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Perspectives: ASEAN’s role in the global economy
723 Plays8 days ago
George Yeo, Visiting Scholar, Lee Kuan Yew School of Public Policy, National University of Singapore and Former Singapore Foreign Minister, joins Che Ning Liu, Vice Chair, Corporate & Institutional Banking, HSBC. They discuss ASEAN’s role in the global economy as geopolitical competition intensifies.
Watch or listen to their discussion covering strategic developments for the Association of Southeast Asian Nations, including its relationships with the US and China and the role it plays in a multi-polar world.
This episode was recorded on the sidelines of the HSBC Global Investment Summit in Hong Kong on 25 March 2025. Find out more here: grp.hsbc/gis
Disclaimer: Views of external guest speakers do not represent those of HSBC.
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Transcript
Welcome and Introduction
00:00:05
Speaker
Welcome to Perspectives from HSBC. Thanks for joining us. And now, on to today's show.
ASEAN's Rise as a Global Power
00:00:14
Speaker
Today, we will do a deep dive into ASEAN's success story as a growing global political and economic power. We are delighted to be joined by Mr.
Guest Introduction: George Yeo
00:00:24
Speaker
George Yeo, former Singapore foreign minister and currently a visiting scholar at the Lee Kuan Yew School of Public Policy in the National University of Singapore.
00:00:35
Speaker
Welcome, George, to the Global Investment Summit, and thank you for joining this podcast. Thank you. Thank you for having me, Channing.
ASEAN's Economic and Demographic Significance
00:00:42
Speaker
Before we start, I'd like to set the steam for our discussion.
00:00:46
Speaker
Established in 1967 with five members, ASEAN has grown to 10 member states. ASEAN is currently the fifth largest economy in the world with a GDP of almost $4 trillion. dollars and is well on track to becoming the fourth largest in the world in 2013. ASEAN is also the third most populated entity in the world after India and China, with around 700 million people.
Key Factors Behind ASEAN's Success
00:01:12
Speaker
Without further ado, let me kickstart my first question for you, George. Can you explain to us why ASEAN has been such a success? And what are the critical ingredients for the countries in the region to work together?
Historical Context and Unity in ASEAN
00:01:27
Speaker
During the Cold War, ASEAN was divided between two camps. And the Mekong River, instead of being a river which nourishes us, became a dividing line between two worlds.
00:01:43
Speaker
With the end of the Indochina War, there's been peace. And ASEAN has helped to maintain the peace in the region, without which economic development is not possible. And now there's a genuine regional sentiment.
00:01:59
Speaker
I feel myself citizen of ASEAN. I feel myself a Malayan, Singaporean. And this is where the monsoons blow over, this where we eat durians, where the food is always delicious, where we welcome people from all corners of the world.
ASEAN's Neutrality and Connectivity
00:02:17
Speaker
And with geopolitical competition intensifying, ASEAN is a neutral platform, friendly to everybody, will play an important role in furnishing a platform where everyone can meet on the basis of equality and cooperation.
00:02:37
Speaker
This has been ASEAN's contribution to a much larger region. And internally, we're becoming better connected good progress has been made. There's a few patches which have not done well, like Myanmar.
00:02:51
Speaker
But on the whole, if you visit Brunei or Laos or Vietnam or Indonesia, even in the third tier cities, you'll significant improvement.
Positioning Between East and West
00:03:01
Speaker
And there's every hope that if we can maintain another generation of peace, that many of us in the region can pull vault into the first world.
00:03:10
Speaker
How do you see the role of ASEAN in this increasingly ah multipolar world? And how do you see yourself being positioned between the East and the West?
00:03:22
Speaker
We were, except for Thailand, colonized by Western powers. And we had to fight for independence.
00:03:33
Speaker
But after that, under Pax Americana, many of us made rapid strides and achieved tremendous economic progress.
US-ASEAN Relations and Geopolitical Dynamics
00:03:45
Speaker
So the American presence is important in maintaining open lines of access and creating ah larger environment of peace where trade can move freely, where funds can move freely.
00:03:58
Speaker
But America is now going through a phase where it's self-questioning. It takes a more selfish view of its own national interests. And under Trump, there's no embarrassment now in saying America first.
00:04:14
Speaker
And we'll remember that.
