EASTASIAFORUM ECONOMICS, POLITICS AND PUBLIC POLICY IN EAST ASIA AND THE PACIFIC Vol.13 No.1 January–March 2021 $9.50 Quarterly

Asia after Biden’s election

Dewi Fortuna Anwar What Southeast Asia wants from the Biden presidency

Jia Qingguo China–US strategic competition

Paul Heer Biden recalibrates Trump’s approach to East Asia

Kori Schake Realistic ambitions for US alliance system... and more ASIAN REVIEW: Julia Voo on US cyber and tech priorities EASTASIAFORUM CONTENTS Quarterly 3 RYAN HASS Biden builds bridges to contend with ISSN 1837-5081 (print) ISSN 1837-509X (online) Beijing 6 JIA QINGGUO From the Editor’s desk China–US strategic competition 8 PAUL HEER Few American administrations in living memory face as arduous a set Biden recalibrates Trump’s approach of domestic and external policy challenges as that led by President Joseph to East Asia R. Biden. What faces the new team in Washington is nothing short of 10 KORI SCHAKE herculean: arrest the scourge of COVID-19, grow the economy and begin Realistic ambitions for US alliance once more to address the historic grievances of racial injustice and socio- system in Asia economic inequality. How it handles those tasks will profoundly affect its 12 PATRICK CRONIN capacity to prosecute an effective foreign policy. A clear mantra for US defence strategy It is in Asia that the new president’s foreign policy task looms largest. 15 LARRY DIAMOND So much has changed since Biden left the vice-presidency four years ago. A hard time for democracy in Asia China’s rise, having taken an even stronger authoritarian turn at home 18 JEREMY YOUDE and abroad, represents the biggest test for American primacy since the ASIAN REVIEW: Global vaccination collapse of communism in Eastern Europe. Since taking office, Biden has is still a jab in the dark given no indication that he will falter in a policy of ‘strategic competition’ 21 SANGIN PARK with China across a broad range of policy fronts. After the Trump ASIAN REVIEW: Chaebol reforms presidency frayed so many nerves, confidence in the return of competence are crucial for South Korea’s future to America’s regional posture is high. But US allies and partners in Asia, 26 JULIA VOO while looking for a surer US tread in this part of the world, especially on ASIAN REVIEW: The world needs trade and investment, will resist pressure to add to the clamour for a new US leadership on cyber and tech Cold War with China. priorities As this issue of East Asia Forum Quarterly shows, a ready mix of 30 CHUNG MIN LEE problems await Biden and his team of familiar, and highly experienced, Looking beyond the North in South foreign policy faces. Among other subjects, contributors ponder the fate Korean foreign policy of the US–China trade war, the limits to achieving an ambitious national 32 GORANA GRGIC climate policy, the ongoing challenges on the Korean peninsula, in South Domestic divisions leave blanks in US and Southeast Asia, and the likely financial constraints on a more forward- Asia policy leaning US military posture. US allies have always been asked for more 34 ADAM TRIGGS but given the new administration’s domestic preoccupations—it has Biden’s brief window to reform global already signalled that its foreign policy will be judged by what is good for institutions the American middle class—Washington may well give a new meaning 36 DEWI FORTUNA ANWAR to ‘burden’ sharing over the life of this term. A much less discordant tone What Southeast Asia wants from the emanating from the Oval Office has already soothed the allied ear. But Biden presidency the next four years will no doubt reveal once more the strains and stresses 38 MICHAEL KUGELMAN inherent to maintaining Pax Americana in Asia. How will strategy on South Asia differ? 40 NICK BISLEY James Curran Shared burden of a new vision for the Asia Pacific 42 ROBERT N. STAVINS COVER: A TV screen in Hong Kong shows news of US President Joe Biden after his inauguration. Domestic challenges could limit new Picture: Tyrone Siu / Reuters US climate policy

2 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 SITUATIONS OF STRENGTH PICTURE: TINGSHU WANG / REUTERS

The flags and stakes are raised as the Biden administration balances US priorities in the region with its allies’ China relationships. Biden builds bridges to contend with Beijing

RYAN HASS that massive rearmament would be Acheson articulated in 1950—that the necessary to ensure the viability of the United States must build ‘situations N 1949, American strategists free world. of strength’ with like-minded I feared that Soviet advances were Acheson distilled his thinking in nations to respond to challenges generating an intensifying threat to a 1950 speech at the White House, posed by rival powers—is a central the free world. That August, the Soviet arguing that ‘The only way to deal with organising principle for how the Biden Union broke the United States’ nuclear the Soviet Union, as we have found administration plans to compete with monopoly by successfully detonating from hard experience, is to create China. an atomic device. Washington worried situations of strength. Wherever the This approach is informed by that Moscow’s build-up of military Soviet detects weakness or disunity— a judgment that, as in 1950, the forces could be a prelude to an and it is quick to detect them—it United States and its main partners offensive against western Europe and exploits them to the full’. are aligned in support of important the Middle East. There are clear limits to historical objectives—peaceful settlement of In response, former US secretary analogies between the US–Soviet disputes, prevention of great-power of state Dean Acheson led an effort rivalry at the onset of the Cold War conflict, promotion of an open and to formulate a government-wide and the tense competition that exists rule-based economic system, and the response. The result was NSC-68, a between the United States and China need for international coordination strategy document that concluded today. Nevertheless, the core logic that to tackle transnational challenges.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 3 Additionally, Washington and its The Biden administration’s EASTASIAFORUM main partners share broad interests Quarterly in urging Beijing to forgo its bullying behaviour and accept greater approach to China reflects responsibility for finding solutions to EDITORIAL STAFF global challenges. a subtle but significant But alignment in support Issue Editor departure from the James Curran, Professor, Department of of common objectives will not automatically generate unity of effort. History, The University of Sydney. Trump administration’s Series Editors Unlike in 1950, when the United States Peter Drysdale, Editor in Chief, East produced 50 per cent of global output, Asia Forum and Head, East Asian every major economy in the world more direct approach of Bureau of Economic Research, today maintains deep connections Crawford School of Public Policy, ANU. with China. As a result, no country confronting China Shiro Armstrong, Director, Australia– is willing to join a bloc to oppose or Japan Research Centre, and Editor, East contain Beijing. This reality will place Asia Forum, Crawford School of Public Policy, ANU. limits on the level of unity that is available to contend with challenges timelines for achieving its climate Editorial Staff posed by China. targets. There also could be space for Coordination: Arius Derr, Marie Armstrong. To the extent that Washington productive trans-Atlantic cooperation Editing: Editing: Nicol Brodie, David proves able to collect the weight of to accelerate technological innovation, Chieng, Alison Darby, Serena Ford, key countries to deal with Beijing shore up international trade and Oliver Friedmann, Annie Gao, Brandon from a point of maximum advantage, investment rules, combat the Harrington, Ingrid Mao, Dorothy it will be on an ad hoc, issue-by-issue COVID-19 pandemic, uphold human Mason, James Naylor-Pratt, Jake Read, basis. Countries will join the United rights and democratic values, and Maya Salama, Lily Shen, David Wu, States in seeking to influence Beijing exchange best practices on countering ANU. based on their own priorities and how domestic violent extremism. Editorial Advisers: Max Suich, Peter Fuller. China relates to them. For some, the With ASEAN partners, US goal might be to push Beijing to halt policy might be tailored around the Production: Niki van den Heuvel, Hill Editing. its problematic behaviour. For others, priorities of the region’s youthful it might be to press China to exercise and dynamic population. Specific Email [email protected], [email protected]. greater leadership in addressing global projects might focus on expanding challenges such as climate change. access to information and opportunity, Views expressed are those of individual To weave together issue-based developing human capital, authors and do not represent the views of coalitions, the United States will need demonstrating leadership on climate the Crawford School, ANU, EABER, EAF, to meet partners where they are, rather change or improving local public or the institutions to which the authors are than demanding that they accept health capacity. Such efforts could attached. Washington’s perception of a China pay dividends over time by elevating threat. Building common purpose America’s appeal and creating a more with partners will not be exclusively fertile environment for coordination animated by China. Rather, the guiding on specific issues relating to China. principle will be forging habits of Attempting to mobilise the region to coordination with friends wherever collectively push back against China’s possible. maritime activities, by contrast, will With European partners, such have limited purchase. Published by ANU Press efforts could work towards setting The United States must The Australian National University common climate change ambitions, simultaneously allay concerns among Canberra ACT 2601, Australia Email: [email protected] which could then inform joint efforts partners about being ‘forced to Web: http://press.anu.edu.au to push Beijing to accelerate its choose’ between the United States

4 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: CHIP SOMODEVILLA / REUTERS

President Xi Jingping and then vice-president Biden met in Washington DC for an expanded bilateral meeting in 2014. It is expected that the new Biden administration will revive a more subtle and productive strategic policy when it comes to engagement with China and its allies in the region. and China. The inescapable reality cooperation with others on China. The Biden administration’s is that China’s importance to other Washington’s partners will feel more approach to China reflects a subtle but countries is growing. It is the world’s comfortable working with the United significant departure from the Trump largest trading power and the leading States on issues relating to China administration’s more direct approach engine of global economic growth. It when doing so is not perceived as of confronting China. Although the is becoming more embedded in Asian an expression of hostility towards results of the Biden administration’s and European value chains. China. When Washington is seen as strategy may not be visible for some Given this reality, the United States an instigator of tensions with Beijing, time, President Biden and his team will need to give allies space to pursue on the other hand, it reduces partners’ do not harbour illusions of changing their own interests with China, even willingness to work with the United China overnight. They intend to play while they partner with the United States for fear that doing so could a long game. If their approach bears States on priority issues. Washington be perceived as tacit support for fruit, the United States will fortify its will also need to demonstrate— adversarial antagonism toward China. capacity to compete with China from a through its own words and actions— Above all, Washington will need position of strength. EAFQ that it supports developing a to right its own ship as a prerequisite constructive relationship with China, for instilling confidence in its partners Ryan Hass is the Michael H. Armacost even as it prepares to push back to join efforts to influence China. Chair in the Foreign Policy program strongly against problematic Chinese The United States must restore its at the Brookings Institution, where he behaviour. own sources of strength by hastening holds a joint appointment to the John Somewhat counterintuitively, domestic renewal, investing in L. Thornton China Center and the the more Washington is seen as alliances, re-establishing US leadership Center for East Asia Policy Studies. He responsibly working to develop on the world stage, and restoring is also a non-resident affiliated fellow durable relations with Beijing, the America’s authority to advocate for at the Paul Tsai China Center, Yale more diplomatic space it opens for values. Law School.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 5 MALIGN OR BENIGN China–US strategic competition

JIA QINGGUO back on a range of issues, including consulates, traded insults and attacks, human rights, Hong Kong, the South and suspended most official channels N late 2017 China–US relations China Sea and Taiwan. of communication. The two countries’ I shifted dramatically when the Secondly, under the Trump warships and military aircrafts tried Trump administration officially labeled administration, China–US strategic to outmanoeuvre each other in close China as a strategic competitor. For competition was competition where proximity in the South China Sea and various reasons the Democrats seem the end justified the means. To the Taiwan Strait, escalating the risk of to have accepted this label. Many rally domestic and international an accidental military clash. believe strategic competition will support to contain China, the Trump Is this the kind of strategic continue to define the relationship administration resorted to spreading competition in which the Biden under the Biden administration. But lies and misinformation. It branded administration wants to engage? On what exactly did strategic competition the COVID-19 virus the ‘China virus’. the surface, it appears so. For example, mean for China–US relations during It claimed that China’s Belt and Road senior US officials recently stated the Trump administration? Will it be Initiative is a debt trap and that China’s in congressional hearings that they different under Biden, and if so, in economic growth has been a result of believed the Trump administration what ways? theft of American technologies and was correct to take a tough approach The strategic competition between unfair economic policies. towards China. They also openly China and the United States under Infuriated by the Trump claimed that the administration will the Trump administration turned out administration’s attacks, some Chinese work with US allies to put pressure to be rather malign. Firstly, it was a retaliated in kind, presenting the on China. But closer analysis suggests competition to undermine rather than United States as a vicious monster that despite the tough rhetoric, the outperform the other. The Trump constantly stoking conflicts and Biden administration’s understanding administration managed to trash the wars overseas to advance its selfish of the strategic competition could be engagement policy that previous US interests in the name of defending quite different from that of the Trump administrations—both Democrat and freedom and democracy. One Chinese administration. Republican—had adhered to since the senior diplomat even alleged that a The Biden administration appears normalisation of China–US relations US military lab was responsible for to favour a strategic competition to in 1979. It devoted much time and the COVID-19 outbreak. This trading outperform rather than to undermine energy to smearing China, accusing of barbs deepened the mistrust and the other. At home, it promises to Beijing of trying to destroy freedom hostility between the two countries. focus on issues like restoring unity, and democracy and dominate the Finally, it was a lose–lose freedom and democracy, investing world through territorial expansion competition. The trade war initiated more in education and science, and and diplomatic coercion. To this end, by the Trump administration has reversing the trend of economic the Trump administration pressured— left many factories closed and many polarisation that has frustrated and or collaborated with in some cases— people unemployed in both countries. angered many Americans. other countries to work with the American consumers are paying more Overseas, the Biden administration United States to contain China. for imported goods. The technological claims that it will try to restore Many Chinese both in and outside war saw high-tech companies relations with US allies and rally the government believe that China from both countries bleeding. The international support to tackle global should not tolerate this. They argue two countries found it difficult to challenges, including the COVID-19 that what the United States wants from cooperate on anything, even on the pandemic, economic recovery and China is not just its money but its life response to the COVID-19 pandemic. growth and climate change. While (bujin yaoqian, erqie yaoming). That Both countries imposed sanctions accepting that some aspects of leaves China no alternative but to fight on each other’s companies and China–US relations are increasingly for its existence. Thus, China pushed officials, closed down each other’s adversarial, the new administration in

6 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: THOMAS PETER / REUTERS

The front page of the Southern Weekly reports on the domestic competition between former US president Donald Trump and President Joe Biden during the November 2020 election.

