Big Deal

US dictates terms to China, Cambodia ASEAN trade, Vietnam's bamboo foreign policy, Thailand's general elections

UPDATE:?Treasury Secretary Janet Yellen has made her first major statement on economic relations with China since 2021. Judged by the tone, her message is intended to clarify and calm the waters of speculation and debate about motives and intentions. In the current situation, however, it is far from clear whether clarity actually contributes to calm.

Cambodia’s trade volume with the other ASEAN countries was nearly US$4 billion in the first quarter of this year, a reduction of 16 per cent compared to the same period in 2022. The report said that neighbours Vietnam and Thailand are Cambodia’s leading markets within ASEAN.?

Vietnam is the only Southeast Asian country at this critical moment to be facing a major challenge as it attempts to juggle the three great powers -- China, Russia, and the US -- simultaneously. It is bamboo diplomacy Vietnamese style, at its very best in keeping these extraordinary allies and friends at bay.?

Thailand is?set?to hold general elections on May 14, it’s first since 2019. The country has been under military rule since 2014, when a coup deposed the democratically elected government led by the current opposition Pheu Thai party. Although military takeovers are regarded as “business as usual” in Thailand – there have been 19 coups since 1932 – and usually do not significantly impact the business environment.

Yellen at China

In the wake of this month’s International Monetary Fund and World Bank spring meetings, Treasury Secretary Janet Yellen has made her first major statement on economic relations with China since 2021. Judged by the tone, her message is intended to clarify and calm the waters of speculation and debate about motives and intentions. In the current situation, however, it is far from clear whether clarity actually contributes to calm.

The scenario that Yellen rejects is that of the Thucydides trap, but her reasons for doing so are telling. The idea that “conflict between the United States and China” is “increasingly inevitable” is, she insists, based on a false premise. That outlook was “driven by fears, shared by some Americans, that the United States was in decline. And that China would imminently leapfrog us as the world’s top economic power, leading to a clash between nations.” America would seek military confrontation to forestall the unfavorable shift in the power balance attendant on China’s phenomenal economic growth. This makes no sense, Yellen reassures us, because the American economy, thanks to its foundational institutions of freedom, its culture of innovation, and the wise governance of the Biden administration is in rude health.

“The United States remains the most dynamic and prosperous economy in the world.” So, Yellen insists, America has no reason to seek to “stifle China’s economic and technological modernization” or to pursue a deep decoupling. America’s economic power, the Treasury secretary goes on, “is amplified” by its relationships with “close friends and partners in every region of the world, including the Indo-Pacific.” America thus has “no reason to fear healthy economic competition with any country.” And then Yellen delivers the punchline:?

“China’s economic growth need not be incompatible with U.S. economic leadership.”

So a strong and self-confident America has no reason to stand in the way of China’s economic and technological modernization except in every area that America’s national security establishment, the most gigantic in the world, defines as being of essential national interest. For this to be anything other than hypocrisy, you have to imagine that we live in a goldilocks world in which the technology, industrial capacity, and trade that are relevant to national security are incidental to economic and technological modernisation more broadly speaking.

The upshot is that America welcomes China’s economic modernization and will refuse the lure of the Thucydides trap so long as China’s development proceeds along lines that do not infringe on American leadership and national security. And America’s attitude will be all the more benign the more successful it is in pursuing its own national prosperity and preeminence precisely in those areas.

It is telling that what seems to be intended as a reasonable and accommodating statement is, in fact, so jarring. China must accept America’s demarcation of the status quo. If it does not respect the boundaries drawn for it by Washington between harmless prosperity and historically consequential technological development, then it should expect to face massive sanctions.

But it is hard to see how her vision, in which the United States arrogates to itself the right to define which trajectory of Chinese economic growth is and is not acceptable, can possibly be a basis for peace. If the United States is still interested in global economic and political order, and it surely should be, it must be open to negotiate peaceful change. Otherwise, it is simply asking for a fight.

Read more?here.

