Will the real China please stand up? A Southeast Asian perspective on China’s growing power and influence

by Aileen S.P. Baviera / (This article originally appeared in Japanese translation in Gaiko (Diplomacy), Vol 46, Nov./Dec. 2017, pp. 43-49) / English version from APPFI

The first five years of Xi Jinping’s rule saw major changes in Chinese policy that have affected its relations with Southeast Asia. With a slowing economy in need of difficult restructuring, a global financial crisis threatening China’s markets and sources of investments, the Communist Party facing issues of legitimacy amidst rampant corruption, and serious environmental problems threatening growth and people’s welfare, Xi set out on a direction that was rather unexpected. He began to assert strong central authority domestically; waged a sustained anti-corruption campaign (that also masked a purge of political rivals); took steps to raise China’s economic, political and military profile abroad; and began to contest some rules of the international order which China had been dissatisfied with. Xi abandoned Deng Xiaoping’s exhortation – obeyed by his predecessors Jiang Zemin and Hu Jintao – that China keep to strategic patience, remain low-key, and “bide its time and hide its capacities” (taoguang yanghui韬光养晦 ). Xi Jinping was instead happy for China to show off its achievements (including in the area of defense technology), and seemed in a greater hurry for China to take its place – after a “century of humiliation” — at the rule-making table alongside other big powers. In particular, the Chinese leadership set as one of its goals that China, already the world’s largest trading nation and a top trading partner of over 120 countries in the world, shall become a global maritime power. In the process, China under Xi became more assertive in defending territorial interests in surrounding seas, including the East China Sea facing Japan and the Koreas, and the South China Sea where several Southeast Asian countries also had claims to territory and maritime entitlements.

Its launch of the “One Belt, One Road Initiative” (yi dai yi lu一带一路; renamed Belt and Road Initiative or BRI), the establishment of the Asian Infrastructure Investment Bank, Silk Road Fund and other financial support arrangements for developing countries, were signals that China was ready to be a global economic and financial leader. BRI entails massive China-led investment in infrastructure in developing countries westward of China all the way to Africa, and also envisages policy coordination in trade and finance, as well as strengthening sociocultural linkages. On the one hand, BRI was China’s solution to its own industrial overcapacity, foreign currency reserve excess, and need for resources; on the other hand, it was a promise to help boost development financing (mainly through infrastructure) and economic integration at a time when both were losing steam given global financial woes. Some governments of advanced industrialized countries, private companies including from China’s geopolitical rivals Japan and the United States. let alone neighboring Southeast Asia and developing Africa, were keen to be China’s partners in these new undertakings. BRI was a portent of the long-anticipated economic power shift from West to East, exciting and at the same time disquieting.

The outcome of these policies was a mixed bag in the ways that China began to be perceived, particularly in Southeast Asia, with some countries eager to embrace this new role for China and others resisting it. BRI and its promise of massive fund infusions for infrastructure building, when first launched for Southeast Asia as the 21st Century Maritime Silk Road in Indonesia in 2013, initially drew polite interest when the concept seemed long in vision but short in specifics. It stirred greater response when understood as but a framework for China’s stronger bilateral cooperation with its neighbors, then drew skepticism when specific infrastructure investment projects became bogged down in difficult negotiations over incompatible technical specifications, unacceptable terms, and politics. For some countries, such as Vietnam and the Philippines, it was viewed with trepidation against the backdrop of China’s growing military power and strategic influence in the region, whilst their maritime and territorial disputes with China in the South China Sea were in fact escalating.

Chinese investment projects in Thailand, Laos, Indonesia, Malaysia and Myanmar have encountered problems. A high-speed railway connecting Thailand to China has yet to begin construction more than two years and 20 negotiations since the agreement was first signed. Laos remains unconvinced of the need for its own Chinese-financed high-speed train to run from north to south of the country that would connect the Thai railway to China. Similar delays in the Chinese-funded Jakarta-Bandung railway have given way for Japan (an early investor in Indonesia) instead of China (the latecomer) to build the country’s first high-speed railway which will run from Jakarta to Surabaya. In Malaysia – the country most receptive to BRI and economic cooperation with China, there is strong public criticism of how the government has allowed China to take control of Malaysian assets and land. In Myanmar, after the suspension of the Myitsone Dam project in 2011 , the public remains deeply suspicious of large Chinese infrastructure deals.

Still, regional states with the exception of Vietnam have opted to be part of BRI, the latest being the Philippines whose relations with China turned around for the better after Rodrigo Duterte assumed office. The prospects for mutually beneficial investments by China in pipelines, ports, industrial zones, energy infrastructure, and the like remain positive. Whether this will translate into Chinese economic influence expanding at the expense of other economic players and of other big powers will depend as much on the extent of engagement by these other actors and their ability to compete with Chinese terms. At the ASEAN level, the preference is to persuade China to coordinate its BRI strategy with that of the Master Plan on ASEAN Connectivity (2016-2025), which remains unimplemented in part for lack of financial resources.

In the political arena, the situation of China’s relations with neighboring Southeast Asia has been generally positive and stable. China’s growing political influence in Southeast Asia was evident in the frequency of high-level visits and strategic dialogues involving Southeast Asian leaders. Even military-to-military confidence building and cooperation, both bilateral and multilateral, have increased. China’s greatest success, not of its own making but as an outcome of Philippine elections, was the change in the Philippine leadership from Benigno Aquino III to Rodrigo Duterte. The former had perceived China as primarily a security threat to Philippine territorial integrity and one whose power needed to be constrained and balanced by whatever means; the latter saw China primarily as a source of economic opportunity and therefore a welcome partner in development. Read more…

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