Washington also argues that the two election campaign Biden risked How the Biden administration countries share important interests in losing popular support by declaring actually deals with the thorny issues other aspects, providing opportunities that he perceives China as a strategic between the two countries is yet for cooperation. competitor rather than an enemy. to be seen. It will also depend on Biden’s administration appears to While endorsing a tough approach how China responds to US actions. resist the idea that the end justifies toward China, US Secretary of State Given the strong negative public the means. It has condemned Antony Blinken also said that Biden’s sentiments toward each other, and Trump’s practice of spreading lies and China policy will be different from his their increasingly divergent domestic misinformation, and claims that it will predecessor’s. The new administration political practices, a truly benign develop policies based on principle will confront China on some issues, strategic competition still remains and fact. Senior Biden officials while seeking to collaborate in other difficult, if not impossible, to achieve. indicated that they will reassess areas where the two countries share EAFQ some of Trump’s China policies. For interests. This leaves much room for example, Jen Psaki, White House press cooperation, given that they actually Jia Qingguo is Professor of Diplomacy secretary, said on 29 January 2021 that share many common interests. and International Relations at the ‘everything the past administration has Although the Biden administration’s School of International Studies, Peking put in place is under review’. approach to strategic competition University. Crucially, the Biden administration is quite different from the Trump does not believe that all-out administration’s, it does not confrontation with China serves US necessarily follow that China–US interests. During the presidential relations will stabilise and improve.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 7 COMPETITION OR COLLABORATION Biden recalibrates Trump’s approach to East Asia

PAUL HEER reassessment of its interests and goals system, and its egregious human and aspirations in East Asia. rights behaviour. Blinken, during his RESIDENT Joe Biden has much This recalibration will take time, confirmation hearings, agreed with P repair and restoration work to do especially given Biden’s need to the Trump administration that China in East Asia. Donald Trump seriously focus on urgent domestic priorities, merits a strong US response, even degraded the United States’ role in including reining in the COVID-19 though he disagreed with many of the region, helping Beijing to escalate pandemic and healing the deep Trump’s tactics. Since taking office, he the most hostile and confrontational political divisions that fuelled the and Sullivan have reiterated the need US–China relationship in 50 years. constitutional crisis of 6 January. Nor to impose costs on China and to shape Simultaneously, Trump undermined can he immediately reverse all of Beijing’s behaviour. US credibility with the allies and Trump’s East Asia policy initiatives. Although Biden’s team recognises partners that Biden will rely on to For example, domestic US politics the need for cooperation with Beijing confront the strategic challenge will influence how quickly he can on global issues of mutual concern— of China. Even before the Trump defuse the trade war with China, such as climate change, pandemics administration took power, East which in turn will depend in part and economic crises—it will not cease Asian nations had started to reassess on what reciprocal concessions are to confront China on other issues. their policies in the wake of historic forthcoming from Beijing. Indeed, Campbell and Sullivan wrote shifts in the regional balance of In any event, Biden will not retreat jointly in Foreign Affairs that ‘the best power and growing doubts about to a posture of complacency towards approach’ to Beijing is ‘to lead with the substance and sustainability of China or simply ‘engagement’: there is competition [and] follow with offers of Washington’s commitment to the too much water under the bridge for cooperation’. region. Trump exacerbated this with that. During his presidential campaign, They also outlined a policy his confrontational approach to Beijing Biden wrote in Foreign Affairs that of ‘managed coexistence’ and and his inconsistent and often reckless ‘the United States does need to get ‘sustained competition’, based on the approach towards US allies. tough with China’ because of Beijing’s acknowledgement that ‘each will need Biden will revive a more pragmatic many coercive and covert challenges to be prepared to live with the other and attentive posture towards the Asia to the United States and its allies and as a major power’. This indicates the Pacific. Many members of his foreign partners, China’s global efforts to Biden team’s recognition of the need policy team—especially Secretary legitimise its authoritarian socialist for a reciprocal approach that does not of State Antony Blinken, National overestimate US leverage over China. Security Adviser Jake Sullivan and But Campbell and Sullivan also framed Indo-Pacific policy coordinator Kurt Biden and his team have the goal as coexistence with China ‘on Campbell—have ample experience terms favourable to US interests and in the region from their work in the been emphatic about values’. The key challenge here will be Obama administration and earlier. competing with Beijing’s inevitable They know, however, that they cannot their determination to pursuit of terms favourable to Chinese simply revert to Obama-era policies— interests and values, without letting the region and the world have changed reinvigorate US alliances the contest devolve into a zero- dramatically in the past four years. sum struggle for regional or global Washington will need new strategies and partnerships supremacy. and tactics, and probably some The good news for East Asia is

8 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: KEVIN LAMARQUE / REUTERS

US President Joe Biden, pictured at the White House shortly after his inauguration, will revive a more pragmatic and attentive posture towards the Asia Pacific. that Biden and his team have been partners. Biden has acknowledged the Much of East Asia has already emphatic about their determination need to ‘salvage [the United States’] adapted to a new regional security to reinvigorate US alliances and reputation’ and ‘rebuild confidence in dynamic, so the United States cannot partnerships there, thus mending our leadership’. simply ‘catch up where it left off’. the damage done by Trump. Biden But that is only the first step Washington must work closely with emphasised that Washington must toward rebuilding trust in the United its allies and partners to understand ‘build a united front’ against ‘China’s States’ commitment to East Asia where it now fits in East Asia’s abusive behaviours and human rights and its prestige, reliability, economic balance of power and use that as violations’. Campbell and Sullivan competitiveness and military the foundation for a renewal of US wrote that ‘the combined weight preparedness there. Washington leadership in the Asia Pacific. EAFQ of US allies and partners can shape must have an accurate and up-to- China’s choices across all domains date understanding of its allies’ and Paul Heer is a Distinguished Fellow at . . . if Washington deepens all those partners’ varying interests, priorities the Center for the National Interest, relationships and works to tie them and threat perceptions. The United Washington and a Non-Resident together’. States must avoid the risks of taking Senior Fellow at the Chicago Council This is reassuring, but Biden’s task allies for granted—presuming that on Global Affairs. He served as the will not be easy: there is much ground their ideas on how best to deal US National Intelligence Officer for to recover. The Trump presidency with China are identical to those of East Asia from 2007 to 2015. He is the has substantially eroded the exemplar Washington, for example, or forcing author of Mr X and the Pacific: George of US democracy that underpinned them to choose between Beijing and F Kennan and American Policy in East Washington’s ties with its allies and Washington. Asia, Cornell, 2018).

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 9 STRIKING A BALANCED POSE Realistic ambitions for US alliance system in Asia PICTURE: IVAN ALVARADO / REUTERS

The Trump administration walked away from alliances such as the 2018 Trans-Pacific Partnership. Domestic politics may hinder President Biden’s ability to re- engage in such regional alliances. Delegates of the Trans-Pacific Partnership gather for an official photi before signing the agreement in Santiago, Chile 2018.

KORI SCHAKE to them, but do not want to choose system is that most of its regional allies between Washington and Beijing. don’t like each other much. Another S ALLIES in Asia, like US allies They want US involvement—but not is that they are enmeshed with China U everywhere, have many and too much. economically in ways that cause them often conflicting desires. More often than not they are anxiety, while the United States— They want the commercial freedom disappointed. never the most reliable ally—is more to benefit from Chinese investment, The key to success in US alliance self-absorbed than usual. markets and supply chains without relationships, in Asia as elsewhere, While the Biden administration unwelcome Chinese influence. is that most countries have no better portends some policy changes They want protection from military alternatives. Countries in the region towards Asia, these changes will likely intimidation or attack by China have no greater reservoir of trust in be less than anticipated. There is a without going to war or interrupting their neighbours than they do the strong bipartisan consensus that the the flow of commerce. They want US United States, and Washington brings ‘responsible stakeholder’ approach domestic politics to stop at the water’s the advantages of diplomatic heft, to China is unsustainable—China’s edge, even as their own domestic an economy of scale and a capable behaviour indicates it does not want to politics require complicated detours. expeditionary military. accept the existing order. They want Washington to commit One weakness of the US alliance Some scholars argue that ‘great

10 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 power competition is not a coherent of a wealthy, domineering China. protection and has six months before framework for US foreign policy’; that Increasing repression at home and Trade Promotion Authority (TPA) it ‘risks confusing means and ends, aggression abroad may reflect a expires, allowing Congress to modify wasting limited resources on illusory country seeking to claw as much any agreements. It doesn’t want to threats, and undermining cooperation change as it can get as it sinks in expend the political capital to get a on immediate security challenges, such quicksand. Even if China’s predation trade agreement ratified by Congress. as climate change and nuclear non- is the result of its accomplishments, The same goes for ratifying the UN proliferation’. But competition does its choices are strengthening the Convention on the Law of the Sea, not mean ‘unrelenting struggle’, and antibodies against its continued a treaty that the United States was President Biden is making it clear that success. instrumental in negotiating, abides by a more confrontational approach to It will, for example, be difficult for and even enforces, but will not ratify. China does not preclude cooperation Volkswagen to sustain operations in The gaps between the policy poses on climate or non-proliferation. Xinjiang as the German public grows Washington strikes and the effort Two US experts on Asia policy, more aware of Uyghur ‘re-education’ it is willing to make has made allies Michael Green and Evan Medeiros, camps and the brand’s association sceptical of US leadership. argue that ‘an ambitious new strategy’ with them. More confrontational Another area of potential daylight is in order, entailing the ‘bold and Chinese ‘wolf warrior’ diplomacy is between the pose Washington is somewhat risky moves [of past US compounding the problem. striking and the policies where it is administrations] that confirmed willing to accept potentially dangerous American strength, decisiveness, HINA as only a formidable consequences is human rights. The and leadership’. Their daunting list of C regional power would still Biden administration is putting human requisite policies includes a digital complicate US and allied security. rights front and centre in its political trade agreement, a government– Preserving US attention to and messaging, but while rhetoric about private sector infrastructure alliance, leadership in Asia may be harder if the importance of protecting human an Asia-specific initiative to set rules China doesn’t pose a global challenge. rights shapes most of the public on state competition and the United But the failure of China’s global statements by both Secretary of State States to volunteer to host APEC in ambitions will also diminish countries’ Tony Blinken and National Security 2023. And that’s before they address willingness to accede to Chinese Advisor Jake Sullivan, policy actions the specifics of cooperation over power plays, so the equation may well beyond economic sanctions are not yet infrastructure, bringing European balance out. apparent. allies into the mix for ‘economics, The great US baseball pitcher The United States does not need a technology, human rights, and climate’, Satchel Paige was once asked what sweeping and bold agenda that takes or doubling down on the United advice he would give to young 85 per cent of its foreign policy effort States’ role as a security provider. pitchers. His answer: ‘Throw strikes. to preserve the existing international While these are all good ideas, it Home plate don’t move’. order against Chinese efforts to is unlikely they will eventuate. But He meant that there is simply no establish something that the United the failure of these elegant ambitions substitute for doing the things that States and many countries in Asia and will not result in China’s hegemony. are known to succeed. The same beyond oppose. Focusing on a few The prevailing view of China is as a is true for US foreign policy. If the key areas is probably good enough, stampeding success, sweeping aside Biden administration wants allies given the cost of the choices China is the existing order and supplanting US to make difficult choices with costly making. Fortunately for a solipsistic influence. But, as Michael Beckley’s consequences, it must make some society, paramount among those work has demonstrated, China’s itself. areas is strengthening the domestic growth model is more expensive than Green and Medeiros argue that the foundations of US strength. EAFQ it can afford. We may already be seeing Biden should rejoin the Trans-Pacific a stalling—and potentially failing— Partnership, but that ‘domestic politics China. won’t allow him to do so’. Kori Schake is the Director of Foreign A failing China brings problems That’s not strictly true. What and Defence Policy Studies at the of a different character—shorter they actually mean is that the Biden American Enterprise Institute (AEI). and sharper than the problems administration is in favour of trade

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 11 LESS CONFRONTATION, MORE COOPERATION A clear mantra for US defence strategy