Cambodia ASEAN trade $4B in first quarter

Cambodia’s trade volume with the other ASEAN countries was nearly US$4 billion in the first quarter of this year, a reduction of 16 per cent compared to the same period in 2022, a Ministry of Commerce report said on April 24. The report said that neighbours Vietnam and Thailand are Cambodia’s leading markets within ASEAN. Cambodia-Vietnam trade volume in the first quarter of 2023 reached nearly US$1.9 billion or an 8.4 per cent increase.

Cambodia-Thailand trade volume was pegged at almost US$1.1 billion, or down 9.8 per cent. Indonesia is the third country with US$305 million, up 43.2 per cent.

By comparison, Customs (GDCE) reported that the commodity trade between Cambodia and the top five ASEAN markets – Vietnam, Thailand, Indonesia, Singapore and Malaysia – hit US$3.563 billion in the first quarter, down 15.88 per cent from the US$4.235 billion recorded in the same time last year.

Ministry of Commerce spokesman Penn Sovicheat said that there was a decline not only in regional trade but also with other major countries such as China because at the beginning of this year, agricultural products were not exported a lot.

“It is not possible for us to look at the whole picture of the market as it is difficult to find the practical reason. The reason does not reflect the negativity of exports and imports of Cambodia and ASEAN. It is also due to declining demands for overseas orders after pressure from the war and crisis in Ukraine,” he added.

He continued that trade exchanges, especially the export market, were no different, but it has always changed seasonally year on year and according to the needs of purchasers.

“After they order their purchases they prepare a timetable so we can export the goods. Additionally, it can also depend upon the timetable for the cargo ships because when many ships arrive in our port, that’s when we can export a lot of goods,” Sovicheat stated.

Cambodia Logistics Association president Sin Chanthy said on April 24 that the decline in trade was not just between Cambodia and countries in the region, but global trade also declined at the beginning of this year.

“Usually, trade and transport logistics go hand-in-hand. It means that if trade exchanges increase, so does transport. But if the trade exchange drops, so does transport.

“This decline is not only in Cambodia, but also in the ASEAN region. The decline is global because of the same obstacles facing us, especially before it was the Covid-19 crisis, now it is the war that continues in Ukraine. Therefore, the price of fuel increases and that leads to higher transport prices and inflation,” he stated.

The commerce ministry said that Cambodia has exported agricultural products, clothes, footwear, bags, electronics and bicycles to ASEAN countries while importing food, drink, electrical and electronic equipment, construction materials, agricultural machinery and vehicles.

The GDCE said that in the first quarter of this year, trade between Cambodia and international markets reached nearly US$11.3 billion, or down 14.5 per cent from the same period in 2022.

Cambodia’s exports to international markets totalled close to US$5.4 billion and Cambodia’s imports from abroad totalled over US$5.8 billion.

Read more?here.

Vietnam’s bamboo foreign policy

Vietnam is the only Southeast Asian country at this critical moment to be facing a major challenge as it attempts to juggle the three great powers -- China, Russia, and the US -- simultaneously. It is as if Hanoi is keeping a dagger, a bomb, and a gun in perpetual mid-air flight to ensure the tripartite relations will not crash along the way. It is bamboo diplomacy Vietnamese style, at its very best in keeping these extraordinary allies and friends at bay. In recent years, the bamboo policy description has been widely used due to the country's distinctive diplomacy.

Thailand and the Philippines, for instance, only require to deal intensely with the US-China competition. To them, the ties with Russia are a sideshow. They are important of course, but not at the same level as Vietnam's. Within the region, the Russia-Vietnam alliance is rock solid -- even the ties and sentiments of other Indochinese countries, such as Cambodia and Laos, are not quite as unwavering. In particular, Phnom Penh's attitude towards Moscow has been shifting in ways that nobody expected. Cambodia jumped the high fence without looking back over the Russian invasion of Ukraine. While the rest of the world shuns Russia, Vietnam is still grateful to Moscow for assisting in its post-war reconstruction.

Since joining Asean in 1995, Vietnam's foreign policy has been very active and omnidirectional in trying to end its longstanding isolation. Hanoi has quickly normalised ties with former foes and equally quickly established diplomatic ties with new friends. Although the former Soviet Union collapsed, rock-solid ties with Moscow have continued unabated. When Vietnam joined Asean, it also normalised ties with the US. Nobody can deny that since then, Vietnam has been on the upswing. For Vietnam's internal and external development, the past two decades have been the greatest period of national rejuvenation and all-around development.