ASEAN-China Trade and Economic Relations
00:04:18
Speaker
China has of course become more important to all of us. And I sense trade with China has been growing steadily. We now have a future agreement with China.
00:04:29
Speaker
And last year, our trade with China, I think we should $1 trillion. dollars The Belt and Road has been a great boon to us. But as our account with China grows, there's a feeling that we better diversify so that we're not completely dependent on China and not have to have a negotiating relationship which is lopsided.
00:04:56
Speaker
So the more we see our accounts with China growing, the more all of us in ASEAN seek diversification. And this is true whether you're Indonesia or Thailand or Philippines or Vietnam or Singapore for that matter.
00:05:10
Speaker
And our approach is avoid taking sides. Be friendly to everybody. But look after ourselves. And if any major power pushes too hard, you'll find us leaning in a direction you do not like.
Impact of Investments and Trade on ASEAN's Economy
00:05:26
Speaker
so please remember that. Maybe I can pick up on one thing you mentioned about China being now your top trading partner. With this China trade growing in leaps and bounds um over the years, um how do you see the relationship with China evolving as um a more Chinese companies invest ah in ASEAN and also Chinese companies wanting to sell more products, consumer products in ASEAN,
00:05:56
Speaker
with the young population, with the increasing middle class, it's a great market for Chinese products. How do you see that evolving?
00:06:05
Speaker
It's another cycle of history where China's ascendancy radiates and influence into Southeast Asia. and brings prosperity into the region, into all corners of the region.
00:06:20
Speaker
There's great complementarity between China and Southeast Asia. China is dry, China is cold, China is aging.
00:06:32
Speaker
Southeast Asia is is young, is full of water. And we are more or less in the same time zone. So even though you travel long distances in East Asia, you don't have jet lag.
00:06:47
Speaker
That's a big plus. And as China develops, you can imagine a lot of older people wanting to avoid the cold will come down south.
Relocation of Businesses to ASEAN
00:06:58
Speaker
In recent years, they have developed a liking for durians. And I've been told, I can't verify it, that Xi Jinping himself likes durians. And once told an ASEAN leader that China's market for durians would at least be 6 billion fruits a year.
00:07:15
Speaker
And durian producing countries in Southeast Asia are reacting to the opportunity. And it's only one fruit. So there will be a two-way intercourse.
00:07:27
Speaker
And with trade tensions between America and China, many companies, including Chinese and American companies, are relocating to Southeast Asia to avoid the line of fire.
00:07:40
Speaker
And some of them become Singaporean or Malaysian or Indonesian. So this, if we play right, we will be a beneficiary ah tension of some tension in the world.
00:07:52
Speaker
But of course, if it leads to great conflict, then it's not good for us. I've heard you talk in the past about how ASEAN and China understands each other through long history of neighboring countries and and the fact that ah there's obviously big ethnic Chinese communities in Southeast Asia.
00:08:18
Speaker
How does that help the interaction between ASEAN and China?
Comparative Analysis of ASEAN's Global Relationships
00:08:24
Speaker
And how do you contrast that with, say, a more Western a perception of China in terms of being able to understand the culture and and the the driving forces?
00:08:39
Speaker
The role of the Chinese communities in Southeast Asia is a very interesting one. During the colonial period, they were intermediaries between the metropolitan powers and the local communities.
00:08:55
Speaker
They were competitors, they were traders, they were shopkeepers.
00:09:02
Speaker
Now the China trade is flowing the opposite direction. And investments and trade are coming in from China. And curiously, the same local communities, ethnic Chinese,
00:09:16
Speaker
are intermediating between Chinese investors and traders and local communities. Of course, this sometimes create tension, say in countries like Indonesia or Philippines, Thailand or Malaysia.
00:09:31
Speaker
But for the next phase of history, I see them playing a very positive role. They have greater understanding of China. And you have greater cultural understanding.
00:09:41
Speaker
You're better able to assess risk. Therefore, the cost of capital goes down. And this facilitates trade and increases profitability and the viability of many projects. These are the role the Chinese overseas chinese ah ethnic chinese overseas are playing in Southeast Asia, including Singapore.
