Asia must guard against protectionism as US-China rivalry intensifies

Singapore's economic experts gathered in early January 2021 to confront a question that would shape the region's next decade: as countries rebuilt from the pandemic, would they turn inward or stay open? The answer, they warned, was far from certain.

The coronavirus had forced an unusual moment of global cooperation. Governments threw resources at the crisis. Supply chains adapted. Vaccines arrived faster than anyone expected. China was already recovering, which meant demand and stability for its neighbors. By early 2021, there was genuine reason for optimism. But the panelists at The Straits Times Global Outlook Forum—a treasury strategist from OCBC Bank, editors from Caixin Media and the Times itself, and the paper's China bureau chief—saw a darker possibility emerging from the wreckage. As economies focused on their own growth, the instinct to protect domestic industries and shield local businesses from foreign competition would almost certainly resurface. The question was whether Asia would resist that pull.

Selena Ling, OCBC's head of treasury research, posed it plainly: "With policymakers very focused on trying to boost growth recovery story this year, will protectionism come back again?" She was asking whether countries would look inward, protecting their own industries at the expense of their neighbors. The pandemic had accelerated digital disruption, leaving small and medium enterprises, older workers, and low-skilled laborers scrambling to adapt. Malaysia faced political instability. Indonesia was executing an ambitious omnibus law meant to create jobs and attract investment. Singapore's workforce faced a narrowing window to adjust to technological change. Each country had reasons to circle the wagons.

But the deeper threat came from above. The United States and China were locked in rivalry that would shape every decision in the region, and Southeast Asia sat directly in the middle. Huang Shan, deputy managing editor at Caixin Media, invoked David Shambaugh's recent book on great power competition: Southeast Asia would be "the next battleground" in Sino-American rivalry. The risk was not abstract. If Asean fractured—if internal discord gave the major powers an opening to play countries against each other—the region would lose all leverage. "If Asean is an easy target for the 'divide and rule' strategy, it can be easily penetrated and split," Huang said. Ravi Velloor, an associate editor at the Times, echoed the warning: "If there is discord within Asean, it loses its relevance to both." For the bloc to matter, it needed coherence and an unwavering commitment to openness and rules.

Yet the picture was not entirely bleak. Vietnam, Malaysia, and Thailand had attracted manufacturing investment as companies diversified away from China. ByteDance, the Chinese tech giant, had expanded into Singapore after facing restrictions in the United States and India. Asean benefited from the spillover of great power competition. But that advantage came with a price. "If things really go south with the big relationship with the US and China, then Asean will be affected because whether we like it or not, we'll be asked to choose sides," Velloor said. It was a fear that could not be wished away.

Singapore's Deputy Prime Minister Heng Swee Keat, addressing the forum, offered a measured view: competition and cooperation could coexist. Global cooperation would be shaped by US-China relations. There would be friction. But Asean's prospects remained bright—if the region worked together to advance its collective interest. The challenge was whether that unity would hold as each country faced pressure to protect its own recovery, and as the two superpowers competed for influence across the region.