ASEAN-China Ties: Can Trade Buy Peace?

Increasing ASEAN-China economic relations illustrate the dangers of possibly becoming too economically beholden to one major power.

asean-china-tiesGreater economic integration may reduce the chances of conflict or tensions between countries. Among capitalist peace theorists who held this view include Immanuel Kant who maintained that “the spirit of commerce… sooner or later takes hold of every nation, and is incompatible with war.”

Historically good trade ties decrease uncertainty and establish mutual trust and confidence. To this extent, it can be said that trade is beneficial to concerned parties.

However, there is also power play at work to advance certain political agenda, possibly influencing policy decisions of smaller states.

Therefore, it is imperative that small countries be wary of these “political strings attached” in contracting trade agreements, as well as adopt such measures as diversifying partners to avoid reliance on one or two major powers. This may give them greater room to maneuver, avoid being cornered by one camp and thus be turned into pawns in major power rivalry or competition.

Since the establishment of the ASEAN-China Free Trade Agreement (ACFTA) in 2010, ASEAN-China trade had grown by 25 percent. From $7.9 billion in 1991, bilateral trade grew to $292.7 billion in 2010. While ASEAN-US trade continues to decline despite the pronouncement of the US pivot to Asia, China’s trade with ASEAN continues to rise and the country had been ASEAN’s biggest trading partner since 2009.

But while the economic dimension of China’s diplomacy towards ASEAN had been thoroughly covered, China’s drive to create security cooperation with countries in the region received less attention, partly because most of them were subsumed under the banner of “comprehensive strategic partnerships.”

China’s special relationship with Thailand, Indonesia and Malaysia

Of the core ASEAN members that have the most favorable ties with China, Thailand, Indonesia and Malaysia stand out.

All three countries have entered into “comprehensive strategic partnerships” with China, an agreement which include provisions for security and defense cooperation. This paved the way for high level visits and exchanges between defense/military of China and the three countries, as well as joint military drills and exercises.

Chinese and Thai marines had conducted joint military exercises in 2010. Chinese and Indonesian navy in December 2013 announced a joint exercise to be held in the Indonesian part of the South China Sea (SCS). And despite the PLA naval exercises in Malaysian-claimed James Shoal in the Spratlys in March 2013, Malaysian and Chinese armed forces will conduct their first ever joint exercise with a strong maritime element in 2014.

While Thailand does not have active unresolved boundary disputes with China, Indonesia and Malaysia have maritime disputes with China over the SCS. However such disputes did not received the scale of media and public attention as it did in Vietnam and the Philippines.

Though Indonesia is not a formal party to the multilateral SCS dispute, certain parts of Indonesian SCS were included in China’s controversial nine-dash line, including waters near its gas-rich Natuna Islands, and incidents involving Chinese fishermen in these waters regularly creates rifts between the two countries.

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Moreover, although Thailand has a long history of military cooperation with China dating back the 1980s, China’s success in forging security ties with Malaysia and Indonesia is fairly recent and is, in fact, a major turnaround from its largely troubled relations with these two Muslim countries, especially during the 1970s.

Whether the policy of downplaying disputes is a deliberate state policy or not, it is successful in maintaining good economic relations for now, but for how long, no one knows.

China’s economic influence 

Despite lingering unresolved territorial and maritime disputes, China continues to be a major trade partner for Indonesia, Malaysia and Brunei. In fact, President Xi Jinping became the first foreign leader to address the Indonesian Parliament last October 2013.

China and Brunei, both SCS disputants, also entered into a Joint Statement last April 2013 wherein the two sides pledged greater maritime and energy cooperation. But “accidents-at-sea,” such as confrontation between maritime law enforcement vessels of competing claimants, if not managed properly, can ignite nationalist stirrings which could, in turn, harden state responses towards the dispute.

As far as preventing a common ASEAN stand against increasing Chinese actions in the SCS is concerned, Beijing’s diplomacy is working. Whether it amounts to China buying off ASEAN into silence as far as SCS is concerned remains debatable. But China’s influence was felt in 2012 when an ASEAN Summit hosted by close China ally Cambodia failed to agree on a communiqué – a first in its 45 years history. The Philippine Foreign Affairs Department blamed Cambodia for the impasse saying it consistently opposed any mention of the SCS disputes.

Whether China offered more concessions to some ASEAN SCS disputants remains inconclusive but it appears that any security cooperation is preceded by good economic ties. But one must take note that improved economic performance can also finance increased external defense spending which can increase the likelihood of “accidents” if appropriate mechanisms are not put in place.

It could be that China’s diplomatic initiatives towards Indonesia and Malaysia constitute as showcases directed to win the Philippines and Vietnam over to its fold or, at least, isolate the Philippines which just legally challenged China’s sweeping SCS claims before an international tribunal and which is also perceived as the closest US ally in ASEAN. To the extent that the Philippines is not getting much vocal support from ASEAN, an organization it helped founded, this conjecture may stand.

Increasing ASEAN-China economic cooperation is risky. Recent ASEAN discord over SCS demonstrates the concealed political force that economic influence can wield. Hence, it is important to diversify economic partners, as well as political and security allies as this would spread risk and give countries greater control over their domestic and foreign policies.

Lucio Blanco Pitlo III is an MA Asian Studies student from the University of the Philippines Asian Center. His research interests include China-ASEAN relations and maritime security. The views expressed here are the author’s own. Read other articles by Lucio.