Asean has become the key testing ground for relations between China and the US that could determine whether the world’s two great powers go to war, an AsianInvestor forum heard.

Chan Heng Wing, senior adviser at Singapore’s foreign affairs ministry, outlined the region’s relevance as a geopolitical hotbed at the recent Southeast Asian Institutional Investment Forum.

Reflecting how investors in the room needed to keep an eye on sovereign risk, Chan suggested Asean was where the two nations’ struggle for influence politically and economically was playing out.

“Asean is neutral between China and the US and friendly to both. Geographically, it is where the interest of both the US and China comes together,” Chan observed.

Reflecting on the status quo, Chan noted that China was now Asean’s top trading partner at $350 billion per year, a figure that had grown six-fold over the past decade. Chinese president Xi Jinping has set $1 trillion target within six years.

While Chan said the US economic presence in the region was nothing to sniff at, with foreign direct investment of $204 billion a year and two-way trade of $240 billion, he noted it was military might that made the US a key strategic partner, highlighting US ties with Singapore, the Philippines, Vietnam and Malaysia.

“Such are the forces at play in our region. Both these powers [the US and China] are growing towards a new regional occupation,” said Chan.

He set the scene by outlining the changing political and economic backdrop. While China had followed Deng Xiaopeng’s doctrine to “bide you time and hide your capacity” for a decade after his death in 1997, the 2007 banking crisis in the West marked a turning point in China’s attitude to the West.

“That was when China said the western financial system was wrong and that it was right. China had never taken that position before,” said Chan.

He referred to China’s growing sense of self-confidence, with Chinese people exhibiting a belief that their time has come after a century of humiliations from the 1890s into the 20th century. “This is a great sense of arrival, a China that is reclaiming its position in the world,” he said.

Chan observed greater nationalism at play in China, while specifying that what was being demanded by the Chinese population was externally directed, not internally.

Worryingly, he subsequently conceded in response to a question from the audience that domestic forces driving foreign policy was especially dangerous.

He had earlier cited the latest book from 91-year-old former US secretary of state Henry Kissinger entitled World Order. In it the author outlines 15 historical examples where established powers interacted with rising powers, and in each case that interaction ended in war.

Chan also recalled how a former Chinese vice-foreign minister had rhetorically asked Kissinger whether the US had ever had an equal partner like a brother, rather than an ally that followed or relied on the US for support. Kissinger had apparently paused and laughed, before admitting he had never thought about it.

“Enough said, that tells you something about that relationship,” said Chan.

He referred to the US developing anxiety syndrome that it would be replaced as the world’s pre-eminent power, while China’s starting point was an assumption that the US would always side against it in international disputes.

He observed that the US had resorted to using the language of containment and China the language of replacement. He said these approaches ran the risk of locking in such perceptions and could become a self-fulfilling prophecy.

He questioned how recent Chinese proposals to create a $100 billion Asia infrastructure fund, a $40 billion maritime silk route fund and Beijing’s move to get Apec to support an Asia-Pacific free-trade agreement would be received.

“These actions are seen as a test of whether US economic power in the region since the end of the Pacific War is waning,” he said.

Chan argued the success or failure of three Asean platforms would set the rules of engagement for the US and China in future: Asean plus one (China); Asean plus three (China, Japan and Korea); and the East Asia Summit (including the US).

He suggested it was incumbent on civil societies and business communities around the world to safeguard peace and stability in Southeast Asia and East Asia.

“Not only can it bring prosperity to the region in time to come, but also it benefits none of us here [in Asia] or in Europe if China and the US go eyeball to eyeball,” warned Chan.

Nevertheless, in the end Chan agreed that the most dangerous flashpoint in Asia was not China’s relationship with the US, but with Japan.

“I am hoping upon hope that the leaders of China, the US and Japan are wise enough to pull back from the brink,” he concluded.