• The Economist Intelligence Unit expects US president-elect, Joe Biden, to deepen US security ties to South-east Asia and re-engage at a high level with regional forums amid ongoing tensions in the South China Sea.

• On the economic front, however, a Biden administration is unlikely to reverse the decline in US influence in the region. We do not expect him to push US membership of regional free-trade agreements (FTAs), given weak support for this in US politics.

• Human-rights issues may become sticking points, as the Biden administration comes under pressure to demonstrate a values-based foreign policy. This could complicate the primary US strategic goal of checking Chinese influence in South-east Asia.

We do not expect US policy towards South-east Asia to change fundamentally under Mr Biden. The backdrop of geopolitical competition with China will continue to drive US regional strategy, as it did for the Trump and Obama administrations. This will prompt US efforts to deepen security co-operation with countries in the region and, under the more internationalist Mr Biden, high-level re-engagement with regional forums, including the Association of South-East Asian Nations (ASEAN).

While political and security ties between the US and South-east Asia will be maintained and, in some cases, strengthened, we think that Mr Biden will nevertheless struggle to reverse the relative decline in US economic influence in the region. The recently signed Regional Comprehensive Economic Partnership (RCEP), led by ASEAN but anchored by the Chinese economy, will create a more cohesive Asian trade bloc and supply chain that excludes the US. Given China’s rising economic weight, it will be a difficult task for Mr Biden’s administration to persuade South-east Asian countries to side with the US.

South China Sea: mother of (most) conflicts

The biggest caveat to this assumption, however, lies in the security realm. The odds of a major military clash involving the US, China and South-east Asian nations are shortest in the South China Sea. Under our core forecast, we do not expect a military conflict to erupt within the next five years or so. Nonetheless, the risk will persist under a Biden presidency, as China develops its military capabilities and as the US continues to conduct freedom of navigation operations in the South China Sea, to China’s chagrin, and pressurise China’s for its ongoing island-building activities.

In the coming years, we expect the US to develop stronger security ties with countries in territorial disputes with China in the South China Sea, notably Vietnam, as well as regional powers such as Indonesia that have, to date, retained a neutral position. Tensions over the South China Sea will also likely manifest themselves in other ways. Economic sanctions against Chinese entities for their involvement in South China Sea operations, which first started under the current US president, Donald Trump, will remain a tool in terms of checking China’s activities in the disputed waters. For the Biden administration, this has the added benefit of muddying China’s growing footprint elsewhere across Asia, as the entities under scrutiny are also major contractors for China’s Belt and Road Initiative (BRI).

Economic carrots, not sticks

Mr Biden’s trade policy is set to be less antagonistic and less reliant on tariffs than that of his predecessor. For South-east Asia, this will remove a source of uncertainty that has roiled the global economy in recent years. It will also be welcomed by countries such as Vietnam and Thailand, whose growing goods trade surpluses with the US have raised the prospect of countervailing tariffs on their shipments. We currently expect the Biden administration to proceed with preliminary tariffs recently imposed on Vietnam, but these will be narrow in scope.

In another respect, South-east Asia may bemoan a cooling in the US-China tariff war, given that a desire to avoid tariffs has helped drive investment and trade through the region. On this point, however, they probably have little to fear, as we expect “decoupling” of the US and China to continue, with the Biden administration still set to maintain economic pressure on China through targeted, non-tariff actions, including the application of export controls, investment restrictions and financial sanctions. These will continue to incentivise firms to look towards South-east Asia as a hedge.

While we do not expect Mr Biden to have much recourse to tariffs as a trade weapon, neither will he prove an advocate for trade liberalisation. As vice-president, Mr Biden championed the Trans-Pacific Partnership (TPP), a trade pact that has since morphed into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—without the US. However, with support in US politics for free trade having diminished, and more pressing policy issues having emerged, we do not expect Mr Biden to promote US membership of the CPTPP in future. This will be to the diminishment of US economic influence in the region, especially following the signing of the RCEP.

A more promising area for the US might be foreign aid, which will likely be one of Mr Biden’s go-to foreign-policy tools, as with previous Democratic presidents. In the context of South-east Asia post-coronavirus (Covid-19), this will prove particularly relevant. It should be noted that, even under Mr Trump, the US continues to support development projects in the region. Partly in response to China’s mask diplomacy amid the pandemic, South-east Asian countries will gain from an expanded US foreign aid budget. But, in contrast to Chinese capital, which has often gone to megaprojects under the BRI, the appeal of US funding and expertise on community and capacity-building projects in the healthcare space will grow in the aftermath of the pandemic. South-east Asia could expect to benefit from better terms of development assistance amid competing offers from the US and China.

Human rights: a sticking point

An area of clearer divergence with the Trump administration will be Mr Biden’s desire to establish human rights as a stronger pillar in US foreign policy. This will increase scrutiny of some South-east Asian countries. The region is home to multiple human-rights crises, which risk impeding attempts by the Biden administration substantively to elevate respective political ties, with an eye on China’s growing influence. An escalation of a human-rights crisis would pressurise a Biden administration to take actions that exemplify its rhetoric of a values-based diplomacy.

The Philippines, under the presidency of Rodrigo Duterte, warrants special mention. Long considered a close US ally prior to Mr Duterte’s administration, the country matters particularly in US strategy because it won its maritime claim in the South China Sea against China at the Permanent Court of Arbitration in 2016. With Mr Biden’s emphasis on holding China accountable for aggressive conduct, this ruling could serve as a basis for US involvement in the region.

The ability of the US to do so, however, is complicated by Mr Duterte’s unusually pro-China foreign policy and his controversial ongoing war against drugs. There may be better prospects under his successor, with Mr Duterte unable to seek re-election in 2022. The result of this particular election will have a visible impact on the Philippines’ relations with China and the US, and the broader geopolitical dynamic in the South China Sea.

Amid ongoing US-China competition, South-east Asian countries will strive to preserve their independence and optimise benefits from maintaining relations with both sides. The growing intensity of tensions between the two great powers, however, will make this balancing act increasingly difficult to maintain.

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