PATRICK CRONIN military power is far from Beijing’s order that Biden hopes to achieve. main strategic thrust. President Xi The lengths to which Putin has gone HE defence challenge in Asia Jinping’s priority is China’s economic to muzzle political opponent Alexei T is enormous. The Joe Biden and technological leadership, which, Navalny could further poison US– administration must preserve a if achieved, could yield military Russia relations. credible force posture to defend advantage and, if halted, could trigger Amid this bracing security against potential threats from North military action. environment and the imperative Korea, China and Russia. It must also Xi is using this centennial year of slowing climate change, Biden’s transform a Cold War legacy force of the Chinese Communist Party to primary defence goal may shift from structure with advanced technologies burnish his credentials as the most confrontation towards cooperative like artificial intelligence, autonomous powerful man in China. A might- security. His Asia team would like systems and quantum computing. makes-right conviction is found in to concentrate on working well with It must do all this as it battles to his exhortation that the PLA must be others, using persuasion when it can contain the COVID-19 pandemic, ready ‘to act at any second’. Having and power when it must. Yet the past turn an economic recession into more watched Xi silence Uyghurs in three US administrations—Bush’s equitable growth and overcome deep Xinjiang and create a national security global terror diversion, Obama’s political and racial divisions at home. law to throttle Hong Kong, democratic under-resourced pivot, and Trump’s North Korea’s test of the Taiwan and regional states should not ‘America First’ retrenchment—suggest Hwasong-15 intercontinental ballistic rest comfortably. a more erratic policy course out of missile (ICBM) in November 2017 Russia remains a potential spoiler Washington. demonstrated its ability to strike the in Asia. Through its strategic weapons, Kurt Campbell’s appointment as US homeland. Kim Jong-un told the an alliance of convenience with China, coordinator for the Indo-Pacific—or Eighth Congress of the Workers’ Party brazen espionage and barely cloaked ‘Indo-Pacific czar’—positions him of Korea in January 2021 that his interference in the internal political to follow through with the United country needed more weapons. Easily affairs of democratic states, it has the States’ rebalance to Asia in a way he reversible promises not to test nuclear means to thwart the international could never do as President Obama’s weapons and long-range missiles Assistant Secretary of State. He is appear dubious deterrents to Kim’s China’s international clear-eyed, neither resigning to Pax ambition of making North Korea a Americana nostalgia nor succumbing permanent nuclear-weapon state. environment and global to fear and xenophobia. Reducing President Biden would like America’s trust deficit is central to to strengthen non-proliferation, development space narrowing challenges and broadening including through negotiations with responses. North Korea, yet even a rational North has recently begun to A shift toward more cooperative Korean regime could trigger conflict security begins with repairing through miscalculation. constrict as countries Americans’ trust in their government Yet North Korea is a minor irritant and allies’ trust in the United next to the China challenge. react to the full realisation States. Defence policy untethered The People’s Liberation Army (PLA) from popular support will founder is the United States’ most daunting of Xi’s governance model and the challenges in Asia and military problem, even though around the world are too large for

12 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: US NAVY / REUTERS

A Seahawk helicopter launches during flight operations aboard the US Navy aircraft carrier USS Ronald Reagan in the South China Sea. the United States to tackle alone. economic bulwark that advances the pursuit of technology governance Another objective of cooperative cooperative security through the rule (a so-called D10 or T10). The security is to limit strategic distrust of law, standards and norms to deal administration will also operationalise with major-power competitors. with the challenge of trade in an age the Quad alliance coalition between China is a formidable competitor of new technologies and secure supply Japan, India, Australia and the United but not an adversary, while Russia chains for national security. But that is States to address functional issues with wants greater status but is willing not how it will be viewed, especially in these and possibly other partners. to engage in arms control. Still, in Beijing. Because cooperative security Cooperative security is no acknowledging ‘extreme competition’ aims to be inclusive, the United States substitute for basic defence. As the with China, vowing to protect Taiwan will have to endeavour to be more pro- Pentagon conducts both a global force and allies, and accusing Russia of rule of law than sharply anti-China. posture review and China policy, the election meddling, Biden walks a Enlarging cooperation will happen job of deterring aggression without fine line between cooperation and through both established and triggering conflict remains a looming confrontation. innovative mechanisms, multilaterally challenge. After Biden’s inauguration, Campbell and an experienced and bilaterally. The United Nations and PLA bombers and fighters flew interagency team of regional international organisations, including through Taiwan’s air defence specialists are working to build a web those centred on ASEAN, will be fully identification zone and simulated of allies and partners. The goal is not engaged. But the region may also an attack on a US carrier. Military an Asian NATO but a diplomatic– expect a summit for democracy and manoeuvres were backstopped by this

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 13 unprompted diplomatic message for bomber, Columbia-class SSBN administration is likely to replace Taiwan: independence ‘means war’. submarines and replacements for attempts to seek to denuclearize the Holding the line on deterrence land-based ICBMs are more likely to Korean peninsula with but step-by- requires clear red lines that the United be delayed than eliminated. Because step arms control. While the United States will not tolerate being crossed, Biden has made clear that the sole States may be unable to convince supported by ready and credible purpose of nuclear weapons is to deter Beijing to cap its growing nuclear forces. Secretary of Defense Lloyd a nuclear attack, he may cancel a low- force, it might have more success with Austin may wish to might adopt the yield nuclear warhead for the Trident risk-reduction measures. Avoiding a prior administration’s guidance of: II D-5 missile. conflict over Taiwan is vital. But the 1 denying China sustained air and Budgetary pressures are also apt dialogue might also pursue ways to sea dominance inside the ‘first island to affect and constrain the size of prevent conflict in space, cyberspace, chain’ in a conflict; 2 defending the conventional forces. Financial strains or with new technologies like first island chain nations, including may reinforce the administration’s autonomous systems. Taiwan; and 3 dominating all domains argument for deploying forces forward Before being tapped as Deputy outside the first island-chain. But there in the Indo-Pacific. While overseas Secretary of Defense, Kathleen Hicks is an obvious tension between a US basing may prove cost effective, wrote that the way to compete with ability to protect regional actors and distributing forces to geostrategic China’s military–civil fusion strategy China’s desire to prevent interference and reliable locations takes effort. was not to focus on disrupting it but in its neighborhood by foreign powers. The silver lining of budget constraints on boosting US efforts in tandem So, Secretary Austin’s team will seek is that the trend fortifies Biden’s with allies and partners. Similarly, as to offset US military capabilities with desire to lighten the United States’ the Biden defence seeks to turn the bilateral dialogue and confidence- defence burdens by strengthening page on the past four years, its mantra building measures with Beijing. alliances; rejuvenating arms control is clear: less confrontation, more Deterrence costs money and and multilateral institutions; and cooperation. EAFQ defence spending may decline. Force forging rules in cyberspace, space, structure, operations and personnel telecommunications and high- are bound to be affected, as the technology exports. Patrick Cronin is Asia Pacific Security Department of Defense seeks to Biden gave arms control a boost Chair at the Hudson Institute, preserve investments in innovative by immediately extending New Washington DC. technologies. Even the nuclear triad START with Russia and announcing will receive scrutiny. But follow-on that the US will continue to support delivery systems like the B-21 strategic the nuclear test ban treaty. His

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14 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 AUTHORITARIAN SURGE PICTURE: STRINGER / REUTERS

Demonstrators protest against the recent military coup on the streets of Yangon, Myanmar, February 2021. A hard time for democracy in Asia

LARRY DIAMOND own traditions of advocacy for an upshot of its concurrent public democracy—Trump himself had a health, economic and democratic NDER the presidency of transactional, value-neutral approach crises. It also stems from the inevitable U Donald Trump, concerns about to dealing with China. collision of realist and idealist logics in democracy and human rights were President Biden will be different. In American foreign policy. demoted in US foreign policy. Trump’s a formative essay outlining his foreign The battle over China policy in administration deserves credit policy views early in 2020, Biden the Biden administration will likely for reorienting American foreign prioritised the renewal of democracy emerge from two competing views policy to confront an increasingly at home and abroad. Yet the new of what constitutes a ‘realistic’ stance authoritarian China. But while some administration faces formidable towards China. US officials did what they could to difficulties and contradictions in The ‘old realism’ emanating from advance human rights—for example trying to counter authoritarianism and President Nixon’s opening to China in protesting against China imposing defend freedom in Asia. This is due (and dominating American foreign its national security law on Hong both to China’s increasing power and policy for the following several Kong or in commemorating China’s the United States’ declining stature— decades) held that drawing Beijing

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 15 PICTURE: DANISH SIDDIQUI / REUTERS

A protestor dressed as Captain America attends a Human Rights Day march, organised by the Civil Human Right Front, in Hong Kong, December 2019.

more deeply into the international decades of relentless technology theft must do more to enhance its military system would make it a ‘responsible and an intense Chinese Communist readiness and deterrence. stakeholder’, facilitating its ‘peaceful Party (CCP) campaign of ‘military– Within Asia, the indispensable rise’ and gradual modernisation into a civil fusion’—increasingly threatens counterweight to China is India. more politically open—if not entirely Taiwan. President Xi Jinping and India will have a larger population democratic—system. other senior Chinese leaders speak in than China within a decade. While ‘New realism’ sees China pursuing belligerent terms of their intention to China is three times richer in per dominance in Asia with specific ‘reunify’ Taiwan with the mainland, capita income, India is catching up objectives—including pushing the no longer using the adjective ‘peaceful’ economically and technologically. And United States out of the Indo-Pacific to describe the process by which it though India’s military spending is region, constructing military bases will occur. Taiwanese President Tsai only a quarter of China’s, it has one of in and controlling maritime traffic Ing-wen’s policy restraint is met with the world’s largest militaries and is a through the South China Sea, and psychological warfare and other forms Quad partner with the United States, eroding US alliances. From this of intimidation. Japan and Australia. perspective, countering China’s bid for The Biden administration must A loose strategic forum, the Quad regional dominance is imperative both consider how it can deploy greater lacks joint military exercises but is for regional security and for defending military force to defend against—and evolving towards greater military freedom and democracy. hopefully deter—Chinese military cooperation and intelligence sharing The military dimension of this coercion, while also avoiding to deter Chinese aggression. While the imperative looms large. The unnecessary confrontation or further legacy of ‘non-alignment’ in Indian modernisation and expansion of stoking Chinese nationalist sentiment foreign policy precludes a formal China’s military—aided by four already on the rise. And Taiwan military alliance, the Quad countries

16 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 share a powerful strategic imperative to democracy. An illiberal populist, in preserving a free and open Indo- Rodrigo Duterte has degraded Any strategy to promote Pacific region. a functioning democracy in the This would seem to augur well Philippines. democracy in Asia will for growing cooperation among the The prospect of a democratic region’s powerful democracies—but transition seems stalled in Malaysia need to integrate strategic just when India is becoming important and distant in Singapore. Hun Sen to the future of democracy in Asia, has completed Cambodia’s slide into and human rights it is drifting in an authoritarian one-party dictatorship. Vietnam direction. has been cracking down heavily on imperatives, strengthen Re-elected in a landslide victory dissent and civic space. Indonesia and in 2019, the Bharatiya Janata Party Mongolia remain genuine democracies and defend partners in (BJP) and its Prime Minister, Narendra but are preoccupied with internal Modi, are eroding the independence stresses. Even in Japan, Asia’s oldest civil society and look to the of India’s main institutions. The right- liberal democracy, democratic norms wing populist party traffics in religious and practices weakened during the medium run chauvinism and intolerance of critics nearly eight years of Shinzo Abe’s and minorities. leadership. While liberal democracy is diplomacy and aid flows to preserve If the Biden administration remains in many ways thriving in Taiwan, it is civil society groups and independent silent in the face of these trends, increasingly threatened by China. media. These democracies will have the strategic partnership with India more impact if they coordinate their will ring hollow in its defence of O there is little prospect for activities and prioritise the diffusion democracy. On the other hand, if it is S success in a frontal—not to of technologies to help democrats too confrontational and moralistic— mention unilateral—campaign evade digital surveillance and especially when US democracy demanding perfect fidelity to censorship. In some instances—and is visibly diminished—US–India democratic norms. Any strategy to sadly for Hong Kongers—established relations could careen off the rails. promote democracy in Asia will need liberal democracies may need to No dilemma complicates the Biden to integrate strategic and human rights provide a temporary or even long- aspiration to promote democracy in imperatives, strengthen and defend term home for democrats at risk. Asia more seriously than this one, partners in civil society and look to the In the near term, the priority which remains poorly understood in medium run. may need to be containing the Washington. Few people in the region want democratic retreat and countering South Korea’s left-of-centre their countries to become vassals of a the rise of authoritarian China. In government is also infringing on regional order under China’s control. some countries, this means just judicial independence and freedom of This common interest can provide trying to keep democrats alive. But speech. It presents Washington with a leverage for engagement around the growing demands of young similar dilemma, particularly given the human rights issues and rule of law. people in the region for more open potency of anti-US sentiment on the Some leaders, like Duterte, may and accountable government offer political left in South Korea. threaten to ‘play the China card’ but it hope that this authoritarian moment It is a hard time for democracy is unlikely to be popular domestically, will have an expiration date. EAFQ in Asia. Myanmar’s military, which particularly as the costs of economic already held veto power over and strategic engagement with China Larry Diamond is Director of the constitutional change and control become more apparent. When a Center on Democracy, Development, of Myanmar’s power ministers, democratic rebound comes, it will be and the Rule of Law at Stanford staged a coup in February ending the driven by forces in civil society. University, Senior Fellow at the Hoover country’s five-year experiment with The United States and its liberal Institution and the Freeman Spogli semi-democracy. In Thailand, the democratic allies, such as Australia, Institute at Stanford, and author of military remains in charge alongside Canada, the European Union and The Spirit of Democracy (St Martin’s the monarchy, blocking any return hopefully Japan, must work through Griffin, 2008).

