Hedging in Post-Pandemic Asia: What, How, and Why?

As the US-China rivalry intensifies amid the COVID-19 crisis, more observers have opined that the “hedging” by smaller states—widely interpreted as a “middle position” between being fully aligned with the US camp and fully bandwagoning with China—is irrelevant, irresponsible, and even dangerous. I engage this debate from a Southeast Asian perspective, addressing the what, how, and why questions surrounding hedging in post-pandemic Asia. I contend that hedging is likely to become even more prevalent at a time of great uncertainty.

Is hedging becoming untenable because of the shrinking space resulting from the increasingly intense rivalry between the two strongest powers? The answer depends on whether or how soon the two powers’ current round of rivalry escalates into outright war. If all-out war erupts, there will be little room for lesser powers to maneuver and no room for small-state hedging. Practically all the smaller Southeast Asian states—especially those located along the Straits of Malacca and the South China Sea—would be entrapped into the conflict, regardless of their preferences. But, short of this, if rivalry remains without direct military confrontation, then the smaller states will have the space, reasons, and perhaps even leverage to hedge—the only path the weaker states have to ensure their survival in an increasingly uncertain world.      

Critics describe hedging as opportunistic, dismiss it as “sitting on the fence,” and denounce it as a source of instability. I disagree. Smaller-state hedging is a response to—not a cause of – the uncertainties surrounding big power relations—a minefield because the stronger powers may harm them (intentionally or not) even when the stronger powers’ main targets are their peer competitors. The Southeast Asian states, most of which underwent centuries-long Western colonization, Japanese occupation, independence struggles, US-Soviet Cold War confrontation, and recurring external interference in their internal affairs, have learned and remembered this painful lesson.¹ Big powers come and go, while it is they who deal with the ensuing damage.

The current US-China rivalry is but the latest manifestation of such a pattern, a reminder of “might makes right.” Both share the same sin, having flexed their muscles to get their own way, often at the expense of smaller states, including their respective regional partners. The Trump administration has moved to scrap the Trans-Pacific Partnership (TPP) and reduce multilateral commitments, while questioning the value of decades-old US-centered alliances and partnerships, disappointing partners which had long embraced the US-led order and invested in Obama’s “rebalance to Asia” policy. Xi Jinping has stepped up his predecessor Hu Jintao’s maritime assertiveness, building artificial islands and consolidating China’s coercive presence in the South China Sea to exert “sovereign rights,” in effect, turning the disputed international waters into China’s internal lake. Both did what they did because they could: Washington has changed its mind at will, Beijing has coerced its smaller neighbors, and the two will continue to compete for influence, with Southeast Asia at the epicenter of their rivalry.²

Smaller states cannot stop the big powers from pursuing their might-makes-right actions, but they will, and must, do what is necessary to ensure their own security. Nobody wants to be a pawn in another’s game. Their survival instincts push them to hedge, primarily by avoiding actions that leave the impression they are siding with one power against the other. Doing so mitigates the risks of entrapment, abandonment, and domestic resentment. Hedging is a self-help mechanism to respond to the uncertain actions on the part of the big powers.

Is hedging a dangerous act? Counter-intuitively, it is not. Rather, compelling or inducing smaller states to stop hedging is perilous. When a competing power attempts to push some smaller states to stop hedging and align with it, the other power will step up pressure on the rest of the smaller states. The ensuing vicious cycle will result in regional polarization and Cold War 2.0, posing a greater danger than the current situation, where the ambiguity and absence of clear division provide space to maneuver and to pursue region-wide, multilateral cooperation (e.g. RCEP, CPTPP, and ASEAN +3’s COVID-19 collaboration), while allowing the big powers to compete without resorting to war. As many comments about hedging result from misunderstanding of the term, it is important to define what hedging is (and is not). 

What is hedging?

Hedging is insurance-seeking behavior under high-stakes and high-uncertainty conditions. It entails three attributes: 1) insistence on not taking sides (avoiding rigid alignment); 2) attempts to pursue opposing measures to offset different risks (preserving ambiguity as a self-help mechanism); and 3) diversification to cultivate a fall-back position (following the “just-in-case” instinct).³ Hedging is not the same as “balancing” (or “hard balancing” or “direct balancing,” as some IR scholars say), which is an unambiguous act of confronting a clear and present threat in an open, complete, and direct manner, chiefly through military means (alliance and armament). By contrast, while hedging involves some pushback and, at times, even confrontational measures, this is done in a partial and selective manner in order to avoid burning-the-bridges vis-à-vis the hegemon. Hedging is also different from bandwagoning, which denotes complete acceptance of a hierarchical relation with a stronger power. Hedging, in comparison, necessarily manifests itself in both limited deference and selective defiance, in order to avoid complete subservience or outright subordination.⁴ The most significant distinction between hedging and balancing and bandwagoning is that hedging avoids making a clear-cut choice of siding with one big power.

