Alice Li
Hello everyone, this is Alice Li, and welcome to this special episode of Pacific Polarity. Today we are having Professor Ji Xianbai. He is the Associate Professor at School of International Studies and the Director at the Institute for South and Southeast Asian Studies at Renmin University of China. Professor Ji, great to have you on.
You have recently published two academic works: Area Studies in China: History and Development,and the co-authored volume, Sanctions and Economic Warfare. So let’s talk about the China-US “Economic Warfare” first.
Following the recent high-level call between Chinese and US leaders, there seems to be a tangible progress since the one-year tariff suspension reached three months ago. Could this positive momentum carry over once the suspension expires, or are we instead witnessing a shift toward what economists call “managed trade”? Beyond the short-term deals, is there a sustainable long-term equilibrium that both sides can reach?
Ji Xianbai
OK, thank you, Alice. First of all, thanks for having me. On the issue of “managed trade”. In my view, what economists often call “managed trade” or what I would describe more precisely as “balanced trade” should not be automatically seen as a negative development. Actually, for several decades, global economic policy has been strongly shaped by theories supporting free trade, and these theories are built on the assumption that efficiency is the highest economic objective. The idea is that through division of labor and comparative advantage, countries specialize in what they do best, which would lead to the overall global efficiency gains.
However, in practice, efficiency has also produced structural global imbalances, we have seen persistent deficit countries and surplus countries emerging as durable features of the global economy. The United States has experienced large-scale deindustrialization, countries like China build strong export-oriented industrial systems, but delayed the expansion of domestic welfare and consumption structures. So these imbalances are economically and politically difficult to sustain over the long term. So this is what I think it is useful to revisit ideas associated with John Maynard Keynes who emphasized the importance of balanced trades through the systems of bancor. Make no mistake, balanced trade doesn’t mean protectionism or isolationism. Rather, I think it reflects the principle of sustainability. If a country wants to consume more, it must also produce more. And if it wants to export more, it must also be willing to import and support global demand. For example, the United States would need to strengthen its export capacity to sustain its current level of consumption and living standards. Similarly, resource exporting countries such as Saudi Arabia would need to function as major consumption market if they want to maintain their commodity based export driven growth models. In this sense, I think balanced trade may reduce some efficiency gains, but it contributes to systematic stability and long-term sustainability.
On the second issue, whether the United States and China have reached a long-term equilibrium. If you look at the past four decades of globalization, the global economic order was built on a very cooperative arrangement between American financial leadership and Chinese industrial capacity. The United States provided global liquidity through the dollar, which became the global reserve currency, while China developed into the world’s largest manufacturing and industrial hub. This combination has supported global growth and supply chain expansion.
Looking forward, if a stable equilibrium is to emerge between these two countries, it will likely require a more balanced and centrist argument and arrangement. One possible pathway in my view is a form of mutual adjustment. The United States may seek to rebuild parts of its industrial base, which has become a bipartisan strategic objective. In return, the international monetary system could gradually evolve to accommodate a larger role for China’s Renminbi alongside the dollar. At the same time, China could deepen industrial and technological cooperation with the United States and global partners while accepting a partial redistribution of manufacturing dominance. In other words, a long-term equilibrium to my mind may involve a reciprocal adjustment: the United States trading part of its exclusive monetary dominance for greater industrial revitalization, and China moderating part of our industrial concentration in exchange for greater international monetary and currency influence. Such an arrangement will not eliminate competition structurally, but it would provide a more stable foundation for coexistence and global economic governance.
Alice Li
OK, thanks for your explanation. Over the past months, there is a diplomatic flurry with several Western leaders visiting Beijing to reset ties and sign trade deals. It seems that some of America’s traditional allies are seeking a more predictable partnership with China amid the turbulence of “America First” policies. What many noted was how China did not try to actively court Western countries who are looking to de-risk from America, instead standing by its bottom line. It seems that the patients had paid off. Why and how do you think China came to this approach?
