Positive Visions, Powerful Partnerships - The Keys to Competing with China in a Post-Pandemic Indo-Pacific - Amazon S3
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MARCH 2021
Positive Visions,
Powerful Partnerships
The Keys to Competing with China in a
Post-Pandemic Indo-Pacific
Stephen Tankel, Lisa Curtis, Joshua Fitt, and Coby Goldberg
About the Authors About the Indo-Pacific Security
Dr. Stephen Tankel is an Associate Program
Professor at American University and an
The CNAS Indo-Pacific Security Program addresses oppor-
Adjunct Senior Fellow with the Center for
tunities and challenges for the United States in the region,
a New American Security (CNAS) Indo-
with a growing focus on issues that originate in the In-
Pacific Security Program. He has served
do-Pacific but have global implications. It draws on a team
on the House Foreign Affairs Committee
with deep government and nongovernment expertise in
and in the Office of the Under Secretary
regional studies, U.S. foreign policy, international security,
of Defense for Policy. Tankel is the author
and economic statecraft. The Indo-Pacific Security Program
of numerous works, including With Us and Against Us: How
analyzes trends and generates practical and creative policy
America’s Partners Help and Hinder the War on Terror.
solutions around four main research priorities: U.S.-China
strategic competition, India’s growing role in the Indo-Pa-
Lisa Curtis is the Senior Fellow and
cific, the North Korea threat, and American alliances and
Director of the Indo-Pacific Security
partnerships.
Program at CNAS. Curtis has over two
decades of experience working for the
U.S. government, including as Deputy
Acknowledgments
Assistant to the President and National This report was made possible by generous funding from
Security Council Senior Director for the Government of Japan. The authors are grateful to
South and Central Asia from 2017–2021. Curtis also worked the many officials and experts—both in the United States
at the CIA, State Department, Senate Foreign Relations and elsewhere—who shared their perspectives during the
Committee, and as Senior Fellow for South Asia at the course of the project. This report would not have been
Heritage Foundation from 2006–2017. possible without assistance from a variety of current and
former CNAS colleagues, including Melody Cook, Isha Dalal,
Joshua Fitt is a Research Associate Christopher Estep, Allison Francis, Kristine Lee, Maura
with the Indo-Pacific Security Program McCarthy, Ely Ratner, and Emma Swislow. In addition, the
at CNAS. He focuses on U.S. East Asian authors would like to thank Zack Cooper, Elina Ribakova,
security strategy and specializes in and Rachel Ziemba for reviewing full drafts of this report.
Japanese and Korean Peninsular affairs. The views presented here are the authors’ alone and do not
Before joining CNAS, Fitt was a campaign represent those of CNAS or any other organization. The
field organizer during the 2018 midterm authors are solely responsible for any errors in fact, analysis,
elections in the Upper Midwest, an earthquake and tsunami or omission.
disaster relief volunteer with IsraAID in Japan, and an intern
with the Council on Foreign Relations’ Japan Program. He
earned his BA in East Asian studies from Yale University
Coby Goldberg is an analyst with the
Counterproliferation Program at the
Center for Advanced Defense Studies. He
was previously the Joseph S. Nye Intern
with the Indo-Pacific Security Program at
CNAS. He recently graduated summa cum
laude and Phi Beta Kappa from Princeton
University, with a BA in East Asian studies.
TABLE OF CONTENTS
01 Executive Summary
02 Introduction
05 Chapter One: The United States, China,
and COVID-19 in the Indo-Pacific
13 Chapter Two: The View from America’s
Quad Partners
21 Chapter Three: Spotlight on COVID-19
in Southeast Asia
24 Chapter Four: Challenges, Opportunties,
and Recommendations
32 Conclusion
INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
Executive Summary » Option 1: Lay the groundwork for an eventual
smooth transition from distributing vaccines in
T
he United States was losing ground to China in the United States to distributing them abroad.
the Indo-Pacific when the COVID-19 crisis began.
» Option 2: Provide financial support to fund the
China’s growing economic might, military mod-
purchase and distribution of vaccines in the Indo-
ernization, and aggressive diplomatic efforts were already
Pacific, especially among Southeast Asian countries.
eroding America’s competitive advantage and shifting the
regional balance of power. A year after the virus first spread, » Option 3: Consider additional steps to boost vaccine
it is possible to identify where the pandemic is affecting production by supporting distributed manufacturing
diplomatic, economic, and defense trends in ways that could capacity in the Indo-Pacific.
accelerate declines for the United States, but also might » Option 4: Create an Indo-Pacific COVID-19 response
create opportunities to reverse or mitigate some of them. mechanism that includes Quad and Association of
Restoring U.S. alliances and partnerships in the Indo- Southeast Asian Nations (ASEAN) countries, South
Pacific is critical to competing effectively against China, Korea, Taiwan, New Zealand, and the Pacific Islands.
and President Joe Biden has made this a top foreign
policy priority. In particular, his administration is making ¡ Build shared mechanisms for tackling Chinese disinforma-
the Quadrilateral Security Dialogue—a strategic forum tion about the origins of COVID-19 and the efficacy
commonly known as the Quad, which is comprised of of Western vaccines.
the United States, Japan, Australia, and India—a core ¡ Prioritize public health and emergency preparedness in
component of its approach to the Indo-Pacific. Chinese Quad and ASEAN engagements, and increase public health
post-outbreak behavior has driven increased cooperation assistance to Southeast Asian countries.
among these four countries in the diplomatic, economic,
and defense domains to address shared challenges from Economic Lines of Effort
China. Seizing the opportunities this cooperation creates is ¡ Prioritize helping Indo-Pacific countries, especially those
critical for the United States. in Southeast Asia, deal with debt problems resulting from
While expanding U.S. cooperation with Quad countries, or exacerbated by the COVID-19 crisis.
the United States cannot neglect Southeast Asia, where
competition with China for influence is fiercest. Southeast ¡ Accelerate implementation of existing assistance programs
Asia is at the heart of U.S. and Japanese efforts to promote a for infrastructure and human capital development in the
free and open Indo-Pacific, and is a region where Australia region and enhance coordination with other Quad countries
has played a traditional leadership role. Competing on the delivery of assistance.
