An informed US approach to the Asian Economy in this Decade

Due to deglobalization and an increasingly complex dynamic between the US and China,

any diplomatic responses must be successful and lasting. There is a great opportunity to alter

existing agreements like the Indo-Pacific Economic Framework (IPEF) and the CHIPS and

Science Act to extend the depth of US influence in this region. As foreign policy evolved in the

past decade, the current administration is seeking to interact with regional economies on their

trade terms and integrate relevant domestic interests. With appropriate changes to already

existing frameworks, the United States can extend economic and political influence through

trade. In this approach, the US can kill ‘two birds with one stone’ and remain the economic rule

maker of the Asia-Pacific region.

Throughout history, the state of the Asian-Pacfic economy is constantly changing;

whether it be the Asian financial crisis in the 90s, the Global financial crisis in the early 2000s,

the COVID-19 pandemic, or the proximity to the conflict in Ukraine. As a result, the attitude

about the viability of capitalism and Western economic structures has transformed as well.

Domestically, American policymakers are beginning to become skeptical of Free Trade

Agreements and favor the deglobalization of industry. In this context, the Secretary of State

Antony Blinken focuses on a policy that funds more domestic manufacturing and sourcing.

These policies include protecting opportunities for American workers and making the US

economy more self-reliant. After the pandemic, many are beginning to rethink the long-term

economic costs of interdependency (Wyne 22, p.87). At this point, the US is very vulnerable and

there are high stakes that IPEF and CHIPS initiatives succeed. The intended purpose of

agreements must respond to changes in the political state as well. It is essential that policies

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regarding long-term goals relate to the Chinese economy as this interaction is increasingly

relevant. These initiatives often include clauses to exclude China in nature or separate Chinese

involvement in Asian economies as much as possible, but this effort may not be easy when the

US economy is increasingly entangled with China itself. Many believe that decoupling now may

be premature and even impossible when more than six hundred billion dollars were spent

between them during 2021 (Wyne 97). Ultimately steps towards deglobalization could be good

domestically for creating jobs, protecting national security, and promoting US autonomy in the

future.

While manufacturing domestically is often expensive, the CHIPS and Science Act does a

great job of attracting larger technology companies and beginning to build trading networks

separate from Chinese involvement. The goal of this act is to create at least a few manufacturing

clusters which can make advanced chips sourced in the US. This was highlighted after the

shortages due to the pandemic and the looming conflict which could impact this sector in

Taiwan. CHIPS is one of many newer initiatives that Taiwan has been excluded from to reduce

unreliability and limit potential blowback from China. There are specific conditions to make sure

that subsidies only offset the costs of US operations and ensure that taxpayer money doesn’t go

towards Chinese operations as well. These stipulations are essential because Chinese and

American investments often intertwine more than corporations realize. Companies that choose to

receive subsidies are barred from initiating new high-tech projects in China (New York Times 23,

p.2) This could also be a tool in causing large corporations to re-think Chinese investment in the

private sector as well since “subsidies are putting chip makers like TMSC and Samsung in a

difficult position” (New York Times 23, p.3)

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 Biden is attempting to include a childcare policy within this program which he wasn’t

able to write into policy with his Build Back Better Bill. This guarantees affordable programs

within plants for construction workers and implements providers within the infrastructure (New

York Times 23, p.3). Policy must be free of partisan motivations otherwise it will not sustain

objectives in the long term. These additional focuses will pull funding from the general

investments in the project which will limit its capability to change supply chain sourcing.

Although this act includes the primary goals of policy in this region and appropriately

implements Chinese domestic policy, the trajectory of the project may ultimately be limited. It is

likely that this effort requires further resources to succeed and depends too heavily on the

for-profit sector. Many claim that creating an effort to restructure the US role in the global

manufacturing economy is already difficult and a 50 billion investment may not be enough (New

York Times 23, p.2). If the US adjusted this approach to extend the intended impact, subsequent

policy would likely benefit. This approach limits the hold that China has on the international

economy, makes the domestic market more self-reliant, and promotes trade that occurs on US

terms. There has arguably been significant progress made by the CHIPS and Science Act and

sizable potential for future growth. When combined with IPEF and newer initiatives, future

administrations can maintain political influence in the Asia-Pacific if they remain consistent and

commit to funding efforts.

A recent economic incentive, the Indo-Pacific economic framework, allows the US to

have a do-over to negotiate trade in this region. This agreement has been a huge part of recent

policy to address problems in the Asia Pacific like labor laws, environment, and much more.

Although this agreement certainly needs a few changes to achieve its intended effect, the existing

agreement would align thirteen countries and in this region is essential after the Trump

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administration withdrew from the TPP (Manak 22, p.3). Without IPEF there is no agreement in

place to address the United States’ economic reach with 40% of the global GDP. There is major

potential here if the impact of this framework can sustain like the impact of USMCA agreements.

For this to happen, it is essential that the promises “require a flexible and patient approach to

relationship building” (Lovely 23, p.6). Similar to the Mexico and Canada agreements, IPEF can

be successful with the foundation of strong relations with the five major treaty allies included in

the deal. This relationship which is already established can aid in the growth of more robust

supply chains which limit Chinese industry (Lovely 23, p.5). Domestically, this is likely to create

a host of benefits for the US. This framework can successfully improve the American working

economy, boost agriculture, adapt to the growing technology industry, and help local economies

compete with greater powers, but it must make a few changes first (Inside US Trade 23, p.7).

The blowback of initiatives may limit relations with China more than the US intends.

Although any strong policy in this region must include intent about this complex relationship, it

must seem as though the government is acting to preserve its domestic interests and promote the

global economy. If it is clear that such efforts are focused on contesting Chinese interests, they

may alienate China to a debilitating extent (Wyne 22, p.102). If trade agreements are framed in

terms that explicitly exclude China, this may limit the participation of regional economies which

are vulnerable to Chinese coercion. This in effect will ultimately limit the political influence and

ability to dictate the future of the economy in this region. Many are also worried that this

state-led initiative is too dependent on the private sector and will be risky to control. To address

the limited trajectory, the US must expand incentives for local economies for all they are putting

at risk. They also may need to rethink the model of four pillars which states can join

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independently (Manak 22, p.2). This model limits American political impact and sacrifices the

values of autonomy, environmental protections, and outlining trade rules.

It is uncertain what will occur in the Asia Pacific in the next decade, but the US must

work to exercise political and economic influence. These efforts must anticipate the motivations

of the PRC and the incentives of American allies. Since there are large repercussions for

agreements that fail, it is essential that existing acts are constantly changing in response to the

state of the international economy. If the CHIPS Act and IPEF agreement are stagnant, they will

have a limited trajectory. It is also essential that new affairs in this region are consistent and

creative. If the United States can create an approach under these guidelines that is intentional and

a little less safe, they will be able to establish the perfect combination of economic and political

change in the Asia Pacific.