After the United States cracks down on China's trade, it can use the European Union to take the top, and after China loses the US market, there will also be ASEAN on top, but against the background of the United States constantly fanning the flames of the Philippines and other neighboring countries in the South China Sea, how long can the ASEAN market be topped?
Six years ago, when Trump bullied China and broke the chain of decoupling, by 2020 the United States was no longer China's largest trading partner. The European Union has also replaced China as the largest trading partner of the United States, and by 2023, China has become the fourth largest trading partner of the United States, after the European Union, Canada, and Mexico.
After striking China, the United States can still maintain the support of the global trading power, thanks to the support of the European Union and other countries with 447 million people;
(Source: Foreign media)
At present, ASEAN is the key fulcrum for China to become the world's largest trading country in goods. ASEAN has a total population of 670 million people, including Thailand, Vietnam, Malaysia, and Indonesia, although not as strong as Germany, France and other large countries in northwest Europe, but they are all booming late-developing countries.
According to the latest data from the General Administration of Customs, in 2023, the trade between the mainland and ASEAN will continue to grow, with a scale of 6.41 trillion yuan, ASEAN has maintained its position as the mainland's largest trading partner for four consecutive years, and China has also been ASEAN's largest trading partner for many years. As of 2023, the trade volume between China and ASEAN has increased by 16.8 times in 20 years, and the total two-way investment has exceeded US$380 billion.
But can ASEAN, a key fulcrum, be stable? The intervention of external forces is complicating ASEAN's geopolitics. On January 9-11, the German female foreign minister, who declared that she "cannot imagine being on the same planet as China," visited the Philippines and said that Germany was willing to help boost the military potential of the Philippine Coast Guard.
On February 1, Agence France-Presse reported that the U.S. and Japanese navies recently held joint exercises in the Philippine Sea. The challenge will not come from the external intervention of the United States, Japan, and Germany, but also from the imminent challenge, and China is facing a new adversary, India, which is pursuing its eastward strategy.
(Modi in Lakshadweep Source: NDTV)
India's eastward expansion began in the early 90s of the 20th century, initially known as the "Look East Policy" and upgraded to the "Act East Policy" in 2014, India's eastward expansion strategy formed a co-defense with the first and second island chains of the United States on the one hand, and formed a linkage with the Indo-Pacific Economic Framework (IPEF) of the United States on the other.
The 8th issue of Geo-Supply Chain explains India's eastward expansion strategy and its impact on China's and ASEAN supply chains.
1. India actually controls the deep-water port of Sidui, the throat of the main road between China and Myanmar
Myanmar Sittwe Port is an unfamiliar name to most Chinese, but it is not unfamiliar to Chinese logistics companies. Sittwe Port is located in the capital of Rakhine State in Myanmar, the largest seaport on the coast of the Bay of Bengal and the third largest port in Myanmar.
In 2009, PetroChina and Myanmar's state-owned oil and gas company jointly established a US$2.5 billion China-Myanmar energy pipeline, starting in Sittwe, Myanmar and ending in Kunming, Yunnan Province, China, with a total length of about 771 kilometers. The pipeline is designed to have an annual capacity of 20 million tons.
(Source: CCTV News)
The China-Myanmar oil and gas pipeline is the fourth largest energy import channel after the Central Asian oil and gas pipeline, the China-Russia crude oil pipeline and the sea lane. It includes crude oil pipelines that allow mainland crude oil imports to be transported from the southwest to China without passing through the Strait of Malacca. It can be said that Sittwe Port is a strategic throat of China's energy logistics channel.
In 2008, India and Myanmar signed a $484 million Kaladan intermodal transport project to connect India's northeastern state with the eastern coast of the Indian Ocean. As a key part of the project, Sittwe Port is not only an important passage connecting India's northeastern state and Southeast Asia, but also a strategic fulcrum of India's "Eastward Strategy".
On May 9, 2023, the Indian-sponsored Sittwe Deepwater Port project was officially launched, opening up a new corridor between India and Myanmar. The move is seen by the West as a strategy to balance the China-Myanmar Economic Corridor (CEEC) and to strengthen ties between India and Myanmar and provide an alternative to China's connectivity plan.