effectively with China requires offering Southeast Asian ¡ Pursue small-scale trade initiatives, while simultane-
countries a positive alternative vision to the one Beijing ously exploring the costs and benefits of entering the
promotes. Whether the United States and its fellow Quad Comprehensive and Progressive Agreement for Trans-
democracies can help Southeast Asian countries recover Pacific Partnership.
from the COVID-19 crisis will be a key litmus test of their
¡ Balance reshoring with diversification of supply chains
ability to deliver on such an agenda.
and emphasize efforts to help allies and partners deepen
This report offers recommendations for the United States
their own supply chains.
to take unilaterally and in close cooperation—bilaterally,
trilaterally, and through the Quad—with Japan, Australia, ¡ Expand opportunities for Quad engagement on economic
and India to address challenges and seize opportunities issues in the Indo-Pacific.
created by the COVID-19 crisis along three lines of effort:
diplomatic, economic, and defense. Defense Lines of Effort
¡ Increase defense integration with Japan and Australia.
Diplomatic Lines of Effort
¡ Adapt exercises to account for potential reductions in
¡ Swiftly follow through with plans to work with Japan presence and possible future disruptions to training cycles.
and Australia to fund the Indian production of at least
one billion vaccine doses and their distribution in the ¡ Seize opportunities to expand the U.S.-India
Indo-Pacific. Consider additional vaccine diplomacy defense relationship.
options to pursue unilaterally or in concert with the ¡ Seek opportunities to reinforce and expand defense ties
Quad and other countries. between all four Quad countries.
1
@CNASDC
Introduction America’s allies and partners are already key players in
the Indo-Pacific, and will only become more important
T
he United States is losing its strategic advantage as Chinese economic and military power grows. Since
to China in the Indo-Pacific. Although the United the pandemic began, Chinese behavior in the diplo-
States remains the security partner of choice in the matic, economic, and defense domains has strengthened
region, China’s increasing economic clout, assertive diplo- cooperation among the United States, Japan, Australia,
macy, and growing military capabilities are shifting the and India bilaterally, trilaterally, and through the
regional balance of power. Many Indo-Pacific countries are Quadrilateral Security Dialogue (commonly known as
wary of China, which uses its economic and military power the Quad). While the pandemic aggravates challenges for
to coerce its neighbors, but they are also increasingly the United States, it also creates opportunities to coop-
viewing China as a peer of the United States in the Indo- erate more closely with other Quad countries to compete
Pacific and according due deference to Beijing. The more effectively with China in the Indo-Pacific.
that regional countries see China’s rise as inevitable, the The Biden administration has retained the Trump
more likely they may be to accommodate Beijing. China’s administration’s competitive posture toward China, but
growing influence in the region is partly the result of struc- indicated plans to break from its predecessor’s transac-
tural shifts beyond U.S. control, but the United States has tional approach toward the region.2 Instead, Biden has
also hastened the decline of its own influence there. made it a priority to rebuild U.S. alliances and part-
Many key Indo-Pacific countries embraced the Trump nerships, including in the Indo-Pacific.3 This requires
administration’s unambiguous declaration that China is moving beyond the Trump administration’s narrow,
a global competitor, but they also bristled at its tendency China-centric agenda and offering regional countries a
to make U.S. policies toward them a function of their positive agenda that serves their interests. The ability
approach to Beijing.1 Moreover, Donald Trump strained of the United States to help the region address its needs
U.S. relations with regional countries by targeting them when it comes to dealing with the COVID-19 crisis and
with tariffs, its aftermath
skipping regional will be a litmus
multilateral
China’s growing influence in the region is test for U.S.
gatherings and partly the result of structural shifts beyond U.S. competence
economic nego- control, but the United States has also hastened and com-
tiations, and, in mitment to
the decline of its own influence there.
the case of Japan delivering on
and South Korea, such an agenda.
attempting to impose extractive cost-sharing agreements Nowhere is this more important than in Southeast
on them. His decision to pull out of the Trans-Pacific Asia, where competition with China for influence is
Partnership (TPP) hobbled the United States economi- the most intense.
cally and diplomatically, exacerbating growing Chinese The Biden administration is prioritizing the Quad as a
influence in both of these domains and robbing the United core component of its approach to the region.4 On March
States of the opportunity to help write the trade rules in 12, the Quad held its first ever leader-level summit.
the Indo-Pacific. Leveraging cooperation with Japan, Australia, and India
The COVID-19 crisis is accelerating and intensifying to respond to the needs of other Indo-Pacific countries
trends in the diplomatic, economic, and military domains that the COVID-19 crisis created is absolutely critical.
in ways that could put the United States at a further disad- In addition to the benefits for the region, such cooper-
vantage. Beijing has sought to leverage the COVID-19 crisis ation will reinforce ties among the Quad countries. It
to expand its influence in the region, taking advantage of could also help create linkages between the Quad and
the vacuum Washington created to place itself at the heart the Association of Southeast Asian Nations (ASEAN),
of the regional economic and public health recovery. With and provide a rationale for developing a scalable frame-
China rapidly rebounding from the global health crisis work to connect others, such as Taiwan and South Korea,
that originated there, and the United States continuing to into select Quad initiatives. For example, Seoul’s New
grapple with the legacy of the Trump administration’s mis- Southern Policy and Taiwan’s New Southbound Policy
management of COVID-19, the ensuing economic fallout, could play an important role in the U.S. Indo-Pacific
and bitter partisan divisions, the regional balance of power strategy, including in Southeast Asia. Both South Korea
could tilt further in China’s direction. and Taiwan have also been models for how to handle
2
INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
COVID-19 domestically. Beyond further integrating U.S. could further strain America’s military position in the
allies and partners into a regional framework, such an Indo-Pacific, or at least undermine regional countries’
approach would provide a powerful example of four confidence in that position. These countries may seek
democracies working together to address the pressing more autonomy as a result, leading them to develop
needs of other Indo-Pacific countries. stronger capabilities of their own to deter aggressive
There is an immediate need for a public health Chinese behavior. Such a development could create
response to COVID-19 in the Indo-Pacific. Investigating opportunities for greater burden sharing, but this will
the origins of the virus and its spread is important for require close coordination to ensure these capabilities
preventing or coping with a potential future pandemic, are complementary and not duplicative.
