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The Year Ahead: Focus Remains on the Pandemic and Economic Recovery

09 Feb The Year Ahead: Focus Remains on the Pandemic and Economic Recovery

Even with the turn of a new year, the effects of the COVID-19 pandemic continue to be felt acutely across the world. Economic recovery remains a priority for ASEAN member states but depends very much on the effectiveness of each country’s response to the pandemic. Governments will have to manage the roll-out of vaccines, maintain aggressive pandemic control measures and continue to provide support at the policy level.

Eyes are fixed on how the new US administration will shape up in comparison to the turbulence of the Trump presidency, particularly on relations with China. Tensions linger across a host of issues from trade, technology and human rights to the South China Sea, and these will certainly have spillover effects in engagements with ASEAN and the broader region.

On Thursday, 28 January 2021, the Singapore Institute of International Affairs (SIIA) held its Year Opener to discuss expectations for the year ahead. The webinar focused  on the pandemic, US-China relations and the outlook for ASEAN’s recovery. The session featured views from Dr. Henny Sender, Managing Director, BlackRock Investment Institute; Dr. Elizabeth Economy, Senior Fellow for China studies, Council on Foreign Relations and Senior Fellow, Hoover Institution at Stanford University; and Mr. Manu Bhaskaran, Founding Director and CEO, Centennial Asia Advisors and SIIA Council Member. The full recording is available as premium content on the website for SIIA Roundtable and Corporate members.

Cautious Optimism around ASEAN’s Recovery

Recent outbreaks of COVID-19 and the re-imposition of harsh restrictions in various ASEAN countries have dampened hopes of a rapid recovery and reignited uncertainty around the economic outlook for the region. While much depends on the trajectory of the pandemic in the coming months, panellist Mr. Bhaskaran believes there is reason to be optimistic. With the combination of vaccine rollouts, improved clinical management, better testing capabilities, and strong policy support at both the local and global level, he expects that there will be a comfortable pick-up in economic activity from the second half of the year. Panellist Dr. Sender commented that her firm, Blackrock, is very optimistic about China. As the only major economy in the world to record positive growth in 2020, it will be an important partner for ASEAN. Countries are also looking towards renewed engagement with the US, although the panellists agree that it will be difficult, at least in the immediate term, for the US to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or any major multilateral trade agreement with the region due to domestic opposition.

What does the new Biden Administration mean for Asia?

In his final days in office, the Trump administration unleashed a deluge of jabs at China, imposing sanctions and investment bans on major Chinese companies, removing restrictions on US official relations with Taiwan and declaring China’s treatment of Muslims in Xinjiang a ‘genocide’. Panellist Dr. Economy commented that it is unlikely there will be a significant difference in how the Biden administration understands the nature of the challenge China poses to US interests. However, the manner in which it will approach the relationship will differ in key ways. Biden’s team is likely to pursue a more multilateral and rules-based approach, through consultation with allies and leveraging on multilateral institutions and platforms to formulate a coherent and cohesive strategy on China. One can expect to see the return of US leadership to forums like the East Asian Summit and the Asia-Pacific Economic Cooperation (APEC).

While aspects of competition between the two major powers will inevitably persist, the US will also look to cooperate with China on global challenges like climate change. The panellists agreed that US-China conflict is undesirable to both parties and, if it ever happens, will be a result of miscalculations on either side. As countries focus on tackling the pandemic and reviving the economy, it is important to be alert and cognizant of the risks that so-called “black-swan” events may pose in catalysing instability.