Great Powers, Small States w/ Joseph Liow

Alice Liu: Many observers of international politics take the view that the United States is in a state of decline. Do you agree with their opinion?

Joseph Liow: I think it would be a mistake to think that the U.S. is in decline, certainly not in terminal decline, as some would also argue. Does the United States have some problems that it has to deal with? I think that’s very clear. In terms of domestic politics, the economy, and other issues, such as immigration, which is a major issue for this administration now. But, as far as the indicators of power and influence are concerned, I think it’s very difficult to make the case that the United States is in any way significantly declining.

Now, that is not to say that other powers, like China, aren’t making up ground. China has been investing very heavily to close the gap with the United States in technology, military capability, the economy, et cetera. But China’s catching up doesn’t equate to U.S. decline.

AL: In discussing the Trump administration, you called many of the policies he pursued as having “self-destructive” tendencies. What did you mean by that?

JL: Over the past decades, a lot of goodwill has been accumulated among the Asian countries who positioned themselves as allies and friends of the United States—Southeast Asia and Northeast Asia, especially. Considerable alignment has been achieved in terms of strategic outlooks and objectives. The United States has always been seen and welcomed as a major provider of public goods. 

The Trump administration, as we all know, has taken on a far more transactional approach to relations with both adversaries and friends alike. Transactionalism itself is not something new; it has always been a part of international affairs. But I think the challenge now is the way the Trump administration has gone about it. With this administration, it’s not so much the issues that it has identified, but rather the way it has gone about addressing those issues. It’s less about the problems themselves but about the kinds of solutions that the administration has pursued. Those solutions often leave a bad taste, alienating countries that have otherwise been closely aligned with, or strongly supportive of, the United States playing a more active role.

The question now is how unpredictable the United States has become. One day it says one thing; the next day it says another. It signs executive orders and agreements, and then the courts rule those actions illegal. That uncertainty is something everyone has to deal with, and the current administration feeds it through the policies it has chosen. To my mind, that’s self-defeating. It’s squandering a great deal of the goodwill that had been accumulated by previous administrations—Republican and Democrat alike.

AL: Where does the administration’s unpredictability stem from? Is it political anxiety or something else?

JL: The first thing that comes to mind for most people is the president himself. Trump being a capricious figure is a large part of it. The U.S. president today is someone who has very strong faith and confidence in his own gut, and that’s how he makes decisions. The man is unapologetic about his New York real estate mogul instinct, and he brings that into everything, including foreign policy.

Beyond the idiosyncratic president, however, I think it is fair to say there is a measure of uncertainty within the American political elite about the United States’ place in the world. As I mentioned earlier, I think it is a mistake to assume that the United States is in decline. At the same time, because it is confronted with a challenger that is rapidly accumulating power across a broad range of indicators, by which I mean China, the sheer pace of that competition is causing quite a bit of anxiety among the American political elite.

The U.S. has prevailed before against great power rivals, with the Soviet Union being the obvious example. But China, as many have argued correctly, is a very different proposition altogether. The Soviets were a nuclear and military competitor, but certainly not in many other respects. Economically and technologically, it was no match for the United States.

China is different. It’s developing its military, but we all know that Chinese technology, especially advanced technologies in various fields, can compete with the best the U.S. has to offer. The Chinese economy is still smaller than the United States’ economy, but that gap has narrowed over the last 20 or 25 years. At the turn of the century, China’s GDP accounted for less than 10% of global GDP. Today, it’s up to around 17 or 18%. In fact, if you remember, not too long ago, perhaps seven or eight years ago, certainly no more than ten, many were speculating that the Chinese economy would very soon overtake the U.S. economy, possibly by 2025 or 2030. That hasn’t happened, and I don’t believe it’ll easily happen, but the narrowing economic gap caused palpable anxiety among the U.S. elite.

AL: Do you find the Cold War a meaningful reference for today’s geopolitical relations, or is the situation more nuanced?

JL: When we think about a cold war, we think about THE Cold War. As I alluded to earlier, the U.S.-China rivalry today is very different from the U.S.-USSR standoff. China is very different, and it poses a different manner of competition. Another major difference is that during the previous Cold War, the two camps were bifurcated and had very little interaction between themselves. Quite often they didn’t even want to compete in sports, boycotting the Olympics, for example. Today is quite different, as the two opponents are heavily invested in each other’s economies. Regardless of the Trump administration’s claims, both the U.S. and the Chinese economies are very plugged into the global economy.