and should remain an international priority. Although The authors made several analytical choices for
countries in the region recognize China’s failure to act in this report that are worth illuminating. First, the
a transparent manner following the coronavirus outbreak project that resulted in this report was nested under a
and some want China held accountable, finding a way Center for a New American Security (CNAS) initiative
out of the crisis is the more urgent task. China has a head launched in April 2020 on America and the post-pan-
start in vaccine diplomacy—the use of vaccine production demic world. As such, we explored how the COVID-19
and distribution to enhance diplomatic influence—espe- crisis is affecting key trends related to competition with
cially in Southeast Asia, where it has sent more than 60 China in the Indo-Pacific in the diplomatic, economic,
percent of its global vaccine supply.5 There is still time and military domains. Our guiding principle was to keep
for the United States to make up ground. At the March 12 the focus on developments related to the pandemic.
leader-level Quad summit, the four countries announced All of the research was conducted after the COVID-19
plans to cooperate to expand vaccine production and crisis began and culminated just as the first vaccines
distribution and speed economic recovery.6 Other diplo-
matic responses will be critical as well, including the use The pandemic’s possible
of foreign assistance to help Southeast Asian countries effect on future defense
respond to the immediate economic fallout resulting
from the crisis and make longer-term improvements budgets could further strain
to public health infrastructure. Here, too, coordination America’s military position
among Quad countries could help ensure assistance in the Indo-Pacific, or at
has maximum effect.
Washington must also deal with Beijing’s growing
least undermine regional
economic clout and the influence that comes with it, both countries’ confidence in
of which are likely to get a boost from China’s unsteady that position.
but undeniable economic recovery. In the near-term, the
United States needs to be part of the economic recovery were becoming available for distribution. We first
in the region, especially in Southeast Asia and in India, sought to develop a baseline by conducting a review of
as New Delhi seeks to reduce its economic reliance on key regional trends in the diplomatic, economic, and
Beijing. The United States also needs to find a way to military domains, after which we assessed whether
address the longer-term deterioration of its economic and to what degree these trends were affected by the
position—a development that is likely to be exacerbated pandemic. We recognized that in many cases, the
by COVID-related economic trends in the region and COVID-19 crisis was accelerating preexisting trends,
the U.S. decision to opt out of the TPP. but that it also had the potential to create inflection
Although the diplomatic and economic domains are points for key countries. A crucial issue then became
most affected by the COVID-19 crisis, the United States determining where the pandemic created opportunities
also must mitigate the potential second-order effects for the United States to mitigate existing challenges,
of the pandemic on its military capabilities. America’s and where it might exacerbate these challenges. Our
military position in the Indo-Pacific is eroding partly aim in taking this approach was to identify concrete
as a result of China’s increased military spending and recommendations related to the effect of COVID-19 on
the demands of America’s global responsibilities, but U.S. interests in the Indo-Pacific, while also accounting
the United States has also failed to adapt its warfighting for the fact that the empirical data necessary for a full
concepts and forces to the challenges China poses. The assessment of the pandemic’s impact simply will not be
pandemic’s possible effect on future defense budgets available for some time.
3@CNASDC
Second, this project was designed to focus on the work with key allies and partners to mitigate challenges
U.S.-Japan alliance, as well as U.S. relations with and seize opportunities related to the pandemic, it
several other countries that are critical to competition became evident that the interplay between these four
with China. Among America’s allies in the Indo-Pacific countries would be critical. We recognized that other
and beyond, Japan most closely shares American views regional countries, such as South Korea, with its New
of the challenge China poses. Japan is viewed posi- Southern Policy and model COVID response, European
tively throughout much of the region for its provision allies, and the European Union will be important as well,
of public goods and support for infrastructure, and and sought to factor them in where appropriate.
is poised to play a vital role in mitigating challenges Third, we accounted for the challenges and opportu-
exacerbated by the COVID-19 crisis and maximizing nities the pandemic created in Southeast Asia, where the
opportunities the pandemic has created. Our focus U.S. competition with China for influence is fiercest. The
on developments related to COVID-19 informed United States is at risk of losing influence in Southeast
which additional countries we looked at and how we Asia, in part because of its failure to offer a positive vision
organized our findings. It quickly became clear that to the countries in this area of the Indo-Pacific region.
no countries in the region have seen greater shifts in While we engaged with how to address this develop-
their bilateral relations with China since the pandemic ment, we also recognized the important role that other
began than Australia and India. Australia is a key U.S. countries play. Southeast Asia is at the heart of Japanese,
ally, and the U.S.-India partnership has improved as well as U.S., efforts to promote a free and open Indo-
substantially over the past decade. Both countries have Pacific, and it is a region where Australia has played
clashed with China since the pandemic began—mili- a traditional leadership role. Our focus in the body of
tarily in India’s case, and economically in Australia’s. the report is on the damaging effects of the COVID-19
In addition to examining the effects of the pandemic crisis on Southeast Asian countries. With the excep-
on diplomatic, economic, and defense trends in the tion of Indonesia and the Philippines, these countries
U.S.-China bilateral competition, we conducted a have recorded lower transmission and fatality rates per
similar assessment of these trends from the perspec- capita than those in other regions, but the pandemic
tives of Japan, Australia, and India. Post-pandemic has had devastating economic effects throughout
developments have helped drive increased cooperation much of Southeast Asia. When making recommenda-
between the four Quad countries and spurred them tions, we considered how the Quad countries can work
to elevate and operationalize the Quad as a strategic independently and collectively to aid Southeast Asian
forum. As we looked at ways the United States could countries’ recovery from the crisis.
4INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
Chapter One: The United States, Diplomatic Trends
China, and COVID-19 in the As a CNAS report published before the COVID-19
pandemic observed, Beijing is outpacing Washington in
Indo-Pacific the Indo-Pacific with its more focused and innovative
approach to diplomacy.10 China leverages its economic
E
ven before the COVID-19 crisis spread across and military might in pursuit of diplomatic objectives,
the world, Chinese influence in the Indo-Pacific employing a mixture of hard and soft power. Beijing
was increasing at the United States’ expense.7 devotes considerable resources to public diplomacy and
Seventy-nine percent of Southeast Asian regional elites propaganda that promote the narrative of China’s rise
consider China the most influential economic player, and America’s inevitable decline. Chinese messaging
an increase of 6 percent from 2019. Fifty-two percent also advances the idea that its system of governance is
consider China the most influential political-strategic superior to Western democracy. Beijing’s efforts target
player, compared to only 26 percent for the United businesses, media organizations, universities, and thought
States.8 Regional countries recognize the perils of an leaders in democratic societies. China employs informa-
illiberal China-led order, but they also perceive an tion operations not only for its own direct benefit, but also
inevitability to China’s rise, driven first and foremost to support like-minded leaders. When Beijing-supported
by China’s growing economic clout. China integrates rulers have come under threat in the region—for example,
its instruments of national power so that they are during 2018 elections in Cambodia and Malaysia—
greater than the sum of their parts—one example Chinese hackers and security officials have been deployed
is China’s use of economic influence to further its to assist their beleaguered friends.11
geopolitical objectives and facilitate military cooper- China has directed much of its diplomatic capital
ation with regional countries. Beijing simultaneously toward engaging the region’s pivotal states, summits,
uses its military capabilities to support its economic and institutions.12 In Southeast Asia, where China has
efforts and applies extensive government resources to prominently promoted its concept of a “global network of
develop and advance the interests of Chinese business partnerships,” Beijing has sought to deepen cooperation
overseas. The United States remains the security through the ASEAN-China Strategic Partnership Vision
partner of choice for most Indo-Pacific countries, but 2030, which was issued at the 21st China-ASEAN Summit
Beijing’s approach is predicated on the assumption in November 2018 and laid out a medium- and long-term
that Washington cannot translate its military power blueprint for cooperation.13 In the Indian Ocean, China is
into regional influence with many countries because the only country with diplomatic missions on all six island
they prioritize economic development and worry that nations.14 These diplomatic investments pay dividends,
the United States will not act militarily to protect their especially when combined with economic inducements.
interests in the event of Chinese aggression.9 In contrast to Beijing’s focused efforts, former
The U.S. approach toward China has shifted dra- President Trump alienated close allies, most notably
matically from the pursuit of a more constructive Japan and South Korea, through his extortive demands
relationship to one based primarily on competition for four- and five-fold increases, respectively, in payments
with a revisionist power, but the United States is still for U.S. military forces based in these countries.15
in need of a comprehensive and coherent strategy to Moreover, despite the centrality of Southeast Asia to the
compete with China. In particular, the failure to match competition for regional influence, the United States
defense cooperation with positive diplomatic and failed to pay sufficient diplomatic attention to ASEAN
economic engagement can undermine U.S. influence in or ASEAN member states. Trump’s policy and rhetoric
the Indo-Pacific. As China gains ground militarily, this exacerbated America’s downward diplomatic trajectory.
could reduce the inclination of regional countries to Both Trump’s failure to appoint a U.S. ambassador to
align with the United States in order to balance against ASEAN during his time in office and his decision to skip
China. Although Washington’s waning influence in the ASEAN summit for three years in a row signaled a
the Indo-Pacific pre-dates the Trump administration, serious lack of interest in Southeast Asia.16 More broadly,
the former president’s policy and rhetoric exacerbated Trump’s decision to exit the Intermediate-Range Nuclear
downward diplomatic and economic trends. The Forces (INF) Treaty, the Paris Climate Agreement,
fallout from the COVID-19 crisis has accelerated these Iran nuclear deal, and the TPP all sent the signal that
trends and could hasten the erosion of the U.S. military trusting Washington to keep its commitments was
advantage in the region as well. a risky proposition.
5@CNASDC
Chinese Foreign Minister Wang Yi (right side, center) hosts a Beijing meeting of permanent representatives to the Association of Southeast
Asian Nations (ASEAN) in 2018. China continues to promote partnerships in the Indo-Pacific, particularly with ASEAN
member states. (Lintao Zhang/Getty Images)
The COVID-19 crisis initially appeared as though it charged with shaping online discourse, called on the
would mainly damage China’s reputation given the coro- agency to not only clamp down on viral anger at home,
navirus’ origins in the city of Wuhan in Hubei province. but also to “actively influence international opinion.”21
When Chinese New Year began on January 25, 2020, the At first, these efforts were largely defensive. Chinese
domestic coronavirus case count had surpassed the total official channels debunked claims that the virus had
case count of the 2002 SARS epidemic, and the disease started with a leak from the Wuhan Institute of Virology
was popping up in other countries too.17 The virus was and played up statements of support from leaders in the
battering the Chinese people, the Chinese economy, region.22 As infection numbers hit exponential growth
and the Chinese Communist Party’s (CCP) legitimacy. globally and China’s strict lockdown helped it turn a
At home, the CCP raced to silence a groundswell of corner in its battle at home, however, Beijing’s messaging
anger on social media about its attempted cover-up of switched from tamping down claims that CCP missteps
the virus, while abroad people speculated that it could had sparked a global crisis to claiming that China’s
spell doom for Chinese President Xi Jinping’s grip on efforts had “bought precious time for other countries
power.18 That week, a headline in the New York Times to fight the virus.”23 The CCP even began to propagate
read, “In Coronavirus, a ‘Battle’ That Could Humble unfounded claims that the virus might have origi-
China’s Strongman.”19 By mid-February, the widespread nated outside of China.24
narrative was that the “Coronavirus Crisis Shows While it worked to unburden itself of responsibility for
China’s Governance Failure,” as one New York Times the global pandemic, the CCP began casting itself as the
article put it.20 leader in a global response, offering to share supplies and
