Biden’s pivot to Asia challenged by China’s rise, climate change and trade tensions

“Managing the relationship with China will be one of the most important foreign policy challenges for the Biden administration,” says Lewis Alexander, US chief economist at the Japanese banking group Nomura. 

The US will likely attempt to deepen security co-operation with potential allies in the region, including the Association of Southeast Asian Nations (ASEAN). As part of efforts to revive US influence in Asia, President Biden has filled his team with veterans of Asian affairs, including Kurt Campbell — who served as assistant secretary of State for East Asian and Pacific affairs under former US President Barack Obama — as coordinator for Indo-Pacific Affairs on the National Security Council.  

“We will see something of a pivot back to Asia,” says Bennett Freeman, former deputy assistant secretary, democracy, human rights and labor at the US State Department and now principal at Washington DC-based Bennett Freeman Associates. “We’re going to see a significant focus [there] that’s as great as, or greater than, what we’ve seen in any administration of either party.”  

Fending off China is only one of a myriad of challenges facing the US in a rapidly changing Asian landscape. Asia is a critical trading bloc for the US, and will be key to tackling climate change due to its huge population and skyrocketing carbon emissions. Steven Okun, senior advisor at McLarty Associates and chief executive of APAC Advisors in Singapore, said the Biden-Harris administration has already made appointments that showed it intends to take the lead on environmental, trade and investment issues in the region. 

“In appointing former secretary of state John Kerry as a Cabinet-level special envoy on climate, the United States will undertake energetic diplomacy for countries to commit to ambitious pledges on environmental sustainability such as reducing deforestation and decreasing reliance on coal in favour of renewable energy sources,” Okun says, noting that businesses looking to invest in sectors like agriculture and infrastructure can look to US support through its development finance arm, US International Development Finance Corporation. 

Energy financing opportunities 

President Biden has put tackling climate change at the centre of his domestic and foreign policies. He was quick to re-join the Paris Agreement and declare plans to eliminate fossil fuel emissions from power generation by 2035. This comes at a time when Asian superpowers are making their boldest pledges yet to shift away from a reliance on fossil fuels. The United States’ goal of carbon neutrality by 2050 mirrors the commitment made by the European Union, Japan and South Korea; China is pledging to do the same by 2060. 

This global wave of green commitments has created new investment opportunities in many parts of Asia, as countries that have traditionally relied on coal to power their economies transition to cleaner forms of energy, leading to a boom in wind and solar power in countries like Vietnam and the Philippines. 

This energy transition will be a point of strategic alignment between the US, China, and other countries, according to Jeremy Prepscius, the Hong Kong-based vice president, Asia-Pacific of Business for Social Responsibility (BSR), who says: “How this impacts energy infrastructure in the region will be a point of competitive, possible political pressure, as energy choices will be linked to national investment decisions”. 

Sarah Jane Ahmed, V20 finance advisor at the Vulnerable Twenty (V20) Group, a cooperation initiative of economies systemically vulnerable to climate change, agreed, noting that countries will likely compete heavily to see “who can bring the lowest cost of capital or new technology and system options to enhance economic competitiveness in the region”.  

This competition “may bring re-orientation of financing and leveraging of economic cooperation, especially as China and the United States take seriously their carbon neutral commitments,” Ahmed adds. 

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…the United States will undertake energetic diplomacy for countries to commit to ambitious pledges on environmental sustainability such as reducing deforestation and decreasing reliance on coal in favour of renewable energy sources.

Steven Okun, senior advisor at McLarty Associates and chief executive of APAC Advisors in Singapore.

Waste not, want not   

As the world’s second-largest emitter of greenhouse gases, the US continues to be isolated on other environmental issues by being the only major nation to still not have ratified the Basel Convention, a United Nations treaty specifically designed to prevent the transfer of hazardous waste from developed to less developed countries.

In January, new and inaugural rules to control transboundary shipments of most plastic scrap and waste kicked into effect, which prompted California assemblywoman Cristina Garcia to introduce a resolution calling on the Biden-Harris administration to ratify the convention. Environmental advocacy groups have also called for the US to bear more responsibility for its waste.   

