China gaining influence over ASEAN while US influence dwindles

China has wasted no time stepping up its audacious bid to exert more control over ASEAN following Donald Trump’s election as US president. Southeast Asian nations find themselves in an uncomfortable position.

By John Pennington

It did not take long for the impact of Trump’s election to reach Southeast Asia. The repeal of the Trans-Pacific Partnership (TPP) and the establishment of a warm accord with Xi Jinping to combat the threat of North Korea are moves that could have been designed specifically to push ASEAN nations into China’s orbit.

China needed no second invitation to take advantage. China continued its audacious bid to swallow them up and assert control over a disunited Southeast Asian bloc as ASEAN countries feel ignored or even abandoned by the US.

China is adopting a “divide and conquer” approach

China is instead using a “divide and conquer” approach in ASEAN. As a united front, ASEAN has bigger bargaining power than if they were dealing with China one at a time. They turned their attentions to bringing individual countries into their sphere of influence to break down the ties that make ASEAN strong. China employed bilateral diplomacy to smooth over relations to keep potential flashpoints under control.

China also committed significant investment and commitment to future partnerships. Closer ties mean those countries are heavily reliant on China and are unlikely to go against Beijing for fear of reprisals. In return for infrastructure and investment, China negotiated concessions. Unsure about what support ASEAN has from the US, there is “neither the stomach nor the means” to challenge China.

Chinese investment in Southeast Asia is significant

China’s increasing investment in ASEAN (US$ billion)

In total, two-way investment between China and ASEAN since 1967 adds up to more than US$160 billion. China invested more than US$5 billion in Laos, US$18.5 billion in Myanmar, more than US$10 billion in Cambodia between 1994 and 2012 and a further US$3.7 billion since. Chinese companies control Cambodia’s power supply.

China is Thailand’s largest trading partner and second largest investor. The country has just approved the purchase of three submarines from China worth more than US$1 billion and is a recipient country of the One Belt, One Road (OBOR) initiative.

The promise of future investment helped turn the Philippines into an ally

A good example of China’s approach is the way that they turned the election of President Rodrigo Duterte into a success for themselves. Despite Duterte’s recent conversation with Trump, he decided to reinvigorate Sino-Filipino relations at the expense of his ties with Washington. By making that decision, Duterte gave China the opportunity they needed.

The promise of investment in his country – for the first time in five years – has ramifications beyond just his own borders. The Hague’s legal judgment in the Philippines’ favour against China’s claim to the South China Sea has been swept aside.

Proof of that came when, during his address as ASEAN chairman, he rowed back on keeping the pressure on China to respect the judgment. Duterte will cut a deal to ignore the judgment in exchange for financial support. With the US out of the picture, Beijing will now agree on the framework for a Code of Conduct.

ASEAN capitulation over the South China Sea is a huge win for China

Duterte’s actions undermine the other countries – Brunei, Malaysia, Taiwan, and Thailand – with claims to the South China Sea and supports China. The other countries cannot stand up to China now that Duterte has effectively ceded the initiative. One of the parties having its own bilateral arrangement means the previous unilateral approach is no longer viable. Furthermore, a complete lack of US support or action in the area leaves ASEAN increasingly isolated.

China’s lobbying worked. “By any measure, this was a slam-dunk diplomatic victory for Beijing, which has sought to court Mr. Duterte by offering multibillion-dollar investments and the prospect of joint development deals in contested waters,” surmised Richard Javid Heydarian, a political science professor at De La Salle University in the Philippines.

For the moment, only Singapore and Vietnam do not appear to have moved any closer to Beijing. Instead, Singapore Prime Minister Lee Hsien Loong urged ASEAN nations to strike a balance between Beijing and Washington. Vietnam has long-standing good relations with the US and will host Trump at November’s APEC summit in Hanoi while Singapore is close to both China and the US.

One Belt, One Road and RCEP may now take centre stage

ASEAN nations will now see China’s One Belt, One Road (OBOR) programme and its Regional Comprehensive Economic Plan (RCEP) as increasingly significant. Without the TPP to support them, they will now compete for investment that the One Belt, One Road programme can deliver.

Discussions over reviving or revising the TPP continue but OBOR offers some degree of certainty. Laos was promised US$6 billion to link its capital Vientiane with China’s Yunnan province by 2020. Work on the Singapore to Kunming line has started. China won the US$5.1 billion contract to build a 150-kilometre rail project in Indonesia.

However, for all the infrastructure benefits that OBOR will provide, the scheme would give China control of land and sea routes, further increasing its influence over the region. It puts ASEAN nations in a difficult position. They need Chinese infrastructure investment but can no longer rely on the US to act as a buffer. As a result, they lose bargaining power and influence.

It represents a fundamental shift. “Before, most Southeast Asian states wanted to benefit from Chinese regional economic initiatives and from American pushback against China,” said Malcolm Cook, a senior fellow at the Institute of Southeast Asian Studies in Singapore. “The second part of this balance is now in question. Hence, the pressure to acquiesce to China diplomatically and on security issues is stronger,” he added.

ASEAN nations may end up as pawns in a bigger power game

While world leaders concentrate on North Korea’s nuclear arsenal, Southeast Asian nations risk becoming pawns in a bigger power game. It is a return to old-fashioned politics. Trump’s administration essentially gave China freedom to do as it pleased in the South China Sea, and by extension, ASEAN, because the US needed China to keep the pressure on North Korea.

Now Trump has removed the handbrake, the balance that Loong spoke about becomes much harder to strike. China is the more stable partner as uncertainty surrounds everything coming out of Washington. What trust can ASEAN place in Mike Pence’s assertion that the US, has “unwavering commitment” towards the region?

Yet, at the same time, ASEAN needs to find a way to keep the US onside. ASEAN may welcome recent US “freedom of navigation operations” in the South China Sea. As Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Bangkok’s Chulalongkorn University, said, “ASEAN is in a precarious position now with the concessions, accommodation and even appeasement with China. If China continues to be shrewd and takes ASEAN on another ride, then ASEAN will be much worse off.”