CIAO DATE: 02/05/08
The National Interest
Hu's on First?
Joshua Kurlantzick and Devin Stewart
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IN RECENT issues of The National Interest, there have been a series of articles that take China’s rise to both regional and global pre-eminence as a given.1 But it is worth stepping back to take a sober look at some of the very real challenges China faces—and in particular, how China’s neighbors assess these developments. Sometimes the view from Washington and New York can be a bit overly optimistic.
Of course, over the past six months, that confidence about China’s continued progress was shaken as governments across the world witnessed an explosion of terrifying stories about Chinese exports. News reports detailed toothpaste tainted with poisons, fake baby formula and pet food packed with illegal substances. Though China vowed better safety standards—and executed the head of its own food and drug administration—it also stonewalled in many cases, blaming complaints on overaggressive foreign news reporters and claiming that American exports also can be dangerous.
For leaders in Southeast Asia, the problems of China, its giant neighbor, can have a more immediate impact—as they found out when the SARS crisis, initially covered up by China, quickly spread across Asia and decimated the region’s economies. Over the summer, Southeast Asian reporters learned of another terrifying outbreak of disease in China. A mysterious illness in Guangdong province was causing pigs to bleed to death. Gruesome foreign TV and newspaper reports described bloody pigs staggering around, panicked Chinese farmers trying to sell their hogs en masse and rivers filled with pig carcasses. Southeast Asian officials worried about whether the pig disease would spread into their nations. Yet once again, the Chinese government did almost nothing. In fact, in China itself, few people even seemed to know about the pig illness. Chinese state media had not reported on the Guangdong disaster, and even well-informed businesspeople in Shanghai had heard little about it.
The cover-up and finessing of the pig debacle is hardly unique. In recent years, China has made enormous strides in its relations with Southeast Asia and with many other parts of the developing world. Using more sophisticated diplomacy, a growing aid program, and trade and investment, it has boosted its global profile and smoothed relations with neighbors, who a decade ago clearly feared the rise of China’s military and economic power. China is even eyeing a regional leadership role in Asia, playing a key part in the run-up to the first East Asia Summit (EAS), mediating some intra-regional disputes and taking the lead away from Japan in driving regional trade initiatives. As one Philippine official said, “China has mastered the diplomacy, but Japan and the United States, they’ve not mastered the art of talking like their partners.”
But as long as China remains so opaque that other nations cannot hold it accountable or even understand how its domestic politics operate, it cannot become a regional—or global—leader. Indeed, within Southeast Asia, many nations warming to China also have maintained close relations with the United States —not a popular actor in this part of the world these days—primarily because Washington still offers some degree of transparency. “When you have a problem with China, who do you call?” asks one Southeast Asian official. “You never have any idea.”
TEN YEARS ago, few Southeast Asians would have believed that China could claim regional leadership. In the mid-1990s, commentators in the Thai, Malaysian and Philippine media warned of the economic threat from China, whose booming manufacturing sector threatened the medium-value exports that had driven the economic boom in Southeast Asia. China offered little public information about its military build-up and took several unilateral military actions, like seizing reefs in the South China Sea and lobbing missiles near Taiwan, which frightened Southeast Asian defense planners. In the Philippines, which was unprepared for China’s actions in the South China Sea, this fear resulted in the establishment of closer defense ties with the United States, which had vacated bases in its former colony several years earlier.
In the 21st century, China has dramatically changed its approach to the rest of Asia. Recognizing regional fears of its economy, China pushed for a free-trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN), even as Japan remained reluctant to embrace regional free trade. China slashed tariffs on imports from some of Southeast Asia’s poorer economies and also began funding the infrastructure necessary to boost regional trade, like the new north-south road corridor running from China through Laos and Thailand. (Major multilateral donors largely had stopped funding infrastructure.)
China has already surpassed Japan as the largest trading partner with several Southeast Asian nations and has become a significant aid donor, particularly in countries like Myanmar that are isolated from multilateral donors. As Chinese firms started looking to invest overseas, they often first moved into neighboring states. In Cambodia, for example, China has become the largest investor, though overall in Southeast Asia, Chinese firms’ outward investment still pales behind that of Japan and the United States. Beijing has also wooed ASEAN, signing the region’s Treaty of Amity and Cooperation, which the United States has not done, and has become a far more active dialogue partner with ASEAN than either Washington or Tokyo. China has even tried to increase defense ties with Southeast Asia, proposing joint exercises with the Philippines and Thailand, among others.