“Between the pandemic and the last four years of the previous presidency, there are a lot of things we weren’t doing, a lot of work got paused or got lost. So, I think this resolution is also about putting it back on people’s radars and agendas,” Garcia told Plastics Recycling Update. 

China, which once accepted the bulk of America’s trash, in 2018 banned all plastic scrap shipments, saying that it no longer wanted to be the “world’s garbage dump.” American companies have since looked to channel waste to other countries, including Malaysia and Indonesia, which are signatories of the Basel convention. Malaysia’s government said on 24 March that it will return a container of plastic trash en route from the US, signalling an intent to enforce the convention — in public at least.   

To ratify the convention, the US first needs to pass new legislation, but it is too early to know how long or winding that road will be. While the United States Environmental Protection Agency gave advice and consent for ratification in 1992, the terms of the treaty have changed substantially since then, so it could require a new consent process, according to the Basel Action Network (BAN), a Seattle-based advocacy group.  

“We are told that the Administration — which will propose implementing legislation for Senate consideration — is considering the matter, but we don’t know what or when they will decide,” Adina Renee Adler, vice president of advocacy at Institution of Scrap Recycling Industries (ISRI), told Eco Business. 

Upholding human rights  

Human rights will remain firmly in the spotlight under the Biden-Harris administration. The US, alongside the EU, the United Kingdom and Canada, imposed sanctions on Chinese officials on 22 March over its treatment of Uyghur Muslims in Xinjiang, the first such coordinated Western action against Beijing under the current administration.   

The sanctions from western powers apply to high-level officials and entities in Xinjiang with direct connections to the internment camp system, even as China denies all accusations of what the US State Department has classified as “genocide and crimes against humanity in Xinjiang.” US secretary of state Antony Blinken said the sanctions demonstrated “our ongoing commitment to working multilaterally to advance respect for human rights”.  

The Tatmadaw military junta that unconstitutionally took power in Myanmar on February 1 and has since killed more than 500 civilians in a crackdown on pro-democracy demonstrations, has drawn widespread condemnation. The White House broadened existing sanctions and suspended trade with the country on 29 March, “until the return of a democratically elected government,” said US trade representative, Katherine Tai. 

At least one former UN expert advised foreign firms to suspend all business in Myanmar to send a clear message to the Tatmadaw that its coup will hurt its people and economy. “Businesses need to put pressure and use their leverage on the government to make sure they can, [if they have to stay in operation in Myanmar,] also influence the direction of both the political and economic life of the country,” said Golda Benjamin, programme director of the Business and Human Rights Resource Centre. 

As for possible further sanctions, the US may rethink or revoke its deal with Myanmar to benefit $37 million worth of Burmese imports under the US Generalised System of Preferences programme, due to serious breaches of workers’ and human rights. 

Rebalancing trade and supply chains    

In 2017, the Trump administration pulled the US out of the Trans-Pacific Partnership (TPP), a 12-country free-trade deal that was never ratified. But the remaining countries, who have since forged ahead with a new version of the pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), should not be too quick to expect President Biden to jump in on it. 

For him to do so, say observers, there must at least be a revival, if not strengthening, of the kinds of labour protections that were originally built into the TPP. At the same time, the US needs to quickly rebalance strategies to advance both its economic interests and security goals. 

“There is a sense that it would be a geopolitical disaster, if not a catastrophe,” says Freeman, for the US to be excluded from re-negotiating trade agreements in the region. 

While the US continues, for now, to recalibrate its strategy and influence in Asia, countries in the region are buoyed by measures they have taken to help offset losses incurred by the US-China trade war. Aside from the CPTPP, in force since December 2018, the Regional Comprehensive Economic Partnership (RCEP) was signed by 15 countries comprising ASEAN members and five regional partners in November 2020 and formed arguably the largest free trade agreement in history.  

“Whilst the drivers behind it may have been the ASEAN countries, the main beneficiaries will be Northeast Asia, namely China, Japan and Korea,” said Hans Vriens, founder and managing partner of Vriens & Partners, a government affairs, public policy and political risk analysis firm in Southeast Asia. 

“This is a very significant impact because supply chains will predominantly now be focused around Asia.”