Beijing's moneyed advance on Southeast Asia

Two men row their fishing boat along the Mekong River near Phnom Penh. The industrializing area has become a tug of war between China and Japan in recent years. (Reuters)
China's Vice President Xi Jinping toasts with Cambodia's Prime Minister Hun Sen after signing an agreement on cooperation in Phnom Penh on Dec. 21, 2009. (Reuters)

Friday, March 5, 2010
By Brendan Brady,
Special to CBC News (Canada)

A few days before Christmas, Cambodia hastily deported 20 ethnic Uighur asylum-seekers back to China over the strong objections of Western nations.

Two days later, Beijing followed through on a planned $1.2 billion infrastructure investment in Cambodia, one of Southeast Asia's most impoverished nations.

The two governments denied any quid pro quo but, for many observers, the coinciding moves were just another sign of China's ability to leverage its giant economy to enforce self-serving diplomatic priorities in what is essentially its backyard.

Chinese authorities believe the Uighurs, ethnic Muslims native to the restive Xinjiang province, were involved in violent protests last year and Cambodia was not the only pressure point.

Nepal, Pakistan and Uzbekistan have also carried out extraditions at Beijing's behest, Human Rights Watch reports.

Andrew Swan, a researcher with the Netherlands-based Unrepresented Nations and Peoples Organization, says the Cambodia deportation was part of a growing trend in the region to capitulate to China's diplomatic demands under the weight of its economic muscle.

"China now has more tools to make its reach felt," Swan says. "And its diplomatic confidence is growing."

Courting friends

To feed its booming economy, China has expanded its presence in many Southeast Asian countries with projects for roads, dams, mines, oil, irrigation and telecommunications.

In Cambodia, for example, China has become that country's leading foreign investor as well as one of its leading donors.

On the heels of the Uighur deportations, Chinese Vice-President Xi Jinping signed 14 pacts worth $1.2 billion related to infrastructure, construction, grants and loans in Cambodia.

A few days earlier, Xi was in Burma with senior general Than Shwe, the leader of the reclusive state's ruling junta, to sign a deal for a 1,240-kilometre pipeline to bring crude oil from western Burma to southern China.

The groundwork for many of these initiatives was laid years ago, particularly during the Asian financial crisis in 1996-97, when Beijing stepped up its presence in the region to fill the void left by slumping domestic economies and the flight of foreign investment, notably Japan's.

Beijing's primary tools have been aid disbursements, new trade agreements, cultural diplomacy and military ties.

"Part of their diplomacy is that they say they don't want anything" in return, says Joshua Kurlantzick, a Southeast Asia expert at the Council of Foreign Relations in Washington and author of Charm Offensive: How China's Soft Power is Transforming the World.

"But that's not accurate," he goes on. In return, Beijing has demanded diplomatic loyalty on certain core issues such as Taiwan, Tibet and, latterly, the Uighurs — often at the expense of good governance and human rights in the reciprocating nations.

'No strings'

What distinguishes China's economic aid in Southeast Asia is that, unlike Western countries, it hasn't tied democratic or human rights stipulations to its contributions — demands that are seen by many governments in the region as impediments to their rule.

"There are no conditions," Cambodian Prime Minister Hun Sen said about the aid his country has received from Beijing. "We talk back and forth directly."

Trade giant

In 2008, China surpassed the U.S. to become ASEAN's third largest trading partner, after Japan and the European Union. China is now looking to further entrench its regional economic role by pledging to create a free-trade zone with countries belonging to ASEAN, the Association of Southeast Asian Nations. It recently sweetened the deal by offering a $10 billion China-ASEAN Investment Corporation Fund and $15 billion in credit to support ASEAN nations.

But it is precisely this direct conversation, away from public scrutiny, that has Western countries and rights groups worried.

Since 2007, China has strongly outspent the U.S. in Southeast Asia, according to the U.S. Congressional Research Service, and the effect of this aid can be seen on a variety of fronts.

In the 1990s, for example, when most of Cambodia's aid came from the West and Japan, Phnom Penh worked closely with multilateral aid agencies and the UN.

But, with Chinese patronage, Hun Sen has become emboldened to publicly lash out at these organizations, tossing out a UN human rights rapporteur for his criticisms and banning the group Global Witnesses for a report that was critical of his family's business operations.

China's support has also helped sustain the insular, single-party rule in Laos and Burma.

China's investment in Laos's transportation and hydropower projects vastly outstrips the money the Communist government there receives from the U.S. As does the nearly $5 billion in loans and investments Beijing has made in natural gas-rich Burma since the military junta took power in 1998.

And just as China can dish out the money, it can also withhold it when it feels an affront. Beijing reportedly halted $200 million in aid to Vietnam after the country invited Taiwan to the Asia-Pacific Economic Cooperation summit in Hanoi a few years ago.

Not so fast

While China's bolstered presence in Southeast Asia has set off alarm bells in some circles, Robert Sutter, a professor at Georgetown University and author of several books on China's rise, says its role in the region has been more calming than many are making it out to be.

"What you see in China's approach to Southeast Asia is a desire to keep the atmosphere peaceful, take advantage of economic relationships, and reassure countries that might be concerned about China's growing power — it hasn't been a blitz," he says.

"Southeast Asia still isn't the most important place for them — places like Korea and Japan are more important. But it's where they have been most successful in recent years."

In fact, these countries that border China's southern flank have been pulled almost entirely into the economic orbit of their bigger neighbour, with their roads — and businesses — pointed towards Beijing.

Clearly, China wants the region's raw materials to fuel its manufacturing centres. But just as clearly, there are many developed countries in the region — such as Singapore, Indonesia, Malaysia and Thailand — that will buck this model and want to keep their ties to the West.

Indonesian manufacturers are already complaining about the flood of cheaper Chinese goods while some Laotians and Vietnamese have voiced criticism over Chinese land acquisitions, dams and bauxite mines.

Even in isolated Burma, China's dominance seems to have stirred the junta's interest in engagement, albeit limited, with that seemingly passé power, the United States.

Though here, as elsewhere in the region, aid tied with pesky preconditions of enhanced democracy will appear a tough bargain compared to what China is offering.