Could China’s Influence Split Asean in Two?

Bridgehead: China's expanding influence in Southeast Asia with construction in Cambodia (top); Wu Bangguo (left), chairman of China’s National People’s Congress, signed many deals with Cambodian Prime Minister Hun Sen 

Could ASEAN Drift Apart?

China’s growing influence in the Greater Mekong subregion risks splitting the organization

25 February 2011

Geoff Wade

YaleGlobal

Last year, the Association of Southeast Asian Nations celebrated its 43rd anniversary with fanfare, but cracks were visible in the organization. Thanks to the lopsided development of the Greater Mekong Subregion, propelled by China with the help of the Asian Development Bank, the area along China’s border has been transforming into a bloc of its own — a trend that could permanently divide Asean.

The GMS nominally comprises Cambodia, Laos, Burma and Vietnam, as well as Thailand and two of China’s southern provinces, Yunnan and Guangxi. However, in reality, China as a whole is a member with national-level technocrats engaging in GMS initiatives. And through this massive membership imbalance, the country of 1.3 billion overwhelms the polities and economies of mainland Southeast Asia.

About $11 billion has been injected into infrastructure investment in the GMS over the last decade with one-third coming from the ADB. This aid has been channeled into three so-called economic corridors — transport arteries being built to link multiple countries across mainland Southeast Asia.

The North-South Economic Corridor connects Kunming, China, to Bangkok, while the East-West Corridor ties the Indian Ocean coast of Burma with the South China Sea ports of Vietnam. The Southern Economic Corridor connects Bangkok with Phnom Penh, Ho Chi Minh City and the nearby port of Vung Tau.

China has openly declared that the GMS is the most effective economic mechanism in Southeast Asia.

Under a new initiative launched by Chinese President Hu Jintao in July 2009, Yunnan has been designated as the bridgehead to mainland Southeast Asia, connecting the countries through transportation routes, mines, energy infrastructure and foreign trade production bases in the subregion. And the China-Asean Free Trade Agreement, initiated on Jan. 1, 2010, has greatly increased Chinese trade and investment in the mainland Southeast Asia states.

Funding for the economic development of the GMS derives from both ADB coffers and Chinese loans and investment, often difficult to distinguish. China is establishing a $10 billion China-Asean Fund on Investment Cooperation to support regional infrastructure development.

Investment funds have also flowed into these countries from China in much greater volumes. More than $8 billion of Chinese funds have been invested in Burma since March 2010 in hydropower, oil and gas and mining. By July 2010, Cambodia had 360 Chinese investment projects, with the value of the agreements totaling $80 billion. The degree to which Chinese interests are gaining control over most of the upstream industrial sectors in Vietnam is evident from the official estimate that about 90 percent of engineering, procurement and construction contracts are won by Chinese firms.

The number of Chinese people moving into these countries is growing. Laos, a country of seven million, estimates 400,000 illegal immigrants from China are in the country. Countries have also reported increased Chinese-language teaching, with Cambodia claiming to have the best language program in Southeast Asia and its schools staffed with hundreds of Chinese teachers.

But this flurry of development along its border and China’s growing engagement with the countries of mainland Southeast Asia — in effect dividing Asean — have not gone unnoticed by regional powers.

Japan has met with Cambodia, Laos, Burma, Thailand and Vietnam, without including China, to assure them of assistance. South Korea has also declared its intention to participate in the development of the GMS, particularly in terms of transforming transport corridors into full-fledged economic corridors and addressing environmental issues.

In a July 2010 speech while in Hanoi, US Secretary of State Hillary Clinton spoke of US interests in the South China Sea and noted that Washington saw its relationship with Vietnam “not only as important on its own merits, but as part of a strategy aimed at enhancing American engagement in the Asia Pacific, and in particular Southeast Asia.” The recent inclusion on the United States in the East Asia Summit partially aims at countering perceived Chinese hegemony in mainland Southeast Asia.

The idea of “Asean centrality” in regional architecture, being widely promoted by Western interests, is premised on two conditions: That Asean will develop sufficient weight to constitute a bloc, and that members will adopt a common stand on key issues.

Neither condition is likely to be realized, much less maintained, in the near future. Asean states show an unwillingness to surrender any sovereignty to a central administration and the seems unable to take unified positions on international issues.

In turn, new physical infrastructure connections, economic interactions and intimate political and military engagements with China increasingly divide mainland Southeast Asian states from the maritime Asean countries. Burma, Cambodia and Laos are already virtual client states of China, while Vietnam and Thailand are economically beholden to the economic behemoth.

Asean’s most recent response to the threat of division was to call for more connectivity among its members. A master plan — announced at the 17th Asean Summit in Hanoi in October, for physical, institutional and people-to-people connections — openly recognized emerging division: “This is not likely to be smooth sailing, especially since the two programs [Asean and GMS] have been pursuing parallel efforts and have sunk substantial investments in certain areas of cooperation.”

With growing distance between the mainland and maritime states, the likelihood of an Asean community coming into being by 2015 is slim. Together with China, the mainland states are now entrenched in the GMS, and the links being developed will override those existing and planned among Asean states. Asean is indeed dividing.

These changes may simply reflect the mainland states’ geographic proximity to China or could be a manifestation of a long Chinese tradition to either divide neighboring polities or incorporate them within the Chinese polity. In either case, revival of a hierarchy is underway in mainland Asia, a phenomenon that some perceive as an indication of the Westphalian system’s irrelevance to Asia.

Geoff Wade is a historian with interests in Sino-Southeast Asian relations over time and comparative historiography.