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Chinese relations with Southeast Asia were overshadowed for most of the quarter by Chinese leadership preoccupations with the 2008 Olympic Games and various crises involving toxic Chinese milk supplies, turmoil in U.S. and international financial markets, leadership uncertainty in North Korea, and the Russia-Georgia war. Although official Chinese media highlighted President Hu Jintao’s meetings with Southeast Asian and other world leaders at the Beijing Olympics, he and other top leaders did not travel to Southeast Asia except for the foreign minister’s attendance at the ASEAN meetings in Singapore in July. New troubles emerged with Vietnam, notably over oil exploration in the South China Sea. The recent pattern of Chinese, Japanese, and South Korean leaders meeting independent of ASEAN, despite their continued avowals of ASEAN’s “leadership” in East Asian regional matters, paused when Japanese officials announced the postponement of a planned summit among the three northeast Asian powers in September on account of the resignation of Japan’s prime minister. China-ASEAN meetings From July 22 to 24, Chinese Foreign Minister Yang Jiechi attended and participated in a series of meetings in Singapore with regional leaders organized around the annual ASEAN foreign ministers’ meeting. The developments and outcomes from Yang’s activities in Singapore indicated that Beijing remains supportive of regional interaction and multilateral engagement under the ASEAN framework. At the same time, there is continued interest in strengthening Beijing’s partnership with other counterparts in the Asia-Pacific region. Yang took part in an informal, consultative meeting between the foreign ministers in the East Asia Summit (EAS). As a follow-up to the Cebu Declaration in January 2007, discussions focused largely on energy security and climate change. Yang maintained that China remains committed to working with EAS partners in addressing these topical and transnational challenges and reiterated China’s position that developed countries bear the responsibility to take greater action in reducing their emissions, providing financial assistance, increasing research and development exchanges, and diffusing the necessary technologies for the developing South. China-Southeast Asia Relations 63 October 2008 At the 9th ASEAN Plus Three Foreign Ministers Meeting, a retreat format was arranged by the Singapore hosts. The more relaxed atmosphere was reflective of the warming of relations since last year between the “Plus Three members,” namely China, Japan, and South Korea and sought to facilitate a more frank, open, and interactive dialogue among the thirteen ministers. A broad range of security and economic issues were discussed. ASEAN ministers also noted their appreciation for Chinese, Japanese, and South Korean contributions and support for the ASEAN-led mechanism on humanitarian assistance for the victims of Cyclone Nargis. China, together with Japan and South Korea, also announced that they would each contribute $900,000 toward the ASEAN Plus Three Cooperation Fund that would promote greater regional community building through the support of such mutually reinforcing and complementary processes as the ASEAN Plus Three meetings, EAS, ASEAN Regional Forum (ARF), Asia-Pacific Economic Cooperation (APEC), and Asia-Europe Meeting (ASEM). Subsequently, at the China-ASEAN Foreign Ministers’ Meeting, Yang emphasized that in light of new security, political, and economic challenges in the region, the two sides stand to benefit from closer consultation and collaboration. Yang called for closer coordination and the need to maintain high-level policy exchanges, as Beijing also announced that it will soon appoint a new special envoy to ASEAN. He also pushed for the establishment of the China-ASEAN Free Trade Area and the need to step up cooperation on agriculture, energy security, climate change, and environmental protection. On the security front, Yang called for greater coordination on disaster relief, upgrading the level of cooperation in counter-terrorism and transnational crimes, and following up on the implementation of the Declaration on the Conduct of Parties in the South China Sea. More important, Yang reiterated that China will support ASEAN’s leadership role in the region in contributing to “safeguarding regional peace, promoting common development, and realizing the long-term goal of building an East Asian community.” China’s seemingly supportive view of ASEAN was also seen in the ARF. Much of the discussion focused on the ARF’s role in managing security challenges emanating from the region. Yang noted that the ARF’s emphasis on “trust building measures” has been gradually replaced by its “preventive diplomacy.” While such a change reflects the new, emerging challenges in both regional and global security, he also urged caution and said that such preventive diplomacy “should keep to the principle of cooperation instead of interference theory and create harmony instead of confrontation.” Equally important, on the sidelines of the Singapore meetings, China, as chair of the Six-Party Talks, also initiated and chaired the first foreign ministers’ informal meeting of the Six-Party Talks on the North Korean denuclearization issue. China’s relations with each of the other five parties have been relatively stable and positive since last year and the informal talks saw candid and open exchanges by all sides. A six-point consensus on the North Korean denuclearization process was reached at the conclusion of the dialogue. Pyongyang’s latest decision to bar international inspectors from visiting a reprocessing plant at its