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Panel: Southeast Asia Growing Increasingly Wary of Chinese Investment Strategy

Prime Minister of India Narendra Modi and President of the People’s Republic of China Xi Jinping before the beginning of the BRICS Leaders’ meeting in 2017. Kremlin Photo

Nations stretching from India into Southeast Asia see China’s investments and loan practices as a direct threat to their sovereignty as much as Beijing’s military, the editor of a new work on Indo-Pacific security balance said last week.

Jeff Smith, a research fellow at the Heritage Foundation, said what had been a balancing act for these nations is changing. Where there had been “a lot of engagement with China” because it was either their largest or second largest trading partner is being re-examined with “more attempts to insulate one’s economy,” even in an age of globalization and interdependence.

These nations are also more conscious of Beijing’s debt traps, loans with high-interest balloon payments on ports, airfields, rail lines, highways, dams and power plants.

Smith said this change has occurred notably since 2015 when China became more assertive territorially, particularly in the South China Sea. Beijing claimed islands far from its shores and turned coral reefs into artificial islands with military facilities. In those instances, Beijing backed up those moves with very aggressive maritime presence from warships to armed naval militia and aerial surveillance.

Before that, the reaction to a rising China among the countries in the Association of South East Asian Nations who were engaged in territorial disputes with Beijing centered around calls for sticking to international rules and norms to handle disputes while “the Quad,” the United States, Australia, Japan and India took a more traditional military approach, like Freedom of Navigation transits through contested waters to counter China.

All, including the United States, still pursued a lot of engagement with China economically. In turn, the smaller nations in Southeast Asia particularly were “free-riding off the United States” for security, posing a challenge for official Washington and policymakers over how much of a commitment should be made to those nations in a time of crisis.

In Heritage’s Asia’s Quest for Balance: China’s Rise and Balancing in the Indo-Pacific, Smith noted that defense spending has been rising steadily across the region and the economies are also expanding at the same time as China seeks regional dominance and global reach.

For Singapore, the city-state whose population is more than 75 percent ethnic Chinese, its government realizes “a rising power is going to stake out large claims in the region,” Hunter Marston, a senior research assistant the Brookings Institution and a contributor, said at the Washington, D.C., event.

Even so, its goal is “political stability at home” with enduring U.S. security support, he added, noting the various agreements Washington and Singapore have signed on American naval presence and hosting visits of carriers and other warships from the Pacific Fleet.

“It’s the largest defense spender” in that part of Asia, committing more than 3 percent of gross domestic product to security. Further irritating China, Singapore is one of the few countries conducting military exercises with Taiwan. While not signing up with “the Quad,” Singapore’s “interests and views seemed quite aligned” with the Trump administration in Indo-Pacific security affairs. It is “an important non-ally partner of the United States.”

On the other hand, Prashanth Parameswaran, a senior editor at The Diplomat and a contributor to the book, said even with the change of government in Malaysia, bordering Singapore, its “military capability is not very significant” so for security it tries to link with the United States, Japan and Australia for defense and aid in building up its security forces. But with that noted, he said it would be no match for Beijing in a showdown over territorial claims in the South China Sea.

Although Chinese businesses have been exposed in bribery scandals that toppled the previous government, its lending practices questioned, and continued confrontation over borders, Kuala Lumpur remains an active trading partner with Beijing, following a tradition since independence from Great Britain of seeking a balance between great powers to survive.

India sees itself as an emerging power, not only in the waters closest to the subcontinent but also in the Pacific, Sylvia Mishra, a fellow at the Nuclear Threat Initiative and a contributor, said. “The scale of differences between India and China remain massive” from economic development to military strength to the definition of boundaries.

Now, New Delhi “is in strategic alignment with the United States” as shown in its new arms agreement and expanded exercise schedule with the American Navy and Marine Corps. It also for the first time is working jointly with the United States, Australia and Japan when it comes to curbing China’s ambitions and overall security in the Pacific. “The challenge is to manage China’s rise in South Asia,” she said. India also shows a new willingness “to help shape the security environment in Southeast Asia,” citing its recent sales of missiles to Vietnam.

Like Smith, Mishra cited the change in Beijing’s behavior affecting nations’ sovereignty and added its new interest in collecting demographic information as part of the “digital silk road” it is constructing in Africa. India and the United States “should deepen ties” in cyber as well as traditional military avenues to address Beijing’s use of the information age for political advantage.

  • marc6850

    These Asian countries wary of the Chinese investment strategy are amusing, since they are the first ones banking on China’s door for money. Same for African nations. China can and will devastate their
    economies if it in their best interests.