Ji Xianbai
I think China’s approach reflects a longstanding and the traditional strategic philosophy in Chinese political thinking. Chairman Mao once said that struggle can be a means towards unity, and unity can be the ultimate goal of struggle. In simple terms, China often follows the cycle of maintaining unity, engaging principle struggle, when core interests are challenged, and then rebuilding cooperation on a more stable basis. So I think this logic has shaped China’s response to recent tensions with the United States and the West at large. Instead of actively trying to exploit divisions among Western allies, China chose to hold firm on our bottom lines while maintaining openness to dialogue and economic cooperation. So the idea is that relationships built on mutual respect and clear boundaries tend to be more sustainable than those built on a short-term tactical concessions.
So, another factor is China is reading of US political dynamics, particularly under “America First” policies, Chinese policymakers tend to believe that the US leaders like Donald Trump plays very strong emphasis on leverage and negotiating power, the so-called “cards”. So I think from the Chinese perspective, demonstrating resilience and consistency, therefore, could become part of our strategy of building credibility in negotiations.
Alice Li
Canadian Prime Minister Carney’s trip to China was particularly notable, as the reduction to tariffs on Chinese EVs may provide a “beach-head” for the North American market. However, even as Carney tries to frame this as an economic opportunity for an independent growth trajectory, there is significant opposition, not just from south of their border, but also from their domestic car industry, which is concerned that they are not able to compete with Chinese manufacturing. These concerns extend beyond the West to Global South countries as well, including Southeast Asia, like Indonesia and Thailand, which have tariffs on Chinese goods. To what extent are tariffs on China the result of American pressure, and to what extent are the domestic concerns? How can China alleviate these concerns?
Ji Xianbai
So I think Canada’s concerns reflect a combination of both external pressure and domestic structural challenges. Actually, if you look at history, Canada was one of the worst major automobile producers. Its economy was deeply integrated into the North American manufacturing system. But today, Canada’s auto industry face tremendous pressure from two major structural shifts. On the one hand, there has been a redivision of labor within North America, especially since the implementation of the USMCA, the US-Mexico-Canada Agreement, which Donald Trump renegotiated in 2020. Mexico has emerged as a lower cost manufacturing hub, attracted a lot of new investments and auto supply chains, while the United States continues to dominate higher value segments of the auto industry. So this has squeezed Canada’s traditional manufacturing position and created deep-seated domestic anxieties about competitiveness and employment. And this is just not an auto-issue, it’s this anxiety applies to Canada’s manufacturing industry at large.
On the other hand, I think Canada is facing the rapid rise of Chinese automobile manufacturers, especially in the Electric Vehicle sector. Chinese firms have achieved significant breakthroughs in battery technology, supply chain integration, and cost efficiency for many countries, not only in the West, but also in the Global South, as you have mentioned, countries like Indonesia. Chinese EVs represent both an opportunity for green transition and undeniably competitive challenge to domestic industries.
So, tariff based on Chinese EVs are partly influenced by American strategic pressure given the high level of integration within North American supply chains and security arrangement, but they also are driven by genuine domestic industrial concerns especially fears of losing technological and manufacturing capacity.
From China’s perspective, addressing these concerns may require shifting from a purely and predominantly export-driven approach toward deeper industrial cooperation. This could include joint ventures, localized manufacturing, technological partnerships, and participation in host countries supply chains. And if Chinese companies of EVs are seen as contributing to local employment, indigenized innovation and industrialized upgrading may help to reduce political resistance and create more sustainable economic partnerships.
Alice Li
The topic of “Chinese overcapacity” remains somewhat contested within China. On the one hand, some view it as justification for the imposition of tariffs against Chinese exports, essentially a geopolitical tool of the West; while on the other hand, there is recognition that the profit margin of Chinese firms is too low and that the current state of affairs leaves the Chinese economy exposed to external demand. How do you view the current state of the conversation? What if anything should be done about overcapacity?