Myanmar's border trade with neighboring countries totaled US$6.53 billion in fiscal year 2023, of which US$4.38 billion was exported and US$2.14 billion was imported, showing a trade surplus, the head of Myanmar's Ministry of Commerce said. Myanmar trades with China, Thailand, India and Bangladesh, and Myanmar mainly exports agricultural products, forest products, fishery products and other products.
India is not content with being the third largest trading nation. India Today reported on May 11 that India's Minister of Ports, Shipping and Waterways Sonowal and Myanmar's Deputy Prime Minister and Minister of Transport and Communications Ting Aung San attended the opening ceremony and witnessed the arrival of the first Indian cargo ship at the port.
Sonoval said the Sittwe port is key to India's eastward expansion strategy, not only facilitating trade and people exchanges with Myanmar and the wider region, but also expected to become a key node connecting Southeast Asia, bringing economic opportunities to neighbouring countries such as Bangladesh, Bhutan and Nepal.
Connecting Kolkata, India, with the port of Kyaukphyu on the west coast of Myanmar, the port provides a direct trade route with the potential to expand to Chittagong in Bangladesh. At the same time, it is planned to establish regular commercial routes between India and Myanmar.
The Port of Sittwe is part of India's Eastward Expansion Strategy, which aims to connect India's east coast with the northeast through a new route, reducing transportation costs and time, and enhancing regional influence. Sonoval describes this as "unlocking the gateway to Northeast India for Southeast Asia".
In addition, India plans to create special economic zones near ports to strengthen its geostrategic position against China's Belt and Road Initiative.
The Government of Maldives calls for the withdrawal of Indian troops
Located in the Indian Ocean, the Maldives is made up of several islands in close proximity to India and Sri Lanka, and its geographical location is crucial for the passage of the international shipping route through the Strait of Malacca. But this logistics hub has been controlled by the Indian military for a long time, and India has been stationed for 35 years.
In recent years, with the advancement of China's Belt and Road Initiative, the Maldives has gradually strengthened its ties with China, especially in the field of infrastructure construction.
(China-Maldives Friendship Bridge Source: BBC)
China's signature project in the Maldives is a 2.1-kilometre bridge connecting the capital city of Malé to Malé International Airport, which not only enhances local convenience, but also symbolizes the growth of China's influence in the Maldives.
But the Maldives' cooperation with China has attracted India's attention. India views the Maldives as a strategic location and is concerned that China's growing influence could threaten its security in the Indian Ocean. However, to India's displeasure, it is the Maldivian government's resistance to India's forcible control.
On November 18, 2023, the day after Muiz was inaugurated as the new president of the Maldives, he formally demanded the "withdrawal of troops" from the Indian government. India also seems unable to find a reason to refuse. On December 4, 2023, the new President of the Maldives, Moiz, announced that the Indian side had agreed to withdraw all troops and end the long-term military presence in the Maldives.
Although both the Maldives and India issued statements on February 2 on the withdrawal of troops, there were significant differences in the content of the two countries' statements, according to a February 3 report by the Associated Press and India's New Delhi Television (NDTV).
"After consultations between the two sides, the Indian side agreed to withdraw the military personnel of one aviation unit by March 10 and plans to complete the withdrawal of military personnel from the remaining two aviation units by May 10," the Maldives Ministry of Foreign Affairs said in a statement. ”
However, the statement from India's Ministry of External Affairs did not mention the word "withdrawal", instead reiterating its previous position, announcing that the two sides had agreed on a series of solutions that both sides agreed would be feasible "to ensure the continued operation of India's aviation units to provide humanitarian and medical support to the Maldivian population."
3. India plans to open up logistics channels to Vietnam and Thailand
In September 2023, at the 43rd ASEAN Summit, Indian Prime Minister Narendra Modi announced a twelve-point plan to strengthen cooperation with ASEAN, which includes a number of key areas, from connectivity to digital public infrastructure and counter-terrorism. In addition, the plan aims to create an integrated transport and economic link between India, Southeast Asia, West Asia and Europe.