00:09:59
Speaker
Maybe we can switch gears a little bit and talk about ASEAN relationship with the U.S. And obviously, ASEAN, as you say, has positioned itself very well between China and the U.S. But with the new administration in the U.S., there's more focus on balance of trade, more focus on on ensuring that intellectual property and technology is is kept is kept safe within sort of national, with a national interest lens.
00:10:38
Speaker
How do you see the ASEAN relationship with the U.S. in a new era developing, especially um because of the increasing focus on balance of trade that ASEAN collectively runs a trade surplus with the
ASEAN's Flexible Diplomacy
00:11:01
Speaker
US.
00:11:01
Speaker
Well, all of us worry about Trump because he is is dramatic in the way he negotiates. But in the end, he wants a deal. He's pro-business. If he screams at you, it's because he wants something from you.
00:11:14
Speaker
And if he gets at something, he becomes friends again. Because Trump's core is in fact, well developed from a young age. He's against war, he's pro-business.
00:11:29
Speaker
He's ideological. Which is okay with us because, We ourselves are diverse. We believe neutral non-interference. And talked earlier about the 70 years of Bandung, which is really peaceful coexistence, but neutral cooperation on the basis of equality and respect.
00:11:50
Speaker
And if America, if others show that to us, you'll find us reciprocating.
00:11:58
Speaker
But the balance that we achieve is a dynamic one. It's not static. If you are static, you will topple over. it has to be a tight balance. You got to respond to shifting forces and always adjust the center of gravity so that you can be in a good position and flexible.
00:12:16
Speaker
With Trump, we've got to adjust position because he's different from Biden. And after Trump, we'll have to adjust again. China's more steady. But America, we must expect from administration to administration changes.
00:12:34
Speaker
But this is part of Southeast Asia. Every six months, the monsoons change direction.
00:12:41
Speaker
That's a great great observation because one of the phrase that I hear being talked about with Southeast Asian diplomacy is this notion of bamboo diplomacy, which is about ah being adaptable, being flexible, ah but yet maintaining good balance so that you're able to respond ah quickly to shifting forces.
Influence of Soft Power on ASEAN
00:13:04
Speaker
Oh, absolutely. absolutely i mean, i mean you we don't have typhoons in Southeast Asia except in... in the Philippines, but under storm force wind, the bamboo will still to be there.
00:13:20
Speaker
Ban but not yield. It may ban, but it will not break. It will not be uprooted. this That is what we should try to achieve in civilization. But it's done with effort. It doesn't happen automatically.
00:13:32
Speaker
It's helped by instinct. There's a deep instinct civilization because historically, to quote Professor Wang Kang-woo, we are where mandalas overlap.
00:13:44
Speaker
So in every country of Southeast Asia, the mandalas of China, of India, of the Middle East, of the West overlap. So there's an instinct to adapt to the foreigner who we meet.
00:13:58
Speaker
He's an Australian today. It's a Japanese tomorrow, it's an American the next day, it's an Italian a day after. You have to make small adjustments all the time in order to establish a relationship, trust, friendship, and do business.
00:14:15
Speaker
What are your observations in terms of um Chinese soft power and this and and how you see AI and Chinese technology affecting ASEAN's economic outlook and and a strategy?
00:14:31
Speaker
Well, Chinese soft power is different from American soft power, the way Joseph Nye described it.
00:14:40
Speaker
There was a time when America was light on the hill and we are attracted to that light. And many of us wanted to be American, to go there, to live there, to excel there, to take up green cards, even citizenship.
00:14:57
Speaker
And in that America, you're welcome. You pick your oath of loyalty to the constitution, to the flag. You're American. yeah You can vote. You can take part in politics.
00:15:09
Speaker
China is not like that. China is, I think, 93% Han, Chinese. It's unusually homogeneous for population four times that of the US.
00:15:21
Speaker
And this homogeneity of China is not accidental. It's not a result policies. It's an instinct maintained by culture, transmitted from mother to child through mother's milk, and then elaborated in rituals, in institutional arrangements.
00:15:40
Speaker
So China is not a missionary power. China does not want you to become Chinese. It wants you to respect China. It wants you to know that it's a high culture, but it doesn't seek from you conversion.
00:15:54
Speaker
There's a big difference. So the Chinese will put on land dance. They will demonstrate Tai Chi to you. But it's OK. You don't have to be Chinese. We just want to be friends. The case America, they want to convert you because they think it's good for you.