Even as the CCP struggled to control the spread best practices with the world.25 China’s highly publicized
of the virus and ensuing domestic anger, it turned its donations of sometimes faulty equipment drew criticism
attention to shaping the narrative abroad. A directive in the European Union and the United States, but played
for the Cyberspace Administration of China, the agency better in Southeast Asia, where leaders and media
6INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
generally expressed gratitude toward Beijing.26 The first As of early February, Chinese vaccines developed by
donation in China’s global campaign of “mask diplo- Sinovac, Sinopharm, and CanSino were authorized and
macy” went to the Philippines on February 3, 2020, and approved for use in China and over 60 other countries.30
by the end of March every ASEAN member state except Numerous countries, including many ASEAN member
for Singapore and Vietnam had received shipments of states, were either signed up to use a Chinese vaccine
masks, test kits, and other medical supplies.27 or competing to access them.31 Their pursuit of these
Although Beijing sought to position itself as a vaccines, despite the fact that these options were less
global leader, it took a regionally bifurcated diplo- effective in phase three trials than those developed
matic approach. As China’s economy reopened and by Western countries, is a function of affordability
the pandemic worsened across the United States and and availability. Notably, at the time this report went
Europe during the second half of 2020, the CCP went to press, China had sent over 60 percent of its global
on an aggressive offense against these states. Chinese vaccine supply to Southeast Asia.32 Focusing on vaccine
state media and government spokespeople emphasized development and distribution not only gives Beijing a
the failure of democratic governments to get their own way to pursue its global health leadership ambitions,
houses in order.28 After Canberra, a democratic gov- but also provides an opportunity to build out logistics
ernment that had gotten the virus under control, began chains in line with the BRI.
By seizing the opportunity presented by the region’s
China’s highly publicized need for vaccines, China could expand its ties in
donations of sometimes faulty Southeast Asia. For example, Chinese vaccine pro-
ducers are building manufacturing partnerships with
equipment drew criticism in the local companies in countries like Indonesia and setting
European Union and the United up supply chains that will endure beyond the current
States, but played well in vaccine race.33 Beijing has also institutionalized its
public health engagement with ASEAN by establishing
Southeast Asia, where leaders a China-ASEAN human resources training program for
and media generally expressed the health sector, a regional reserve of medical supplies
gratitude toward Beijing. for public health emergencies, and a liaison mechanism
for public health emergencies.34
calling for an “independent assessment” of the virus’ The U.S. government response—domestically
origin in April 2020, Beijing resorted to extremely and internationally—to the COVID-19 crisis further
punitive economic measures in an attempt to make undermined America’s diplomatic position in the Indo-
an example out of Australia to other countries that Pacific. Failure to properly handle the virus at home
might contemplate criticizing it.29 Although Western severely damaged U.S. credibility abroad.35 Although not
media accounts of China’s diplomatic efforts since the necessarily seen as an indictment of democratic gover-
pandemic began often focus on its aggressive, “wolf nance writ large, the Trump administration’s inability
warrior” diplomacy against the United States and to prevent hundreds of thousands of deaths reinforced
European countries, the CCP took a different approach regional views that the United States is incapable of
to Southeast Asian nations, where it largely set aside such governing itself effectively, which in turn has sowed
muscular diplomacy in favor of touting China’s capacity further doubt about America’s ability to contribute to
to assist with the regional economic and public health regional prosperity.36 In addition to their concerns about
recovery. In the healthcare space, Beijing moved away U.S. competence, stakeholders in the Indo-Pacific have
from the mask diplomacy that marked the early days of questioned how Washington can increase attention to
the pandemic to vaccine diplomacy. the region with so many pandemic-related problems at
Although the Chinese government has promoted home.37 The Trump administration’s withdrawal from
the Health Silk Road since Xi first announced it in the World Health Organization (WHO), refusal to join
2017 as an effort improve public health in countries COVID-19 Vaccines Global Access (COVAX, which is an
that are part of China’s Belt and Road Initiative (BRI), alliance that seeks to provide fair and equitable access
Beijing had done little to actually build public health to COVID-19 vaccines), and unwillingness to export
infrastructure in BRI countries before the COVID-19 vaccines, even to countries with contracts, reinforced
crisis. Since the pandemic began, China has sought to many of the damaging aspects of his administration’s
position itself at the forefront of global health leadership. “America First” approach.
7@CNASDC
It is important to note that the United States contrib- U.S. efforts, such as the USAID funding for COVID-19
utes more aid to Southeast Asia than China, including relief, were overshadowed by Beijing’s heavily publicized
$90 million in earmarked USAID funding for COVID-19 assistance—as seen with mask diplomacy and then vaccine
relief donations, which is the highest amount of aid to the diplomacy—and the United States’ unwillingness, until
region from an individual donor country.38 Additionally, recently, to contribute to international vaccine develop-
the State Department’s recent U.S.-ASEAN Health ment and distribution. Although the United States missed
Futures initiative presents a promising framework for an opportunity early on to show that it could lead the way,
long-term engagement that will build significant public there is still time for it to play a critical role in the pandemic
health capacity in Southeast Asia.39 Two of the vaccines response. In December, 2020, Congress authorized a $4
authorized in the United States as of March 2021—Pfizer- billion contribution to the global pandemic response, $2
BioNTech and Moderna—are considered more effective billion of which was allocated to COVAX.41 On January 21,
than the Chinese vaccines currently approved for use in the day after President Joe Biden was inaugurated, the U.S.
other countries, although Pfizer-BioNTech is more dif- government announced it would rejoin the WHO and join
ficult to distribute because of the need to store it at -70 COVAX.42 Biden pledged up to an additional $2 billion toward
degrees Celsius.40 The Johnson & Johnson single-shot the COVAX effort at a G7 meeting in February.43 As this paper
vaccine and the AstraZeneca vaccine, the latter of which went to press, the United States and its fellow Quad members
is not authorized for use in the United States, are both announced plans to work together to strengthen equitable
roughly equivalent to Sinopharm’s self-reported efficacy vaccine access for the Indo-Pacific in close coordination with
rate. (When comparing efficacy it is important to note multilateral organizations, including the WHO and COVAX.