What is most remarkable about Vietnam's external relations has been its ability to win over the West, in particular the US and Europe, in terms of the country's political stability and pro-free trade frameworks. Vietnam's membership in the former Trans-Pacific Partnership and its free trade agreement with the EU are good indicators of the country's capacity to engage and conduct its foreign policy with the most demanding partners like the US and EU. Even allies like Thailand and the Philippines might find it difficult to perform such a task. It is noteworthy that Western analysts credit the age-old rivalry between Beijing and Hanoi for Washington's continued efforts to raise the profile and capacity of Vietnam, which indeed was the US's former foe in the Cold War period.

One would have thought that the cordial Vietnam-US ties, which have been further consolidated both in terms of trade and security, would go on forever as long as the rise of China is unstoppable. In a similar vein, Vietnam has also become one of the US's major trading partners. In 1995, bilateral trade was a pittance, with a mere total of US$195 million; in 2021, the volume was 5.5 billion USD. In comparison, Vietnam-Russia trade was much smaller -- expanding from US$229 million in 1994 to US$80 billion in 2019.

But Russia's invasion of Ukraine on 24 Feb 2022 caused an unexpected hiccup in the US-Vietnam dynamic. Indeed, without the Russia-Ukraine war, Vietnam-US cooperation would have been more strategic and attained the level of "comprehensive strategic partnership" by now. This trajectory has been set forth for quite a while. The Russian-Ukraine war has uncharacteristically added stress to Vietnam's foreign policy and US-Vietnam relations. Hanoi was placed in an unavoidable position of having to abstain from voting on the three UN General Assembly's distinctive resolutions on the situation in Ukraine, much to the chagrin of its Western friends. Hanoi's votes caused a high level of anxiety among the US and European policymakers who have bet on Vietnam as a new bulwark against the rising influence of Russia as well as China.

The West has been vexed by its Asian friends' attitude toward the Russian-Ukraine war, mainly India and Vietnam. Both have been considered the staunchest Western allies in countering China's rise. It has taken nearly a year before the West reached an understanding that their support of India and Vietnam must continue and further strengthened despite their aberration over the Russian-Ukraine war. It was a quick U-turn.

It is interesting to note that even in the midst of the Russia-Ukraine war, Vietnam and Russia have diligently forged closer cooperation on non-sensitive matters, especially in energy security, humanitarian assistance, science, and education. Deputy Prime Minister Dmitry Chernyshenko's visit in early April demonstrated the scope and depth of their bilateral cooperation, the most remarkable example being in the cultural, educational and nuclear research fields. Both countries agreed to upgrade the AS Pushkin Institute?to a regional centre for the study of the Russian language in Southeast Asia. Vietnam still has the largest number of students taking up the Russian language.

Most important has been the agreement to create the Nuclear Science and Technology Centre in Dong Nai, which will be established in June. This is will be the first Russian nuclear research centre in Asean. It is well known that before the Fukushima incident in Japan, several Asean members had plans to establish nuclear-powered plants. Now they are having second thoughts due to yet another energy crisis.

During his trip, Mr Chernyshenko reiterated that Vietnam-Russia ties have not been subject to change for more than 70 years. "We will definitely not change our relations, which were established by our ancestors," he stressed, adding that strengthening a comprehensive strategy partnership with Vietnam will be one of Russia's foreign policy priorities. Mr Chernyshenko has already called Vietnam one of Russia's leading partners, according to the Vietnam Express.

As far as bilateral trade cooperation is concerned, the Vietnam-Russia economic roadmap to 2030 can serve as a guide. One important task is to double the trade volume by 2025 to US$10 billion. In the near future, both countries hope to use their national currencies for payment, facilitation of the visa procedures and logistics.

Hot on the heels of Chernyshenko's visit came that of US State Secretary Antony Blinken, who had postponed his visit planned for last year. Mr Blinken's first visit was more subdued. While he met the key leaders, including General Party Secretary Nguyen Phu Truong and Prime Minister Pham Minh Chinh, to further promote their relations to a higher level, the local media placed no focus on the plan to upgrade the Vietnam-US relationship to a comprehensive strategic level in the near future.

