","tag-asean-us-trade","tag-block-2","tag-business","tag-cambodia","tag-economy","tag-indonesia","tag-malaysia","tag-pacific-forum","tag-phillippines","tag-south-china-sea","tag-trump-tariffs","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-vietnam"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/276320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=276320"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/276320\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/276321"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=276320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=276320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=276320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}