The difference between hedging and seemingly interchangeable terms such as “neutrality” and “non-aligned” is more blurred. These terms overlap in not allying with one power against another. Beyond that, there are subtle differences. Hedging is not about passive neutrality, because it involves some degree of strategic activism—either high-profile or behind the scenes—beyond declaring impartiality. Hedging is not about strict non-alignment, because it typically involves multi-pronged alignments, i.e. simultaneously cultivating, maintaining, and enhancing partnerships with as many powers and players for as long as feasible. Such multi-layered, multi-dimensional alignments involve multiple partners instead of a single ally. Not confined to military alignment, they can be either formal or informal, depending on the needs of partnering states. Hedging-based alignments—which are far more prevalent than traditional “alliances” in Southeast Asia and elsewhere—are based on selective converging pragmatism, as opposed to a rigid mutual defense commitment. This means inter-state alignments and partnerships are forged flexibly according to the prevailing practical needs at a given time in particular areas (e.g. institutionalized diplomatic engagement, financial surveillance, regional connectivity-building, maritime security, defense dialogue, military exercises, pandemic cooperation).

The extent and substance of convergence determine the manifestations of a country’s layers of hedging-driven alignments. The layers may overlap and take various forms: bilateral (partnerships with individual powers and players), multilateral (the ASEAN-plus mechanisms), and/or minilateral (ASEAN-minus, sub-regional, or trilateral arrangements.). The nature of convergence also determines the degree of institutionalization (ad hoc versus more institutionalized) as well as the longevity and domain of a given alignment: states align when and where their interests converge. Alignment diminishes when interests diverge; it expands when interests evolve or transform. Hedging-driven multilayered alignments are thus dynamic, adaptable to changing relations and evolving environment, accumulative in nature, and built on: 1) the patterns and lessons learned from past partnerships; 2) a leader’s new and previous initiatives; and 3) proposals for partnerships by the powers and players near and far.

Hedging, in short, is operationalized and evolves through selective, adaptive, and accumulative multi-layered alignments. It involves pragmatic, overlapping, and flexible alignments without rigid commitment. Its manifestations evolve according to a country’s prevailing security and elite’s domestic needs, as motivated and constrained by a given power structure of the day (e.g. conflictual bipolarity, competitive bipolarity, uneven multipolarity). The greater the power uncertainties, the greater the number (and complexity) of alignment layers that will be developed to offset the perceived risks.

In practice, hedging is not only a middle position between full-balancing and full-bandwagoning; it is also a deliberately “opposite” position⁵—contradictory measures being adopted concurrently to offset one risk against the other (e.g. simultaneously forging defense partnerships with both the United States and China to offset the twin risks of uncertain US commitment and uncertain Chinese intentions). Hedging-skeptics (from both powers) often find such a contradictory approach unacceptable, describing it as “unprincipled” and “opportunistic.” Such a big power bias conveniently ignores smaller states’ security needs in the face of big powers’ self-centered, contradictory, unpredictable, and unreliable commitments. The critique also reflects a misconception. Contrary to the conventional understanding, hedging is not about targeting a single risk or a specific power; rather, hedging is about offsetting a wide range of risks stemming from high-uncertainty.⁶ When the perceived risks are so numerous (not just territorial stakes but also power entrapment, economic security, and regime survival) and power relations so uncertain, no rational actor—especially smaller states which are vulnerable to a broad array of challenges in an anarchic world—would place its bet on a single power. International politics—especially in this unprecedented post-pandemic era—are too fluid for any “speculation” about future power structures and inter-state relations to be made. Hedging is the avoidance of speculation, not the making of speculation (as to which power will inflict more harm, which will prevail, which is more reliable, etc.). Betting on multiple powers is pragmatic, not opportunistic.     

How do we know states hedge?

Hedging, by design, is a policy without pronouncement. Hedgers typically hedge without announcing their actions as such. Doing otherwise would invite unwanted attention and even suspicions from contending big powers, defeating the purpose of this deliberately ambiguous act. How then do we know whether a state is hedging at all?⁷ We need concrete parameters to support our assertion that smaller states in the Indo-Pacific region are hedging more extensively vis-à-vis the competing powers in light of growing uncertainties in the pandemic era.

Our conceptualization of hedging points to three parameters: 1) efforts to avoid taking sides or statements to emphasize “non-alignment”; 2) signs of both deference (pleasing China) and defiance (displeasing China); and 3) an inclination to diversify, to preserve policy independence, or to keep options open. Hedging behavior is evident when all three parameters are observable: the stronger the observable attributes, the heavier the hedging. Non-hedging prevails when no sign or very thin signs of the above are present.