Mr Blinken was quoted by the Western media as saying that he hopes to do that in the foreseeable future. In more ways than one, Mr Blinken's visit also prepared for Mr Truong's upcoming visit to Washington in July. Unconfirmed reports also spread around that President Joe Biden might make a surprise visit to Hanoi to shore up ties in the near future. Frankly speaking, Washington cannot afford to be complacent in its relationship with Vietnam, which needs constant adjustment. After all, Vietnam is a pivotal partner in the US Free and Open Indo-Pacific Strategy.

On top of the US and Russia, Vietnam also has to navigate ties with its northern neighbour, China, in every possible way it can. Vietnam and China have a two-tier relationship. The party-to-party ties have been cordial, especially after Mr Truong's visit to Beijing in late October last year, right after the conclusion of 20th National Party Congress. He was the first foreign leader to meet with President Xi Jinping who is leading China for a third term. The trip was not only rich in symbolism but a deep reflection of their fraternal ties, which are increasing intertwined as the world's two most successful communist states. They have efficiently adopted their distinctive political and political systems to reap developmental benefits from globalisation.

In terms of state-to-state relations, both sides can still manage differences that are deep-rooted in their complex relations, including managing territorial disputes, especially in the South China Sea. After Covid when all meetings can be face-to-face, the Asean chair, Indonesia, has expressed the hope that the negotiation of a code of conduct in the South China Sea will proceed at an encouraging pace and in a meaningly way. China and Asean have both said that they would like to expedite the negotiations on the code of conduct to ensure its early conclusion. It is not an overstatement to say that the two communist parties need each other despite some ups and downs in their friendship. Today, Beijing and Hanoi are the biggest supporters of open trade and multilateralism, which have brought progress and prosperity to their nations and peoples.

For now, Vietnam has to balance its economic relations with the strategic imperatives of the three great powers. The World Bank has already forecast that Vietnam will enjoy the highest economic growth in the region this year at 6.3% -- and the growth rate is expected to be the same in 2024. As such, Vietnam's stable ties with these major powers are necessary as they are also huge markets for Vietnamese exports. The US is pivotal because it is still Vietnam's largest export market. Its economic health depends on smoothing US-Vietnam trade relations. At the same time, Vietnam-China trade is also growing. The regional value chain, both traditional and the newly established free trade agreements including the Regional Comprehensive Economic Partnership, has also boosted the trade volume between the two countries.

While bilateral trade with Russia is marginal, unmatched by the volume of trade with the US and China, Moscow's strategic value is far more important. Vietnam-Russia ties have continued non-stop for the past seven decades, and this serves as a counterweight vis-a-vis the US and China.

One can easily see the pragmatic way Vietnam plays its so-called bamboo diplomacy, with great powers, without over-bending but being flexible and curvy enough to stand up to external pressure.

Read more?here.

Thailand Election and Foreign Policy

Thailand is?set?to hold general elections on May 14, it’s first since 2019. The country has been under military rule since 2014, when a coup deposed the democratically elected government led by the current opposition Pheu Thai party. Although military takeovers are regarded as “business as usual” in Thailand – there have been 19 coups since 1932 – and usually do not significantly impact the business environment, almost a decade of quasi-military rule has slowed the country’s growth momentum and diminished its regional status.

The economy?contracted?in the last quarter of 2022 and GDP is expected to?grow?by a modest 3.8 percent this year, far behind Vietnam, Indonesia, and the Philippines. Despite Bangkok’s successful hosting of the APEC summit last year, Prime Minister Prayut Chan-o-cha has also been much less active abroad than his regional counterparts.

Although Parliament was formally?dissolved?on March 20, political maneuvering and campaigning has been ongoing for the past few months. In January, Prayut?joined?the newly formed United Thai Nation Party (UTNP) to run for reelection, pitting him against ally and Palang Pracharath Party (PPRP) leader, Deputy Prime Minister Prawit Wongsuwan. All members of the Senate are appointed by the military, which usually gives pro-military parties more leverage in forming a ruling coalition. However, the split between Prayut and Prawit and the presence of other conservative candidates for prime minister could divide the Senate vote this time around.