(Modi at the 43rd ASEAN Summit Source: Vietnam News Agency)
On January 10, a delegation led by Vietnamese Deputy Prime Minister Tran Liuguang attended the 10th Vibrant Gujarat Summit in Gujarat, western India, where they delivered a major speech.
Originally proposed in 2004 by Narendra Modi, then Chief Minister of Gujarat and now Prime Minister of India, the summit is held every two years to promote business cooperation, knowledge sharing and strategic partnerships.
At the summit, Vice Premier Tran Liuguang highlighted the focus of discussions, including key future-oriented issues such as green economy, circular economy, digital economy, e-commerce and smart city.
(India plans to extend the highway connecting Southeast Asia to Vietnam Source: Vietnamese media)
At the same time, he stressed that there is still great potential for the two countries to promote bilateral economic cooperation in the future, especially in the fields of transportation, green economy, circular economy, digital transformation, software industry, semiconductors, and artificial intelligence.
Back in July 2023, India's Federal Minister of Road Transport and Highways, Nitin Gadkari, issued a statement on the progress of the India-Myanmar-Thailand tri-state highway, which is about 70% completed.
The 1,400-kilometre-long highway is designed to strengthen the links between India, Thailand and Myanmar. It will enable India to connect with Southeast Asia by land, opening up new avenues for regional integration and economic development. Gadkari stressed the importance of the project, noting that it was originally proposed in 2002 to connect India and Thailand through Myanmar.
The latest development is India's plan to extend the highway to Laos, Cambodia and Vietnam, bringing its total length to 3,200 kilometers. This expansion will improve regional connectivity and facilitate trade between India and Southeast Asian countries, especially for the export of natural resources such as natural gas and oil from Northeast India.
ASEAN is an important trading partner of India, with trade with India reaching US$91 billion in 2021, demonstrating the growth potential of the trade relationship between the two sides.
Fourth, China's influence in ASEAN and South Asia has increased
1. Cooperation between Myanmar and China logistics channels
After years of delays, Myanmar's junta decided to resume the Chinese-backed Kyaukphyu deep-water port project. The project is a key Chinese move to create access to the Indian Ocean and circumvent the Strait of Malacca.
(Signing Ceremony Source: D-wave)
China and Myanmar's State Administration Council signed a "supplementary agreement" at the end of 2023 on the Kyaukphyu deep-water port project and its affiliated special economic zone, further deepening cooperation between the two countries.
The Kyaukphyu deep-water port project is expected to cost about US$1.3 billion and attract the textile and oil refining industries. China and Myanmar signed an agreement in 2011, but international sanctions against Myanmar's military junta have slowed down the plan.
Now, if China has another important outlet to the Indian Ocean, it can significantly shorten the distance to the Middle East, Africa, and Europe, and reduce the geopolitical pressure on the Strait of Malacca to be controlled by adversaries, and respond to the US and India's strategy of containing China.
Myanmar shares a border with China and is an important country in the Belt and Road Initiative. The U.S. Institute of Peace report notes that Burma's Indian Ocean corridor will help China counter India's regional influence and provide China with new access to oil and gas.
2. Maldives supports the Belt and Road Initiative
During the election campaign in the Maldives, Muizu chanted the slogan "India is leaving" and expressed to India's special envoy, Rijiju, that the Maldivian people had given him the right to make demands on India in the hope that India would respect the democratic choice of the people.
At the same time, Muizu demanded that India withdraw its troops. At his inauguration ceremony, China's special envoy Chen Yiqin also met with Muyizu on November 18 and expressed his willingness to strengthen bilateral cooperation.
In response, Moizou said that the new Maldivian government firmly follows the "One China" policy and actively promotes practical cooperation with China in the Belt and Road Initiative and other fields, hoping to open a new chapter in Malaysia-China relations.
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Palm Chain Column: Geopolitical Supply Chain
The "Geo-Supply Chain" aims to analyze the global supply chain restructuring situation from the perspective of the impact of geopolitics and geo-economy on the supply chain, provide research and analysis for enterprises in the fields of Chinese manufacturing, Chinese commerce/cross-border e-commerce, and Chinese logistics to "go global", and help build a more resilient and safe international supply chain. As a reminder, don't misread it.
Editor: Li Yu Guan Yi