​► The US and China are currently locked in hegemonic contest, and Southeast Asia has become a major battleground for their strategic competition.  Driven by strategic considerations, the US has given much attention to two Southeast Asian nations, namely, Vietnam and the Philippines, and promoted its bilateral relations with them accordingly. 

​► The US has two major objectives vis-à-vis Southeast Asia.  One is to curtail China’s growing maritime influence in the South China Sea, and the other is to secure a steady supply of critical minerals, including rare earth elements (REEs). 

​► South Korea must pay closer attention to what happens in Southeast Asia, as it indicates how the regional strategic environment is evolving and the supply chains are reconfiguring.

Introduction

The US and China are currently locked in hegemonic contest, and Southeast Asia has become a major battleground for their strategic competition.  Driven by strategic considerations, the US has given much attention to two Southeast Asian nations, namely, Vietnam and the Philippines, and promoted its bilateral relations with them accordingly.  This bilateral approach targeting specific Southeast Asian countries would likely continue, despite the rhetorical respect for ASEAN Centrality, as the US seeks to expand its circle of like-minded countries for strategic interests and to reconfigure global and regional supply chains.  South Korea must pay closer attention to what happens in Southeast Asia, as it indicates how the regional strategic environment is evolving and the supply chains are reconfiguring.

US-China Strategic Rivalry and US Strategy toward Southeast Asia

Viewing China as the “only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it,”[1] the Biden administration bases its China policy on three C’s: cooperate (where it can), compete (where it should), and confront (where it must), with the latter two C’s dominating the bilateral relationship to date.  It seeks to carry out its policy in partnership with its allies and like-minded countries. 

Amidst the intensifying US-China strategic competition Southeast Asia has become a major battleground.  The US has two major objectives vis-à-vis Southeast Asia.  One is to curtail China’s growing maritime influence in the South China Sea, and the other is to secure a steady supply of critical minerals, including rare earth elements (REEs).  In this regard two Southeast Asian countries have enjoyed special US attention, as their strategic interests are most closely aligned with those of the US.  They are Vietnam and the Philippines.  Hence when US defence secretary Llyod Austin and vice president Kamila Harris visited the region in July and August 2021, both officials made sure to visit Vietnam and the Philippines, even though they bypassed Indonesia, the de facto leader of ASEAN.  The fact that Indonesia was bypassed by both officials suggests that the US emphasizes bilateral approach toward Southeast Asia, targeting specific regional countries.

Vietnam and the Philippines are favorred by the US for both strategic considerations and critical minerals.  First, strategically, both Southeast Asian countries confront China in the South China Sea where Beijing is making its expansive nine-dash line claim.  The heightened threat perception of China in Vietnam and the Philippines due to maritime clashes[2] push both regional countries closer to the US.  In the past, as weaker powers that are economically reliant on China, both countries could do little more than lodging diplomatic complaint against what they perceived to be Beijing’s heavy-handed, muscle-flexing activities in the South China Sea.

But, since the US has adopted a new South China Sea policy, with the aim of fully implementing the decision of the 2016 Permanent Court of Arbitration ruling to its fullest logical extension.[3]  This implies that the US will enforce the freedom of navigation and overflight and confront China in the South China Sea.  It also means that the two Southeast Asian nations can increase their voice vis-à-vis China in the South China Sea with the backing of the US.

Bilateral cooperation has culminated in the signing of the Comprehensive Strategic Partnership with Vietnam[4] and the establishment of new US military bases in the northern part of the Philippines[5] in 2023.  Vietnam’s upgrading of its relations with the US clearly indicates where Hanoi is leaning in its foreign policy.  The comprehensive strategic partnership lists semiconductors as a key area for bilateral cooperation, which may indicate that the US sees Vietnam’s potential in this tech sector.

 The establishment of military bases in the Philippines suggests the heightened sense of China threat that Manila has, and the increased utility of bilateral military cooperation to curb Beijing’s ever-expanding land reclamation projects in the South China Sea.  In addition, the new military bases could potentially serve deterrence function in the Taiwan Strait and carry out useful functions in contingency scenarios involving Taiwan crisis.  At the closest the northern tip of Luzon Island and the southernmost point of Taiwan is only approximately 250 km. 

Rare Earth Elements (REEs) and Critical Minerals

The Biden administration’s main pressure on China is in the advanced technologies, especially semiconductors.  It does so in partnership with its Asian and European allies and partners such as Japan, South Korea, Taiwan, UK, and the Netherland.  In contrast, China’s advantage over the US, albeit limited, is critical minerals and rare earth materials.  As Figure below shows, China occupies somewhere between 40 and over 85% of global production of critical minerals and REEs (copper, nikel, cobalt, lithium, and rare earths), whereas America’s market share is close to zero.  From the US perspective, therefore, it is imperative that it ensures a steady and stable supply of raw materials and critical elements, including REEs.[6]

Here, once again, Vietnam and the Philippines become useful partners for the US.  Vietnam is said to have the world’s second largest REE reserves and is set to start REE mining next year.[7]  The Philippines is a major nickel ore supplier and produces other minerals such as copper.  It is also set to start major government-led explorations to increase critical mineral production.[8]  In addition to these two Southeast Asian countries, Indonesia is also important when it comes to the supply chains of critical minerals, as its resources include nickel, copper, bauxite. And tin.

         The US seeks to draw Southeast Asian countries and form its own trust-based secure supply chains, in an effort to reconfigure the existing supply chains that rely heavily on China.  This policy is being carried out in the form of of the Indo Pacific Economic Framework (IPEF)  One of the four pillars of IPEF concerns with supply chains, where fourteen Asian countries are currently members and are advancing their own standards for supply chains.[9]  While it is too early to tell if IPEF will succeed and how far it will advance, America’s intention is clear: to reconfigure global and regional supply chains to minimize dependency on China for manufacturing and critical minerals.

Implications for South Korea

What does all this mean for Korea?  There are at least three major implications.  First, strategically, since the US strategy toward Southeast Asia is part of its general Asia policy, knowing what the US attempts to do in Southeast Asia will inform Seoul of the general US Asia policy and its aims.  At the same time, understanding how Southeast Asian countries react to the US policy could inform Seoul of how other countries make their strategic choices amidst the intensifying US-China strategic competition.  Since the old modus operandi of “security with the US, trade with China” can no longer be a viable foreign policy option, Seoul will also need to adjust its foreign policy orientation.  Hence, the more Seoul is aware of how others are adjusting, the better its own adjustment strategy will be.

         Secondly, as a manufacturing country with enviable capabilities in advanced technologies, Seoul must remain an integral part of global and regional supply chains.  This means that it will need to have an accurate understanding of how global and regional supply chains are being reconfigured, and what happens in Southeast Asia in terms of regional manufacturing and critical minerals will be indispensable to Seoul’s long-term growth strategy and approach to supply chain issues. 

         And lastly, the US-China strategic competition has increased the utility of third-party cooperation and partnership beyond great powers.  In this regard Southeast Asia can be useful as potential partners and a growing consumer market for South Korea.  Seoul has already embarked on New Southern Policy that gives enhanced importance to Southeast Asia, a trend that continues under the current Yoon government.  Now is time for Seoul to provide more details and resources for its policy by developing multifaceted cooperation with Southeast Asian countries for mutual benefits that goes beyond great power dynamics.