Both governments are trying hard to bifurcate certain areas, especially critical technology. But the reality is, if you talk to people from any industry, creating alternative supply chains is something easier said than done. It entails such substantial investments and risks that many still prefer to just try to wait the time out and not tinker too much with their supply chains. So it’s a very different, far more complicated dynamic that we’re looking at today.

AL: What is the power transition theory? Do you find it an accurate prediction of the bilateral relationship?

JL: Simply put, the power transition theory assumes that when two global powers, one rising and the other declining, meet in the middle, that’s where the risk of conflict is the greatest. Graham Allison advanced a U.S.-China version of this theory, the Thucydides Trap. The idea there is that at some point, the rising China will be dissatisfied and want to assume the pole position, and the incumbent United States will be reluctant to abdicate its leadership. This gives rise to possibly conflict and war.

If you ask me whether that will happen, I admit we can’t be sure. We certainly hope that it doesn’t happen because if both the United States and China come to blows in a significant way, it’s going to impact practically the entire world. This is why creating channels of communication between not just the paramount leaders but at various other levels underneath becomes critical. Personally, I find it hard to picture an outbreak of superpower war, simply because globalization and interdependence have substantially raised the cost of war, despite not always ensuring peace. One hopes that good sense will prevail when situations escalate and tensions rise.

AL: What’s something else in U.S.-China competition that you think is important and that we should learn about?

JL: The first challenge comes in understanding each other’s culture and historical backgrounds. We certainly have academics in both countries who’ve spent their entire lives studying the other party. But my concern is at the level of decision-makers, the political elite. In the case of presidents, prime ministers, or party secretaries, decisions are never made in a vacuum. Understanding the other party’s historical and cultural context improves our grasp of their perspective. To my knowledge, that aspect can be improved in terms of U.S.-China competition.

The other aspect concerns my nation of origin. I come from Singapore, the smallest of all small states. The concern here is that the superpower rivalry has cascading effects on others, especially small states that get caught in between these two giants. It is, at minimum, a very uncomfortable position. But the great powers don’t seem to feel the need to understand the small-state perspectives. This is another aspect of great power competition that is not nearly appreciated enough in the U.S. or in China: their competition isn’t confined to them alone, and it holds implications for the rest of the world.

AL: Let’s talk about Singapore’s diplomatic ties with China and the U.S. How has the country aligned itself, vis-à-vis the two great powers, historically and in the present? Is it now pressured to choose sides?

JL: Singapore is quite clear that its preference is not to be in a situation where it must choose sides because it cannot afford to do so. We have good relations with both parties, and we are very deeply connected in so many ways with both parties that it is quite difficult to imagine having to choose a side. But of course, that’s very different from having a choice foisted on us by one party or the other. And that is the kind of situation that Singapore wants to avoid.

How? Well, we want to make sure that we have a sufficient value proposition so that it is not in the interest of either the United States or China to force us to take a side. As a small country, we do not inherently present value for a big power. We must make ourselves useful—as we are. Hopefully, being valuable to one big power or the other will create a situation where it would not be in their interest to undermine Singapore in their competition with each other.

That’s our approach to managing the relationship with both the U.S. and China. Different countries in Southeast Asia have different ways of managing that relationship, but the underlying premise shared across all the countries in the region is that we want to have good relations with both the U.S. and China. We don’t want to be in a situation where we are, whether collectively as Southeast Asian states or individually, forced to choose between the two.

AL: How can Singapore make itself useful to China and the United States, respectively?

JL: I’ll just give you one example. The United States is the single largest investor in the entire region of Southeast Asia. Many American MNCs are present in Southeast Asia, many in multiple countries across Southeast Asia. China is also starting to invest in Southeast Asia, increasingly becoming an exporter of capital to Southeast Asia. A lot of these American companies and Chinese companies are headquartered in Singapore. This is because the Singapore government has really endeavored to create the most conducive environment for them, in terms of everything from lifestyle to taxation rates to the rule of law.

Businesses prize predictability more than anything else, and what Singapore tries to do is create a predictable environment with political stability and consistent policies, so there’s nothing that catches MNCs off guard. That’s the value that we provide for American interests and Chinese interests.

AL: Will you walk us through the country’s historical relationship with the two superpowers?

JL: It’s a long history, but I won’t get into all the details. The point is that we’ve had close relations with both parties for a long time. Since independence, we have had foreign relations with the United States. The then-leadership of Singapore was supportive of the U.S. involvement in Vietnam. I know it’s very controversial in the U.S., even today. But as far as Singapore is concerned, it was about the United States having a stake in the security and stability of Southeast Asia.

