The past few months have been a strategic roll coaster for Asia. Earlier this year, China dealt a huge blow to the United States’ leadership in the region when it managed to enlist leading European economies as well as American allies in Asia as founding members of the Asia Infrastructure Investment Bank (AIIB), which will be headquartered in Beijing. Former Treasury Secretary Larry Summers went so far as claiming that the AIIB episode possibly marked “the moment the United States lost its role as the underwriter of the global economic system.”
The Obama administration, which vigorously lobbied against the AIIB, was left isolated and bitter. It didn’t take long, however, before China similarly found itself isolated and bitter, when much of the region, including perennially neutral countries like Singapore, criticized—directly or indirectly—Beijing’s expansive construction activities in the South China Sea during the Shangri-La Dialogue. Recently, China announced that it is in the final stages of its massive reclamation project in the Spratly chain of islands.
More recently, however, the United States came under growing criticism for struggling to forge a coherent strategy on the Trans-Pacific Partnership (TPP) free trade agreement, as the Obama administration scrambled for legislative support to expedite the ongoing trade negotiations involving key Asian partners such as Japan, Vietnam, Malaysia and Singapore. This time, Singapore’s Foreign Minister K. Shanmugam warned, “American credibility will be seriously impacted if this [the TPP] doesn’t go through,” underscoring the repercussions of continued political squabbles over the TPP in Washington.