Under the current scenario of intensified US-China rivalry amid the pandemic, the most likely non-hedging behavior would be balancing manifested in the following forms: openly supporting and joining the US-led anti-China, creeping-containment actions, including taking part in the FONOPs, participating in the Quad or Quad-Plus, publicly blaming Beijing for COVID-19, collaborating in technological decoupling, coordinating actions among “likeminded” nations to accelerate broader decoupling moves (e.g. developing separate supply chains), undertaking military exercises and operations only with the US and its allies, and discontinuing similar arrangements with China.⁸ These balancing efforts presumably are aimed at preserving the “rules-based” international order, maintaining regional stability, as well as safeguarding one’s own security and autonomy, “before it is too late.” By these indicators, Australia is balancing; Japan and India are near-balancing; South Korea and the ASEAN member states are not balancing in the strict sense of the term, so far. 

Non-hedging behavior may take another form: bandwagoning. This happens if and when smaller states totally align with China’s growing power, showing across-the-board deference and accepting a tributary-like regional order—kowtowing to the Asian giant in exchange for receiving greater economic rewards, minimizing potential security loss, or both, even at the price of sacrificing one’s own sovereignty. None of the ASEAN countries is bandwagoning with China in the real sense of the word, not even Cambodia, a country perceived as “pro-China” and “anti-US.”⁹

Instead, the Southeast Asian states have positioned themselves vis-à-vis China and the United States in ways that display all three hallmark elements of hedging: not taking sides, pursuing opposing measures to offset different risks, as well as diversifying their strategic and development links to preserve their autonomy as much as possible. States hedge differently. Hence these elements of hedging have been expressed in different forms and different degrees across the region. The variations in the smaller-state hedging theme are clearly displayed in their policy responses toward COVID-19, as well as other China-related policy issues ranging from the South China Sea, defense outlooks, Xinjiang, and infrastructure development partnerships.  

None of the ASEAN states have openly criticized China on its initial handling of the pandemic. Instead, most have demonstrated a diplomacy of solidarity. In addition to raising funds and donating masks, gloves, and medical material to China at the early stage of the crisis, Southeast Asian countries also expressed their sympathies and support to their northern neighbor. Indonesian president Joko Widodo “Jokowi”, for instance, told Xi on February 11 that his country would stand together with China during this difficult time. The earliest and strongest show of solidarity came from Cambodia’s leader Hun Sen, who met with Xi on February 5 in Beijing, offered to visit Wuhan, the epicenter of the deadly coronavirus, calling for calm and asking Cambodians in China to stay put. He also declined to enact travel restrictions against China.

In Southeast Asia as elsewhere, the national governments’ decisions on travel bans to and from China during the pandemic were made not only on public health grounds, but also on economic and diplomatic concerns. Countries have shown different degrees of defiance or deference. On January 29, Singapore was the first to impose an entry ban on all foreign nationals who had travelled to China in the past 14 days. Vietnam followed suit on February 1. Indonesia did the same on February 5, in the face of the Chinese ambassador to Indonesia Xiao Qian’s objection, who claimed such a move “would likely have a negative impact on the global economy.”¹⁰ These actions contrasted starkly with Cambodia’s deferential move. Malaysia was another country which refused to impose a travel ban against China at the early stage of the outbreak, despite an online petition (which had more than 400,000 signatures) to impose such a ban. Although Putrajaya eventually did announce a travel restriction, the ban was done in phases, targeted at certain provinces (rather than the entire China) and, interestingly, tied to China’s decision to lock down certain cities in certain provinces (i.e. Hubei, followed by Zhejiang and Jiangsu). It was only on March 18, when Malaysia started its own nation-wide movement control order, that travellers from all foreign countries were banned from entering Malaysia.

Later in March, after containing the COVID-19 virus domestically, China launched its “mask diplomacy” globally. The Chinese embassy, Chinese foundations, and firms made huge donations of medical supplies to numerous Southeast Asian countries. Reactions to China’s pandemic diplomacy have been mixed. Some viewed the donations “a public relations exercise” to sway public opinion; some expressed unease about Beijing’s efforts to project itself as a “protector” during this global health crisis; while others welcomed China’s concrete help with open arms, viewing it as constructive, especially to badly-hit countries.¹¹

The Heavy Hedgers

Vietnam stood out as the only Southeast Asian country which pursued its own mask diplomacy, donating masks and other medical supplies to the United States, United Kingdom, Russia, Japan, Cambodia and Laos. This was made possible by its success in fighting the pandemic (no deaths and less than three hundred cases), an ability to repurpose its garment factories into facilities for producing masks and other forms of personal protective equipment (PPE), as well as a desire to solidify strategic bilateral alignments.¹² Its virus diplomacy was described by observers as a challenge to “China’s dominance of coronavirus diplomacy.”¹³