that results may vary depending on where trials were Most notably, the Quad has pledged to deliver at least one
conducted and whether they occurred before or after billion COVID-19 vaccine doses throughout the Indo-Pacific
new coronavirus variants emerged). by the end of 2022.44 Although the details are still taking
Southeast Asia’s Cumulative COVID-19 Cases per 100,000 People 46
Percent of Population Vaccinated
against COVID-19 by Country in the
Indo-Pacific 47
UNITED STATES 19.4%
SINGAPORE 6.9
CHINA 2.7
INDIA 1.6
INDONESIA 1.5
SOUTH KOREA 0.7
MALAYSIA 0.6
CAMBODIA 0.5
AUSTRALIA 0.4
LAOS 0.3
JAPAN 0.2
PHILIPPINES 0.1
THAILAND 0.1
BURMA 0.1
Number of VIETNAMINDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
shape, the plans reportedly include U.S. and Japanese are increasingly marketing their new tools abroad.52 As
financing for Indian vaccine production, including Beijing’s tech companies move abroad, they bring with
Johnson & Johnson's single-dose vaccine, and Australian them the state-centric digital norms that define China’s
support (possibly with Japan as well) for vaccine dis- domestic digital environment.53
tribution across the Indo-Pacific.45 The announcement China leverages its growing economic clout to further
of such an ambitious vaccination production and distri- discreet objectives in a number of ways. First, Chinese
bution plan, including a vaccine expert working group economic entanglements can serve as political ends in
to ensure speedy implementation, within 60 days of themselves. For example, strategic investments in the
President Biden’s inauguration is remarkable. This effort Pakistani port of Gwadar and the Sri Lankan port of
indicates that the Biden administration is likely to priori- Hambantota have allowed China to begin constructing a
tize the Quad in achieving its goals in the region and that logistics network to support its global ambitions. China
it will also increase U.S. reliance on non-military instru- also endeavors to use the export of dual-use surveillance
ments of statecraft in pursuit of these goals. technology and attendant authoritarian technology
norms along the Digital Silk Road to reshape foreign
Economic Trends countries in its ideological image. Second, whether by
China’s gross domestic product when measured in design or as a result of opportunism, Beijing has taken
terms of purchasing power parity is greater than that of advantage of situations in which recipients of Chinese
the United States, though this metric is most relevant loans default on their debts in order to pursue its own
for domestic goods, and so China’s capacity to import geopolitical objectives. Finally, outright coercion is
goods from the global economy is still somewhat lower. the bluntest instrument at China’s disposal for turning
China’s economic heft—measured in terms of bilateral economic power into strategic leverage. Beijing has used
trade and tourism, as well as investment, albeit to a lesser aggressive economic tactics with Australia, Japan, the
degree—also outweighs that of the United States in every Philippines, Norway, and South Korea.54
Indo-Pacific country in the region except for India.48 U.S. Historically, the United States was the main driver of
allies are among the regional countries most dependent economic demand and set the pace on trade and invest-
on China as an export market (see Figure 1).49 But China’s ment in the region. The United States still purchases
regional economic footprint is not limited to trade. Over a large amount of goods from the Indo-Pacific—U.S.
the years, it has developed a chokehold over key supply consumption as percent of GDP is twice as high as
chains on which many countries rely. With domestic China’s—and its economic toolkit grew during the
venture capital markets flooded, China has also upped Trump administration to include the Development
its investments in regional innovation ecosystems: In Finance Corporation. Yet, the United States is increas-
Southeast Asia, total Chinese investment in the region’s ingly absent from the economic integration occurring in
startups hit $1.78 billion over the first seven months of the Indo-Pacific. Instead, regional countries increasingly
2019, an eight-fold increase over the previous year.50 drive demand, and regional trade has eclipsed trade with
Beyond its bilateral economic ties, Beijing has pushed the United States.56
new economic structures to undergird an increasingly Regionalization is partly a function of the fact
Sino-centric regional order, like the Asian Infrastructure that regional states are no longer just producers and
Investment Bank (AIIB) and BRI.51 As the long-term debt exporters, but are also consumers and importers that
and environmental implications for recipient countries provide demand and capital to one another.57 The
of China’s infrastructure building spree along the New Trump administration’s decision to withdraw from the
Silk Road began to garner greater scrutiny in recent TPP (now the Comprehensive and Progressive Trans-
years, the CCP shifted its focus to nimbler technology Pacific Partnership, or CPTPP) and its absence from
and public health projects, organizing them under a the Regional Comprehensive Economic Partnership
Digital Silk Road and Health Silk Road, respectively. Just (RCEP) is hastening the decline of U.S. involvement in
as BRI is a product of China’s massive excess capacity at regional trade.58 Absence from both agreements also
home in the hard infrastructure space, the Digital Silk means that the United States is increasingly marginalized
Road is an effort to encourage outbound investments by in the regional trade architecture, including in terms
Beijing’s ascendant tech giants. Chinese tech startups, of its ability to influence the rulemaking that governs
flush with funds from massive government-led invest- regional markets.59 In short, without joining the CPTPP
ments in cutting-edge AI-enabled technologies like or something like it, the trend of regional integration
facial recognition and smart city traffic management, over transpacific integration will continue. Moreover,
9@CNASDC
Percent of Exports and Imports to and from China, by Country55
Percent of country’s China’s rank among Percent of country’s China’s rank among
total exports destined country’s export total imports coming country’s import origins
for China (ranking) destinations from China (ranking)
AUSTRALIA 39% 1st 25% 1st
BURMA 24% 1st 43% 1st
6th
Behind the United States,
CAMBODIA 5% Singapore, Thailand,
27% 1st
Germany, and Japan
3rd
INDIA 5% Behind the United States 15% 1st
and the United Arab Emirates
INDONESIA 15% 1st 27% 1st
JAPAN 18% 2nd 23% 1st
Behind the United States
LAOS 28% 2nd 26% 2nd
Behind Thailand Behind Thailand
MALAYSIA 13% 1st 24% 1st
Tied with Singapore
NEW ZEALAND 28% 1st 18% 1st
THE PHILIPPINES 15% 1st 29% 1st
SINGAPORE 15% 1st 16% 1st
SOUTH KOREA 25% 1st 22% 1st
THAILAND 12% 2nd 22% 1st
Behind the United States
VIETNAM 14% 2nd 35% 1st
Behind the United States
although bilateral trade deals may remain a sensible The COVID-19 crisis is likely to accelerate trends
fallback in some cases, recent history has shown that in the economic domain. To begin with, the Chinese
such deals are very labor intensive and bring fewer gains. economy could overtake the U.S. economy faster than
Trump’s decision to use tariffs against allies and previously anticipated. According to the Centre for
partners as part of a zero-sum bilateral trade agenda Economics and Business Research, China will surpass
sent the message that the administration saw economic the United States as the world’s largest economy in 2028,
growth in the Indo-Pacific as a threat to be coun- five years earlier than was expected one year ago.62 China
tered, rather than as an objective worth pursuing.60 is one of the few global economies that grew in 2020—at
Cooperating on economic issues can be challenging least according to Chinese data—enabling it to increase
because even allies are sometimes competitors, but regional investments. For example, over the first three