Yongbyon nuclear reactor site in late September, however, indicates increasing tensions. This could see international calls for China to press North Korea to follow through with its commitments. While in Singapore, Yang also took the opportunity to meet individually with foreign ministers from Indonesia, Vietnam, Myanmar, Japan, and Singapore as well as the deputy prime minister China-Southeast Asia Relations 64 October 2008 from Thailand. He also met with his Australian, South Korean, and U.S. counterparts to discuss the prospects for strengthening each set of bilateral relations and to work even more closely with the latter two in addressing the current situation in North Korea. Troubles with Vietnam The South China Morning Post reported on July 20 that China had warned ExxonMobil against its involvement with Vietnam’s state oil firm PetroVietnam regarding exploration in areas of the South China Sea off Vietnam’s south and central coasts. The report recalled that the areas to be explored were near disputed areas where the Anglo-Dutch oil company BP had been carrying out seismic work in cooperation with Vietnam until Beijing formally protested to Hanoi last year and BP stopped the work. Chinese official media prominently carried remarks underlining claims to the South China Sea by the Chinese foreign ministry spokesman in response to a question at a regular press briefing on July 22. China Daily also highlighted reports that Chinese officials in Washington had threatened to withdraw business from ExxonMobil if it went ahead with the exploration in the disputed areas in the South China Sea. The Chinese newspaper repeated past official Chinese charges that Vietnam and the Philippines have used military force to occupy uninhabited islands and reefs, have arrested and detained Chinese fishermen, and have carried out other affronts to Chinese sovereignty in the South China Sea. It also repeated China’s avowed determination to settle these disputes through peaceful means and diplomatic consultations without the involvement of external forces. The Chinese actions were cited by veteran Southeast Asian observer and maritime expert Mark Valencia in an assessment (“The South China Sea Hydra” July 24, 2008 www.nautilus.org) that concluded “China’s behavior in the South China Sea has become more confrontational than cooperative and deserves renewed ASEAN attention.” In Valencia’s view, past ASEAN hopes that the 2002 China-ASEAN declaration on a code of conduct in the South China Sea and some joint Chinese seismic work with the Philippines presaged continued Chinese cooperation have failed in the face of soaring energy prices and searches for petroleum. Notably, in his view, “China appears to have reverted to its preference for dealing with ASEAN members separately, rather than as a whole, particularly regarding South China Sea issues.” Further complications emerged in September when foreign media reported that Vietnam protested to China over so-called “invasion plans” appearing on Chinese websites that detailed plans for a Chinese military invasion and occupation of Vietnam. Officials from Vietnam and China cited in the foreign media reports highlighted Hanoi’s position that the Chinese internet plans are harmful to bilateral relations, and Beijing’s response that they represent the views of only “a handful of people” and do not represent China’s official position in support of Sino-Vietnamese friendship and development. Meanwhile, Vietnam’s high inflation, high dependence on foreign investment, and recent market instability were duly covered in official Chinese media amid warnings to Chinese entrepreneurs. A signed commentary in China Business Weekly on July 13 noted that Vietnam has been an attractive place to invest because its labor costs are one third those in China’s coastal regions, it is closer to ASEAN markets, it has fewer pollution and energy restrictions than China, and its exports face fewer anti-dumping duties than China’s. However, the commentary noted that labor China-Southeast Asia Relations 65 October 2008 costs in Vietnam are rising with inflation, some of the investment incentives offered by Vietnamese officials are being withdrawn, and overall worries about the financial stability of Vietnam continue. China’s quiet response on the Thai political crisis and the Thai-Cambodia border dispute On Sept. 2, in response to the political situation in Thailand, Chinese Foreign Ministry spokesperson Jiang Yu stated that Beijing is monitoring the developments in Thailand closely and that the Chinese government “sincerely hopes that Thailand can continue to maintain political stability.” The government refrained from making further comments, reflecting its traditional foreign policy principle of noninterference. A scholarly article published by the Beijing Zhongguo Qingnian Bao on Sept. 3 by a security analyst provided a largely descriptive narrative of the current situation in Thailand. It concluded that the Thai military has thus far largely remained on the sidelines and restrained itself from taking action against the protesters, adding that there is no clear indication of divisions within the military. Earlier, Chinese media reported that Chinese tourists who were stranded in Phuket in southern Thailand after anti-government protests closed down the airport returned safely to Beijing. Likewise, in spite of the close ties China shares with both Cambodia and Thailand, Beijing took little to no action in settling growing tensions between its two Southeast Asian neighbors. On Aug. 4, the People’s Daily published an article assessing the military standoff between Thailand and Cambodia over a territorial dispute near the Preah Vihear