We continued to have strong relations with the United States across an entire spectrum of areas: economic investment, technology, education, defense, you name it. The Singapore military is very much built on American defense technology, not exclusively, but for the most part. The best and brightest of Singaporeans study in the United States. A lot of them don’t return but choose to reside in the States, forming a very important bridge between Singapore and the U.S.

And in the case of China, the relationship is a bit more complicated due to the issue of ethnic affinity. Singapore has a majority ethnically Han Chinese population. In fact, we are the largest Chinese-majority country outside of China. Consequently, a large segment of the Singapore population enjoys a cultural affinity with China, and this opens a lot of doors and facilitates interactions. We speak the same language and celebrate the same cultural festivals. That’s all well and good. The tricky part is when that affinity spills over to questions of political allegiance. Our ethnic kinship at times leads to an expectation of complete political alignment, running up against other identities, primarily nationality and citizenship.

The challenge for Singapore has always been to emphasize that, though culturally a Chinese-majority country, our allegiance is to Singapore first and foremost. This has been the basis of Singapore’s interaction with the PRC. But it isn’t just the Singaporean government who’s walking this fine line; it’s a rub for the Chinese officials as well. China has to understand that because of the strength of our cultural bond, they want to be very careful playing the issue up, as it is a double-edged sword for bilateral relations. It can be beneficial for fostering goodwill, but it is also a delicate issue to be managed.

In fact, it was precisely because of this that Singapore was the last country in Southeast Asia to establish formal relations with the People’s Republic of China. Singapore wanted to send a clear signal to our neighbors that we are not an outpost for China. Not until our immediate neighbors, Malaysia and Indonesia, normalized relations with China, did we reach out. It was only after Malaysian normalization in 1974 and Indonesian normalization in 1990 that Singapore forged diplomatic ties with China.

AL: Let’s talk about China and Southeast Asia in particular. What are some of the pressing issues between China and Southeast Asia?

JL: What immediately comes to mind is the territorial disputes that China has with a number of Southeast Asian countries, specifically in the South China Sea. China has expansive claims in the South China Sea. At the same time, they are vying with four Southeast Asian countries, four or five depending on how you look at it, because Indonesia is sometimes lumped into the claims. But the four primary protagonists from Southeast Asia are Vietnam, the Philippines, Malaysia, and Brunei. Given the expanse of China’s claims, they effectively are in dispute with these four countries over sovereignty, the waters, and the resources under the waters. And all that is not sorted out yet. The Association of Southeast Asian Nations is engaged in discussions with China for a code of conduct to manage the dispute. It’s not going to adjudicate claims, but it is going to hopefully serve as a mechanism to manage differences so that they don’t spill over into acrimony or, worse, actual armed conflict.

There are other issues as well. The mainland Southeast Asian countries such as Cambodia, Laos, Vietnam, and Thailand all have a stake in the Mekong Basin. The Mekong River that runs through all these territories is a very important economic lifeline for these countries. Because China is the upper riparian state and the river flows from China into Southeast Asia, it can control the flow of water. When China builds dams, that affects agriculture downstream in the Southeast Asian countries. There’s always a concern that those countries further downstream will be in a situation where they are at the mercy of the upper riparian state, who can control the water flows.

A third issue that has surfaced recently is the trade imbalance between China and Southeast Asia. China and Southeast Asia have excellent trading relations. China is the largest trading partner of practically every ASEAN country, and ASEAN is one of China’s largest trading partners. All this looks great on paper, except for the fact that the trade deficit between China and Southeast Asia is huge. Southeast Asia is importing far more from China than we are exporting. The problem is that a lot of the imports from China are in competition with local industries in many Southeast Asian countries, including Thailand, Indonesia, and Malaysia—mostly textiles and consumer electronics. Small and medium-sized local enterprises are affected by a flood of Chinese goods that are priced at a lower price point. Because China has problems with domestic consumption, they’re very reliant on exports, and a lot of that hyper-competition in China is being exported out to Southeast Asia. These high-quality, low-price products give welcome options to Southeast Asian consumers. But it’s rough competition for Southeast Asian businesses, who are getting squeezed out of the market. This not only affects the livelihoods of locals but also takes a toll on economic growth.

All these kinds of challenges tend to manifest in political ways: protests, people taking to the streets, and political mobilization. In many Southeast Asian countries, they’ve had to deal with these sorts of things ever so often. Southeast Asian leaders are trying to dissuade their Chinese counterparts from being overly active in terms of exports, especially products that are in direct competition with local industries. These are some of the issues that still need to be ironed out.

AL: You just said that Singapore hopes that it will not see itself in a position where it is forced to choose sides. But you also made the claim that, amidst U.S.-China rivalry, the country is gradually pivoting towards China. Why is that the case?

