Reimagining Economic Security Cooperation as Resilient Interdependence: Lessons From Asia

Interest in economic security has proliferated in recent years, not just in the United States but also in Asia, Europe, and beyond. Building on an assessment of shared concerns about the risks of economic interdependence, especially among allies in Europe and East Asia, the Joe Biden administration pursued cooperation on specific issues such as semiconductor export technology controls and critical-mineral supply-chain resilience. China was at the center of all those discussions, and the logic of cooperation was based on a sense that countries such as Japan and South Korea were as worried about asymmetric dependence on trade and investment ties to China as the United States and were therefore eager to cooperate in targeted, and limited, efforts to de-risk commercial links with China.

Yet any focus on the delimited and calibrated “small yard, high fence” economic security cooperation that was at the heart of the Biden team’s putative “new Washington Consensus” [PDF] is nowhere to be seen in the new Donald Trump administration’s approach. Instead, the focus so far has relied on the threat and use of tariffs, including against allies and neighbors. If such punitive measures are what remain of the United States’ seemingly brief rediscovery of economic statecraft, then policymakers should look to Asia for examples of the limited but real remaining possibilities for economic security cooperation in the years ahead.

A closer look at Asian approaches to economic security and resilience highlights significant gaps, but also offers valuable lessons—in how the United States and many of its allies and partners view their most pressing economic security challenges, and therefore in the most appropriate responses. Although governments and businesses in parts of Asia, Europe, and even the Global South have shared some similar anxieties with the United States about trade and investment dependencies on China, including increased Chinese attempts at economic coercion as a response to diplomatic disputes or the destabilizing consequences of China’s manufacturing overcapacity, there are two key divides between how the United States and even its closest friends have viewed economic security and the most appropriate policy answers.

First, even China’s neighbors—such as Australia, Japan, Korea, and Taiwan—who have experienced its heavy-handed (if often ineffectual) efforts to leverage trade and investment ties to bend others to its will have demonstrated little to no appetite for openly adversarial, confrontational forms of decoupling or de-risking, let alone efforts to win a strategic competition with China. Among governments and businesses in such places, there is indeed strong interest in shared approaches to reducing certain supply-chain vulnerabilities, including those linked to China’s dominance of critical minerals (also known as “minor metals”), for example. Indeed, Japan has taken a leadership role on exactly those forms of economic security cooperation, including via its Group of Seven leadership in 2023 [PDF]. But notably, Japan and others in Asia, especially Australia, have emphasized that for them, true economic resilience depends not just on limiting certain dependencies but also ensuring stable, open markets and institutions that expand and ensure rather than diminish economic opportunities for their people.

This leads to the second major gap between the United States and others actively thinking about economic security in Asia: even those most exposed to asymmetric interdependence with China continue to see open, rules-based, multilateral, and cooperative forms of economic interdependence as a vital component of their economic security. In fact, even as the United States has leaned into exclusionary and threat-based forms of economic statecraft, many governments and businesses in Asia and beyond have been actively deepening regional economic integration, often in ways that both include China and provide expanded alternatives via China+1 strategies, which involve diversifying manufacturing and sourcing beyond just China. Even in the face of rising economic nationalism, including beggar-thy-neighbor policies that are heightening the competition over manufacturing in Asia, such balanced and multifaceted efforts are seen as necessary components of deepened resilience and economic dynamism. Again, Japan’s own approach to economic security has included not just greater cooperation with the United States for a “free and open Indo-Pacific,” but also its promotion of regional trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, and its push for “high-standard” lending and infrastructure development.

If leaders in the United States and China continue their downward spiral into tit-for-tat tariffs and export controls and to view the “weaponization of interdependence” as the new baseline for foreign economic policy, neither will be likely to provide the kind of economic leadership that most of the world actually wants and needs. In Asia and beyond, any effort at creating a new, or at least reformed, version of viable and truly resilient economic interdependence that also accounts for heightened awareness about economic security will require the active participation and leadership of governments, institutions, and individuals in countries beyond the United States and China. At the level of government, the most likely candidates would be Japan and members of the Association of Southeast Asian Nations such as Singapore and Indonesia, given that they already play important roles in regional measures to promote cooperative economic security and resilience. But the active and creative input of individuals and civil society in the United States, Asia, and beyond will also be crucial in efforts to support healthy regional, or more broadly global, economic integration and to effectively navigate the volatile yet inevitable role of the United States and China in the region.

No matter the source of emerging ideas and support for a newly conceived architecture for resilient economic interdependence—one that accounts for the real concerns about economic security—certain principles will be critical. Contemporary critiques of untethered globalization [PDF] underscore a crucial sense that unmitigated economic openness can create social, economic, and political costs that lead to destabilizing imbalances and inequalities. Economic sociologist Karl Polanyi, whose ideas are experiencing somewhat of a resurgence, recognized that similar imbalances contributed to cycles of economic and political disintegration and conflict, including war, in the first half of the twentieth century. Any new, viable form of economic interdependence, trust, and cooperation that can underpin a collective sense of economic security will require creative ideas about how governments, businesses, workers, and societies can balance the benefits as well as the risks of regional and global integration with an allowance for domestic policies, including development and industrial strategies, that cater to the needs and interests of individual countries and their citizens.

Matt Ferchen is a Senior Fellow at the LeidenAsiaCentre.