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 17 ASIAN REVIEW: PANDEMIC PREPAREDNESS

PICTURE: AJENG DINAR ULFIANA / REUTERS

A health care worker prepares a dose of China’s Sinovac Biotech vaccine for the coronavirus disease (COVID-19), during a mass vaccination for elderly people at Indonesia’s health ministry in Jakarta, March 2021. Global vaccination is still a jab in the dark

JEREMY YOUDE until 2024. partnership between the WHO, the This lack of access persists Coalition for Epidemic Preparedness N LESS than a year since the throughout much of Asia. Most Asian Innovations (CEPI) and Gavi, The I World Health Organization states have not started vaccinating Vaccine Alliance (GAVI). (WHO) declared COVID-19 to be their populations, largely due to Its aim is to develop, purchase and a pandemic, there are already 10 limited vaccine manufacturing supply COVID-19 vaccines to provide different vaccines approved for use capabilities, logistical challenges and more equitable access, with the goal in various countries around the regulatory delays. In contrast to the of vaccinating 1.8 billion people (or 20 world. But vaccines are only effective strong initial responses to COVID-19 per cent of the population in its target if people can get vaccinated—and by many Asian states, the slow rollout low-income states) by the end of 2021. progress on that front is incredibly of vaccination programs threatens to Under this plan, Southeast Asian states uneven. While many states in the undermine early successes. should receive 695 million vaccine Global North will likely achieve There are efforts to improve doses by year’s end, covering roughly widespread vaccination by late 2021, COVID-19 vaccine access throughout half of the region’s population. middle and low-income countries may Asia, two of which deserve particular COVAX represents a global not receive significant vaccine access attention. The first is COVAX, a joint collaboration to fight against vaccine

18 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: PANDEMIC PREPAREDNESS

PICTURE: REUTERS / CINDY LIU

Workers offload boxes of Oxford/AstraZeneca vaccines, distributed by COVAX, at Phnom Penh International Airport, Cambodia 2021. nationalism and widen vaccine COVAX’s leaders estimate that it will vaccine manufacturers, jumping the availability. So long as significant require at least another US$2 billion queue by offering to pay more. By portions of the world lack access to to achieve its goals. US President Joe doing so, they circumvent COVAX COVID-19 vaccines, the pandemic will Biden’s recent announcement of a and increase the amount of time that continue to threaten the globe. Nearly US$4 billion contribution to COVAX other countries will have to wait for every country in the world has signed should provide a significant boost. their doses. on to COVAX’s plan, giving a strong Second, the initiative needs The second effort is vaccine boost to its legitimacy and reinforcing to overcome serious logistical diplomacy, specifically efforts being the interdependence inherent in hurdles—transporting the doses undertaken by the Indian and Chinese fighting global pandemics. quickly, maintaining the cold-storage governments. Vaccine diplomacy Despite this optimism, COVAX requirements, training enough medical refers to governments providing other faces three serious challenges that workers to administer the vaccine countries with access to vaccines as could limit its effectiveness for Asian and conducting public information part of a strategy to build goodwill states. campaigns. internationally. First, it lacks financial resources. Finally, some wealthier countries India, which is home to 60 per cent While it has raised US$6 billion so far, are negotiating their own deals with of the world’s vaccine manufacturing

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 19 ASIAN REVIEW: PANDEMIC PREPAREDNESS capacity, and China, which has vaccines to Nepal, Bangladesh and have had to wait years—to gain access developed at least two COVID-19 Sri Lanka—all three of which have to the vaccine. This will sustain the vaccines, are both well-poised to experienced tense relations with the successful efforts that many of these make doses available to their Asian Indian government in recent years. states have already undertaken to limit neighbours and have undertaken China is making its vaccines freely COVID-19’s spread. aggressive programs to do so. This available in Sri Lanka, Indonesia and But one main challenge is comes in contrast to the United States other Southeast Asian countries as how recipient states navigate the and other wealthy states buying up part of its Health Silk Road Initiative. geopolitical tensions that helped give existing vaccine stocks, and is part of The obvious advantage to Asian rise to Indian and Chinese vaccine a concerted effort by both countries to states from these vaccine diplomacy diplomacy. Both countries have build alliances with regional partners. efforts is that they allow more sought to use the vaccines to curry India is giving free COVID-19 people—primarily people who would favour with regional partners, rebuild frayed diplomatic ties and counteract diplomatic moves by the other. This could have far-reaching foreign policy effects for the receiving states, particularly if China and India ‘overpromise and underdeliver’. There are also questions about China’s unwillingness to share accurate and complete data about the efficacy of its vaccines, raising suspicions about its motivations. The other challenge is rooted in Indian and Chinese domestic politics. Both countries are making vaccines available to other countries at times when their own internal vaccination campaigns are in a nascent state, a situation that could lead to questions about why Beijing and New Delhi are not prioritising their own citizens. Because Asian states have largely done a good job containing COVID-19, they may not face the same immediate pressures to unleash widespread vaccination campaigns. But that reality should not hide the glaring inequalities around access to COVID-19 vaccines and the need to overcome them. EAFQ

Jeremy Youde is Dean of the College of Liberal Arts at the University of Minnesota Duluth.

A woman poses for a photo after receiving a dose of COVISHIELD, a COVID-19 vaccine manufactured by the

Serum Institute of India, at a vaccination centre in Mumbai, March 2021. PICTURE: FRANCIS MASCARENHAS / REUTERS

20 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: ECONOMIC POWER

PICTURE: SHWE PAW MYA TIN / REUTERS

The 123-storey Lotte World Tower building in eastern Seoul epitomises the dominance of large business conglomorates throughout the South Korean economy. Chaebol reforms are crucial for South Korea’s future

SANGIN PARK Then-president Park Chung-hee, While the chaebols undeniably who came to power after a military contributed to government-led O understand the South coup in 1961, had to establish economic development, they also T Korean economy is to have an his political legitimacy through caused a number of economic and understanding of the chaebol, large economic development. With the social problems. These include the business conglomerates controlled country lacking natural resources and relationship-based allocation and by their founding families. South foreign aid, Park chose an export-led tunnelling of assets and profits, price Korea’s rapid economic growth since development strategy and provided a squeezing and intellectual property the 1960s—the miracle on the Han variety of business favours to high- (IP) expropriation through exclusive River—was driven by a government- performing exporting firms. This was a subcontracting. The chaebols have led and chaebol-centred development merit-based perks system. also been identified as a fundamental strategy. This strategy enabled South South Korea’s economy was cause of South Korea’s 1997 economic Korea to overcome deficiencies in its transformed through this process crisis, while the deviant behaviour and financial markets and the markets for of economic development. Park’s economic crimes of their controlling industrial parts and components, and strategy increasingly concentrated families have been widely criticised. to play catch-up through imitation-led economic power in the chaebols and Yet, chaebols continue to dominate the growth. But this development strategy consolidated major industries around South Korean economy. had its weaknesses. big chaebol firms. Intra-group trade is extensive

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 21 ASIAN REVIEW: ECONOMIC POWER within the country’s chaebols. Between chaebol firm to guarantee its own 2009 and 2017, intra-group trade The chaebol are price competitiveness, it also has occurred within 80 per cent of chaebol less incentive to push for innovation. group firms, accounting for about 13 reminiscent of the trusts The ratio of consolidated sales to per cent of their total sales. Tunnelling R&D spending in Hyundai Motors through related-party transactions— and large businesses that is just 2.4 per cent, while that of which sees funds from a group firm Volkswagen was over 5 per cent in with lower cash-flow rights transferred dominated the United 2014. The devastating consequences to a group firm with higher cash- of monopsony on innovation have flow rights to the benefit of family States in the beginning of already been observed in the US shareholders—has been rife. automobile industry by Raghuram To combat this behaviour, the 20th century Rajan and Luigi Zingales in Saving new regulations on related-party Capitalism from the Capitalists. transactions within chaebols were per cent of domestic automobile sales. Competing on price alone introduced with the Monopoly Once a monopsonist establishes will not work any longer. Price Regulation and Fair Trade Act in exclusive supply chains with suppliers squeezing is reaching its limit in 2014, but inadequate legal provisions of parts and components, it begins low-end automobile models since have meant that such transactions to engage in price squeezing and new carmakers—especially those are yet to be eradicated. According IP extortion when bargaining with from China—have become viable to a 2018 report by the Korea Fair its suppliers. Without punitive in this segment of the market. As a Trade Committee, the proportion of damages and rules of discovery in consequence, the market share of intra-company transactions decreased place in South Korean civil lawsuits, Hyundai Motors in China plummeted temporarily and then increased again subcontractors have no choice from 10.4 per cent in 2014 to 5 per in companies subject to the regulation. but to accept exploitation from cent in 2017. The lethargic pace of Furthermore, for companies able to monopsonists. They know that they innovation by South Korea’s car and take advantage of loopholes within can be cut out of the monopsonist’s parts producers has jeopardised its the new regulations, the proportion exclusive supply chain and left without automobile industry as connected cars of intra-company transactions has viable alternative buyers. and electric vehicles gain traction. remained high. Faced with profit squeezing and IP In an economy concentrated in a There is clear evidence that that extortion, suppliers have less incentive small number of big business groups, the effects of economic concentration for innovation. They become largely monopsony and exclusive supply go beyond tunnelling within business indistinguishable and replaceable chains drive the widening wage gap groups where the controlling minority and even more vulnerable to price between workers at SMEs and those shareholder is the group’s founding squeezing. This is how small- and at big chaebol firms. According to family. medium-sized enterprises (SMEs) the Korea Small Business Institute, Economic concentration and lose both the incentive and the wages in small firms (with 10 to 99 industrial consolidation accelerated capacity to innovate and are forced employees) were 57.2 per cent of those after the Asian financial crisis in to compete in terms of price alone, in large ones (over 500 employees). To 1997. In the Korean automobile rather than in terms of quality- take Japan as a comparison, the same industry between 1998 and 2004, improvements or technological measure of this wage gap was only 83.8 Hyundai Motors acquired Kia Motors capacity. My ongoing research—on per cent in 2017. while other major carmakers went monopsony, price squeezing and sub- This discrepancy reflects price and into bankruptcy before being sold optimal investments—suggests that profit squeezing by large monopsonists to foreign firms. This merger and subcontractors invest substantially less against small subcontractors in South reshuffle activity led to monopolisation in research and development (R&D) Korea. As shown by the Korean Metal in the automobile market and if they are engaged in such exclusive Workers’ Union in 2014, Hyundai monopsony in the automobile parts contracts. Motors, the monopsonist, enjoyed and components market. Today, As long as price squeezing an 8.5 per cent operating profit. In Hyundai Motors accounts for about 80 provides an easy way for a big contrast, operating profits were 5.8 per

22 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: ECONOMIC POWER

PICTURE: KIM HONG-JI / REUTERS

Samsung Electronics vice chairman Lee Jae-yong leaves the Seoul High Court, October 2019. cent in large primary subcontractors, The profitability of manufacturing concentration by chaebols. 3.8 per cent in medium-sized primary industries has been on a downward The concentration of economic subcontractors and 2.8 per cent in trend since 2011, with a few exceptions power in South Korea has led to a small secondary subcontractors. The such as semiconductors. greater risk of governmental capture, wage gap between SMEs and large The chaebol are reminiscent of judiciary capture and media capture. firms is a key contributor to widening the trusts and large businesses that The country today is experiencing income inequality in Korea. dominated the United States in the the same undermining of the market The decline in competition is beginning of the 20th century. But economy and political democracy common in other manufacturing fighting ‘bigness’ in Korea has failed. that ushered in the Progressive Era industries. Manufacturing has The first chaebol regulations in the United States in the early 20th traditionally been the leading source were introduced into the Monopoly century. of South Korea’s economic growth Regulation and Fair Trade Act in The Moon Jae-in administration and accounts for a large proportion of 1986, but much like related party- has been slow to implement pledged the country’s economy (29.3 per cent transactions regulations, these chaebol reforms since taking office of GDP in 2016). The growth rate of had loopholes from the beginning after the Candlelight Demonstrations the manufacturing sector has fallen and were loosened later on in the in 2016–17. It has passively urged compared to the overall economic name of economic revitalisation. the chaebols to voluntarily unwind growth rate since 2012. The country’s Chaebol reform recommended by the the concentration of their economic export growth has slowed substantially International Monetary Fund during power. Worse still, the administration from the annual rate of about 12 per the 1997 Asian financial crisis saw has pursued pro-chaebol policies cent in 2001 to 2011 to the annual rate the adoption of US-style corporate even as Moon’s Minjoo Party racks of about 3 per cent in 2011 to 2017 governance, which turned out to be up victories in local elections. In (OECD Economic Survey Korea 2018). ineffective in resolving economy-wide 2019, a special law on internet-only