Vietnam’s core challenge to China takes place at sea. As one of the four ASEAN claimant countries in the South China Sea, Vietnam has been challenging China’s sovereign claims and maritime actions, often standing up and confronting its giant neighbor. Despite the power gap, Hanoi is determined to display its resolve in defending its interests in the South China Sea. The months-long standoff over the oil rig HYSY-981 in 2014, for instance, was described as “a battle of wills,” where “the party with more resolve may win even if it is the less powerful party.”¹⁴ Such defiance occasionally escalated into diplomatic feuds and brief skirmishes but not all-out armed confrontation. This pattern has continued during the pandemic period. In early April 2020, Hanoi accused the Chinese coast guard of deliberately sinking a Vietnamese fishing vessel near the Paracel Islands. Later that month, when China set up two new administrative districts on the Paracel and Spratly Islands (which Beijing referred to as “Xisha” and “Nansha”) under Sansha city (created in 2012), Vietnam accused the move as seriously violating its sovereignty.¹⁵ Hanoi’s defiance has been boosted by emerging partnerships with the United States and other countries, which perceive China as a threat. In March 2020, the aircraft carrier USS Theodore Roosevelt visited Vietnam, the second time (the first was in March 2018) a US warship has docked in the country since the Vietnam War ended in 1975. Bill Hayton of Chatham House commented in a media interview: “Vietnam is unable to protect its maritime resources from China so it is seeking international support for its position.”¹⁶ Besides the United States, Vietnam has also forged and strengthened strategic partnerships with other powers, including Japan, India, and Australia. Vietnam and Japan have increasingly aligned on maritime partnership, defense consultation, defense industry, cyber security, and law enforcement.

As Vietnam steps up its multitrack alignments (but not alliances) with these partners (despite ideological differences with all of them), it has adopted a seemingly contradictory measure of simultaneously forging strong cooperation with China in selected domains, primarily through its communist party hat (as single-party communist states, they are ideological partners which regularly hold party-to-party exchanges), its regional hat (Vietnam is the chair of ASEAN in 2020), and its bilateral commercial hat (China is Vietnam’s largest trading partner, and Vietnam is China’s largest trading partner in the ASEAN region). David Kang and Xinru Ma observe that despite the increasing tension between Vietnam and China, “overall frequency of high-level exchanges between these two countries is far higher than most countries,”¹⁷ Hence, while Hanoi has strongly criticized Beijing’s maritime actions, it has not joined the Western powers in criticizing China’s handling of the pandemic (even though Vietnamese intelligence agents reportedly launched cyberattacks against China in the early days of the pandemic to gather information about the new virus).¹⁸ Its anti-hegemonic acts, albeit openly confrontational, have been selective. While Hanoi is increasingly drawing strength from Washington, it has done so cautiously, without crossing the red line of forging an alliance with Washington (hence its reluctance to have US warships visit too frequently). In its 2019 Defense White Paper, Hanoi declares: “Viet Nam consistently advocates neither joining any military alliances, siding with one country against another, giving any other countries permission to set up military bases or use its territory to carry out military activities against other countries nor using force or threatening to use force in international relations.”¹⁹

These attributes make Vietnam a “heavy hedger,” qualitatively different from a “light hedger,” which would show greater deference, defy China only indirectly and in less confrontational manner (like Malaysia, discussed below).²⁰ Heavy hedger is also different from a “balancer,” which would confront China in a comprehensive, clear-cut, and unambiguous way (complete defiance and no/little deference), like Australia, Japan (especially before 2018), and the Philippines before Duterte.²¹

Another heavy hedger, Indonesia, has similarly demonstrated an inclination to openly—and selectively—defy Beijing’s will, especially at sea. Although not a claimant country, it views China’s extensive “nine-dash line” as an encroachment into the Exclusive Economic Zone (EEZ) of its resource-rich Natuna Islands. In July 2017, the Jokowi government renamed the area that falls under Indonesia’s claimed EEZ the “North Natura Sea.”²² This followed the footsteps of Vietnam and the Philippines, which renamed the disputed waters as “East Sea” and “West Philippine Sea,” respectively. Under Jokowi, Indonesia has adopted a tougher stance to defend the country’s maritime and economic interests, as most visibly displayed by his administration’s “sink-the-boat” policy. In addition, Indonesian armed forces conducted massive military exercises off the Natuna Islands in October 2016 and May 2017. Jokowi personally observed them to display openly his will to defend sovereignty before his domestic constituency, and to some extent, an external audience. A similar pattern was repeated in January 2020. After the Indonesian government lodged a “strong protest” over a Chinese coastguard vessel escorting Chinese fishing boats around Natuna in mid-December 2019, the Indonesian military deployed fighter jets and warships to patrol islands near the disputed area, where Jokowi showed his presence.

