KUALA LUMPUR, Dec 9 — Despite a renewed emphasis on improving relations with traditional allies in Asia, the United States’ (US) policy towards China is unlikely to change dramatically under President-elect Joe Biden ‘s administration, according to a new report by Moody’s Investors Service (Moody’s).
With ongoing trade frictions, Biden is unlikely to undo the measures taken by the Trump administration against China, said assistant vice-president and analyst Nishad Majmudar in a statement today.
“We do not expect the Biden administration to result in major changes in Asia credit, with any renewed pivot likely to run up against the reality of longer-term shifts underway that are increasing China’s centrality to the region,” he said.
He added that Moody’s expects Biden to embrace recent outreach from the European Union on adopting a unified trans-Atlantic approach against China on certain issues, while also searching for areas of cooperation with China’s President Xi Jinping.
“We expect Biden’s multilateral approach towards China will not stop ongoing structural shifts, including the restricting of supply chains and consolidation of the global economy into three distinct blocs, with potential negative credit effects for multinationals and export-oriented companies,” added Majmudar.
Outside China, he said Biden’s policy may attempt to revise the “pivot to Asia” approach adopted by former president Barack Obama, aimed at increasing diplomatic and investment ties with the region.
However, Biden’s increased engagement in Asia would face a challenge from China’s growing centrality in the region, and could result in countries facing a choice between strengthening security ties with the US or deepening economic ties with China.
Meanwhile, the possibility of an increased focus on climate policy initiatives under Biden’s administration will increase longer term credit risks for industrial sectors prominent in many Asian countries, particularly energy, automotive, oil and gas, and steel.
“Similarly, US financial regulators are more likely to follow European efforts pushing for greater financial disclosures of environmental risk, which could create pressure for Asian regulators to follow suit,” he said.