    • .Hugo.

      chinese mofa spokesperson remarks, 18 nov 2018:
      “…On the basis of mutual respect and win-win cooperation, China has conducted good cooperation with many countries around the world, including the mutually beneficial cooperation with the developing countries under the framework of South-South cooperation. When advancing such cooperation, China has followed the principle of sincerity, real results, affinity and good faith and pursuing the greater good and shared interests to offer assistance to the economic and social development of the relevant countries as its capacity allows with no political strings attached and by fully respecting the will of the governments and people of the recipient countries. Not a single developing country has been mired in debt difficulties because of its cooperation with China. On the contrary, their cooperation with China has helped them enhance their capacity for self-driven development and improved their people’s livelihood. Therefore, the governments and people of the developing countries welcome the cooperation with China. On these issues, the international community, especially the developing countries which engage in mutually beneficial cooperation with China have their fair judgment.”
      who has rushed to join china-initiated aiib as compared with the u.s. led (and abandoned) ttp? 😀

      • Zorcon, Fidei Defensor

        Nice try. Nobody believes the tripe that comes out of the Chinese Dictatorship anymore. You earned your social credits for the day, now back to the PLA school of ridiculousness for you.

        • .Hugo.

          really? but the press room of the chinese mofa is usually packed with reporters, and the question was actually asked by the press, hehe….
          “Q: US Vice President Mike Pence, when delivering a speech at the APEC CEO Summit, made some China-related remarks and claimed that China’s assistance to the Pacific Island countries has caused debt burden for the recipient countries. What is your comment?”
          and oh the recent one was even more interesting:
          fmprc. gov. cn/mfa_eng/xwfw_665399/s2510_665401/
          “…I believe you all know how the US behaved at this meeting. It seemed like the US attended this APEC meeting with great anger. Its speeches and remarks at the meeting openly caused controversy, created discord, spoiled the atmosphere of the meeting and did not contribute to achieving consensus and carrying out cooperation.
          By the way, anger can take a toll on the body and is bad for the health. Whoever gets angry easily will only end up hurting himself.”
          you should try harder. 😀

          • Zorcon, Fidei Defensor

            Nice try but any common person knows the ChiComs and your dictatorship are not to be trusted. Now back to your social credit score.

          • .Hugo.

            if they can’t be trusted then no one would have gone to their press conference. 🙂
            when a country can simply exit from whatever treaty and agreement that it has signed by just one person saying, we certainly know who can’t really be trusted too. 😀
            and so that’s all you can say? you really have to work much harder, hehe….

          • Zorcon, Fidei Defensor

            You mean the BMT that Trump withdrew from? The one the US abided by butbthe Russians violated and China nor Iran are signatories to? Yeah, nice try Comrade.

          • .Hugo.

            trump has withdrawn from not just one treaty. 🙂

    • TomD

      Yeah, I don’t get it.

      First, they ARE sovereign nations, and have the power to ensure that Chinese investments don’t intrude into their societies, such as restricting certain sensitive industries such as media. On the other hand, they are doing a miserable job as it is: for example, there has been stories from Thailand of Chinese diplomats pursuing Chinese dissidents to the airport while escorted by U.S. diplomats, or their secret police abducting refugees and returning them to China. It sounds as if they just don’t want to do the hard work of policing the investments (as China does with the foreign investment in her country, BTW). Perhaps their relations with China will improve if they regulate investments properly – you have to earn the respect of other countries after all. Perhaps their complaint is that they are just too small to have to resources to regulate?

      FYI, the dissidents were Xie Yang, Chen Guiqiu, Guo Feixiong, and Zhang Qing. In two separate incidents, and certainly there have been others.

      Second, as China’s history in the last 40 years (and U.S. history since the early 19th century) has shown, countries do benefit from foreign investments. In theory they should make enough to afford the regulations they need

      Yeah, Chinese investments should be a win-win, despite the necessary hard work.

  • Hugh

    Firstly, China could very successfully continue to grow its trade and economy without the attendant huge military increase. Indeed they are building infrastructure globally, in other lands…… (When Japan was a similarly rising economy there were no aggressive undertones.) So what then are their underlying intentions? Win-win or winner takes all?
    Secondly, they are apt to make a deal, but later “re-clarify” it to better suit themselves, and then accuse the other side of wrongdoing.
    Thirdly, their international moves are made in relatively small steps, where other nations are sucked into situations before they realise it.

  • tteng

    ~75% of Southeast Asian economies are in the hands of ethnic Chinese who are themselves minorities in their nations. It is this contradiction (i.e. political powers in the hands non-Chinese majorities who are leery of China/Chinese, both from mainland and inside their own) that will continue their push-away-pull-closer dynamics with China. Eventually, however, I think China will have its way with that region.

  • vetww2

    My friend, who has a structural engineering company, and who has worked on Chinese projects, in China, including their incredible automobile plant, has a quite different take on the situation. In its most simple form, the Chinese are trying to emulate the USA in all industrial and trade characteristics, independant of the central government’s role as political face of the country. He says that the industrial leaders are now the true driving force and that the commercial provinces look more like the US of the ’50s than we do, now.

  • Chesapeakeguy

    Why is this a surprise? The ChiComs top ‘business mogul’ (wink, wink) has just been exposed as a full fledged member of their Communist Party. Jack Ma of the Alibaba conglomerate is a dedicated commie. The commies there in Red China are no doubt using capitalism as a weapon to advance their commie agenda, against capitalist countries at that..