00:16:08
Speaker
So they're two very different civilizations. And when we talk about soft power, we must make that distinction. But DeepSeek is different. DeepSeek, I think was a master stroke because they could have made it proprietary, like open AI.
00:16:24
Speaker
But they decided probably with Beijing's encouragement, make it open source. make it available to everybody, including Singaporeans, so that we can all grow from there.
00:16:38
Speaker
It has greatly destroyed monopoly power in the US, and much value has been destroyed.
AI's Impact on ASEAN's Future Economy
00:16:44
Speaker
But the result is ah fertilization for wide area.
00:16:49
Speaker
Now, we don't all have to build our large language models. Upon these large language models, we can now build our small language models for specialized areas like HSBC and develop an advantage there.
00:17:02
Speaker
This is amazing. And I think will transform China and the world. It is a much better model than what is currently being developed in the US.
00:17:15
Speaker
So by this move, I think China has kind of shocked the US and the world.
ASEAN's Structure and Internal Growth
00:17:20
Speaker
But it's still early days. AI will change our lives upside down. There will be positive and negative side effects.
00:17:29
Speaker
This is just the beginning. What are the things that you worry about that could derail the growth and the success of ASEAN going forward?
00:17:40
Speaker
but I'm not sure about how useful it is to
00:17:47
Speaker
amalgamate ASEAN's accounts into one entity because we're not at the EU. We don't have a common budget. We don't- Common currency. We don't common currency. We don't allocate funds to one another.
00:17:59
Speaker
We are a collection of countries which share common fear of the kind of world we're entering and therefore huddle together.
00:18:10
Speaker
In order to play a role in a larger region, we ourselves must have a feeling for one another, be connected, and be mutually interdependent.
00:18:21
Speaker
That takes time because intra-Asian trade is still small compared to our trade the rest of the world. But it will grow.
ASEAN Citizenship and Identity
00:18:29
Speaker
And increasingly, there's a sense of our citizenship.
00:18:33
Speaker
Some years ago, when i was still a minister, we agreed that in all our embassies around the world, following the Europeans, we will fly not only the our national flag, We also flag our ASEAN flag.
00:18:44
Speaker
okay But we are not like the Europeans who are very Cartesian in their approach, who make decisions to the late night. We kind of ah agree generally and we move along, know, like water flowing.
00:18:55
Speaker
That's the ASEAN way. It's been good for us because we're diverse. We're at different levels of economic development and reduces tension. There's a sense of obligation by those more advanced to help those less advanced, which is a good thing.
Myanmar's Political Situation and ASEAN's Role
00:19:10
Speaker
Our concerns now are with Myanmar. because the country is close to civil war. The good thing is all the parties are exhausted and no one believes he can overcome all the others.
00:19:27
Speaker
And even though they fight each other, they don't want the country to break up. So even in the north, in Lachio, which was taken over by the other side, the Brotherhood of Three, above the three flags, they had the Union flag.
00:19:43
Speaker
So if on all sides you have the Union flag, then it's possible to conceive of a political arrangement where there is unity and diversity, kind of a lower level homo-homoyo stasis in Myanmar.
00:19:59
Speaker
I think that's achievable. And under Malaysia's championship of ASEAN, I think there'd be a fresh push to mediate in the domestic conflict.
00:20:11
Speaker
I don't think it'll get much worse. because no one wants it to get much worse. So while I worry about Myanmar, I'm not that
South China Sea: Potential for Cooperation
00:20:20
Speaker
worried. And I think we should not lose hope.
00:20:23
Speaker
The other area of concern is of course the South China Sea. And there, if it's just between us and China, I think we can find ah compromise solution where we recognize that we have different views.
00:20:37
Speaker
We set them aside and we concentrate on joint development, look after our fishermen and work to mutual benefit. And with Hainan becoming a free trade port, I think we can conceptualize the South China Sea as the Mediterranean Sea.
00:20:53
Speaker
In other words, not something to be carved up and divided, but something which unites us. And this we should try to do. And I think it's achievable. And it is the start of the one belt, one road when the great Admiral Zheng He rode his ships, steered his ships down into the into the to the Africa.