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 23 ASIAN REVIEW: ECONOMIC POWER

banks was enacted, retreating from the impeachment in late 2016, changes principle of prohibition of controlling Interaction between political to the malpractice of the three-five banks and non-financial firms by rule were highly anticipated. But the same entity (either a company or institutions and chaebols less than 18 months later, the Court individual). The Moon administration of Appeals sentenced Lee Jae-yong, is also considering the introduction has significant implications then vice chairman of Samsung of dual-class shares in the name of Electronics, to two-and-a-half years fostering entrepreneurialism. for South Korea’s economic in prison with a four-year probation Furthermore, the so-called for embezzlement and bribery of Park ‘Samsung clause’ has not yet been growth and her close confidante. In August amended in the Insurance Business 2019, the Supreme Court overturned Act. Currently, an insurance company received pardons in early 2007. Before the Court of Appeals decision and cannot have affiliated firms’ stocks and receiving a pardon in late 2007, Halla ruled that the total amount of bribes bonds whose combined value exceeds Group chairman Chung Mong-won and embezzlement by Lee Jae-yong 3 per cent of its assets. But affiliated was charged for breach of trust. In had been underestimated—increasing firms’ stocks and bonds are valued at 2008, Hyundai Motor chairman to an amount that mandated at least their acquisition prices, while assets Chung Mong-koo was charged with five years in prison. Still, in the retrial, are based on market prices set by the embezzlement and breach of trust, the presiding judge of the Seoul Enforcement Decree. Because of this and SK Group chairman Chey Tae- High Court exercised discretion and clause, Samsung Life Insurance can won was charged for fraud. In the sentenced Lee to only two-and-a-half hold about 8.5 per cent of the shares of same year, Hanwha Group chairman years in prison this past January. Samsung Electronics, which is the key Kim Seung-youn was sentenced to The capture of the country’s shareholding for control of Samsung 18 months in prison for assault and judiciary is closely related to judges’ Electronics by the Lee family. Booyoung Construction chairman Lee career interests. Many judges retire South Korea’s judiciary system has Joong-keun to three years in prison if and when they are not promoted also been notorious for its lenience for embezzlement and tax evasion. All to a higher rank. According to a toward chaebol founder families, most were given suspended jail sentences. 2019 report from the Judicial Policy often known as the ‘three-five rule’: a This is but a short list of examples. Research Institute, each year from three-year prison sentence suspended These lenient court rulings are not 2013 to 2016 between 47 and 67 for five years regardless of the type or because of the practical challenges judges resigned before they reached nature of the crime. involved in finding evidence of mandatory retirement, most of them In 2005, Doosan Group chairman a crime. Even if evidence is clear aged in their 40s and 50s. Considering Park Yong-sung and vice-chairman and irrefutable, the court typically that only 83 to 111 new judges were Park Yong-maan were accused and argues that the founder families appointed annually during this period, received suspended sentences for of chaebols are so valuable to the the number of resigning judges is embezzlement. Both ultimately economy that it may serve the substantial. public interest not to hold them Retired judges typically join the accountable for their crimes. When legal teams of chaebol firms or law EASTASIAFORUM the string of suspended sentences firms whose big clients are chaebol Quarterly drew strong criticism because of the firms. When particular families OUR NEXT ISSUE . . . application of separate legal standards control a significant portion of a for the rich, the Supreme Court’s country’s economic resources, judges Sentencing Commission tightened its with career concerns are likely to make Reinventing guidelines mandating strict minimum distorted judicial decisions which may statutory punishment for significant be beneficial to these families’ private global trade embezzlement or breach of trust. In interests. The South Korean case practice, these guidelines have not indicates that the concentration of www.eastasiaforum.org been well observed by judges. economic power can be a fundamental Following Park Geun-hye’s threat to democracy and the market

24 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: ECONOMIC POWER

PICTURE: KIM MIN-HEE / REUTERS

Technicians work at SK Hynix plant in Icheon, South Korea August, 2015. economy via judiciary capture. Korea Press Foundation, 74.2 per cent wide concentration by the chaebols. It also shows that business groups of field reporters picked advertisers as As a result, the political elite changed with significant economic power can the most important factor that directly from dictators to chaebols, particularly influence the media, even when big or indirectly restricts press freedom in after political democratisation in 1988, business groups are prohibited from South Korea. when chaebols became the gatekeepers holding news media assets in their Journalists’ career concerns are of advancement within South Korean portfolios. Following the Appeals closely related to media capture society. Court decision in favour of Samsung’s as well. A chaebol-friendly stance South Korea is now at a crossroads. Lee Jae-yong, for example, some promises a variety of future benefits. Economic concentration is the root of newspapers ran pieces supporting the Journalists, who typically retire in their the structural problems now faced by court’s decision. 40s and 50s, often find post-retirement the economy and society. The shift to The media’s advertising dependence positions in chaebol-affiliated an advanced industrial structure and on chaebols is critical. The proportion institutions. Marriage between chaebol innovative growth goes against the of total advertising spending by founder families and media owner interests of the chaebols. An economic companies affiliated with the five families such as Samsung and the crisis may not be avoidable without largest chaebols among Korea’s top Dong-A and JoongAng media groups fundamental changes in the country’s 100 advertisers was 35.9 per cent may also play a certain role. economic structure and policies. from January to September 2018. The interaction between political Chaebol reform is the key to these For newspapers alone, the top five institutions and chaebols has indispensable changes. EAFQ chaebols spent 37.3 per cent of the had significant implications for total advertising outlays of the top South Korea’s economic growth Sangin Park is a Professor of Economics 100 advertisers. Among them, the since the 1960s. The country’s at the Graduate School of Public advertising costs of Samsung-affiliated economic expansion was driven by a Administration and Executive Director companies accounted for the highest government-led and chaebol-centred of the Research Center for Market portion, at 12.79 per cent. According strategy of development, which was and Government at Seoul National to a survey conducted in 2017 by the accompanied by increasing economy- University.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 25 ASIAN REVIEW: STRATEGIC APPROACH

PICTURE: CARLOS BARRIA / REUTERS

A protester in the guise of President Xi Jinping controls a marionette of president Trump while demonstrating in front of the Trump International Hotel, Washington DC 2020. The world needs US leadership on cyber and tech priorities

JULIA VOO attacks. While reassuring, parallel to the newly created NSC role of efforts need to be made to grow the Deputy National Security Advisor NDER former President Donald United States’ sphere of influence for Cyber and Emerging Technology. U Trump US global leadership with non-democratic and developing Michael Sulmeyer, senior advisor to on cyber issues came to a screeching countries including through the NSA, and US Cyber Command halt. But as President Joe Biden has revamping global cyber governance leader General Paul Nakasone, will proclaimed, ‘America is back’. Expect regimes with the techno-democratic assume the position of Senior Director to see the development of a sensible alliance of countries for greater long- for Cyber in the White House. The policy, crafted by experts that does term national security and stability. Director of the Office of Science and not totally abandon the previous Biden has placed seasoned cyber Technology Policy has been elevated administration’s focus on technology and technology experts at the heart of to Biden’s cabinet, a first for this competition and trusted networks but the National Security Council (NSC) position, placing science at the centre unpicks the policy discord. and charged them with coordinating of policymaking. Other confirmed The current plan prioritises an interagency approach. Anne appointees who have worked in strengthening trusted techno- Neuberger, former cyber security broader portfolios, such as Secretary democracy alliances and going beyond director at the National Security for Homeland Security Alejandro attribution in response to cyber- Agency (NSA), has been appointed Mayorkas, also have significant

26 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: STRATEGIC APPROACH experience dealing with cyber issues. needed global leadership. Perhaps due Under Obama, for example, he Now the United States to the lack of consensus at the UN dealt with numerous international level, French President Emmanuel cyber security agreements as deputy has an experienced Macron announced the Paris Call secretary of the department. for Trust and Security in Cyberspace These appointments and team of both Asia Pacific which seeks to establish international structural changes are a shift from norms for the internet, including the past four years, which saw the and cyber experts who digital hygiene and the coordinated termination of the Council’s cyber disclosure of technical vulnerabilities. security coordinator role and the recognise that diplomacy It is the largest multi-stakeholder closure of the State Department’s group ever assembled in support office for coordinating cyber issues. is an important tool and of an international cyber security- It seems that US inability to develop focused agreement. The United States, a comprehensive response to cyber are empowered to act on notably, is not involved in this global issues and engagement on cyber issues endeavour, although many leading US at the global level will be remedied. cyber challenges companies are. As identified by the US Cyberspace With a new president who believes Solarium Commission, the United diplomatic efforts will be complicated in global leadership and the power of States needs a more strategic approach by fragmented global cyber- alliances, particularly in dealing with towards cyber attacks. The creation governance that lacks a single source China, we can expect a lot of activity of a new Office of the National Cyber of authority. The use of diplomatic from the Biden administration. It will Director (NCD) within the Executive tools to resolve issues arising in the seek to balance democratic interests Office of the President has been cyber domain occurs at many levels against authoritarian forces by building incorporated into the annual National with an assortment of actors with trusted proprietary technology Defense Authorization Act. While various geopolitical interests. These alliances. Cyber priorities will likely this role is yet to be appointed, the actors range from states and industry include strengthening trusted techno- NCD will be tasked with coordinating to civil society, and they engage in democracy alliances, shaping data defensive strategies for federal and technical, multilateral and multi- flows and going beyond attribution critical infrastructure organisations, stakeholder bodies sometimes with in response to cyber-attacks. Plans to industry engagement, efforts to deter overlapping remits. The current state utilise global governance systems to adversaries, and diplomatic initiatives of global cyber governance is messy address these issues as well as reaching relating to cyber security. and, in some areas, ineffective. out to countries outside of the United Now the United States has an For example, discussions between States’ immediate circle of allies are experienced team of both Asia Pacific states on the application of the Law of notably absent. and cyber experts who recognise that Armed Conflict in the cyber domain Distrust of some foreign-owned diplomacy is an important tool and are have fractured. In December 2018, the companies and the need to protect empowered to act on cyber challenges. Open-Ended Working Group, initially technological advantage drives On substance, it is likely that the proposed by Russia, was established localisation efforts worldwide. The norms articulated under the Obama as a forum for all interested parties guarantee of future cyber attacks administration will endure. These to attend. This is in contrast to the creates urgency for robust information include refraining from conducting UN Group of Governmental Experts, exchange and the gradual increase of cyber activity that could damage a more exclusive group of countries cyber security requirements across critical infrastructure or interfere with including the United States that all markets. Recognising the cost cyber emergency response teams; not issue reports on the development and challenge of recreating an entire conducting cyber theft of intellectual of norms, rules and principles such supply chain within a single country property; mitigating domestic as how international law applies in is broadening the alliance of trusted malicious activities; and helping allies cyberspace. democracies and lengthening the list when attacked through cyber means. Under President Trump, the United of issues on which they cooperate. However, at the multilateral level States did not demonstrate much- In the first three weeks of his

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 27 ASIAN REVIEW: STRATEGIC APPROACH

PICTURE: LEAH MILLIS / REUTERS

White House Deputy National Security Advisor for Cyber and Emerging Technology Anne Neuberger gives an update on the Biden administration’s response to the SolarWinds hack, February 2021. presidency, Biden reached out to an alliance of 10 democracies, will the EU Commission proposed a new Australian Prime Minister Scott gather in June in the United Kingdom transatlantic agenda in December Morrison and South Korean President under the auspices of the G7. While 2020 ahead of Biden’s inauguration. Moon Jae-in. Biden’s National Security cyber and tech issues are not the It highlights two key points: the need Advisor, Jake Sullivan, has called primary focus of the D-10, the United for a closer partnership on China, ASEAN ambassadors to discuss Kingdom has brought Australia, South where both sides view China’s growing opportunities to enhance cooperation Korea and India to the table to address assertiveness as a strategic challenge on climate change, the COVID-19 the pressing issues of 5G mobile but differ on approach; and deeper pandemic and economic recovery, communications and supply chain maritime security and people-to- security issues as a group. people ties, as well as ‘the importance Techno-democractic alliances that We can expect some of ASEAN centrality’. Sullivan also include governments and companies, contacted counterparts in South Korea such as the proposed T-12 alliance efforts to position the and India. While there was no urgency which includes Sweden (Ericsson) and to call President Xi it seems clear that Finland (Nokia) will likely appear in United States as a building a coalition of allies will be the a rewired version of Trump’s ‘Clean tool of choice for key US priorities, Network Initiative’—which focused on shaper, and not a taker, such as China. It is this effort, where keeping Huawei out of United States we can expect a greater US interest and allied 5G networks by encouraging of international rules in cooperating with Asia Pacific allies to use non-Chinese suppliers—to economies particularly Australia, ultimately build a cohort of trusted governing global data India, Japan, and South Korea. vendors. Of these potential allies, the D-10, In anticipation of better relations, exchange

