Despite a renewed emphasis on improving relations with traditional allies in Asia, 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.
"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 under way that are increasing China's centrality to the region," said Nishad Majmudar, a Moody's assistant vice-president and analyst.
With ongoing trade frictions, Mr Biden is unlikely to unwind the actions the Trump administration took against China. And Moody's expects Mr Biden will embrace recent proposals 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 Mr 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," said Mr Majmudar.
Outside China, the Biden administration's policy may attempt to revise the "pivot to Asia" adopted by former president Barack Obama, aimed at increasing diplomatic and investment ties with the region.
Mr 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, in Moody's view.
Meanwhile, the likely increased focus by the US under Mr Biden on climate policy initiatives will increase longer-term credit risks for industrial sectors prominent in many Asian countries, particularly power, 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, the ratings agency said.