these policies made trade a highly contentious wedge quarters of the year, Chinese investment in ASEAN
issue between the United States and countries in the surged 76 percent.63 To great fanfare in Chinese state
region. For instance, by introducing national security media, ASEAN eclipsed the European Union as China’s
concerns as a reason to raise trade barriers, the Trump largest trade partner.64 Moreover, China’s economy has
administration put smaller countries in the middle of the been recovering more quickly following the COVID-19
U.S.-China trade war. This trade war increased Beijing’s crisis than the U.S. economy or the economies of other
incentives for strengthening regional economic ties and countries in the Indo-Pacific.65 This should put Beijing
provided it an opportunity to present itself as the more in a strong position to increase its influence, at least in
credible long-term economic partner, and made some certain parts of the region.
countries, such as Australia, more vulnerable to Chinese While the Chinese economy bounces back—again,
economic aggression.61 according to Beijing’s data—the CCP is simultaneously
10INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
taking steps to insulate its economy from disruptive occur in the near term. Over the medium- to long-term, if
geopolitical and economic changes. The most notable China’s economy continues to grow rapidly and the U.S.
of these steps is China’s introduction of its dual circu- share of the trade portfolio in the Indo-Pacific continues
lation strategy, which places greater emphasis on the to shrink, this will further undermine the overall U.S.
domestic market (internal circulation) and relies less position in the region. In Southeast Asia, for example,
on an export-oriented development strategy (external 70 percent of elites said that they were worried about
circulation). This strategy was first promoted in 2020 China’s growing economic power in the region—the same
as relations with the United States were continuing to number that said they would welcome greater American
deteriorate and has become more pressing as a result of economic influence.73 But with pressing economic, public
the pandemic and how other countries have responded health, and technology needs, regional countries are not
to it. The COVID-19 crisis underscored how depen- waiting around for the United States to enter the game.
dent much of the world is on China for critical medical
supplies and supply chains, leading to growing calls for Defense Trends
greater self-reliance. Chinese policymakers appear to If military superiority in the Indo-Pacific were measured
have determined that it will become unsustainable for in defense dollars, the United States would be the unri-
China to continue relying on overseas demand to keep its valed power of the Indo-Pacific. Yet, although the United
manufacturing apparatus running.66 Yet, there are also States still has the overall military advantage against
questions about whether domestic demand will be suffi- China, the gap between the two countries has narrowed
cient to support this strategy.67 Some analysts assess that considerably. Before the COVID-19 crisis began, it was
China’s dual circulation strategy may reduce Chinese already dangerous to assume that the United States could
leverage with larger, industrialized countries, but could project expeditionary power and “win” an extended,
leave smaller countries even more dependent and prone high-intensity conflict against China in the Indo-Pacific
to economic coercion.68 at an acceptable cost.74 Rather, a U.S. war with China
China was already trying to move up the value chain could result in unacceptable attrition and possibly
toward higher-value tech sectors, including AI, robotics, mission failure. Moreover, through its asymmetric
quantum computing, new materials, and high-speed strategy, which includes aggressive island constructions
transport. Whether ranked by market capitalization, and the use of commercial fishing vessels in militia roles,
revenue, or number of employees, China has more China has developed the ability to establish control over
large tech companies than any other country except the South China Sea in every scenario short of war.75
the United States.69 The pandemic accelerated China’s The erosion of America’s military position in the
efforts to shift the focus of its economic ties with ASEAN region results from a mix of factors, including China’s
nations toward the digital and healthcare domains, increased military spending, the demands of America’s
both in order to further decrease debt loads in an era of global responsibilities, and the United States’ failure
tighter budgets, and to adapt China’s foreign economic to adapt forces and concepts to the types of challenges
footprint to the needs of the decade to come. The China poses.76 As a previous CNAS report highlighted,
pandemic has accelerated demands for digitized econ- the U.S. Defense Department has struggled to adapt to
omies, leading Xi to dub the year “the China-ASEAN China’s military strategy, which seeks to disrupt, disable,
Year of Digital Economy Cooperation.”70 As an earlier or destroy the systems that enable the United States’
CNAS report observed, the digital domain is not only a military advantage. It has struggled because of long-
growing economic market, but also will be a “primary standing trends in how the U.S. military fights wars, how
battleground between freedom and authoritarianism the Pentagon and the defense industrial base develop
in the Indo-Pacific.”71 technology, and how U.S. allies and partners build
The crisis has also deepened overall trade integration their armed forces.77
in the Indo-Pacific. With the successful conclusion of The pandemic has caused deep economic suffering in
RCEP, which brings together 15 countries, including the United States and raised questions about the sustain-
China and all five U.S. treaty allies in the region, Beijing ability of American defense spending. Potential declines
can claim a role alongside ASEAN at the center of intra- in defense spending could make it all the more difficult to
Asian integration meant to power pandemic recovery in project power credibly, underscoring the need to rethink
the Asian century.72 the U.S. approach to warfighting and build capabilities
It is possible the United States will join the CPTPP that deny China’s ability to obtain its objectives through
or something like it in due time, but this is unlikely to the use of force.78 Before the pandemic, Washington was
11@CNASDC
After a deadly clash broke out in June 2020, China-India tensions along the Line of Actual Control escalated considerably. These tensions
resulted in shots being fired between the two sides in September 2020 for the first time in decades. (Yawar Nazir/Getty Images)
already thinking more seriously about how to opera- engaged in increasingly aggressive behavior throughout
tionalize multilateral defense partnerships. The clear the region. In the East China Sea, Chinese ships spent a
advantages of scale Beijing will have in the military realm record 100 days straight around the Senkaku Islands.80
going forward makes clear the urgency of building out In the South China Sea, China dispatched patrol boats
multinational training and deployment and a multina- around Scarborough Shoal, claimed by the Philippines;
tional defense innovation base. built new “research stations” on the artificial islands
Although America’s regional security alliances have it has constructed; and attempted to curtail Vietnam’s
largely endured despite the turbulence of the last four access to its own fishing waters.81
years, China’s growing military capabilities, combined The types of readiness issues caused by the pandemic
with its economic might, are eroding regional deter- are less likely to be a factor as militaries are vaccinated,
rence. The pandemic exacerbated this challenge, at least but they nevertheless highlight the importance of U.S.