28 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 ASIAN REVIEW: STRATEGIC APPROACH cooperation in the Asia-Pacific region While there is much debate however, those efforts alone are to support democratic progress. That about the efficacy of the attribution not sustainable. In an age where effort will need to be balanced with of malicious activity, the Five Eyes both authoritarian and democratic issues on which the European Union (United States, Australia, United countries lead the development and and United States are not aligned, such Kingdom, Canada, and New Zealand) application of digital technologies, as digital taxes and policing big tech public attribution of cyber-attacks what seems to be Biden’s plan so far companies (which are overwhelmingly will likely continue. The appointment is too skewed towards democracies American). of Anne Neuberger and Michael with high-tech capabilities. This risks On privacy and data governance, Sulmeyer suggests that a strong creating a democratic technology Biden has stated that the United States response to the SolarWinds breach— bloc that appears to have no should be doing more on setting the biggest cyber attack on the US aspirations of finding middle ground standards in the space, not unlike the government in recent years—will be with less-democratic high-tech Europeans have done with the 2016 a priority, and a strong response to countries, democracies with limited General Data Protection Regulation future cyber attacks will be the norm. technological capability, and a majority (GDPR). The Asia-Pacific region has Biden’s Chief of Staff, Ron Klain, of the developing 100+ countries who also proven itself as a leader in data suggested that the administration’s are likely to be courted by China. A standards—although not to the same response to the recent supply chain US-led techno-democratic alliance degree as the EU’s GDPR—through the attack on SolarWinds software used could collectively drive a global effort voluntary APEC Cross-Border Privacy across US government IT systems may to improve governance of the cyber Rules system, which was established include not only public attribution but domain for increased security and in 2011 and has since been adopted also financial penalties and retaliatory stability for many countries, not just a outside the region. We can expect hacks on Russian infrastructure. few. EAFQ some efforts to position the United The appointment of cyber experts States as a shaper, and not a taker, of and strengthening old democratic Julia Voo is a Cyber Fellow at the Belfer international rules governing global alliances to tackle cyber challenges Center for Science and International data exchange. are welcome improvements, Affairs, Harvard Kennedy School.

A man looking at a phone is seen through digitally decorated glass during the World Internet Conference (WIC) in Wuzhen, China, November 2020.

PICTURE: ALY SONG / REUTERS

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 29 REALISTIC ROADMAP Looking beyond the North in South Korean foreign policy

CHUNG MIN LEE consumer electronics and computer is back—in a more recognisable chips. The only way that South Korea way—Biden’s presidency is unlikely to S President Joe Biden begins to can maintain an edge is by becoming fundamentally alter the global balance A recalibrate the United States’ role more innovative than China. Crucially, of power in a way that will fully restore and place in the world after Trump’s as a vibrant democracy with a robust US supremacy. Given his decades tumultuous presidency, South Korean alliance with the United States, South of experience as a senator and vice President Moon Jae-in enters his last Korea can enhance its global leverage president, the last thing Biden will do year in power. How much influence by expanding the scope of this alliance. is restart the erratic, dangerous, self- Moon can have in shaping Biden’s The real question confronting the serving and ill-prepared North Korean North Korea policy is unclear. A more Moon government is whether it has adventures initiated during Donald important question is how receptive the strategic bandwidth to revamp the Trump’s term. Biden will be to the weight Moon will alliance as the Biden administration President Moon, however, is hoping want to give jump-starting stalled US– begins to grapple with constraining that Biden will at least come half-way North Korea talks. Despite lingering Chinese power and influence or in fostering renewed engagement hopes in the Moon government that whether it will continue its emphasis with Kim Jong-un. It’s not clear how Biden will opt to re-engage fully with on elusive breakthroughs with North realistic this expectation is. Even North Korea, Biden is unlikely to focus Korea. Trump walked away from a half-baked like a laser on North Korea. Biden entered office with a full deal at the second US–North Korea While the Moon government’s foreign policy plate and will only summit in Hanoi in February 2019. overarching stance is to support US begin to implement his own North Trump’s then-national security advisor efforts in reaching a landmark nuclear Korea policy after his administration John Bolton subsequently described deal with North Korea, what the Biden conducts a thorough policy review. Moon’s ideas on denuclearisation with administration really wants to see For the time being, the lion’s share North Korea as ‘schizophrenic’ and from its ally is for Seoul to expand its of Biden’s attention is going to be on ‘nonsense’. global footprint as a critical middle the increasingly fraught US–China Undaunted, South Korea’s new power. Unlike any other time in their relationship, the hurdles of re-joining Foreign Minister and former National alliance, the time is ripe for South the Iran nuclear accord and resetting Security Advisor, Chung Eui-yong, Korea to bolster its international role ties with Moscow. Despite the has suggested that North Korean on issues such as climate change, resounding assurances that America denuclearisation is entirely possible the multilateral pandemic response, if the right constellation of security restructuring the free trade regime commitments are aligned. Chung and enhancing coordination and President Moon... is played a key role in the inter-Korean cooperation between so-called summits in 2018. In February, at his techno-democracies. On all these hoping that Biden will confirmation hearings, he declared his issues, South Korea can make vital belief that Kim Jong-un was sincere in contributions when the United States at least come half-way his quest for denuclearisation subject needs crucial input from major allies to absolute guarantees of security in Asia and Europe. in fostering renewed on the peninsula. Chung has also China has made strides in most reaffirmed the Moon government’s of the manufacturing sectors where engagement with Kim aversion to restarting large-scale South Korea has traditionally military exercises with the United dominated, such as shipbuilding, Jong-un States.

30 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 REALISTIC ROADMAP

PICTURE: JEON HEON-KYUN / REUTERS

South Korean President Moon Jae-in speaks during an online New Year news conference, January 2021.

Moon’s fixation on putting into driven by AI, and increasing dividends by focusing on global place a so-called permanent peace nationalism—South Korea needs to areas of cooperation with the United regime on the Korean peninsula is extricate itself from a North Korea- States and mending seriously strained all the more urgent given that he will centric worldview. relations with Japan. Globalising leave office in May 2022. All presidents A lasting road to peace and South Korean foreign policy should want to leave legacies that will outlast prosperity on the peninsula can receive bipartisan support. In an era their years in office and Moon is no only be achieved if South Korea of unprecedented decoupling, but exception. But as the world grapples amplifies its international leverage also growing entanglement, it makes with the worst pandemic in a century, by enhancing its contributions to the sense for South Korea to accentuate it makes eminent sense for South global commons. This cannot happen its increasingly prominent role as an Korea to look beyond North Korea if it continues to focus myopically on outward-looking techno-democracy. as the defining element in Seoul’s a peninsular peace regime without To do otherwise would be to go back national security and foreign policies. taking into account the gross human in time and forfeit a rare opportunity There is every reason to maintain the rights abuses of the North Korean to augment South Korea’s strategic highest level of vigilance and defence- government or crafting a more regional and global leverage. EAFQ readiness in the face of growing realistic roadmap towards verifiable North Korean nuclear and other denuclearisation. South Korea will Chung Min Lee is a Senior Fellow at the asymmetrical threats. But in an era also miss out on a key opportunity to Carnegie Endowment of International of escalating power competition— strengthen its alliance with the United Peace and Chair of the International marked by intensifying US–China States at a time when Washington Advisory Council and the International rivalries that will cut across all needs crucial support from allies. Institute for Strategic Studies. sectors, worsening climate change, As important as the North Korea unparalleled technological disruptions issue is, Seoul would gain significant

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 31 POLICY PRIORITIES AND PERSONALITIES PICTURE: REUTERS

President Biden, Vice President Harris and US Secretary of Defense Lloyd Austin tour the Pentagon, 2021. Domestic divisions leave blanks in US Asia policy

GORANA GRGIC the international system and can act as Overall, there is little uncertainty a force for good. about the general beliefs and attitudes N the flurry of analyses of Joe Unlike Donald Trump, Joe Biden is of the new administration. It will I Biden’s early policy moves, there a foreign policy veteran, having served work to prioritise diplomacy, elevate is a common thread that depicts as the Senate Foreign Relations Chair multilateralism and incorporate values the 46th president as an agent of and a two-term vice president. Much in the conduct of foreign policy. change towards predictability in like the famous rhyme for marital However, there is also the ‘something policymaking, and as a much-desired success, Biden has decided to opt for new’ aspect of Biden’s nascent foreign course correction after the chaotic ’something old’ and surround himself policy doctrine that will differentiate Trump years. In undoing the political with people he has had a track record it from his Democrat predecessors. and reputational damage done by his working with. His foreign policy team Biden’s foreign policy will be more predecessor, Biden has a hefty task comprises long-time practitioners and constrained by situational factors of convincing both Americans and experts, many of whom were integral at home and abroad. Deep political America-watchers that the United to the Obama administration and the divisions and multiple crises— States still occupies a central role in Clinton cabinet. emerging from or amplified by the

32 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 COVID-19 pandemic—will limit his questions that can only be addressed Europe. presidential attention and action. And if the world’s two largest economies What these variables might look as the world grows more unstable, work together. like during the Biden years remains to uncooperative and illiberal, US foreign Second, there is a generational be seen. Nonetheless it is not wildly policymakers will have significantly divide within the top echelons of the imprudent to assert that bureaucratic less room to manoeuvre. executive branch. The president’s rivalries will surface and affect the younger appointees generally advocate formulation of policies. Partisan ATHER than a radical departure for a more assertive response to China, politics and the slimmest of margins R from the Trump era, there while the older guard are wary of a in Congress will further complicate are still elements from the previous new Cold War. Some describe the policymaking. Key questions—such administration that could qualify intellectual sparring as a duel between as how much competition with as ‘something borrowed’. While the ‘restorationists’ and ‘reformists’. Seen China is productive and the merits of new administration is talking up through this prism, the restorationists’ Washington’s decoupling strategy— cooperation on transnational issues agenda most closely aligns with will also create domestic winners such as climate change, global health Obama-era policies. and losers who will lobby for their and arms control, it is bound to The reformist playbook is more preferred outcome. maintain the inherited competitive comfortable with the Trump disposition towards China. It has made administration’s strategic diagnosis— HE early signals point towards it abundantly clear that economic that Washington needs to adapt to T President Biden’s willingness to statecraft will remain a vital aspect of a world dominated by great power confront Chinese leadership over a its strategy. competition—even if their policy whole range of issues—from unfair Yet, there is uncertainty around prescriptions are in stark contrast trading practices, gross human rights the policy specifics, much of which to those implemented by the 45th abuses in Xinjiang, and the crackdown will hinge on contingency planning president. Others see this through on democracy in Hong Kong to and bureaucratic politics. While we the lens of international relations growing assertiveness over Taiwan. can only speculate as to what Chinese scholarship and the perennial Biden is far from the first US president foreign policy will look like over the tension between realist and liberal to excoriate Chinese government’s next four years, there is less room for institutionalist tendencies in US actions. The forthcoming months will guesswork when it comes to the key foreign policy. tell to what extent rhetoric will be divides in Biden’s team and the impact Finally, the interaction of matched by policy response. of domestic politics on his Asia Pacific bureaucratic and domestic politics For those in Asia, perhaps the policy. will have a decisive impact on Biden’s greatest takeaway remains that while First, there is the question of policy direction. The Obama years the Biden team is a known entity setting policy priorities. There are are a telling example of the long road and the administration recognises some well-founded fears that a divide between strategic planning and policy the region as the critical theatre over traditional and non-traditional implementation. Obama began his of the 21st century, there are still security issues is beginning to drive first term with a dovish outreach to plenty of unknowns regarding the a wedge through the administration. China, but as China appeared to grow policy specifics. These blanks will be On one hand, there are those who more assertive the more hawkish gradually filled as the United States believe the greatest threats to the response advocated by the State heals on the home front and adapts United States are of primarily kinetic Department became the preferred to navigating the world after having origin. On the other, there are those policy. The infamous ‘pivot to Asia’ had its credibility severely challenged who argue the largest threats are was never fully implemented because under Trump. EAFQ anthropogenic. US domestic politics and partisanship The former argue that the United got in the way of ratifying the Trans- Dr Gorana Grgic is a jointly appointed States should maximise its military Pacific Partnership, and attention Lecturer at the Department of and economic capabilities to compete to seeing through this agenda in Government and International with China. The latter maintain that Obama’s second term shifted with the Relations and the United States Studies climate change is the mother of all reprioritisation of the Middle East and Centre at the University of Sydney.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 33 NO TIME TO WAIT Biden’s brief window to reform global institutions