Ji Xianbai
I think this is a very important and topical issue. But as far as I see it, the debate inside China within Chinese academia and policymaking circles is gradually becoming more nuanced. Personally, I would frame the issue slightly differently. From my perspective, China’s challenge is less about overcapacity and more about what I would call “over-competition”. For decades, China has strongly believed in the logic of competitive advantage rather than comparative advantage. Competitive advantage is the idea that very intense, very fierce, firm-level competition produces very efficient, very competitive industries. And a very efficient and very competitive industries, in turn, strengthen national economic competitiveness.
Therefore, there is the overcapacity allegations, and this is what the US Commerce Secretary Lutnik calls China is leveraging internal fighting for external power. Indeed, this concept of overcapacity is often framed and used in international geopolitical debates. Some Western governments see Chinese industrial scale as a result of market distortion, while many Chinese policymakers view it as the natural outcome of efficiency and industrial upgrading. So the reality probably lies in somewhere between.
Going forward, I think the solution is not simply to reduce production capacity. I think it is more about rebalancing China’s economic model. China may need to strengthen domestic consumption, expand services sectors, encourage cooperative technological upgrade and improve corporate profitability, rather than focusing solely on scale expansion. If a Chinese industries can move further up the value chain and rely more on diversified demand sources, I think concerns about overcapacity would gradually ease.
Alice Li
In your previous research, you discussed the decentralization of the global economic architecture. Today, as the WTO remains paralyzed and the “new-normal” of high-frequency trade friction sets in, Southeast Asia is building its own mini-ecosystems through Local Currency Settlement (LCS) and digital connectivity—most notably the upcoming ASEAN Digital Economy Framework Agreement (DEFA) and the Project Nexus for instant cross-border payments.
Given your nearly 10 years of experience in Singapore, how do you perceive these moves? Do you view this as a form of healthy re-globalization, where regions view resilience from the bottom up—or is it a fragmentation that will ultimately increase systemic costs for small, trade-dependent nations like Singapore?
Ji Xianbai
So I actually see this, as you can tell, as a largely positive development. It reflects what I would describe as a healthier in a more diversified form of globalization. And in my books and articles, I have developed a relatively comprehensive theory known as “complementary multilateralism”. It describes a very cooperative division of labor relationship between global institutions and regional institutions in jointly producing and providing global public goods required by citizens.
Let me break it down. From a power distribution perspective, the global economic system was historically dominated by Bretton Woods Institutions including the World Bank, the IMF, and the World Trade Organization and its precursor, the GATT. Those global institutions are largely shaped by Western technocratic leadership. So the emergence of regional frameworks, such as Local Currency Settlement arrangement, the ASEAN Digital Economy Framework Agreement, and cross-border payment systems like Project Nexus, gives greater agency to regional actors and they are more attentive to regional interests and regional concerns. It allows countries such as those in Southeast Asia to design financial and digital infrastructures that better reflect their own development priorities and economic realities.
From the perspective of global public goods provision, these decentralization processes also make enormous institutional sense. I feel that global institutions can continue to provide broader global public goods, such as overall financial stability and trade norms; while regional platforms such as those highlighted in your question can supply more targeted, more focused public goods, like payment connectivity digital standards and financial resilience tailored to very specific and very localized regional needs.
So for highly open and trade dependent economies like Singapore, for which trade as a percentage of GDP is more than 300 diversification of institutional and financial networks can actually enhance resilience, it reduces reliance on any single system and creates multiple channels for trade investment and financial cooperation for the city-state. In that sense, I think this trend is not about fragmentation, but more about adaptive reglobalization built through layered and more complementary governance structures.
