China’s financial muscle in Southeast Asia

Benjamin Ho

How does China’s economic statecraft go hand-in-hand with its geopolitical pursuits? What is Beijing’s perception of the Association of Southeast Asian Nations (ASEAN), and what are its ambitions in the South China Sea? What are the means in which the Chinese state adopts in exercising political influence among smaller ASEAN countries? These are key questions that many political observers in Asia are asking amidst China’s rise and global prominence. Amidst the burgeoning number of books studying China’s international relations, Daniel O’Neill’s work on how Chinese political strategy within the ASEAN is worth reading for it brings China’s political game to where Beijing is focused on: in Southeast Asia.

Taking advantage of cracks in ASEAN

Notwithstanding a number of existing works which expressed enthusiasm for ASEAN’s community-building project, O’Neill’s observed that ASEAN was divided, and that the pursuit of ASEAN unity was subjected to more fundamental problems, such as varying economic systems, levels of economic development, regime types, religions, and geographical locations. As such, O’Neill’s contention was that China had been adept in taking advantage of these differences which existed among ASEAN member states to stake its territorial claims on the South China Sea. As pointed out, ‘this strategic vulnerability of ASEAN is greatest when the member states’ preferences on an issue vary’ (p. 39).

Indeed, O’Neill is not the first one to observe China’s ongoing divide and conquer approach in its relations with ASEAN, and neither will he be the last. What O’Neill does however is to persuade us that China’s financial influence is as pervasive as its diplomatic actions, especially among countries whose regime type bear similarities to Beijing’s. As O’Neill explicitly puts it, ‘China is more successful in influencing developing state, authoritarian governments to support China’s preferences regarding its core interests than it has at influencing developing state, democratic governments’ (p. 94).

The centrality of regime type and political legitimacy

O’Neill trains his focus on three key countries in China’s regional periphery, namely Cambodia, Myanmar, and the Philippines. While Beijing has historically cultivated strong ties with the Cambodian government, the Philippines have had a more acrimonious relationship with China (at least until the Duterte administration). This is where O’Neill’s comparative analysis of both countries’ relationship with Beijing provide a helpful glimpse of how domestic factors affect the dynamics of how states’ conduct their political relations with China. By highlighting the type of political regime and how it contributes to international relations, O’Neill reminds us that what is at stake oftentimes is not just the pursuit of national interests (whatever they may be), but also include regime legitimacy. His third case study, that of Myanmar, is also highly provocative as he suggests that notwithstanding the ties between ‘blood brothers’, relations between Myanmar and China are also subjected to wider political considerations, and in the Burmese case, evolving political institutions. From these case studies, O’Neill reminds us that what counts in the final reckoning in assessing the future China–ASEAN relations is not simply China’s ability to dole out money (even though that is a major factor), but also dependent upon how domestic political regimes perceive their own legitimacy vis-à-vis their diplomatic relations with China.

While the case studies in the book covers important terrain as far as the choices of countries are concerned, it would have benefitted from one or two additional chapters in analyzing Beijing’s relations with the more ‘influential’ ASEAN countries, such as Indonesia, Singapore, and even Vietnam. Indeed, the appeal to economic incentives to procure influence is understandable among developing countries, but such an argument may be less persuasive in explaining the depth of China’s relations with countries like Singapore (whose per capital GDP is among the highest in the world). Furthermore, as a nation-state with a parliamentary democracy, it would seem that Sino–Singaporean ties go beyond just mere economics, perhaps cultural affinity and ethnic similarities are equally important? Indeed, this book would have been more complete had the author tested his hypothesis with a country like Singapore, or even Indonesia and Thailand.

Not all that glitters is gold

Amidst ongoing Sino–US strategic competition for influence in the Asia-Pacific region, O’Neill’s book provides a timely reminder that financial and economic policies are no magic bullets when it comes to influencing the behavior of states. To this end, both Beijing and Washington – which have major economic links in Southeast Asia – ought to reassess how moving forward they are able to further deepen ties with countries in the region. While having strong financial muscle to back up political priorities remains an attractive proposition in international relations, domestic sentiments, and political persuasion vis-à-vis the power of ideas remain equally crucial.