Temple. The article outlines in great detail the historical context of the conflict and sees the territorial dispute as an unresolved issue left by the former French colonial authorities in Cambodia. Rather than siding with either party of the conflict, the article argues that the two governments should each take a step back, stick to their commitments to demilitarize the border, and continue to negotiate and consult with one another in good faith. It also sees ASEAN’s position in the dispute as “very reasonable and sober-minded” since the regional organization advocated both member states to resolve the situation through continued consultation. In July, Thai media reported that China, like the rest of the permanent members of the UN Security Council, prefers the two sides to address and resolve the conflict on their own through peaceful dialogue. Trade advances Official Chinese media commentary registered satisfaction with the status and outlook of the ASEAN-China Free Trade Agreement (FTA) and the progress in trade and economic relations with Singapore. A feature article in The China Business Weekly on June 29 on the background and importance of the ASEAN-China FTA said that “everything seems to be going smoothly” as the China-ASEAN commodity trade agreement and the first round of service trade agreements came into effect in 2005 and 2007. It projected that ASEAN-China trade would reach $1.2 trillion in 2010. Discussions on investment and two more rounds of service trade agreements are underway and are expected to be completed by 2010. The article also cited cautionary remarks by a Chinese business leader that “the next two years will be harder than ever as the two sides will be squabbling over to what extent they open service sectors and investment.” China-Southeast Asia Relations 66 October 2008 China Daily on Aug. 9 reviewed favorable Sino-Singapore relations based on ever closer economic and trade ties. Bilateral trade in 2007 was up 7.4 percent to a value of $63.8 billion, making Singapore China’s eight largest trading partner. Singapore is the sixth largest investor in China with a cumulative stake in 2007 valued at $33.2 billion. Meanwhile, the Singapore government announced on Sept. 4 that negotiations that began in 2006 on a China-Singapore FTA had concluded, and the media indicated that the deal likely would be signed during the Singapore prime minister’s visit to China in October. Military ties The steady growth of Chinese military relations with Southeast Asia saw the first port visit to China by a Singapore warship in August, the meeting of the Chinese defense minister with Myanmar’s visiting chief of defense industries in August, and a joint Sino-Thai military training exercise in July. Writing in the Jamestown Foundation’s China Brief in early July, Singapore-based expert Ian Storey assessed the evolution and growth of Chinese-Thai military relations, noting such highpoints as annual defense talks, acquisition agreements, and joint training exercises. A recently proposed Joint Action Plan between Thailand and China was deemed a model for Chinese defense cooperation with other ASEAN states. Storey added, however, that Thailand remains reluctant to purchase military equipment from China because of concerns with quality and after-sales service. He stressed the low importance of the Chinese military connection for Thailand when compared with the multifaceted and very active relations between the U.S. and Thai militaries, though he concluded that “the military-security relationship between China and Thailand is on an upward trajectory.” Taiwan interest in ASEAN The administration of President Ma Ying-jeou, in power since May 2008, has endeavored to improve relations with ASEAN amid strong efforts to reassure China and Southeast Asian nations. Ma has said that Taiwan has no intention of following the controversial policies of the previous Taiwan administration of President Chen Shui-bian, which were condemned by Beijing and many ASEAN administrations as provocative and destabilizing. China has not officially reacted to the Taiwan statements of interest in improved relations with ASEAN. The Taiwan foreign ministry issued a statement on July 25 welcoming the statement in the ASEAN foreign minister’s meeting assessing positively the improved relations between China and Taiwan that have developed since President Ma took power. The Taiwan statement pointed out Taiwan’s substantial economic stake in ASEAN with cumulative investment of $51.1 billion and 2007 trade valued at $60 billion. It averred that Taiwan wants to deepen interaction with ASEAN “in a pragmatic manner” and to enhance bilateral relations in various fields. Taiwan Vice President Vincent Siew told visiting Indonesian economic experts on July 30 that Taiwan should be a dialogue partner with ASEAN in line with ASEAN’s dialogues using the pattern of ASEAN Plus One and ASEAN Plus Three. Siew linked this assertion with Taiwan’s recent efforts to reassure Beijing and calm cross-Strait relations, saying “As cross-Taiwan Strait relations are seeing gradual improvement, the Taiwan government wants to further strengthen relations with the ASEAN and its member countries in order to gain an opportunity for future development.” Meanwhile, President Ma, in a foreign policy address to the Foreign Ministry China-Southeast Asia Relations 67 October 2008 staff in early August, said that his government, while seeking a “truce” in international competition with Beijing and gradually building trust in cross strait relations, would employ “flexible diplomacy” that sought among other things the signing FTAs with ASEAN countries in order to achieve Taiwan’ acceptance as a dialogue partner with