Alice Li
Let’s talk about another regional platform, RCEP. Five years after its implementation, do you believe this regional agreement has genuinely alleviated the strategic pressure on ASEAN amid China-US competition? Given that RCEP’s rules are relatively flexible rather than deeply binding, shall we view it less as a site of geoeconomic rivalry and more as a stabilizing platform that lowers transaction costs and anchors regional supply chains? Or do you see risks still there that major powers could leverage these interdependencies for strategic influence?
Ji Xianbai
Actually, RCEP was a geopolitical and geo-economic instrument from the very beginning. In many ways, it emerged partially as a regional slash Chinese response to the Trans-Pacific Partnership, or the TPP, and reflected Asia’s collective desire to maintain open and inclusive trade architecture. However, I feel it is still relatively early to fully assess RCEP’s long-term macroeconomic effects, especially because its early implementation coincided with the systematic disruptions caused by the COVID pandemic. That being the case, I think RCEP has already served as an important insurance mechanism for regional economies. For one, it helps ASEAN and its partners buffer against exclusionary pressures arising from the intensifying and increasingly acrimonious US-China competition. By simplifying rules of origin and strengthening supply chain connectivity, RCEP encourages firms to maintain production networks within the region rather than fragmenting and fracturing along geopolitical lines.
At the same time, we are right that these very rules could also become arenas of geoeconomic great power rivalry and competition. Supply chain integrations can create interdependence and major powers may try to shape these rules and those interdependence to strengthen their own industrial and technological ecosystem. So RCEP is both a stabilizing platform and a potential competitive space.
Looking into the future,I think one key question for RCEP concerns its future expansion strategy. RCEP is very popular now. Many countries have expressed interest in joining it. At this moment, I think RCEP members including China need to reflect on what the agreement ultimately aims to become. If RCEP positions itself as a globally oriented mega trade framework, then economies such as Chile or United Kingdom, one in Latin America and one in Europe, which has already participated in CPTPP could become natural candidates.
But if RCEP sees itself primarily as an Asian integration platform, then accession by emerging Asian economies such as Bangladesh or Sri Lanka may be more consistent with its regional development goals.
So this is a very important strategic choice, strategic call that to be made for leading members, particularly China, ASEAN, to a lesser extent, Japan would need to consider very carefully. And this will determine the future trajectory of RCEP development. And you will have direct impact on RCEP’s geoeconomic influence.
Alice Li
In the face of American tariff pressure, several Southeast Asian countries, most notably Malaysia, have signed deals that many view as favorable to America. In Malaysia’s case, their deal with America on critical minerals seems to harm Chinese interests; in response, the Chinese government urged countries not to prejudice the interests of third parties in their deals. Do you think this is a sign of things to come? If so, how can China safeguard its own interests, as other countries seek to accommodate an aggressive America? And do you think that a more transactional US may offer it opportunities to peel away more partners of China?
Ji Xianbai
I think this phenomenon that you have raised is consistent with a broader emerging trend that the United States increasing pressure on countries that are economically close to China. Many Southeast Asian countries are facing growing pick-a-side pressure, but most of them still want to maintain strategic autonomy, and benefit from both economic partnerships. They want to benefit both from China’s industrial capacity and the vast consumer base of the United States. From China’s perspective, safeguarding its interests and those of regional countries should be less about counter pressure, tit-for-tat, and more about strengthening long-term economic interdependence between China and Southeast Asia, to enhance to step up unilateral opening up towards Southeast Asian countries by continuing to provide market access, investment opportunities and industrial cooperation platforms. China would make its partnership with regional countries more valuable and geopolitically resilient.
Alice Li
On the topic of critical minerals, perhaps learning from the Americans, China has rolled out its own critical minerals export controls, and used it as a key leverage point. How are you thinking about the fact that China has now adopted this and other tools of American statecraft against America itself? Many analysts from China had previously noted that American export controls won’t work because they would just incentivize Chinese innovation. Do the same concerns apply to these export controls by China?