After displaying his determination to safeguard sovereignty and pushback, Jokowi soon adopted the opposing measure of strengthening Indonesia-China relations. On August 21-22, 2017, less than three months after the massive military exercise, the two countries held their sixth vice-premier level dialogue and third high-level economic dialogue in Beijing. This was the first time the two meetings were conducted back-to-back. Indonesia is the only Southeast Asian country to have such a high-level institutionalized annual mechanism to discuss security, political, and economic issues with China,²³ underscoring Jokowi’s pragmatic approach towards the rising China: Indonesia must live with China’s growing power, exploring collaboration where the interests of the two countries align.

Infrastructure development partnership is one of the prioritized areas of collaboration. In March 2019, Luhut Pandjaitan, the coordinating maritime affairs minister, proposed 28 projects worth $91.1 billion to China as part of participation in the BRI, which include seaports, industrial estates, and power plants.²⁴ In November 2019, while announcing Luhut’s role to his Indonesia Onward Cabinet after his successful re-election, Jokowi gave additional responsibilities to Luhut, saying, “Making Indonesia the global maritime fulcrum [GMF] as well as addressing investment barriers and realizing big investment commitments will be in [Luhut’s] hands.”²⁵ Luhut, who chairs a government task force to attract more BRI-related Chinse investment, clearly sees strong incentives and potential synergies between Jokowi’s GMF and China’s BRI.²⁶ In April 2019, he told local media that the GMF-BRI projects would not add to Indonesia’s debt burden because they would be implemented under the “business to business” scheme without Indonesian government funding and government guarantee, adding that Indonesia’s debt to China is much smaller than the country’s debt to Japan.²⁷          

For heavy hedgers, a strong defiant act against a power must be accompanied—and offset—by an opposing, counteracting effort of upgrading and solidifying bilateral relations, in one way or another, to mitigate the risks of unnecessary and potentially out-of-control escalation. While Vietnam attempts to offset its strong maritime actions against Beijing by strengthening ties with its party hat, regional hat, and economic hat as noted, democratic Indonesia has tried to offset its Natuna push-back on multilateral and bilateral bases: i.e. its leadership in ASEAN and its increasingly robust bilateral partnership with China. As observed by Dino Patti Djalal, founder of FPCI and China Policy Group and former Indonesian ambassador to the United States: among Jakarta’s many partnerships, “Indonesia’s partnership with China is perhaps the most substantial.” He added, although some Indonesians are “wary of the risk of becoming too politically and strategically close to China,” its political establishment believes that “China represents ‘the future’ in that Indonesia’s economic fortunes will be inevitably and increasingly tied to China.” This ambivalence thus leads to “a paradoxical tendency to be close but to also maintain some distance.”²⁸

The Jokowi administration’s China policy, accordingly, has the hallmarks of a heavy hedger: a strong show of defiance against China, but doing so selectively (high-profile on Natuna but low-key on Xinjiang’s Uighur Muslims) and, most importantly, offsetting such high-profile defiance (displeasing China) with some quiet, limited deference (pleasing China).

Public defiance has been accompanied by quiet accommodation, both at sea and at diplomatic forums. Consider Jokowi’s sink-the-boat policy, which aims to combat illegal, unreported, and unregulated (IUU) fishing in Indonesian waters by seizing and blowing up illegal foreign-flagged vessels. Since its implementation in October 2014, however, Indonesia has sunk far more boats from fellow ASEAN states than Chinese vessels. Furthermore, Indonesia’s defense endeavors over the Natuna have been driven more for internal political consumption than external military deterrence. As observed by Aaron Connelly, under Jokowi, Indonesia’s South China Sea policy has moved from that of an active player “to one primarily focused on protecting its own interests around the Natuna Islands while not antagonising China.” Connelly adds that, while the Jokowi administration may believe that its current “going-it-alone” approach “may safeguard Indonesian sovereignty and maritime rights” without damaging investment opportunities from China, such an approach “seems unlikely to prove a reliable deterrent in the long term,” considering the asymmetric strength between the PLA Navy and the Chinese coast guard and Indonesia’s much smaller fleets.²⁹

The Jokowi administration’s quiet accommodation was evidenced by the response to the July 2016 Arbitral Tribunal’s ruling (in favor of the Philippines). It refrained from openly pressuring China after the arbitration award and did not accommodate Hanoi’s insistence on including stronger wording against Beijing in the joint communiqué at the 2017 ASEAN meetings. Jakarta’s 5-sentence July 12, 2016 statement was described as “bland, lacklustre” by Evan Laksmana, who attributed the “under-whelming” and “lukewarm” response to the “primacy of domestic politics,” including Jokowi’s disinterest in foreign policy, deteriorating bureaucratic politics, and the growing influence of a “foreign policy oligarchy.”³⁰     

There have been some recalibrations—if not quite a shift—in Indonesia’s external policy, diversifying Indonesia’s strategic and development links. For instance, the Indonesia-Japan partnership has deepened, with a focus on infrastructure development, maritime security, and policy consultation. In January 2020, two days after Jokowi visited the Natuna Islands,  he told Foreign Minister Motegi Toshimitsu: “I want to invite Japan to invest in Natuna.”³¹ During Motegi’s visit, Indonesian foreign minister Retno Marsudi told the media that, in addition to bolstering investment cooperation in fisheries, energy and tourism in the islands, the two governments also “agreed to strengthen coastguard coordination,” while Motegi said: “We shared a serious concern regarding efforts to change with force the status quo unilaterally, and we confirmed continuing close collaboration.”³² The Jokowi government also held talks with potential investors from the US and UAE.