Meanwhile, Pheu Thai has set its sights on a?landslide victory, aiming to win up to 310 seats out of 500 in the House of Representatives; 376 votes are needed to elect a prime minister. Paetongtarn Shinawatra, daughter of former prime minister Thaksin Shinawatra, is?one?of the party’s three prime ministerial candidates. The nascent Move Forward Party (MFP), led by Pita Limjaroenrat, is likely to join a coalition government led by Pheu Thai and has?made it clear?it will not form a government with PPRP or UTNP. Other parties that are unlikely to win a majority but will play a key role in forming the ruling coalition are the Bhumjaithai Party, led by Health Minister Anutin Charnvirakul, and the Democrat Party, led by Commerce Minister Jurin Laksanawisit.

As in many other countries, Thai elections are usually won on domestic issues, and this has been reflected in parties’?campaign platforms, many of which have promised to raise the minimum wage, increase social welfare, and improve infrastructure conditions. Under Prayut, foreign policy has not been the government’s priority, but this article aims to examine how Thailand’s stance toward major global and regional issues may change depending on which party comes to power in May.

On Myanmar

If PPRP or UTNP leads the ruling coalition, Thailand’s position toward the ongoing political and humanitarian crisis in Myanmar is unlikely to change. Prayut has been frustratingly complicit in the Myanmar junta’s atrocities by?continuingto maintain diplomatic ties with the military-led government due to the historic brotherly relationship between the two countries’ militaries. Despite a de facto?ban?on Burmese junta representatives at Association of Southeast Asian Nations (ASEAN) meetings, Thailand has invited Myanmar to attend multiple ASEAN-related meetings hosted in Bangkok, including?one?in December that was boycotted by four maritime Southeast Asian countries, and the?ASEAN Defense Ministers’ Meeting-Plus?working group on maritime security in February.

On Navigating Great Power Competition

Similar to and perhaps more so than other Southeast Asian countries, as one of the few countries in the world that has never been colonized, Thailand practices “bamboo diplomacy” and has avoided overtly choosing sides between the United States and China. However, almost nine years under Prayut has caused Thailand to “disappear from the world stage,” in the?wordsof Pheu Thai senior advisor and PM candidate Srettha Thavisin. Although Thailand often touts itself as the United States’?oldest ally?in Asia, bilateral relations have undeniably stagnated over the past decade since the last coup as strategic interests have?diverged. While Washington’s relationships with the Philippines, Vietnam, and Indonesia have improved holistically across multiple areas, the best it seems to be able to do with Thailand is to continue holding the annual Cobra Gold military exercises. Thailand’s?growing defense ties?with China have also been cause for concern.

As economic issues have taken center stage in campaigning, pledges to foster and revive domestic industries have been a driver behind many parties’ election promises, with fisheries being a particular focus. In 2019, the European Union?delisted?Thailand from its group of “warned countries” for illegal, unreported, and unregulated (IUU) fishing to recognize Thailand’s progress in fisheries governance. According to?Pheu Thai?and?Move Forward, this progress came at a high cost for Thailand’s fishing industry, which suffered a loss of roughly?$127 million?in annual export revenue from Prayut’s?excessively prohibitive approachto regulations. Civil society organizations?called out?redundant regulations on vessel tracking requirements, capital requirements for high-seas fishing, and a lack of compensation for vessels affected by the regulations.

Speculation is still rampant on Thailand’s election forecast.?Party switching, factional politics, a potential split vote in the Senate, and a?new law?favoring larger parties in the House of Representatives make it difficult to predict the final breakdown of Parliament seats. Although Paetongtarn Shinawatra leads the most recent opinion polls in popularity over Prayut, animosity toward Pheu Thai from pro-military and pro-monarchy forces is strong and there could be a repeat of 2019, when the party won a majority of seats in the House but was unable to form a government. Activists also?say?that the election date’s postponement from May 7 to May 14 is an attempt to suppress the progressive youth vote, since it coincides with university exams. Domestic policies may be the focus for now, but a new government presents a chance for Thailand to reorient its foreign policy priorities to be more modern, relevant, and capable of adapting to global challenges.

Read more?here.