Ji Xianbai
I think China’s approach to critical minerals export controls should be understood primarily as defensive and regulatory moves rather than coercive statecraft. For many years, China was the main supplier and producer of critical minerals while facing increasing restrictions from advanced economies in technology and industrial sectors. Hence the term “Tech Cold War” introducing export controls reflects China’s effort to protect supply chain, security manage strategic resource response responsibly and ensure that these materials are not used in the in ways that undermine China’s own development on national security interests.
But it is also important to note that export controls are now a widely accepted policy tool used by many major economies, the United States, the European Union, and not something unique to China. In that sense, China is operating within an emerging global norm of strategic resource governance rather than creating a new form of economic confrontation.
As for concerns about whether such controls could stimulate innovation, history suggests that competition can indeed drive technological development, but this cuts both ways. China has already developed very strong industrial ecosystem and technological capabilities around critical minerals processing, refining, and supply chain integrations.
Therefore, I think these controls will encourage more balanced cooperative and responsible resource partnerships. I think, ultimately, China structurally benefits from a stable and open global market. China’s objective and China’s mission is not to weaponize any resources, be it critical minerals or other resources, but to ensure that global supply chains develop in a more secure, more open, more sustainable, and mutually beneficial way.
Alice Li
The start of 2026 has placed the Philippines in a deeply paradoxical position. As the ASEAN Chair this year, Manila is expected to act as a neutral broker, yet the 75th anniversary of the US-Philippines Mutual Defense Treaty and the 80th anniversary of bilateral relations have also prompted Manila to reinforce alliance commitments with Washington.
At the same time, we have seen mixed signals: only days after accusing China of “illegal cruises” in the South China Sea, Manila made a surprise move on January 15 to grant Chinese citizens visa-free entry, followed shortly by a high-level maritime consultation in Cebu. Would you interpret this as a deliberate hedging strategy — stabilizing economic ties while strengthening defence — or more as tactical de-escalation to buy time and multilateralize disputes under ASEAN mechanisms?
And looking ahead, if tensions persist, do you think the consensus-based ASEAN Way can still function effectively? Or could economic interdependence itself increasingly become a tool of coercion in the region?
Ji Xianbai
On the specific visa-free policy you have raised towards Chinese nationals, my honest answer is I don’t know. As with other policies, it is always difficult to fully understand the internal policymaking calculations of the Philippines from the outside. But broadly speaking, many countries in Southeast Asia are trying to maintain security partnerships with the United States while preserving very strong economic and people-to-people engagement with China. And that reflects Southeast Asia’s long-standing preference for strategic balance instead of exclusive alignment.
From a regional perspective, these measures that strengthen people to people exchange such as visa facilitation are positive because they help stabilize the overall relationship even when some political tensions still exist.
On ASEAN, I think it is very important to remember that ASEAN was fundamentally created in 1967 in Bangkok as a peace project. As an institution, ASEAN’s core purpose has always been to maintain regional stability, prevent interstate armed conflict, and provide a platform for continuing dialogue. Therefore, the ASEAN way which emphasizes consensus, flexibility and inclusiveness has served the region relatively well especially given the diversity of political systems, economic structures, linguistic systems and development levels among member states. Now ASEAN has admitted its 11th member Timor-Leste, and the admission of Timor-Leste would only add to the diversity of these already highly diverse regional organization.
But at the same time we should recognize that as geopolitical competition intensifies ASEAN will face pressure to strengthen its collective voice on the international stage, the key challenge moving forward is finding a better balance between preserving the ASEAN way and enhancing ASEAN centrality. If ASEAN can maintain unity while gradually strengthening institutional coordination, it can remain an effective stabilizing force in the region instead of becoming an arena for major power competition.
Alice Li
In the Thailand–Cambodia border crisis, we saw three distinct mediation models: ASEAN’s institutional framework, US tariff-based pressure under Donald Trump, and China’s “Fuxian Meeting” approach. Yet the post-ceasefire reactions were strikingly different, as almost every party sought to play up America’s contribution, with Trump nominated for the Nobel Peace Prize by both Thailand and Cambodia. How do you explain this asymmetry? Do you think China is happy just playing a positive but relatively unacknowledged role in the background?
