	Background

As Southeast Asian countries, Indonesia and Vietnam are in a region of  growing economic power. Indonesia is the world’s fourth-largest country by  population. In 2008, the two  countries agreed to establish a comprehensive strategic partnership that  enhanced cooperation in multiple areas, such as trade and investment. U.S. and Chinese Trade and Investment, Competition, and Actions to Further Economic Engagement in Indonesia

		China Has Surpassed the United States in Trade in Goods with Indonesia, but U.S. Investment Has Exceeded Chinese Investment

The value of China’s total trade in goods with Indonesia surpassed the  United States’ in 2005 and was more than double the United States’ in  2014, when Chinese imports and exports both exceeded U.S. imports  and exports. Given these limitations, available data  show that U.S. FDI flows to Indonesia in 2007 through 2012 totaled about  $10.2 billion, exceeding China’s reported FDI flows of about $2.7 billion. 4). United States and China Compete Most Often with Other Countries in Goods Exports and Win Government Contracts in Different Sectors

Data on U.S. and Chinese goods exports to Indonesia indicate that from  2006 through 2014, U.S. exports of goods to Indonesia were more similar  to Japanese and EU exports than to Chinese exports, suggesting that the  United States is more likely to compete directly with Japan and EU  countries than with China. According to a State official, Indonesia’s  economic growth is not likely to increase without significant  investment in infrastructure. In contrast, China and  Indonesia are both parties to ongoing negotiations for the Regional  Comprehensive Economic Partnership Agreement (RCEP), which  negotiating parties have said they hope to complete in 2015. Agencies Have Provided Less Financing for Investment Projects in Indonesia Than Chinese Agencies

Our analysis of U.S. agency data showed that in fiscal years 2009  through 2014, the Export-Import Bank of the United States (Ex-Im) and  the Overseas Private Investment Corporation (OPIC) provided about $2.5  billion in financing to support U.S. exports to, and investment in,  Indonesia (see table 2). U.S. and Chinese Trade and Investment, Competition, and Actions to Further Economic Engagement in Vietnam

		China’s Total Trade in Goods with, and Investments in, Vietnam Have Exceeded the United States’

The value of China’s total trade in goods with Vietnam surpassed that of  the United States in 2007 and was more than double the value of the  United States’ total trade in goods with Vietnam in 2014. 6). Given these limitations, available  data show that from 2007 through 2012, China’s reported FDI flows to  Vietnam totaled approximately $1.2 billion, more than twice the U.S. FDI  flows of approximately $500 million. United States and China Compete More Often with Other Countries in Goods Exports to Vietnam and Win Government Contracts in Different Sectors

Data on U.S. and Chinese goods exports to Vietnam indicate that since  2008, U.S. exports of goods to Vietnam have been more similar to  Japanese and EU exports than to Chinese exports, suggesting that the  United States is more likely to compete directly with Japan and EU  countries than with China. United States and China Are Engaging Vietnam through Separate Regional Trade Agreement Negotiations

The United States and Vietnam are participants in the proposed TPP,  while China and Vietnam are participants in the ongoing RCEP  negotiations. China is not a party to the TPP negotiations. 10). This report is a public version of a sensitive but  unclassified report that we are issuing concurrently. Because of the limited availability of  data and the differing contexts for the data sets we report, the time period  for each of these data sets varied.
Why GAO Did This Study

The United States and China have each sought to increase their economic engagement in Southeast Asia. U.S. agencies have identified Indonesia and Vietnam as important emerging U.S. partners that contribute to regional stability and prosperity. Indonesia has the world's 10th largest economy in terms of purchasing power, and Vietnam is one of the most dynamic economies in East Asia. Both the United States and China have established comprehensive partnerships with each country that are designed to enhance their bilateral cooperation in key areas.
GAO was asked to examine the United States' and China's economic engagement in Southeast Asia. GAO issued a report on 10 Southeast Asian countries in August 2015. In this report, GAO presents case studies for two of these countries, Indonesia and Vietnam, providing greater detail about the United States' and China's trade and investment, competition, and actions to further economic engagement in the two countries. GAO analyzed publicly available economic data and documentation from 10 U.S. agencies and the Chinese government. The data that GAO reports have varying time periods because of the data sets' limited availability and differing contexts. GAO interviewed U.S., Indonesian, and Vietnamese officials and private sector representatives.
This is the public version of a sensitive but unclassified report that is being issued concurrently. GAO is not making any recommendations in this report.

What GAO Found

Indonesia. In 2014, China's imports from, and exports to, Indonesia exceeded the United States' (see figure). The United States and China compete more often with other countries than with each other in goods exported to Indonesia and win contracts in different sectors. In contrast to the United States, which is not involved in a free trade agreement (FTA) with Indonesia, China is a party to a regional FTA that includes Indonesia and is negotiating the Regional Comprehensive Economic Partnership (RCEP) with Indonesia and 14 other countries. In fiscal years 2009 through 2014, U.S. agencies' financing for exports to, and investment in, Indonesia totaled about $2.5 billion, compared with at least $34 billion in Chinese financing, according to the Department of State. In 2007 through 2012, U.S. foreign direct investment (FDI) of $9.6 billion exceeded China's reported $2.7 billion, according to available data.
Vietnam. In 2014, U.S. imports from Vietnam exceeded China's, while Chinese exports to Vietnam exceeded U.S. exports (see figure). As in Indonesia, the United States and China compete more often with other countries than with each other in goods exported to Vietnam and win contracts in different sectors. The United States and Vietnam are both participants in the proposed regional Trans-Pacific Partnership, while China and Vietnam are both parties to a regional FTA and the RCEP negotiations. In fiscal years 2009 through 2014, U.S. agencies' financing for exports to, and investment in, Vietnam totaled about $205 million, compared with at least $4.5 billion in Chinese financing, according to the Department of State. In 2007 through 2012, China's reported FDI of $1.2 billion was more than twice the United States' reported FDI of $472 million, according to available data.