temporarily, by hampering U.S. military readiness. For presence for reassuring allies and partners and deterring
example, the U.S. naval presence was reduced because China. Moreover, the potential residual impacts of the
of COVID-19 and this did not go unnoticed by regional COVID-19 crisis on defense spending could exacerbate
allies and partners.79 In addition, ongoing viral outbreaks tradeoffs between being able to win a high-intensity
at U.S. military installations and on naval vessels created conflict and maintaining current force presence in the
challenges for maintaining the same pace of international region. The United States will need to reassure allies and
exchange through regional exercises. For countries with partners in order to limit Chinese efforts to use its rapidly
more robust armed forces, rescheduling or adapting a growing surface fleet to coerce them, while simultane-
few exercises at sea did not have an outsized impact, but ously encouraging and enabling them to build their own
this did present a problem for some smaller countries. denial capabilities.
As the global community grappled with the coro- Chinese military aggressiveness has been most pro-
navirus pandemic last spring, and the U.S. military’s nounced against India. China took up military positions
operational tempo in the Indo-Pacific slowed, China at several different locations along the Line of Actual
12INDO-PACIFIC SECURITY | MARCH 2021
Positive Visions, Powerful Partnerships: The Keys to Competing with China in a Post-Pandemic Indo-Pacific
Control (LAC) that separates India and China, including Chapter Two: The View from
in areas India considered its territory. Two scuffles broke America’s Quad Partners
out between the Indian and Chinese forces in May, and
T
on June 15, a major confrontation between troops in the he Biden administration appears likely to retain
Galwan River Valley resulted in the deaths of 20 Indian the Trump administration’s competitive approach
soldiers and at least four Chinese troops. The precise to China, but also to reinvigorate U.S. alliances
motive and reason behind the timing of China’s build-up and partnerships in the Indo-Pacific. Among America’s
along the LAC are still being debated. It may have been allies in the region and beyond, Japan most closely shares
intended to keep India in check following a series of U.S. views of the challenge strategic competition with
moves that China believed could challenge its strategic China poses. Reinforcing the U.S.-Japan alliance, which
position, or, alternatively, an attempt by China to consol- decision makers in both Washington and Tokyo regard as
idate its position, especially at a time when COVID-19 essential to achieving their respective national interests
was hitting the Indian army hard.82 Others saw it as a in the Indo-Pacific, will be a top priority. Australia and
Chinese attempt to change the territorial status quo, or at India will also play important roles in dealing with the
least push back on Indian efforts to improve infrastruc- challenges that China and the COVID-19 crisis present
ture near the LAC.83 It is also worth noting that Chinese in the Indo-Pacific.
aggression occurred at a time when the U.S-India rela- Cooperation between the United States, Japan,
tionship was growing more aligned, and the U.S.-China India, and Australia occurs bilaterally, trilaterally, and
relationship was rapidly deteriorating. Whatever China’s between all four countries via the Quad. The Quad—
motivation, the result has been to reinforce India’s whose antecedent was the Tsunami Core Group, which
growing ties with the United States, Japan, and Australia. was formed as a mechanism for the four countries to
coordinate responses to the 2004 tsunami in the Indian
Ocean—has gone through several iterations since it was
established in 2007.84 The Trump administration revived
the Quad before the pandemic began and, as detailed
in the previous chapter, the Biden administration is
making the Quad a key component of its approach to the
Indo-Pacific. Although the four member countries have
not forged an agreement on how to precisely define the
Quad, it is evolving into an important forum for regional
cooperation on various strategic issues and could be used
to even greater effect in this regard.
Diplomatic Trends
The downturn in relations between China and each of
the Quad countries in the wake of the COVID-19 crisis
has spurred them toward greater cooperation with one
another and strengthened their desire to elevate and
operationalize the Quad to balance growing Chinese
influence and aggressive behavior.
The COVID-19 pandemic arrived during an inflection
point in Japan-China relations. After the relationship
hit a low point in 2012, the administration of former
Japanese Prime Minister Shinzo Abe made mending
fences with Beijing a diplomatic priority. Since then,
the Japanese government has simultaneously worked
toward achieving diplomatic understanding with
China while also watching Chinese coercive economic
statecraft and military assertiveness with a wary eye.
The Trump administration’s erratic approach to the
Indo-Pacific contributed to concerns in Tokyo that the
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