November 15, 2016
This week we’ve focused on Donald Trump’s surprise victory in the U.S. presidential election and its implications for Asia and our sense of the initial reactions from China, Southeast Asia, and Japan.
Across Asia, the general sentiment is similar to that elsewhere – most observers and governments seriously underestimated the possibility of a Trump win, and now are scrambling to understand what it means for U.S. engagement in the region.
Candidate Trump and his advisors were not always well-aligned on Asia policy. Trump himself generally espoused a narrower and more transactional approach to relationships in the region, in what would be a shift away from the grand strategy of alliances and robust economic engagement that has been the main thrust of U.S. policy since the end of the Vietnam War. His advisors, however, criticized outgoing President Obama for being too soft on checking Chinese assertiveness, and promised more robust strategic engagement in the region.
How President Trump will shape these policies will be a primary focus of our analysis moving forward. It will also be a point of deep uncertainty and anxiety among many governments in the region.
Without a doubt, the economic relationship with Beijing looks set to get harder, at least in the short-term. Trump’s team has already proposed a shift toward reciprocity in bilateral trade and investments; this could mean, for example, that Chinese firms would only be allowed to invest into sectors in the U.S. that are also open to U.S. investments in China.
Using reciprocity as a policy tool has been avoided in U.S. policy circles when it comes to China policy. The approach has been criticized as sacrificing U.S. open market principles, and potentially risking harsh trade or investment restrictions for U.S. firms doing business in China.
Yet many U.S. businesses have become disillusioned with the slow pace of market opening offered by Beijing. Trump’s harder-line policy orientation may raise concern in the business community. But it could actually be effective in forcing liberalization from Beijing over the medium-term. After all, with the slowing Chinese economy, Beijing needs growth via new investment and job creation; it also continues to desire collaboration with U.S. high technology and services firms.
It’s yet to be seen whether Trump and his team can reorient the economic relationship with China in a way that keeps relations stable. But for the business community, reciprocity may be worth a hearing.
Amid the election noise, it is important to keep focused on changing political stories in Asia. In this week’s lead story we take a look back at China’s 6th plenum, after taking an in-depth look at the Communist Party’s new guidelines on “inner-Party political life” and new Party supervisions regulations which were both passed at the event. The press has focused on the Party raising Xi’s status as “core” leader and on the anti-corruption campaign, but the leadership also used the event to strengthen policy implementation.