ADAM TRIGGS weapons in the US arsenal: the ability and rules it created to cement US to lead in writing global rules and interests and influence. Want to trade ORMER US president Donald shape global institutions. or invest internationally? You’ll need FTrump was right about one thing: Re-writing global rules and US dollars for that. Want to access the many of the world’s international reforming the world’s institutions global payments system? Then don’t institutions are flawed. His arguments isn’t easy. Past reforms have been upset the United States. Need an IMF as to why were usually wrong, often painstakingly difficult. Historically, bailout or a World Bank loan? Only veiled attempts to find a scapegoat for successful reforms have required at the United States has veto power. his own domestic woes. His response least three things: leadership from But these institutions have not aged to those institutional flaws was worse. the President of the United States, well and US influence has suffered as Like the kid who takes their ball and approval from the US Congress (at a result. Past reforms have helped but goes home, Trump’s approach was to least when funding is required) and more is required. The WTO is a relic run away, not pursue reform. a quorum of major countries that of the past. The global trading rules Instead of working to fix flaws in the support the change. For the first time need to be updated to cover subsidies, World Trade Organization (WTO), the in more than a decade, all three pieces state-owned enterprises, forced World Health Organization (WHO), of the puzzle could be in place. technology transfer and the digital the International Monetary Fund The Democrats’ dual January economy. These issues have fuelled (IMF) and other institutions, Trump Senate wins in Georgia mean they tensions and trade wars. either ignored the problem, attacked now control both houses of Congress The IMF is little better. Its quota the institution or withdrew from the and the White House. President Joe formula—which gives too many institution altogether. He recklessly Biden understands that much US votes and funding responsibilities to surrendered one of the most powerful power comes from the institutions Europe and too little to Asia—should be updated to reflect the modern Workers board up the International Monetary Fund building to Biden’s presidential inauguration economy, along with its Executive Board. Without reform, the IMF’s legitimacy and funding suffers; forcing it to be a minority lender in major bailouts while relying on temporary loans (which progressively expire from 2023 to 2025) for half its funding. The WHO’s budget is smaller than the budget of most big hospitals. The share of unearmarked funding is low, with membership dues representing less than 20 per cent of the agency’s total budget. The WHO’s mandate is too broad and its governance structure is too narrow—excluding voices from civil society—while its technical expertise is too limited in areas ncillary but critical to effective PICTURE: ERIN SCOTT / REUTERS health responses: logistics, urban

34 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: ALY SONG / REUTERS

Biden is shown overlooking the White House South Lawn during his vice presidency in the Obama administration, April 2015.

design, economics, law and Fragmentation makes the global WTO reform. Asia’s bitter memories information technology. system less effective. Most global, of the IMF’s past failings have seen Many more global institutions need regional and bilateral trade agreements them spend decades calling for reform. reform. Like the IMF, the World Bank’s are incompatible with each other and A region desperate for investment will governance needs to reflect the global create a nightmare for businesses to benefit substantially from reformed reality. The out-of-date-membership navigate. Responses to financial crises and better coordinated development of the International Energy Agency are now slower, more cumbersome banks while climate change is means that the body meant to and more political. Responses to an opportunity for constructive represent energy consuming countries health crises, development challenges engagement on a common priority now excludes a majority of the world’s and energy transitions are less effective between the United States, China and energy consumers. and less coordinated. the Asian region. The consequences of these out- As US-dominated institutions Indonesia’s G20 host year in 2022 of-date institutions are the same: fade into the background, so does US is an opportunity to get this done. If more fragmentation and less US influence. But for the first time in more history is anything to go by, Biden will influence. As the funding, legitimacy than 10 years, Biden has a window lose the House of Representatives, the and effectiveness of these institutions of opportunity to fix this. Holding Senate or both in the November 2022 dwindle, regional competitors the White House and both houses of US mid-term elections. He has no time emerge. For the WTO, it’s a plethora Congress, the United States can lead to wait. EAFQ of plurilateral and bilateral trade reform in these institutions and create agreements. For the IMF, it’s the new rules where there are none today: Adam Triggs is Fellow and Director European Stability Mechanism, the from tax, trade and climate change to of Research at the Asian Bureau of Chiang Mai Initiative and hundreds competition policy, data and the digital Economic Research (ABER), Crawford of bilateral currency swap lines. economy. School of Public Policy, Australian For the World Bank, it’s the Asian Countries overwhelmingly support National University, and Non-Resident Development Bank, the Asian change, especially in Asia. Indonesia Fellow in the Global Economy and Infrastructure Investment Bank and will host the G20 next year and has Development Program at the Brookings bilateral agencies among others. been a stalwart leader on the case for Institution.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 35 GREAT EXPECTATIONS

PICTURE: WILLY KURNIAWAN / REUTERS

What Southeast Asia wants from the Biden presidency

Construction of the Walini tunnel marks a major milestone of Indonesia’s Jakarta–Bandung high speed rail, a project made possible by the China High Speed Railway Technology Company, February 2019.

DEWI FORTUNA ANWAR attention to ASEAN. These policies increasingly assertive foreign policy were largely overturned by Trump. is seen as a threat to US domestic OUTHEAST Asians are Southeast Asian states increasingly interests and its international position S predisposed to welcome the see US policy towards the region as a as the preeminent power, particularly Biden presidency after four years of function of the US–China relationship. in the Indo Pacific. tumultuous US foreign policy under China’s growing influence in the Trump’s neglect of ASEAN, Donald Trump. There is a general region prompted Obama to strengthen exemplified by his failure to appoint belief that President Biden’s foreign US relations with Southeast Asian a US ambassador to the body and policy will be similar to that under allies and to pay more attention to frequent absences from ASEAN- president Barack Obama, given that ASEAN. After leaving office in 2016, related summits, has contributed to a Biden served as vice president in the Biden wrote that the incoming Trump lack of confidence in the United States Obama administration. But the United administration needed to continue as a reliable strategic partner among States faces an uphill battle to re- working with ASEAN to advance a Southeast Asian countries. engage and strengthen its alliances in rules-based international order and The ISEAS-Yusok Ishak Institute’s the region. cultivate a relationship with China The State of Southeast Asia: 2020 The Obama administration was a where competition and cooperation Survey Report showed that the strong supporter of multilateralism, could co-exist. majority of those surveyed had prioritised diplomacy as the primary American attitudes towards China little or no confidence in the United tool of US foreign policy, cooperated have hardened in recent years. China’s States as a reliable strategic partner, with allies and partners to tackle economic rise is interpreted as a by- with only 30.3 per cent having some common challenges and paid special product of unfair practices, and its confidence and 4.6 per cent having

36 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 full confidence. Compared with the In Southeast Asia, the United States distant eighth with US$989.3 million Obama administration, 77 per cent has already lost its former, preeminent worth of investment. of respondents observed that US status to China. The ISEAS surveys The majority of ASEAN member engagement with Southeast Asia demonstrate that China is seen as the states will also welcome greater US declined under Trump. Despite this, most influential economic power by engagement, particularly in helping to the 2020 survey also showed that ASEAN respondents, increasing from restore democracy in Myanmar after 60.3 per cent of respondents believed 73.3 per cent in 2019 to 79.2 per cent the recent military coup and prevent that this gloomy perception of US in 2020 and falling slightly to 76.3 per the latest political crisis in Myanmar reliability could be reversed with a cent in 2021. US economic influence from further destabilising the region change in American leadership. also trails far behind China, at 7.9 per and thus undermining ASEAN unity The Institute’s same survey for cent in 2019 and 2020 and 7.4 per cent and centrality. At the same time, given 2021—published shortly after Biden’s in 2021. the diversity among ASEAN member- inauguration—shows a much more China is also seen as the most states, Biden’s focus on revitalising favourable attitude towards the influential political and strategic democracy will likely receive a mixed United States. A full 68.6 per cent power in Southeast Asia, although reception. Many ASEAN governments of respondents predict that US this view decreased from 52.2 per cent are likely to be apprehensive that engagement in the region will increase in 2020 to 49.1 per cent in 2021. The the Biden administration will under Biden. A further 55.4 per cent perception of US influence increased also be critical of the democratic expressed confidence in the United from 26.7 per cent in 2020 to 30.4 per shortcomings and human rights States as a reliable strategic partner cent in 2021. abuses in Southeast Asia as a whole, and provider of regional security, not just in Myanmar. and only 23.7 per cent expressed no HE Biden administration has Besides great expectations there confidence. T clearly engendered goodwill and is also some scepticism directed In the face of US–China rivalry, high expectations among ASEAN towards the Biden presidency. The the default position of ASEAN is countries through a renewed pivot United States faces many challenges not to take sides while endeavouring towards the region. In light of on the domestic front, particularly to enhance ASEAN’s resilience and Southeast Asia’s growing distrust the public health and economic ability to ward off external pressure. of China—both because of its impacts of COVID-19 and the If ASEAN were forced to take sides, overwhelming economic presence increasing polarisation of American however, the ISEAS surveys show that and increasingly assertive foreign society. These challenges may detract the majority of respondents favour the policy, particularly in the South China from its ability to fulfil the region’s United States over China—61.5 per Sea—ASEAN countries are eager to high expectations. There are also cent chose to align with the United welcome a more engaged US policy in concerns that like Obama, and unlike States in the 2021 survey report, the region. Trump, Biden will limit the number compared to 53.6 per cent in the 2020 ASEAN countries would like to of freedom of navigation operations survey. see more American investment as (FONOPS) in the South China Sea The change in attitude of four an alternative source of funding. which may further embolden China. ASEAN countries is particularly However, the United States faces an Of even greater concern is the noteworthy. Cambodia, Indonesia, uphill battle to compete with China in frequent sharp swing in US foreign Malaysia, and Thailand all favoured providing foreign direct investment policy from one administration to the aligning with China in 2020, but (FDI) for infrastructure development next, which gives a strong impression preferred to align with the United in the region, which has led to many of US unpredictability and unreliability States in 2021. Indonesia has shown ASEAN countries welcoming China’s in the long run. EAFQ the most significant change in attitude, Belt and Road Initiative. For instance, with 52 per cent of respondents according to the Indonesian Board favouring an alignment with China of Investment, China was the second Dewi Fortuna Anwar is a Research in 2020, but 64.3 per cent choosing largest source of FDI to Indonesia Professor at the Research Center for the United States in the 2021 survey in 2019 with US$4.74 billion worth Political Studies, Indonesian Institute report. of investment, while the US came a of Sciences (P2P-LIPI).

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 37 CONTINUITY AMID CHANGE How will strategy on South Asia differ?

MICHAEL KUGELMAN the promotion of a ‘free and open Indo good and bad. Pacific’ and the strengthening of ties First, the style and tone of Biden’s RESIDENT Joe Biden’s foreign with two close maritime partners in international engagements will P policy will be very different the region, Australia and Japan, as part be softer and kinder, as well as from that of his predecessor, Donald of the ‘Quad’ arrangement. Tellingly, more consistent and predictable. Trump. Biden has vowed to bring according to the State Department’s Washington’s partnership with India back US global leadership, value readout of an initial call between will not be undermined by concerns international diplomacy, restore US Secretary of State Antony Blinken about impolitic distractions resulting alliances and promote democracy and and Indian External Affairs Minister from mocking remarks about India’s human rights abroad. He intends to Subrahmanyam Jaishankar on 29 leaders, policies or challenges. undo the dramatic—and in his view January, ‘The Secretary underscored Washington’s delicate relationship deleterious—changes that the Trump India’s role as a preeminent US partner with Pakistan won’t be upended administration made to US foreign in the Indo Pacific and the importance by abrupt moves, such as a sudden policy. of working together to expand regional decision to cut security aid. And the Yet while Biden may engineer a cooperation, including through the administration will take a careful full-scale foreign policy reset, his Quad.’ approach to the complex challenge of administration’s likely South Asia The two core shared interests that withdrawing its remaining forces from policy will be an anomaly—a rare drive the partnership—combating Afghanistan, even while supporting example of considerable continuity terrorism and countering China—have a nascent and fragile peace process with Trump. Biden, like Trump, Biden’s full-throated support. He has between Kabul and the Taliban that strongly supports a withdrawal from also expressed his admiration for the is playing out against a backdrop of Afghanistan. Under Barack Obama, large Indian–American community, a intensifying violence. Indeed, the he was a vocal opponent of his constituency that further strengthens administration is undertaking an boss’s troop surge. He will side with the bilateral relationship. extensive review of Afghanistan policy, Trump in supporting a workable including the 2020 Trump–Taliban relationship with Pakistan that, at least EANWHILE the rest of South accord that requires all US troops to initially, revolves around securing M Asia will receive less strategic depart by 1 May this year. Despite the Islamabad’s assistance in advancing a focus, as it did during Trump’s term. urgency on the ground, the White fledgeling and fragile peace process in The attention it does garner will largely House’s initial moves in Afghanistan Afghanistan. He will also fully back a be framed through the lens of US– will focus on getting up to speed rather rapidly growing US–India partnership China rivalry and, increasingly, India– than making quick decisions. that enjoyed much forward movement China rivalry amid Beijing’s deepening Second, Biden takes an especially during the Trump years—just as it has footprint across the region, fuelled by robust position on counterterrorism. throughout every administration back its Belt and Road Initiative. It is a key lens through which he has to the Bill Clinton era. So expect Biden to shake up long viewed the world, including Biden is a long-time friend of Washington’s current foreign policy, South Asia. He may well hold the India. He once described the US– but not its present South Asia strategy. Taliban’s feet to the fire and condition India partnership as the defining And yet the very different approach further US troop withdrawals from relationship of the 21st century. The that Biden takes on foreign policy will Afghanistan on the insurgents ending Biden administration will maintain a have considerable implications for their cooperation with al-Qaeda. He focus on two key areas of US–India South Asia and could produce some may also increase pressure on Pakistan cooperation during the Trump years: new outcomes for the region, both to shut down the India-focused

