15 February 2019

High-level Chinese barnstorming in Southeast Asia

After years of troubled relations with the countries of Southeast Asia, China has launched a campaign to improve its ties with ASEAN through a dramatic rise in trade, while not retreating on its sovereignty claims in the South China Sea.

Calling on the Association of Southeast Asian Nations not to allow territorial differences between China and four of ASEAN’s members to block progress in the overall relationship, China’s president and premier crisscrossed Southeast Asia in October, visiting five of the group’s 10 member states.

The Chinese leaders proposed that two-way trade between China and ASEAN, which reached US$400 billion in 2012, be raised to US$1 trillion by 2020, a substantial advance over the previous target of US$500 billion in 2015.

This new goal was affirmed in a joint statement after a China-ASEAN summit in Brunei, which was attended by Premier Li Keqiang.

In addition, the two sides agreed to work towards two-way investment of US$150 billion in the next eight years.

China is already ASEAN’s biggest trading partner while the group is China’s third biggest, after the United States and the European Union.

The Chinese offered ASEAN economic goodies, which were clearly appreciated.

China proposed an Asian Infrastructure Investment Bank “to give priority support to ASEAN connectivity projects.” ASEAN voiced appreciation for the proposal.

In the joint statement, both sides said that they “look for early and substantive progress in the construction of the Pan-Asia Railway,” which will link the continental countries in Southeast Asia with Yunnan province and will clearly benefit both sides.

Significantly, three of the countries visited by either President Xi Jinping or Premier Li – Vietnam, Malaysia and Brunei – have territorial disputes with China. The only disputant country not visited was the Philippines, whose attempt to seek arbitration has been rejected by China.

The two other countries visited, Indonesia and Thailand, were carefully chosen. Indonesia, which hosted Xi, is the biggest and most influential country within ASEAN. Li went to Thailand, which is the country coordinator for China-ASEAN relations.

China’s ties with Indonesia and Malaysia – both visited by Xi – are being raised to a comprehensive strategic partnership.

The fact that US President Barack Obama canceled his Asian trip last month accentuated the Chinese presence in the region.

Everywhere that the Chinese leaders traveled, they offered to improve trading relationships. Thus, when Xi visited Jakarta, China and Indonesia agreed to achieve US$80 billion in trade by 2015, compared with US$66.2 billion last year.

And when he visited Malaysia, China’s most important trading partner in ASEAN, the two countries agreed to aim for US$160 billion in trade by 2017, compared with US$94.8 billion last year.

Li, whose Asia trip started Oct. 9, the day after Xi’s ended, said in an address to the Thai Parliament that Sino-Thai trade will rise to US$100 billion by the end of 2015, compared with US$70 billion last year.

The premier spoke specifically about what China planned to do to help ease Thailand’s problems. Thus, he promised that in the next five years, “China will import one million [metric] tons of rice from Thailand and also import more rubber.”

China is no doubt aware that the Thai government has spent more than US$18 billion in the last two years to buy rice at artificially high prices to shore up support for farmers, and is now stuck with warehouses full of an overpriced product that it is struggling to sell.

Aside from trade deals, Li worked actively to defuse territorial disputes with Vietnam and Brunei.

While in Vietnam, he announced a “breakthrough” agreement to set up a China-Vietnam work group to discuss joint maritime development. This was clearly more politically significant than progress on the economic side, although there, too, the agreement to increase bilateral trade to US$100 billion by 2017 represented a substantial increase beyond the previous target of US$60 billion in 2015.

Similarly, China and Brunei agreed to encourage closer joint exploration and exploitation of oil and gas resources in the South China Sea.

China’s willingness to push for joint development is a move in the right direction. But if China wants this to work, it cannot insist on preconditions, such as acknowledgement of Chinese sovereignty, before there can be joint development.

While China’s assurances of its peaceful intentions are positive, it cannot expect to quickly regain the trust of ASEAN countries, which has been badly eroded by assertive Chinese behavior in recent years. China’s actions as well as its words will be closely watched.

Malaysia, for example, while welcoming China’s assurances, has just announced plans to establish a new naval base near waters disputed with China.

Frank Ching opened The Wall Street Journal’s Bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs

[email protected]
Twitter: @FrankChing1



Frank Ching opened The Wall Street Journal’s Bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs.

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