What is the Indo-Pacific Economic Framework and China’s Response?

The term "Indo-Pacific" has been used as a geographical notion for many years. Since 2010, it has steadily established itself as a political and strategical concept in multiple countries, especially Australia, India, Japan, and the US. The U.S. foreign policy bureaucracy tries to define Asia in a way that best serves its interests in the region, as evidenced by the region's shifting names (Asia-Pacific, and now Indo-Pacific). Approximately 60% of the global population resides in the Indo-Pacific region, and this area is predicted to be the biggest contributor to the global economy's growth over the next three decades, according to President Biden's administration.

The current Indo-Pacific Economic Framework for Prosperity, or IPEF, was formally introduced by President Biden and 12 regional counterparts at a public event in Tokyo on May 23, 2022, detailing Washington's long-awaited Asia-Pacific economic plan. The event included a joint statement and a hybrid meeting of the participating leaders. The initiative's four policy pillars in the IPEF include the connected economy; resilient economy; clean economy; and the implementation of a fair economy. The objective of the first pillar is to establish high standards for inclusive free and fair-trade obligations as well as to foster collaboration in the digital economy. The IPEF also aims to enhance transparency, diversity, security, and sustainability in order to strengthen the resilience of supply chains. Clean energy, decarbonization, and infrastructure will revolve around advancing technological cooperation and raising capital. Finally, discussions on taxes and anticorruption will centre on enforcing effective and comprehensive tax, anti-money laundering, and anti-bribery regimes. This IPEF constructs a partnership which involves 13 countries, excluding China. According to US officials, this framework will offer Indo-Pacific nations "an alternative to China's approach" and deepen political and economic connections with partners.

The IPEF was announced five years after the United States withdrew from the Trans-Pacific Partnership (TPP), a trade deal signed by 12 countries in the Asia-Pacific region. The Sino-US trade war has exacerbated the situation since the US withdrew from the TPP. The IPEF, however, has broken the ice. China has reacted strongly to the initiative, describing it as an "economic NATO" designed to exacerbate regional conflicts. Beijing has also initiated swift countermeasures against the IPEF. Secretary of Commerce Gina Raimondo stated that the United States is trying to take over the economic leadership in the Indo-Pacific area. The goal of the IPEF is to reaffirm U.S. economic involvement in a key area and provide a U.S.-led counterbalance to China's economic statecraft in that area.

The security environment in the Indo-Pacific area is developing and highly unpredictable. In order to handle a wider range of increasingly complex regional security concerns, the post-war American-led network of bilateral alliances, which was supported by explicit promises of extended deterrence and containment, is now giving way to a more diversified set of alignments and coalitions.

China’s Response to The Indo Pacific Strategy

In recent years, the United States has refocused its attention on the Indo-Pacific area in response to the expanding Chinese influence. The United States formed an informal coalition with India, Japan, and Australia to confront China by reviving the Quad. China has been extremely critical of the US's ambitions. China has previously referred to the Quad as the "Asian NATO." China has explicitly discouraged its development partners, like Bangladesh and Sri Lanka, from joining the Quad. China replied immediately to the announcement of the US initial Indo-Pacific Strategy. Chinese experts recognised the strategy as a "fantasy targeting China." Numerous Chinese officials and academics concurred that the policy was a continuation of "The China Threat Theory." The China Threat Theory is referred to by the Western theory which predicts that China's rise will not be peaceful. Chinese experts have argued for years that this ideology undermines China and fosters an "orientalist" view of China. Furthermore, Chinese experts stated that the United States is neither the builder nor the defender in this region, but rather the spoiler and the destroyer. While academics were critical of the concept, China formally rejected it since it directly undermined the One-China principle. Beijing has also called this policy an "anti-China" campaign that will force other countries to give up what is best for them.

According to Chinese experts targeting the IPEF, the implementation of the IPEF is unlikely to have an immediate impact on Chinese economic interests. Based on the existing China-led cooperative mechanisms like the Regional Comprehensive Economic Programme (RCEP) and Belt and Road Initiative (BRI), China is more linked with the Indo-pacific region than the United States. Moreover, many Southeast Asian companies are relying on China for raw materials that are processed for export to the United States or the European Union (EU).


References/Wider Reading

Arasasingham, A., Benson, E., Goodman, M.P. and Reinsch, W.A. (2022). Unpacking the Indo-Pacific Economic Framework Launch. [online] www.csis.org. Available at: https://www.csis.org/analysis/unpacking-indo-pacific-economic-framework-launch.

He, K. and Li, M. (2020). Understanding the dynamics of the Indo-Pacific: US–China strategic competition, regional actors, and beyond. International Affairs, [online] 96(1), pp.1–7. doi:10.1093/ia/iiz242.

Mufssir, R. (2022). The US Indo-Pacific Strategy and China’s Response: South Asia Caught in Between? [online] The Geopolitics. Available at: https://thegeopolitics.com/the-us-indo-pacific-strategy-and-chinas-response-south-asia-caught-in-between/.

Saha, P. (2022a). The Indo-Pacific Economic Framework (IPEF): An Asean perspective. [online] ORF. Available at: https://www.orfonline.org/research/the-indo-pacific-economic-framework/.

Saha, R. (2022b). The Pitfalls of Great-Power Competition in the Indo-Pacific. [online] South Asian Voices. Available at: https://southasianvoices.org/the-pitfalls-of-great-power-competition-in-the-indo-pacific/?gclid=Cj0KCQjwkruVBhCHARIsACVIiOwbTTP8JMh8Suyi9mMR-ydddip1b_s96DR9VQlXVSvVre7sPaIpF9IaAmVcEALw_wcB [Accessed 29 Jun. 2022].

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