Indonesia can be a force for
regional stability as the US and China duel on the world economic stage
As Beijing and Trump’s America prepare
for confrontation over the economic and strategic future of the world, it will
fall to Indonesia to perform a balancing act in Southeast Asia
Something amazing is occurring, but so
unsettling are the times that few realise the gravity of the change.
Under its radical new leader, the
United States is turning inwards. President Donald Trump used his inaugural address
on January 20 to underline a key theme of his campaign: he would restore
America to greatness by bringing back American jobs, borders, wealth and
dreams.
Under its radical new leader, the US is turning inwards
China, however, is saying the opposite.
President Xi Jinping (習近平), speaking at the World Economic Forum
in Davos just a few days earlier, mounted a spirited defence of the open
economic borders created and sustained by globalisation. Warning against
throwing out the economic baby along with the bathwater of problems, he called
on countries to adapt to and guide globalisation, cushion its problematic
consequences, and deliver its benefits to all countries.
Watch: Xi Jinping says globalisation is the way forward
Here was the pragmatic leader of a
communist nation challenging the protectionist ideology of the leader of a
capitalist democracy.
Herein lies the gravity of the
situation. The US, whose rise to global power since the end of the second world
war has rested on the export of a free-trade economic regime, is retreating
from the vanguard of globalisation. And China is seeking to inherit the mantle
of economic leadership, regional if not yet global.
The irony could not be greater. Yet, so
convulsive are the times – marked by another giant rejection of the status quo in
the form of Brexit – that few are willing to say what they see: that
history is turning a corner.
For Indonesia, the message is clear.
Since history is turning that corner, and possibly making a U-turn, Indonesia
has to choose between a possibly receding world order based on America’s
economic activism, and an approaching Asia-centric order premised on China’s
ascendancy.
Significantly, Indonesia’s choice will
have a lasting impact on the economic courses charted by the countries of the
Association of Southeast Asian Nations.
Indonesia has to choose between a possibly receding world
order based on America’s economic activism, and an approaching Asia-centric
order premised on China’s ascendancy
Indonesia is Asean’s largest country by
geography, population and economy. If Asean’s centrality is crucial to the way
in which the great powers – China, the United States, Japan, Russia and India –
interact in Southeast Asia, then there is no Asean centrality without
Indonesia’s centrality in Asean.
As the US and China prepare for
confrontation over the economic fate, and ultimately perhaps the strategic
destination, of the world, Indonesia will play a stabilising role in Southeast
Asia.
One of Trump’s first executive acts in
office was to withdraw his country from the Trans-Pacific Partnership (TPP),
touted as the economic component of his predecessor Barack Obama’s “pivot to
Asia” that had a military aspect as well.
The TPP’s original 12 members –
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, the United States and Vietnam – represented a colossal gathering of
economies that together account for 40 per cent of global GDP and 20 per cent
of global trade.
The free-trade deal was seen as the
Pacific answer to the continental economic aspirations of the European Union.
Watch: Donald Trump orders US withdrawal from the TPP
Trump has removed the TPP from the
theatre of global economics. The partnership is now a lame duck in a much
smaller pond than the Pacific.
Since Indonesia was not a member of the
partnership, the American move means little to it. (However, there are calls
for Indonesia and China to join it, now the US is out.)
The US withdrawal has highlighted the
countervailing agency of the China-sponsored Regional Comprehensive Economic
Partnership (RCEP). Its 16 members are Australia, China, India, Japan, all 10
Asean members, New Zealand and South Korea.
These countries make up 46 per cent of
the global population and are worth 24 per cent of the global GDP. That is less
than the TPP’s reach, but RCEP excludes the US – and Trump.
His insurgent streak is unlikely to
arrive in China and deflect RCEP from building a formidable Australasian
economic entity, united within and open without.
There is another subversive aspect of
the American presidency. Within the global economic order that he is trying to
trump, the American leader has already made his mark in a key area: energy. The
White House has announced that the Trump administration will embrace the shale
oil and gas “revolution”, and achieve energy independence from Opec.
Indonesia is not a member of Opec and
so is not overly concerned with relations between the oil-producers’ cartel and
America. However, Trump’s quest for energy independence underlines his desire
to increase America’s economic autonomy in global affairs. That autonomy would
reduce its stake in the equilibrium of the international oil market on which
depend the economic prospects of Asian powerhouses such as China and India.
Here, again, is a demonstration of the
dissociation between global forces and American exceptionalism that Trump seeks
to achieve. It is his prerogative, but other countries will seek to fill the
vacuum that American retrenchment may create in Asia.
Indonesia’s free and independent foreign policy has
precluded belonging to the American camp [and] will prevent gravitation to the
Chinese camp
It falls on Indonesia to ensure that it
is not sucked into a vacuum of others’ making. Of course, this does not mean
that Southeast Asia’s lynchpin country will switch from the American camp to
the Chinese camp. To start with, Indonesia’s free and independent foreign
policy has precluded belonging to the American camp: the same imperative will
prevent gravitation to the Chinese camp. However, Jakarta would hope that it
does not have to choose between the democratic trajectory that has brought it
so close to America, and the economic logic that is making China the default
choice of many Southeast Asian nations.
Indonesia’s measured and balanced
response will depend on the American project as Trump redefines it – and the
Chinese project that is shaping up in response.
Syahrial Mukhtar is vice-president of Indonesia’s state-owned oil and gas
company PT Pertamina (Persero). He has a PhD in strategic management
This article appeared in the South China Morning Post
print edition as:
Indonesia can stabilise the region as US, China trade
roles
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