- During his trip to Tokyo in May, US President Biden announced negotiations on the Indo-Pacific Economic Framework (IPEF), strongly focusing on supply chain divergence and reducing China’s economic dominance in the region.
- This is a tall task for IPEF: China is now the biggest trading partner for almost all countries willing to participate in IPEF, except for the Philippines and India (see graphic).
- Nonetheless, the willingness of several important ASEAN countries and India to participate signals the demand for US leadership in the region and over time IPEF might offer an attractive alternative to the China-centered trade framework.
- Whether IPEF can deliver on this objective remains to be seen. While some countries have explicitly stressed the desire to reduce dependence on China, most countries do not actually want to choose between the US and China.
- In a survey of ASEAN countries, the majority of respondents voiced the desire to hedge between the US and China and enhance resilience to fend off pressure from both of the two major countries (see graphic).
- The complexity of regional interests is also visible in the overlap between different regional trade frameworks. Most IPEF members are also members of RCEP and CPTPP, and many are signatories to the BRI.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.