Southeast Asian nations fear being caught in crossfire of China-US trade dispute

Southeast Asian nations say they fear being caught in the crossfire of the trade dispute between China and the United States as top diplomats from the two countries attend a summit in Singapore designed to boost cooperation and reduce conflict in the region.

China’s State Councillor Wang Yi and US Secretary of State Mike Pompeo met on Friday on the sidelines of the Asean Foreign Ministers’ Meeting, which closes on Saturday.

Speaking after the meeting, Wang said that neither side wanted the conflict to continue.

“We are willing to resolve issues of mutual concern with the US through talks that are based on principles of equality and mutual respect,” he said.

His comments came after Washington said this week it was considering raising existing tariffs on US$200 billion worth of Chinese products to 25 per cent from 10 per cent.

China hit back on Friday night saying it would impose tariffs of between 5 to 25 per cent on US$60 billion worth of American goods.

China to slap tariffs up to 25 per cent on US$60 billion of US goods

On a more positive note, the two rivals attempted to show their desire to boost ties with Asean this week.

On Friday, the US vowed to increase its investment in the region, while on Thursday, China and the 10 members of the bloc agreed to a draft code of conduct that will lay the foundation for negotiations over the disputed South China Sea.

China and Asean also began a maritime exercise in Singapore on Thursday.

Any signs of compromise or cooperation are likely to be welcomed in the region, where nations are growing increasingly concerned about becoming embroiled in the economic and military rivalry between Washington and Beijing.

China and Asean reach ‘milestone’ draft deal on South China Sea code of conduct

At the opening of the ministers’ meeting on Wednesday, Singapore’s Prime Minister Lee Hsien Loong said Asean was “acutely aware of the storm clouds of the trade war” and given the changes in the security and economic landscape was facing an “inflection point”.

A diplomat from a Southeast Asian nation who asked not to be named said the US-China trade dispute had become one of his country’s biggest worries.

“It’s what everybody is talking about now,” he said. “We are caught between two giants and it [the trade dispute] is going to affect our economy.”

He said that during the two days of bilateral and multilateral meetings in Singapore, his country would be watching closely for any signs of an easing of tensions between China and the US.

A senior official from another Asean country, who also asked not to be named, said he too was worried about the growing levels of competition between Washington and Beijing, both on the trade and military fronts.

“It doesn’t seem likely it [the conflict] will escalate further, but what they [China and the US] are doing is not encouraging either,” the person said.

China-US trade talks ongoing, but progress hamstrung by mutual ‘deep mistrust’, sources say

In a meeting with Asean’s top diplomats, Pompeo said Washington was committed to the rule of law in the South China Sea and wanted to move ahead with more investment in the Indo-Pacific region.

“The US is a Pacific nation and we remain committed to Asean centrality under our Indo-Pacific strategy,” he said.

Before leaving for his five-day Asia trip, Pompeo on Monday announced an initial US$113 million budget for Indo-Pacific development, including security assistance.

US competes with China’s ‘Belt and Road Initiative’ with US$113 million Asian investment programme

Richard Heydarian, a Manila-based international affairs analyst, said Pompeo’s remarks indicated that the US should not be underestimated in the region despite Washington’s investment fund being only a fraction of the money Beijing was spending via its “Belt and Road Initiative”.

“The US$113 million fund has so far been vague about actual projects, but this is clear publicity,” he said.

“The US is saying, we may not be matching dollar for dollar now, but this is a mobilisation fund to drive private capital around the world to come to Asean, to team up with US’ allies to give Asean another option … and for good quality infrastructure to be built.”