Countering Chinese Economic Coercion and Corrosive Capital in Southeast Asia

Southeast Asian nations, at this point, are unable or unwilling to take an active role in protecting the rules-based liberal international order (LIO) from China-led threats, including territorial disputes. They prioritize economic growth and trade over security or geopolitical concerns, and are not willing to put their economy at risk. Southeast Asian nations are willing to accept Chinese investment because, with the exception of Japan which counters China's Belt and Road Initiative (BRI) in aiding infrastructure and energy projects, there is not a viable alternative. The threat of Chinese economic coercion and fear of losing a key export market run high. Europe and America have mostly withdrawn from investing in Southeast Asia, but the EU’s Globally Connected Europe and the U.S.-led Build Back Better World initiative in 2021 provide hope. A joint U.S.-Europe-Japan-led alternative to the BRI can create new standards for transparency, along with clear mechanisms for fair arbitration, debt financing, and judicial processes. A clearer link between the rules and institutions underpinning the LIO and economic growth needs to be shown.