Another notable development took place on May 26, 2020. In a note to UN Secretary General, the government stated its position on the South China Sea, opposing a series of circular notes filed by China in relation to Malaysia’s application (a partial submission over its territorial sea waters to the Commission on the Limits of the Continental Shelf [CLCS]) on December 12, 2019 to define the limits of its extended continent shelf.³³ Jakarta’s diplomatic note thus can be seen as a step leveraging on Malaysia’s move in late 2019, also representing a weaker state’s use of international law as a mean to defy China’s will in the South China Sea, although Jakarta has gone further by explicitly raising and lending support for the 2016 Hague ruling that rejects Beijing’s nine-dash line claim. Gregory Poling described Jakarta’s action as breaking new ground, adding that the development may have wider regional significance: “If this, or more likely the next, Philippine government ever wants to take up the cause again, Indonesian support could be an important part of building a coalition.”³⁴

Indonesia’s hedging is becoming even heavier (but without evolving into direct balancing). This shows that hedging—and broader alignment behavior—is dynamic, and never static. This is perhaps best illustrated by the Philippines’ changing alignment behavior towards China in recent years: a shift from balancing under Benigno Aquino III (2010-2016) to light hedging under Rodrigo Duterte. Aquino’s China policy was a clear case of balancing: allying fully with the United States, confronting China openly and directly, including challenging Beijing both at sea and bringing the South China Sea disputes to the Arbitral Tribunal in 2012, while keeping away from BRI. When Duterte came to power in mid-2016, this policy was replaced by a hedging posture, marked by open deference but quiet diversification, downplaying the victory of arbitral ruling, in exchange for closer partnership with China.³⁵

Duterte’s policy, however, is not a case of bandwagoning, because, despite his rhetoric of “forming new alliances with China (and Russia),” he does not put all his eggs in the Chinese basket: Japan has always been seen as an important partner, vital to securing more economic assistance and pursuing a more balanced big power policy. In spite of Duterte’s remarks on “separation from the US” during the Obama years, defense and economic cooperation with America has continued. His decision in February 2020 to terminate the 1998 Visiting Forces Agreement (VFA) has cast a shadow over the future of the 1951 Philippine-US Mutual Defense Treaty (MDT) and the 2014 Enhanced Defense Cooperation Agreement (EDCA). Yet, some analysts have observed that, while US operational rights and access to the Philippines would be affected by the abrogation of the VFA, “the US security guarantee to the Philippines enshrined in the MDT remains uncompromising” and that without the VFA, joint exercises, maritime patrols, and maritime capability assistance can still be expected, alongside the annual bilateral strategic dialogue, two-plus-two ministerial meetings.³⁶ 

Some observers believe the agreement will be revived—and balancing policy restored—after Duterte. This view stems primarily from the security-maximizing logic, which expects the Philippines, as a weaker state, to ally, or at least align, with actors facing the same threat. In mid-April 2020, the Philippines’ Department of Foreign Affairs issued a statement to show solidarity with Hanoi over the sinking of a Vietnamese finishing boat by a Chinese vessel off the Paracels. According to Lucio Blanco Pitlo III, the statement showed that “despite [the Philippines’] warming ties in the last three years and receiving significant medical aid from China in its campaign against coronavirus at home, its position does not waiver”; its core message is: “[T]he creation of new facts [by China’s militarization] in the water will never give rise to legal right anywhere or anytime”; and that “such incidents undermine efforts to build mutual trust necessary to sustain the positive momentum for ongoing Code of Conduct (CoC) negotiations.³⁷

The Philippines case indicates that state alignment posture is ever-evolving, depending on factors like leadership, levels of threat, and big power actions. The change may manifest itself in: a shift from balancing to hedging, from heavy hedging to heavier hedging, from light to heavy, or subtle recalibrations within the same genre, etc. Singapore has long been a heavy hedger, with a persistent inclination to project defiance, especially when its perceived existential condition and independence are being challenged by bigger powers. The Singapore-China diplomatic feud in 2004 (over Lee Hsien Loong’s visit to Taiwan) and the low point in their bilateral relations in 2016-2017 (over Singapore’s support for the arbitration ruling and other deeper issues) are examples in point. In more recent years, while the island-state has continued to hedge heavily, it has chosen to focus on connectivity cooperation and other partnerships, while cautiously walking the geopolitical tightrope as the US-China rivalry and uncertainty intensify.   

