The South China Sea Won’t Stop China-ASEAN Economic Ties

by Wang Wen, Chen Xiaochen, and Chang Yudi | July 7, 2016 | The Diplomat

Throughout history, the South China Sea has been a key passage of the Maritime Silk Road. The 21st Century Maritime Silk Road, proposed by China in 2013, is no exception. The past 20 years of history show us a basic truth: East Asian cooperation sails far in times of calm in the South China Sea, and stagnates in the shadows of uncertainty in this region.

The South China Sea issue currently is causing a series of negative effects on the “One Belt, One Road” (OBOR). However, these effects have their limits; the negative impacts are short-term, localized, manageable, and will not radically hinder China and ASEAN from building OBOR. On the contrary, OBOR will provide a new momentum for peace in the South China Sea, and will continue promoting peace and stability in the region.

The Maritime Silk Road: From History to Reality

The “Maritime Silk Road”is a sea channel that starts from China’s southeastern ports, passes through the South China Sea and the Strait of Malacca, enters the Indian Ocean, and eventually reaches the Red Sea and the Mediterranean. The route links East Asia with the Middle East, East Africa, and Europe.

The Maritime Silk Road can be dated back to the ancient Chinese Qin and Han Dynasties. During the Han Dynasty, silk and southern Chinese porcelain were transported via this route to the Malay Peninsula and Sri Lanka. Southeast Asian perfume and dyes also reached China through these sea routes. The Maritime Silk Road matured during the Tang Dynasty, especially when, according to historical records, there was emigration and migration between Tang China and Southeast Asia. The Chinese and indigenous people in Southeast Asia jointly gave rise to early development in the region.

During the Song Dynasty, the Maritime Silk Road reached its heyday; Quanzhou and Guangzhou in China became international ports. The famous “Nanhai One” shipwreck is a symbol of the prosperity of the Song Silk Road. The voyages of Zheng He in the Ming Dynasty represented the peak of the Maritime Silk Road and extended the passage to the Indian Ocean and the Red Sea. Ancient China thus interacted with many ancient civilizations, ranging from those in Southeast Asia to East Africa. In addition to the intergovernmental “tribute trade,” there were also frequent civil personnel and cultural exchanges. In the end, a trade circle formed in ancient East and Southeast Asia, in which the South China Sea played a vital role.

In recent centuries, however, Asian countries have gone through a long and struggling process of national independence and state building. The tradition of the Maritime Silk Road has thus been overshadowed by the colonization and warfare brought by Western countries.

But times have changed. Since the 1980s, East Asia has once again become a model of economic growth for the world. Even while enjoying domestic economic growth, East Asian countries were heading toward economic integration as well. East Asia’s most dynamic regional integration organization — the Association of Southeast Asian Nations (ASEAN) — and the largest economy in East Asia — China — formed close trade relations and established a number of economic integration mechanisms including the China-ASEAN Free Trade Area.

As a new development approach for economic cooperation, in October 2013 during his visit to Indonesia, Chinese President Xi Jinping introduced the “21st Century Maritime Silk Road” concept, which (along with the Silk Road Economic Belt) constitutes the OBOR initiative. The 21st Century Maritime Silk Road and the 2014 establishment of the “Mekong-Lancang Mechanism” laid out the basic framework of OBOR between China and ASEAN.

Only two years after the initiation of the 21st Century Maritime Silk Road and Mekong-Lancang Mechanism, related governments have given positive responses. The 2015 “People’s Republic of China and ASEAN on the revision of ‘China-ASEAN Comprehensive Economic Cooperation Framework Agreement’ and Protocols under the Part of the Agreement,” the 2016 “Joint Declaration of Implementation Plan of China-ASEAN Strategic Partnership for Peace and Prosperity,” and the “Joint Statement of Mekong-Lancang Countries Energy Cooperation” are the latest results of China and ASEAN jointly building OBOR.

The South China Sea and the East Asian Regional Economic Integration

While East Asian countries focus on developing their domestic economies and promoting regional economic integration, the specter of security problems loom on the South China Sea. As the most important geopolitical issue in the China-ASEAN relationship, developments in the South China Sea will have a crucial impact on regional economic integration.

From the 1990s to the first decade of the 21st century, the “security dividend” produced by peace and stability in the South China Sea greatly promoted the development of East Asian integration. In the early 1990s, China improved and built diplomatic relations with ASEAN countries; during the late 1990s China also won the trust of ASEAN with the support Beijing gave ASEAN countries during the 1997 financial crisis.

In 2002, China and relevant countries signed the “Declaration on the Conduct of Parties in the South China Sea.” The declaration identified the dispute resolution recognized by all parties, shaped the behavior of the parties, and maintained the stability of the South China Sea to some extent.

Under the premise of political stability in the South China Sea, economic and trade cooperation between China and ASEAN were leading the trend of East Asian integration. In trade, economic ties warm as political ties warm. China and ASEAN have led a double-digit growth rate in exports and imports over a long period. Bilateral trade dependence has gradually increased as well. Read more…

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