00:21:15
Speaker
And even before that, yeah going all the way back to the Han Dynasty, which is why the Pearl River Estuary plays a very important role in the history of China and in China's links.
00:21:28
Speaker
to Southeast Asia and to West Asia. I mean, it was a role played by Pony, then by Macau, and now by Hong Kong. yes So I feel optimistic for Hong Kong.
Financial Roles of Hong Kong and Singapore
00:21:40
Speaker
I'm very glad that you raised ah Hong Kong because obviously we're all sitting here here in Hong Kong and we always comment upon, you know, the friendly competition between the two city-states, Hong Kong and Singapore.
00:21:54
Speaker
And I'd very much like to hear your perspective on ah How do you see Singapore and Hong Kong's role evolving as Hong Kong, obviously under one country, two system, is now positioned as the International Financial Center for China so that we have great financial firms and conferences that we can have in Hong Kong.
00:22:21
Speaker
and then Singapore's role as the financial capital for essentially Southeast Asia and a great hub for wealth management and and and and trade.
00:22:34
Speaker
There's some rivalry between Hong Kong and Singapore which is exaggerated. The much greater relationship is complementary. is complimentary I remember chatting with the penultimate British governor of Hong Kong, Sir David Wilson.
00:22:52
Speaker
And he put it this way, he said it's like the competition between Oxford and Cambridge. At the boat race, we are taking sides and so on, but really it's complementary relationship. And there's growing equity interests of one in the other.
00:23:09
Speaker
I myself, I'm a prominent resident of Hong Kong. And there are many families which straddle both sides. and each energizes the other.
00:23:19
Speaker
The distance from Singapore to Hong Kong is distance from London to Moscow. We're in different geographical regions. Neither can replace the other. Hong Kong cannot replace us in Southeast Asia. Singapore cannot replace Hong Kong in China.
00:23:37
Speaker
But we can help each other. And if we help each other, each is more effective, stronger, more prosperous.
Hong Kong's Strategic Importance
00:23:45
Speaker
I want to ask you, before we wrap up, I want to ask you one final question. As Hong Kong goes through a structural change in the economy, what observations and what advice do you have to give for our current government in terms of how we should think about um our public finances, investments, and how we should position Hong Kong um you know for the future?
00:24:15
Speaker
Hong Kong has crossed the most difficult mountain pass. Things are being done. The bureaucracy can be more effective, but it's moving the right direction.
00:24:28
Speaker
The key is Hong Kong is useful to China. One country, two systems depend completely on Hong Kong being outside the wall and being useful to China outside the wall.
00:24:43
Speaker
China to protect homogeneity always has a wall around it. It can be a physical wall, it can be a financial wall, it can be a biological wall, but that's how China preserves itself. In the crisis, the gates are shut.
00:24:56
Speaker
Hong Kong is outside, Shenzhen is inside. And what's outside will help what's inside. and connect it to the rest of the world. That's Hong Kong's position.
00:25:07
Speaker
So I don't see Hong Kong's rule diminishing at all. Hong Kong is precious to China. If there were no Hong Kong, China have to create another Hong Kong.
00:25:19
Speaker
I think it's important, given the importance of ASEAN to China, that Hong Kong builds up its presence. in all the 10 countries of subvis civilization, including Myanmar.
00:25:33
Speaker
Now, there already links to business networks, but there should also be governmental links. I've long felt that Hong Kong needed an external service, high level, not just trade offices, who function like trade ambassadors, including Brunei and Myanmar.
00:25:53
Speaker
and help develop a knowledge network and relations network throughout Southeast Asia. Because looking to the future, Southeast Asia will become more and more important to China and to Hong Kong.
00:26:08
Speaker
The prospects for ASEAN is truly bright. And with the um increasing network and the increasing connectivity with Hong Kong and China, I think it will further deepen the trade corridors and the opportunities that we have with each other.
00:26:26
Speaker
Thank you. Well, I remain optimistic for Hong Kong. I'm not selling my apartment. Fantastic. And hopefully you add to your visits and your um ah time in Hong Kong as well. You can it your way.
Conclusion and Call to Action
00:26:39
Speaker
Thank you. Thank you very much. Thank you. Thank you. thank Thank you for joining us for this episode of Perspectives. Make sure you're subscribed to HSBC Global Viewpoint to stay connected.