The Light Hedgers

The rest of the ASEAN member countries—consisting of both non-claimant countries (Cambodia, Laos, Myanmar, and Thailand) and claimant states of Malaysia and Brunei—have long practiced a light form of hedging. While the smaller states have similarly avoided taking sides and insisted on pursuing opposing measures to keep their options open, they have chosen to keep their defiance acts indirect and low-profile. The main thrust of their China policies is collaboration and consultation, not confrontation, evidenced primarily in their higher receptivity towards BRI, but also the higher degree of sensitivity displayed towards issues like the South China Sea.

Light-hedgers may be seen as cowards too scared to stand up to China, as easily manipulated by Beijing’s smile diplomacy and economic inducements, or as unsophisticated for not seeing the imminent danger on the horizon. These critiques assume that the weaker states’ deference and non-confrontational approaches resulted from their fear of China’s economic punishment or military coercion.³⁸ These positions are misplaced, if not outright wrong. Some of these light-hedgers, especially the economically more developed Thailand and Malaysia, chose to engage China even when China was still economically backward and militarily weak back in the 1970s. They have long chosen to show voluntary deference (e.g. respecting China on its “core interests” issues: Taiwan, Tibet, Xinjiang), even when these countries invested more in China than the other way around, and to avoid isolating or confronting China, e.g. in 1989.

These weaker states’ engagement and non-confrontational approaches, in short, are choices, resulting from: 1) culture (show respect, do not make others lose face, value harmony, practice reciprocity); 2) calculations (foreign relations are never about a single problem but clusters of multiple issues and interests; policy choices, accordingly, are always about making tradeoffs; and 3) channels (different channels are required to tackle different problems).

Malaysia’s China policy illustrates the logic of light-hedgers. As a claimant country, it should have pursued heavy-hedging if not balancing. Instead, it has hedged lightly, downplaying any political or security problems with Beijing (sometimes to the extent of denying them); prioritizing diplomacy and consultation over confrontation; focusing on economic pragmatism, while keeping the essential and contingency measures in the background. Mahathir, who famously described “the China threat theory” as “a self-fulfilling prophecy” during his first premiership, is the architect of this policy. Malaysia played an instrumental role involving China in ASEAN-based multilateral processes, kicking off ASEAN-China Dialogue, and the two countries collaborated in promoting East Asian cooperation, culminating in the creation of ASEAN Plus Three and the East Asia Summit.³⁹ When Malaysia occupied Erica Reef and Investigator Reef in the late 1999, China’s response was mild, unlike its strong actions against Vietnam and the Philippines. Today, the region faces a different China, a more assertive China. Beijing’s maritime actions since 2007-2008, particularly its growing presence in disputed waters near Malaysia since 2013, have been a wake-up call for the smaller state, showing that its “special relationship” with China is not that special, after all.

Fast forward to April 17, 2020, the Chinese survey ship Haiyang Dizhi 8 was spotted tagging West Capella, an oil drilling ship under charter to Malaysian national oil company Petronas, near Malaysia’s EEZ. The Haiyang Dizhi 8 had appeared in the waters off Vietnam and the Philippines earlier. China’s activities gave the impression that Beijing is taking advantage of the COVID-19 situation to advance its territorial interests in the disputed waters. The Malaysian government reacted in a low-key manner: denying any standoff between Chinese and Malaysian ships, calling for peaceful means to resolve the situation, while expressing concerns about escalations. Foreign Minister Hishammuddin Hussein’s remarks—by mentioning both China and the United States while highlighting the risks of increased tensions and miscalculations—clearly indicated that the Malaysian authorities were more concerned about the dangers of big-power conflict than the presence of foreign vessels in the disputed waters per se. The words “warships and vessels” in his statement referred to not only Chinese vessels but also the US and Australian warships, which were conducting exercises near the site of the West Capella’s operation, in a move perceived to be supportive of Malaysia.⁴⁰ The minister’s statement thus echoed Mahathir’s “warships attract other warships” comment in 2018, when the then premier identified big-power action-reaction as a source of growing tensions in the South China Sea.

Malaysia’s inaugural Defense White Paper (DWP) in 2020 reflects rethinking about the smaller state’s outlook in a fast-changing external environment. The DWP used such phrases as “China’s occupation and militarization” and “perceived aggressive actions” to describe China’s activities in the South China Sea, a rare move by the usually low-profile nation. In late 2019, then foreign minister Saifuddin Abdullah described China’s claim to the entire South China Sea as “ridiculous.”⁴¹ His words mirror the private views of many officials and also the sentiments on the ground, with many feeling it is absurd a big country like China, thousands of kilometers away, would lay claim to reefs and atolls just a few dozen nautical miles off the Malaysian coast. Some consider China’s growing assertiveness as a betrayal of Malaysia’s goodwill, given Malaysia’s decades-long efforts in actively engaging China well ahead and far more than other regional countries.⁴² Others think China is taking Malaysia’s friendly and non-confrontational approach for granted, as if the smaller state had no other options.

