A Very Stable Summit: Southeast Asia’s Best Hope for the Trump-Xi Meeting

As US President Trump and Chinese President Xi prepare for their upcoming meeting later this week in Beijing, both the bilateral relationship and the broader geopolitical context are fraught. Trade issues, ranging from tariffs, technology and critical minerals, will be front and centre while sensitive geopolitical topics, such as Iran and Taiwan, will also be discussed — although meaningful outcomes in either area are unlikely.

While the issues will be contentious, both countries are, at least in broad terms, looking for the same outcome. Think about the upcoming Trump-Xi meeting as the “Don’t Rock the Boat Summit”. Internal economic pressures and a volatile external environment mean that both sides would benefit from greater stability in their bilateral relationship.

Major breakthroughs on the deep structural points of friction between these two very different economic systems, which would require long and painstaking negotiations, are all but impossible. Instead, expect the leaders to be content to reinforce a baseline of stability, extending the “trade truce” agreed last year in Korea. Although details are scant, one interesting possibility that has been floated would be the establishment of a so-called “Board of Trade” to better manage non-sensitive trade between the countries. We could also potentially see a bit of incremental progress, such as modest tariff cuts and easing of technology and critical mineral restrictions, and perhaps some commitments by China to purchase US products.

There will be no one-sided outcomes, however, that impose commitments on China with few on the US side, as we saw during Trump’s first term. Those days are over as China feels confident and empowered.

For countries in Southeast Asia, the best realistic outcome would be an unremarkable Trump-Xi Summit that simply buttresses stability and tamps down prospects for a further deterioration in the bilateral relationship. Although some countries have taken advantage of declining Chinese exports to the US and filled the gap, the region has also frequently ended up as collateral damage as the US and China have exchanged fire. As tensions have mounted, the region has faced direct and indirect pressure from both countries to curtail engagement with the other side, complicating the region’s ability to pursue its preferred course: constructive engagement with both the US and China.

Countries in the region recognise the imperative and have begun looking beyond both the US and China.

Indeed, it would be hard to conceive of a better real-world example of the old adage: when two elephants fight, it is the grass that suffers. For Southeast Asia, a chance to regrow some grass would be highly welcomed.

The analogy, however, breaks down in at least one important respect. Grass is passive and immovable. Southeast Asia, on the other hand, has the ability to more favourably reposition itself. The negative fallout inflicted on the region from US-China tensions is directly proportional to the extent of the region’s dependence on either country. Mitigating those dependencies to the extent possible in a gradual and prudent manner provides the region with the most reliable form of insulation from the combustible superpower rivalry. As a practical matter, that means diversifying trade and investment relationships.

Countries in the region recognise the imperative and have begun looking beyond both the US and China. Malaysia and the Philippines already have FTAs with the United Arab Emirates (UAE). Several countries, including Malaysia, Indonesia, the Philippines and Thailand, are revving or advancing FTAs with the EU, while Vietnam is negotiating with MERCOSUR. The ASEAN-Gulf Cooperation Council Framework of Cooperation 2024-28 aims to strengthen economic and strategic relations between the region. The challenge now is to move forward in concrete terms to breathe life into the document. All of these moves are aimed at securing non-US and non-China sources of investment, technology, and market access.

Perhaps the greatest opportunity for diversification is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is generally considered to be the highest quality regional agreement in existence. Its 12 members cover roughly 15 per cent of global GDP and over 580 million consumers. Importantly, neither the US nor China is a member, although China has applied. Within Southeast Asia, Brunei, Malaysia, Singapore, and Vietnam are already members of CPTPP. As the US-China rivalry threatens to intensify, the rationale for other ASEAN members to consider CPTPP membership as a hedge against US-China volatility will only grow.

As we have seen time and time again, whenever President Trump gets into a room with a world leader, anything can happen. Ukrainian President Zelensky likely still bears the scars from his Oval Office meeting with Trump last year that degenerated into something approaching a reality television show fracas.

Even factoring in Trump’s unpredictability, however, the best bet for the Beijing meeting appears to be a “stability summit” that yields an extended trade truce and perhaps some incremental progress on tariffs and export restrictions. If that proves to be the case, Southeast Asia should capitalise on the reduction in superpower crossfire and push forward even more aggressively to diversify economic and strategic interests away from the two competing superpowers.

Any US-China summit will always hold implications — some positive, some negative — for Southeast Asia. For the upcoming meeting in Beijing, dramatic breakthroughs are unlikely, but the most realistic positive outcome for the region — a bit of breathing room — seems within reach.

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