ASEAN. Australia’s defense posture and China Australian Prime Minister Kevin Rudd delivered a speech on national defense to an Australian audience on Sept. 9 which was seen by regional media as presaging budget and other increases in Australia’s defense posture in Asia. Though Rudd avoided mentioning any Asian country by name, his emphasis on economically rising Asian powers building more capable power projection systems like advanced aircraft and submarines seemed focused on China, in the view of leading journalists. Veteran media commentator Greg Sheridan praised Rudd’s comprehensive and balanced treatment emphasizing a variety of missions for Australian forces. He singled out Rudd’s “wise assessment,” acknowledging but not overemphasizing the significance of Asia’s rising powers. According to Sheridan, Rudd “correctly sees the U.S. as the dominant strategic player in Asia at least until 2050. Other powers, notably China and India, will rise, and may even rise relative to the U.S., but Washington will still lead the region militarily in the middle of the century.” China’s close attention to Australian defense increases was underlined in an Aug. 18 report in official Chinese media that noted Australia was seeking to buy U.S. electronic-warfare aircraft to carry out radar-jamming missions. It said that the purchase was part of Australia’s recently begun $52 billion modernization of the defense forces and would make Australia only the second Western nation to use dedicated electronic warfare aircraft. The report said that the aircraft would be used against “advanced Russian-designed fighters” purchased by Australia’s regional neighbors Indonesia and Malaysia, but it made no mention of China and the hundreds of advanced Russian fighters it has acquired since the early 1990s. Assessing China’s rise The July edition of the journal Asia Policy contained a book review round table involving six specialists and David Kang, the author of China Rising: Peace, Power, and Order in East Asia. Among points discussed, the specialists debated but came to no consensus on Kang’s judgment that China’s neighbors are inclined to accept and accommodate China’s rising power and influence in Asia in the recent period because East Asia is a historically hierarchical system centered on China. A logical implication of Kang’s judgment is that China is in a strong position to solidify the leading role in the region, presumably at the expense of the other powers in East Asia, notably the United States. While many commentators and specialists continue to highlight evidence of China’s rise and U.S. decline in Southeast Asia, there has been some slippage in the ranks of these specialists. Perhaps the leading advocate of China’s rise and U.S. decline in Southeast Asia and other areas was Joshua Kurlantzick of the Carnegie Endowment for International Peace. A prolific writer, Kurlantzick in recent years produced a major book Charm Offensive and dozens of policy papers, journal articles and media commentaries to support his case that China’s rise was part of China-Southeast Asia Relations 68 October 2008 an Asian ascendance that increasingly marginalized the United States. Reflecting an apparently major turnabout in his thinking, Kurlantzick argued in an editorial in the Washington Post on Sept. 7 that a long list of weaknesses and shortcomings in China and other Asian states, ranging from excessive nationalism to deep seated prejudices, means that those predicting an Asian century will replace an American century are wrong. Meanwhile, specialists in the Congressional Research Service (CRS) have continued to pull away from earlier assessments stressing China’s rising influence at the expense of the U.S. in Southeast Asia; they have moved to more balanced assessments. Building on the major study CRS did for the Senate Foreign Relations Committee (reviewed in last quarter’s Comparative Connections), CRS in August published a report involving 14 CRS specialists entitled Comparing Global Influence: China’s and the US Diplomacy, Foreign Aid, Trade, and Investment in the Developing World. The section assessing Southeast Asia concluded that “both China and the United States have strong ties to Southeast Asia, and both draw upon considerable strengths in projecting soft power in the region.” As far as “soft power” is concerned, “neither side can really claim to be the dominant power in the region.” The study did not assess the respective military and defense ties (“hard power” in the CRS definition) of China and the U.S. in the region. China is usually seen leading in this category in its relations with Myanmar, but as indicated by the comments of Ian Storey and Greg Sheridan above, the U.S. has longstanding, advanced, and multifaceted military and other security ties with the important Southeast Asian states that overshadow China’s nascent efforts to build military and defense ties. Outlook Barring unforeseen crises in China’s relations with Southeast Asia, the region is likely to remain low on the list of Chinese leaders’ policy priorities. Leadership and nuclear issues regarding North Korea, the results of the U.S. election, and international economic uncertainties are among the factors crowding out Southeast Asia as an issue warranting salient Chinese leadership attention. Domestic preoccupations and crises in several of the leading Southeast Asian states further curb opportunities for closer cooperation with China. The Hu Jintao administration will welcome regional leaders to the 7th Asia-Europe meeting to be held in Beijing in late October. It also is expected to pursue along already established lines advances in bilateral and multilateral relations with Southeast Asia.