38 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: DANIEL KRAMER / REUTERS

Supporters react during a ‘Howdy, Modi’ rally celebrating India’s Prime Minister Narendra Modi at NRG Stadium in Texas, September 2019. terror networks on its soil, especially which prefers that its top ally have reasons, but Pakistan, Bangladesh with the receding US footprint in better relations with Washington. But and Sri Lanka could find themselves the region making the Afghanistan- it would present a complication for subjected to sharp and frequent focused networks less of a concern for New Delhi, which has seen its relations criticism. Washington. with Beijing plummet to their lowest Fortunately, climate change—a Third, Biden’s position towards point in decades. paramount Biden priority and a three key US rivals—Iran, China Increasingly bitter US–Russia ties major threat to South Asia—offers and Russia—will likely diverge from would be an unwelcome development an opportunity for less tense US Trump’s, with notable implications for India, which knows that its engagement with the wider region. for South Asia. He will seek modest longstanding friendship with Moscow In short, South Asia policy under improvements in relations with the constitutes one of the few entrenched Biden will be a rare case of continuity. first two, while pursuing a more tension points in US–India relations. But it will still be impacted by the sea confrontational policy with the third Biden’s emphasis on democracy change the incoming administration than did Trump. and rights promotion means that will usher in for US foreign policy, The prospect of even modestly South Asian states, including those presenting both new opportunities and improved US relations with Iran often overlooked by the United States, fresh challenges for the region. EAFQ would be a net positive for both New could end up on Washington’s radar Delhi and Islamabad, which value for the wrong reasons. Crackdowns Michael Kugelman is Deputy Director commercial cooperation with Tehran on dissent, assaults on rights and for the Asia Program and Senior and prefer a relaxed US sanctions democratic backsliding are prevalent Associate for South Asia at the regime. A slightly less toxic US–China across South Asia. Biden will likely go Woodrow Wilson International Center relationship would please Islamabad, relatively easy on India for strategic for Scholars, Washington DC.

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 39 ALLIANCE REPAIR Shared burden of a new vision for the Asia Pacific

NICK BISLEY unclear. Exactly what Biden will seek a much more competitive and HE relief is palpable. After to do is also still uncertain, but Kurt combustible regional dynamic than T four years, Washington’s Asian Campbell and Rush Doshi, now both the kind of arrangement sketched by allies have got what they hope is key figures in Biden’s National Security Campbell and Doshi. their old partner back. US President Council (NSC), set out a blueprint The role of regional institutions and Joe Biden won’t shake down Japan for Washington’s Asia strategy: to alliances will also see more change and South Korea, hector Australian preserve what they call the ‘regional from Washington. Where Trump saw prime ministers or fawn over Chinese operating system’. alliances as a liability, Biden’s team will President Xi Jinping’s strong man Their approach is based on the see them as an asset. In particular, they tactics. Kissingerian belief that stable regional will see their alliances in Asia as having Yet the eagerly anticipated return orders must rest on a balance of power three roles: as order stabilisers, force to normality will not be a reversion and a shared sense of legitimacy multipliers and legitimacy anchors. to the status quo ante. Each ally in about the order and its purpose. The Allies will be expected to play a greater the region is concerned not just with implication is that US strategy in Asia part in not just the narrow work of how the 46th president will approach should seek to ensure a stable military shared security challenges but also their bilateral relationship, but also balance and a shared sense of order. in establishing a new equilibrium of with the broader question of Biden’s The problem is how to square this force and also to play a part in trying strategy toward the region that both with an ambitious and assertive China to drive a shared sense of legitimacy his predecessors recognized was the whose view is not compatible with this among countries in the region. world’s most important. vision. The discordant messages allies For Australia, this is a highly A neo-Kissingerian view requires received from the disparate voices consequential period. Its Asia giving China at least some space of the Trump administration will strategy lacks coherence. It upended and legitimacy, an idea at odds with be no more, and alliances will be a long-term regional approach of the language of US officials who more prized. But Washington will developing positive relations with all intend to retain Trump’s hard-line increasingly expect their partners to the major regional powers by shifting posture towards China. Indeed, in carry a greater burden in the overall to a confrontational approach to the Defense Secretary Lloyd Austin’s first strategy than in the past. This will test People’s Republic of China (PRC), communication with his Japanese the alignment between the US vision without a risk mitigation plan or counterpart Kishi Nobuo, he for the region and the interests of its substantive support from Washington. deliberately underscored the Free and alliance partners. Given the centrality of the US alliance, Open Indo-Pacific frame established Biden’s vision for Asia is likely to the direction taken by Biden will be by the Trump administration. align well with Australia. A renewed critical to Australia’s ability to chart The question is whether Biden’s emphasis on institutions and a greater a successful foreign policy over the ambition is to defend the regional priority on alliance partners and coming years. status quo—to maintain US primacy in their respective interests will benefit In contrast to Trump, Biden is likely the face of mounting Chinese power— Australia. Biden also represents to have an Asia strategy worthy of or to adjust the broader setting. Here, a chance for Australia to reset its the name. While the 45th president domestic politics are likely to prevail misaligned regional policy. The and his secretaries spoke regularly and the defence of the old is likely approach to China is a case in point. about the ‘free and open Indo- to remain the long-term ambition of Opting to toughen relations with Pacific’, what that actually meant was the United States. This may prompt China without a sense of the longer

40 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: MC2 MARKUS CASTANEDA / US NAVY PHOTOGRAPH

The Australian frigate Ballarat and Indian Navy destroyer Shivalik, foreground, seen from the deck of USS John S. McCain during the Malabar 2020 exercise in the Indian Ocean in November 2020. The Biden administration’s priority on alliance partners will give Australia an opportunity to reset its regional policy. game it was playing and without on China. This began a process of the uncertainty around economic reliable support from its senior decoupling the world’s two biggest affairs. Yet before too much sparkling partner left it badly exposed. If Biden’s economies and making the task shiraz is popped in Canberra, the approach to China aligns with the of aligning the economic and the reality that Australia faces a much direction taken by Canberra then strategic extremely difficult. riskier international environment Australia will benefit from the political Managing the disconnect between remains. There also remains the and diplomatic support Washington US economic and strategic interests expectation that its close friend in will provide. is the most uncertain component of Washington wants it to shoulder more One of the central challenges the Biden administration’s approach responsibility and risk. for Biden and the United States, as to the region. How the administration Strategic competition with China for other countries, is the growing approaches decoupling and trade over Asia’s order will be the dominant disjuncture between the region’s policy towards China will be hugely feature of the coming years. While geopolitics and its economic relations. consequential. Biden’s team has staff that competition is likely to be better Washington’s former primacy was who recognise the complexity of this managed under Biden, and indeed it is based on the close fit between challenge, but it seems likely that welcome to have a clearer sense as to economic and strategic interests domestic politics will prevent shrewd what the competition is actually about, that existed for most countries. management. It is difficult to see Biden a region dominated by competing China’s emergence and the broader having the political space to join the great powers is a dangerous one transformation of Asia’s trade and TPP successor, the Comprehensive indeed. EAFQ investment patterns has ended that. and Progressive Agreement for Former president Barack Obama’s Trans-Pacific Partnershipp, or take Nick Bisley is the Dean of Humanities Asia policy tried to address this, meaningful steps to reduce Beijing’s and Social Sciences and Professor of principally through the Trans-Pacific economic influence in the region. International Relations at La Trobe Partnership (TPP). Trump scuppered Australia will welcome the new University, Melbourne. the TPP and launched a trade war administration, notwithstanding

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 41 BREAKING THE LOGJAM Domestic challenges could limit new US climate policy

ROBERT N. STAVINS below its 1990 level by 2030 and are connected with the tax code or China’s recent pledge to achieve mandatory spending. But for broad FTER US President Joe Biden carbon neutrality (zero net emissions) and ambitious climate legislation, the A and Vice President Kamala by 2060. 60-vote threshold will be the binding Harris were inaugurated on 20 January If significant ambition is one constraint. this year, the new administration necessary condition for the new Biden Executive orders notwithstanding, initiated the process of re-joining the NDC, there is another one, namely it will be challenging for Democrats to Paris Agreement on climate change. that it be credible, hence achievable, enact Biden’s climate plan, including Thirty days after the necessary given existing and reasonably its US$2 trillion in spending over four paperwork was filed with the United anticipated policy actions. These years with the goal of making all US Nations, the United States resumed necessary conditions can only be electricity carbon-free in 15 years its status as a party to the agreement. met with aggressive new domestic and achieving net-zero emissions Shortly after Inauguration Day, more climate legislation. But even with the economy-wide by 2050. The prospects executive orders were issued, including Democrat-controlled US Senate—with over the next two to four years for one which identified climate change its one-vote margin—meaningful comprehensive climate legislation— as having a central role in foreign and and ambitious climate legislation will such as a carbon-pricing system—are national security policy. be difficult, if not impossible. This not good. That was the easy part. The hard is because of the Senate tradition of But other legislation that would part is coming up with a quantitative filibusters, which can only be stopped help reduce GHG emissions in the statement of how and by how much with 60 votes. long term may be more feasible. That US emissions of greenhouse gases The budget reconciliation process, includes a post-COVID-19 economic (GHGs) will be reduced over time where only a simple majority is needed stimulus bill, which may have a green in a new Nationally Determined to pass legislation rather than the tinge. Another candidate will be Contribution (NDC). The new NDC 60 votes required to cut off Senate infrastructure legislation—something needs to be sufficiently ambitious debate, can be used to reverse some that both parties seem to recognise to satisfy (at least to some degree) of Trump’s last-minute policies that is important to upgrading ageing US both domestic green groups and key roads and bridges. This could include countries within the international funding for improvements in the community—despite the likelihood The new administration national electricity grid, which will be that Biden and his special envoy for needed to facilitate greater reliance on climate, John Kerry, will initially be may or may not find renewable energy. warmly welcomed by most world Finally, there are possibilities for leaders. creative ways to break less ambitious but fundamentally The NDC must be more bipartisan climate legislation, with ambitious than the former Obama the logjam that has much less stringent and lesser administration’s target of a 26–28 per scope than Biden’s climate plan. The cent reduction in GHG emissions prevented ambitious key approaches might involve tax by 2025 compared with 2005. It will incentives and subsidies targeting need to compare favourably with the national climate change wind and solar power; carbon capture, announced targets of other major storage and utilisation; nuclear power; emitters, like the European Union’s policies technology initiatives and electric target to cut emissions 55 per cent vehicles.

42 EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 PICTURE: REUTERS

Birds fly over a closed steel factory where chimneys of another working factory are seen in background, in Tangshan, Hebei province, China.

But such modest, bipartisan administration will not be hostile to that it will embrace scientific and other initiatives are unlikely to satisfy either states and municipalities taking more expertise across the board. The best the demands of domestic climate aggressive action. Climate policies epidemiologists and infectious disease policy advocates or international calls at the state level (as in California) experts will lead efforts on designing for action. So the new administration and regional level (the Regional an effective strategy for the COVID-19 will likely have to opt for regulatory Greenhouse Gas Initiative in the pandemic, and the best scientists, approaches. While this may be Northeast) became increasingly lawyers and economists will cooperate an attractive option, using new important during the Trump on designing sound, politically feasible regulations under existing legislation administration. Bottom-up evolution climate policies. EAFQ rather than enacting new laws raises of national climate policy may another problem—the courts. continue to evolve from Democrat- Robert N. Stavins is A. J. Meyer New regulations are now much leaning states, representing over half Professor of Energy and Economic more likely to be successfully of the US population and an even Development at the John F. Kennedy challenged in federal courts. The 228 larger share of economic activity and School of Government, Harvard Trump-appointed federal judges and GHG emissions. University. He is also a University a six–three conservative majority on The new administration may or may Fellow at Resources for the Future, the Supreme Court gives executive not find creative ways to break the Washington DC, and Research departments and agencies much less logjam that has prevented ambitious Associate at the National Bureau of flexibility to go beyond the letter of national climate change policies from Economic Research. An earlier version the law or to interpret statutes in being enacted (or, if enacted, from of this article Hard National Security innovative ways. being sustainable). Optimistically, Choices was published in Lawfare (14 Even if little can be accomplished the Biden–Harris team, in sharp January 2021). at the federal level over the next contrast with the Trump–Pence two to four years, surely the Biden administration, gives every indication

EAST ASIA FORUM QUARTERLY JANUARY — MARCH 2021 43 There has never been a more urgent time to use research to shape public debate, policy decisions and the well-being of our society.

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