Update Country Report Maldives 09 Nov 2020

Event

Following the US presidential election on November 3rd, Joe Biden has been widely accepted as US president-elect, defeating the incumbent, Donald Trump.

Analysis

Mr Biden and the vice-president-elect, Kamala Harris, have already received congratulations from several leaders in Asia, including those in India, Indonesia, Japan, South Korea and Taiwan (China is a notable abstainer). While Mr Trump continues to dispute the election outcome, attention will shift to the policies that Mr Biden's administration will take towards Asia and his appointees for key cabinet portfolios.

A foreign-policy focus for Mr Biden will be repairing the strained transatlantic relationship. However, he also appears to recognise the centrality of the Asia-Pacific region to US security and prosperity. The incoming president has extensive experience in the region and, as vice-president in 2009-17, played a role in developing the US "pivot to Asia". We expect his administration to remove the uncertainty cast by the outgoing administration over US military alliances with Japan and South Korea and to lend more support to regional multilateral forums. The Quad alliance will develop as Mr Biden seeks to build a coalition of "like-minded" countries to compete with Chinese influence.

Mr Biden's approach to China will not be as antagonistic as that under Mr Trump. Tariffs are unlikely to feature in his trade policy. However, with a bipartisan consensus having formed around the view of China as a strategic competitor to the US, policy will otherwise remain unchanged. US-China competition will persist in areas such as technology, finance and defence, while issues such as human-rights abuses in Xinjiang could generate sharper confrontations under Mr Biden. Among the foreign-policy challenges Mr Biden will face over his presidency, the Taiwan issue will also loom large.

We doubt Mr Biden will choose to expend domestic political capital by joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and this will act as a constraint on the ability of the US to project power in the region. Instead, his administration may look to other policy issues, such as climate change and health security, as avenues through which to foster regional co-operation.

Impact on the forecast

In the near term, risks associated with US-China ties and regional hotspot issues (such as North Korea) will heighten as Mr Trump's tenure ends and the transition begins. Once Mr Biden is in office, we expect a renewed multilateral approach to the region and a de-intensification of bilateral trade-policy pressures.