JL: To clarify, it’s not pivoting towards an alliance with China. You are referring to the research project titled Anatomy of Choice that Professor Yuenfoong Khong and I undertook and published in Foreign Affairs. What our research discovered is that almost all Southeast Asian countries, with the only exception of Vietnam, have been inching closer to China over a 30-year period. If you think in terms of a spectrum with China at one end and the U.S. at the other, between 1995 and 2024, nine of ten Southeast Asian countries have moved closer to China. Interestingly, we also found that much of this activity occurs within a moderate range, as many countries prefer not to take sides.

If you have, say, China at zero and the U.S. at 100, Singapore has moved from 55 to 48 or something like that. Over the past 30 years, Southeast Asian countries’ relationships with China have developed in very substantial ways, especially over economics. Countries leaned more towards China than they did 20 or 30 years ago. But it doesn’t mean that they are going to ally with China. They are still within the boundaries of what you can methodologically accept as hedging states.

When it comes to the question of why, over that 30-year period, relations with China improved so significantly, the simple answer really is economics. We looked at other things, including defense relations, diplomatic relations, people-to-people ties, signaling, and a whole range of other indicators. But the one that really contributed to this shift with regard to China was economics. Southeast Asian countries grew to see China as an economic opportunity for their own development, and that was quite critical in accounting for this shift.

AL: Why is Vietnam an exception?

JL: The Vietnam question is an interesting one. So, like I said, we tracked the change over 30 years. We collected data, starting from 1995. At that point in time, essentially, the Vietnam War had ended 20 years earlier, but there was still very much the hangover, and the U.S. and Vietnam were barely just trying to reestablish official relations. America was viewed very differently in Vietnamese eyes, as they had only just fought a war. Meanwhile, Vietnam had also just entered into the ASEAN fold.

Fast forward to 2025. Vietnam has always had very complex relations with China. They have very good party-to-party relations because of their communist-Leninist type of regimes. But the country-to-country history between China and Vietnam, even before they became modern nation-states, was one that had its fair share of warfare. That historical baggage, coupled with today’s territorial disputes, influences Vietnamese foreign policy behavior very much. The Vietnamese government has tried to balance this by improving relations with the United States. So this accounts for the, I suppose, unique Vietnamese case in that study. They were much closer to China 30 years ago.

AL: What consequences does the U.S.-China rivalry hold for Southeast Asian countries?

JL: For one, if they come to blows and drag us into conflict, which we don’t want to be dragged into, that would be a problem for us. Beyond that, several economies in Southeast Asia are still very much developing and have great aspirations to modernize for the sake of their people, and they’re doing this in the context of a globalized economy. If U.S.-China competition reaches a point where it really separates into two totally independent economic systems, then it creates a lot of problems for Southeast Asia, which relies on a very open and fluid international trading system.

AL: You also note that China today looks very different compared to the one in 2008. In what regard?

JL: Certainly, in many ways. I mean, it’s a far more developed economy. It has made commendable advances in technology, so it’s a very advanced economy as well, notwithstanding problems with disparities in their different provinces. The coastal provinces in the east are very successful and advanced and house all the technology hubs. But further inland, it’s a different kind of economic system. This inequitable distribution of wealth is something that preoccupies the Chinese government quite a lot.

Politically, even more changes. Power is very centralized in China today, far more than it was 15, 20, or 30 years ago. And it’s also much more opaque, with head-scratching changes in the Central Military Commission of members being removed and disappearing. This is tied up with the Xi administration and his huge anti-corruption drive, which continues until today. He had very good reason why he had to embark on that campaign. But the question is the degree of transparency that is involved, without which people start speculating about political motives behind it.

In terms of foreign policy, it is clearly far more assertive than it was in the past. Chinese leaders maintain that China is not a great power and doesn’t aspire to be a great power but only wishes to improve the welfare of their people. But that’s China looking at itself. Everyone else looking at China sees a great power that is very interested in its immediate environment. As it gets more powerful, that interest expands further out, to the Middle East, to Latin America, to Africa, et cetera. And foreign nations see China using that power to shape things in the direction that they want. That’s perfectly understandable on the part of great powers. But, like I mentioned at the beginning of the interview, great powers see the world through their own lens, but they tend not to be able to see it through the lens of smaller countries. When we see China behaving like a great power and asserting itself, it causes anxieties for us, whereas from China’s perspective, it’s simply pursuing its own objectives. Over the last decade or so, we have seen a far more assertive China, certainly in the immediate Indo-Pacific or Asia-Pacific region.