Ji Xianbai
This is a very interesting question. I think the difference mainly reflects contrasting diplomatic styles between Washington and Beijing. The United States tends to emphasize highly visible leader driven mediation that naturally attracts political and media recognition, especially under Donald Trump. China is relatively low-key. China traditionally focuses more on quiet facilitation inconsistency with the ASEAN way and creating dialogue platforms prioritizing long-term stability over short-term public credit.
I think there is also a structural narrative factor as global media systems tend to amplify US diplomatic roles more prominently. I think from China’s perspective, reducing tensions and maintaining regional peace and stability is already a huge success regardless of whom receives this recognition. China is generally comfortable playing a constructive role in the background although it is becoming more active in explaining its diplomatic contributions to the international community.
Alice Li
In conclusion, let’s move back to your foundational work on the paradigm shift within your discipline. As the Director of the Institute for South and Southeast Asian Studies, you are at the forefront of evolving China’s area studies. Do you believe traditional area studies, which often focus on language and history, are still sufficient? Or is there a need for a new approach, such as the “RenDa School” proposed by Professor Di Dongsheng, which emphasizes geoeconomics, supply chain interdependencies, and financial statecraft?
In your view, what is the role of an area studies research institute in today’s China, especially in a fracturing global order?
Ji Xianbai
Generally speaking, area studies has evolved alongside major transformations in the international system. During the colonial period, area studies largely served the expansion and administrative needs of European empires. During the World Wars and Cold War periods, it became closely linked to great power competition particularly in the United States, the Soviet Union and Japan, where understanding foreign societies and foreign communities was essential for strategic planning.
Today, area studies is entering a new phase. It is all about competition alone, and more about understanding complex interdependence in an increasingly connected world. In China’s discourse, area studies is often linked to the idea of building a community with a shared future for mankind, which requires deep more nuanced and more comprehensive knowledge of other regions and other countries.
In terms of methodology, I think area studies has also continuously evolved. Earlier approaches relied heavily on humanities-based methods, such as very rigorous language training, historical analysis, and anthropology. Later, social sciences tools such as comparative economy, and comparative politics and political economy became increasingly important and relevant.
Now I think in the digital era, new analytical tools such as big data analysis, artificial intelligence and network mapping are becoming essential for understanding supply chains, financial flows and technological interdependence. In this sense, the so-called “Ren Da School” which Professor Di and I are working on expanding the traditional area studies. We are trying to integrate classical cultural and historic knowledge with geoeconomics, financial statecraft and digital analytical methods, making more relevant to today’s interconnected and technological-driven global environment.
In the current environment of sanctions, decoupling and growing economic security concerns, research institutes like the School of Global and Area Studies, and the Institute for South and Southeast Asian Studies, in particular needs to place greater emphasis on understanding the different pathways of different countries and the very distinct socioeconomic vulnerabilities.
For me, area studies should move beyond descriptive knowledge and focus more on how political systems, industrial structures, financial networks and social stability interact in different national and regional contexts. This would help China better understand where cooperation opportunities exist, where risks may emerge, and how external pressure affect different countries in different regions in very different ways.
At the same time, future area studies should integrate traditional strengths such as language, culture, and historic understanding with newer, more advanced analytical tools, and this would allow research better support policy planning economic engagement and risk assessment. In the end, area studies in China, in this new era, should help China engage the world more effectively by combining deep cultural understandings with very strategic and economic insights.
Jersey Lee
I think that’s also something that lots of people in the West would do well to keep in mind and adapt a similar framework of understanding as well. We also hope to read more of your research in this regard as well. Professor Ji, great to have you on.
Ji Xianbai
Thanks for having me. My pleasure.
