Thursday, March 01, 2018

China–ASEAN Maritime Drills: How did it come to this?

 By Aditya Vijay*

In February of 2018, the military leaders of China and the 10-member Association of Southeast Asian Nations (ASEAN) met in Singapore and revealed plans to hold two joint military drills later this year, supposedly in October and November. This development perplexed many foreign policy experts and analysts. No one could decipher the motives of the ASEAN countries in agreeing to hold maritime drills with what many members of the association consider the primary aggressor in the South China Sea. Vietnam, the Philippines, Malaysia and Brunei have territorial claims in the South China Sea, which directly conflict with Beijings claims. This then begs the question as to why the regional bloc would allow military cooperation with Beijing, when competing strategic interests are at stake. A possible answer may be found through a closer inspection of Chinas economic ties and investments in ASEAN.

China has been ASEANs largest trading partner for the last seven years. In fact, China–ASEAN trade seems to be burgeoning ever more. Economists predict that total trade volume between the two is expected to reach around USD 1 trillion by 2020.[1] Individually, China is also the largest trading partner to Cambodia, Laos, Vietnam and Myanmar. Myanmars example offers some perspective on the sheer scale of Chinas economic ties to ASEAN. Myanmar shares an extensive land border with India and in 2013, the total value of India-Myanmar trade stood at USD 2 billion. The total value of Myanmar-China trade for the same year stood at USD 14 billion.

For Beijing, maritime and military cooperation is the next logical step to build on the extensive economic linkages it shares with ASEAN. Military cooperation is a crucial element in Chinas goal to consolidate its peaceful rise in the region. China, through its massive inflow of investment into ASEAN had cultivated some goodwill among the blocs leaders. But when Beijing first proposed joint military drills with ASEAN back in 2015, it was immediately met with stern opposition and resistance. At that time, tensions were still simmering in the South China Sea and the value of Chinese economic investment in ASEAN countries was not quite enough for their leaders to acquiesce to Chinas request. However, fast forward to 2018, and it seems that the territorial disputes in the South China Sea are only an afterthought to most ASEAN nations, when they agreed to host joint military drills with China. What exactly had changed between 2015 and 2018?

Examining the data for Chinas Foreign Direct Investment (FDI) inflow into ASEAN over the years, there is a noticeably sharp spike in FDI in 2015. Compared to a total FDI of approximately USD 8 billion in 2014, FDI stood at nearly USD 15 billion in 2015.[2]

This constitutes an 87.5 per cent increase in FDI into ASEAN over the previous year. For comparison, the year-on-year increase in FDI from 2013 to 2014 was around 10.7 per cent. An analysis of the total value of Chinas investment and construction contracts in ASEAN over the years also shows a similar trend of a significant increase in FDI in 2015 compared to the previous years. In 2014, the total value of Chinese investments was a little less than USD 15 billion, while it jumped to over USD 30 billion in 2015. The year 2016 saw total investments worth around USD 30 billion, which was far greater than in any of the years before 2015.[3]

The massive increase in FDI and investment inflows into ASEAN from China since 2015 underlines Beijings conviction that providing financial support to satisfy the economic needs of the ASEAN countries is the best way to secure their approval for Chinas grand design for the Asia-Pacific region. Therefore, it comes as no surprise that the increased investment by China over the last two years has coincided with reduced protestations by the leaders of ASEAN against Chinese aggression. In fact, countries that were once highly antagonistic to Beijing, like the Philippines, now seem to consider China as an ally. Given the recent developments, it seems as though Chinas economic overtures to ASEAN have finally paid dividends. And indeed, until a suitable regional rival can challenge Chinas economic dominance, Beijing will have free reign in bending smaller countries to its will with its own version of dollar diplomacy.

*The author is Research Intern with CPPR. Views expressed by the author is personal and does not reflect that of CPPR.

Featured Image Source: CIE

[2]Edward Ng, The Rise of Chinese FDI into ASEAN, 5 October 2017
[3]Edward Ng, The Rise of Chinese FDI into ASEAN, 5 October 2017

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