In May 2020, Prime Minister Muyhiddin Yassin received a phone call from Trump. It remains a matter of conjecture if their 30-minute conversation was more about pandemic cooperation or China’s disruption of Malaysia’s drilling operations. Privately, some opined “it is time” for Malaysian leaders to be open about the country’s longstanding defense cooperation with the US and Australia in facing China’s intrusion into Malaysian waters. A member of the Malaysian elite commented: “Our military relationship with the US has always been [kept] low profile, [in part] not to antagonize Beijing. But the Chinese [and others] are aware of the cooperation. I think it is wise to keep it that way, but up to a point. We have to [make it clear] if Chinese assertion spikes, [it is only] natural [for us] to side with one that is helping to defend our interest.”⁴³ Another elite member added that Malaysia’s submission to the CLCS in 2019 is “our own way” to use international law as a means to safeguard Malaysian interests.⁴⁴ When asked to assess the importance of the submission, a respected senior diplomat replied: “What Malaysia has done is to promote our interest within the confines of international law. Sometimes this results in unease from our neighbors and partners (it’s not just China, depending on the action taken, it may also be Vietnam, the Philippines, Indonesia, Singapore). If this happens, then we will inform them of our position and the motivations behind it in a mature and reasonable manner … The main point is, on matters such as these, we will treat China in the same way that we [treat] all of our partners.”⁴⁵

Why do states hedge (and so what)?

The smaller states’ hedging behavior before and during the pandemic crisis is rooted in both structural and domestic factors.⁴⁶ The same factors are likely to drive their post-pandemic hedging. While structural power uncertainties motivate states to hedge, it is domestic dynamics—the elite’s legitimation pathways—that determine how and why states hedge differently. States hedge when power structures are uncertain and there are substantial, mixed, and multiple risks. If power dynamics are certain and clear-cut, hedging would not be necessary. Because big power commitments and intentions are becoming even more uncertain, weaker states will have more reasons to avoid taking sides (thereby avoiding the twin risks of abandonment and entrapment), while pursuing opposing measures to offset different risksin order to keep their fallback positions viable for as long as possible.

For weaker states, the big powers’ action-reaction and intentions are structural, system-wide dynamics which they can do little about. Because of the vast power asymmetry, smaller states are in no position to stop any undesired big power moves. As the prospective victims of unpredictable actions and relations, smaller states will always be vigilant, even skeptical. Hence, even though the Trump administration has attempted to reassure about the US commitment to Asia’s security by declaring a robust “Free and Open Indo-Pacific Strategy”, smaller states ask quietly: “Will this time be different? Will America pivot away again?” Similarly, even though China has endeavored to offset the adverse impact of its maritime assertiveness through diplomacy and development-based BRI statecraft, it has continued to suffer a trust deficit among Southeast Asian countries. Indeed, China’s increasingly multifaceted maritime opportunism and coercive presence in the disputed waters, even during the coronavirus crisis, has further deepened the weaker states’ suspicions of its long-term intentions. Its increasing use of coercive means to prevent and obstruct the claimant countries’ oil and gas exploration activities, together with the lack of progress on the CoC after years-long talks, further frustrated the smaller states in the region.⁴⁷ Both powers’ display of military force in the South China Sea in May 2020 further raised the risks of collisions and entrapment. China’s expected announcement of an air defense identification zone (ADIZ) in the South China Sea is certain to throw the strategic Pandora’s Jar even more wide open in the post-pandemic world.⁴⁸  

In the face of these worsening structural conditions, it is only natural, if not inevitable, for smaller states to deepen their hedge—politically, economically, and militarily—even, and especially when their ruling elites are preoccupied with their own legitimation and governance problems at home. As the Southeast Asian elites struggle to fight the pandemic war and political war simultaneously in the light of the unprecedented strategic and economic uncertainties, more partnerships with wider range of partners—near and far—are needed.      

All these developments have implications for regional cooperation. Southeast Asian states would deepen their hedge by widening more multilayered, multi-track alignments with as many powers and players as possible. ASEAN and ASEAN-plus multilateral institutions would continue to serve as indispensable platforms for converged hedging,⁴⁹ alongside bilateral and minilateral efforts on the twin chessboards of geopolitical competition: high politics (military modernization and defense partnerships) and low politics (including trade, production supply chains, infrastructure development, and public health cooperation). Finally, while a deepening hedging trend is not a preferred scenario for the big powers, it is a good second-best mechanism for all, for it offers the needed space, channels, and platforms for pragmatic partnerships while avoiding any vicious cycles of regional polarization.