China’s wooing has begun to pay off. Polling throughout the region shows growing public warmth for China, especially when compared to local opinions of the United States. Compared to a decade ago, Southeast Asian elites are far less worried about economic competition and far more willing to partner with China, as the Philippines and Vietnam have done, agreeing to jointly explore the South China Sea for oil and gas. The region’s leaders also downplay local concerns about freer trade with China—in Thailand, farmers worry about cheap Chinese imports of products like garlic, yet the Thai government has done little to advocate for its agricultural sector in negotiations with China. Thailand has also taken up China on its offer of joint military exercises, the kind of defense cooperation that would have been unthinkable a decade ago. In nations like Vietnam, political elites have even begun to analyze the “China model” of development, assessing whether China’s combination of moderate economic liberalization and no concurrent political reform could be duplicated in Hanoi.
BUT BEIJING’S charm may be reaching its limits. While China has pursued more sophisticated diplomacy in the region, its own political system has hardly become more transparent. Just the opposite: Though many foreign governments hoped for substantial political reform when Hu Jintao came to power, studies by groups like Human Rights Watch actually show Beijing has backslid on political and social freedoms under Hu, with crackdowns on local media and civil-society organizations like China Development Brief (CDB), a prominent Beijing-based website that monitored Chinese non-governmental organizations (NGOs). This summer, with little warning, the Chinese government shut down CDB. At the same time, China clearly has been upgrading its military, boosting defense spending by some 20 percent last year alone and beginning to develop a blue-water navy, but failing to coherently explain to its neighbors the rationale behind its build-up.
Worse, even as wealthier Asian nations are beginning to embrace environmental stewardship, better labor rights and corporate social responsibility, China’s companies, now beginning to invest abroad, remain plagued by low environmental standards, poor governance and little accountability. As Xiaobo Lu, a Columbia University professor, says, China needs institutions to establish the ethical “rules of the game.” “Right now, it is everything goes—precisely because, yes, everything goes—no good credit checking system, no well-placed fear of violating good norms, one can get away with cheating, et cetera”, Lu told The Wall Street Journal. Indeed, to many Southeast Asian nations, there seems no way to hold Chinese firms accountable for disasters ranging from clear-cutting in northern Myanmar to exports of tainted products to significant problems with Chinese joint venture partners. As a member of one of Indonesia’s leading business associations said, Chinese partners offer poor after-sales service on electronic exports, and when Indonesians complain, Chinese firms do not respond. If this service does not improve, he said, Indonesian consumers’ image of Chinese products will plummet.
Because of Beijing’s opaque domestic politics and lack of business ethics, when Southeast Asian nations face crises with China, they often are left frustrated and angry. (To be fair, some Southeast Asian states like Myanmar and Laos are hardly models of transparency themselves, and their leaders probably care less about China’s opaqueness.) Though Hu Jintao and Wen Jiabao travel incessantly, constantly leading business delegations to Southeast Asia, during several crises, such as the recent anti-junta protests in Myanmar, they have moved very slowly. On disease issues, for example, Beijing does not appear to have learned from its SARS stonewalling. In recent years, China has responded hesitantly to outbreaks ranging from the mass pig deaths to a rash of foot-and-mouth disease in Qinghai, in western China.
As a result, China has not been able to assume the kind of regional leadership role many Chinese officials would like. Though Beijing wants to play a primary role in the Greater Mekong Subregion in mainland Southeast Asia, when Laos and Cambodia have complained about China’s dams on the upper, Chinese portion of the Mekong River, China does not respond and even refuses to join the regional organization charged with monitoring the Mekong. As one prominent Cambodian official said, China can never really dominate the subregion if other nations still worry that China will cheat on any agreement it makes.
Beyond government-government relations, China’s lack of transparency has cost it dearly with Southeast Asia’s vibrant civil society. When Cambodian organizations criticized a Chinese company and its Cambodian partner for land deals that allegedly pushed hundreds of villagers off their property, the Chinese and Cambodian firms did not talk with the local NGO, but instead tried to squash any protest. (This has become a common theme with Chinese firms: In southern Africa, where there have been several protests against Chinese mining investments, Chinese companies have refused to engage in substantial dialogue with demonstrators.) When Burmese and Thai activists have released data about China’s involvement in proposed dams on the Mekong and Salween Rivers, Chinese firms have not responded.
Similarly, local activists in the Philippines complain that when they raise questions about the relocation of hundreds of thousands of people living near the Chinese Export-Import Bank–funded Northrail project, they get no response either from the Chinese embassy or from the Philippine government. Opposition to China among Philippine civil society has become so strong that many activists oppose even seemingly progressive initiatives, like China’s plan to help the Philippine Department of Agriculture develop biofuels, because of fears about China’s environmental management.
RECOGNIZING CHINA’S growing influence in Asia, but still wary of completely trusting Beijing, Southeast Asian nations are playing a balancing game. While welcoming China’s growing interaction with ASEAN and relying increasingly upon Chinese aid and investment, Southeast Asia’s major states—Indonesia, Singapore, Malaysia, Thailand and the Philippines—thus far have prevented China from setting the agenda of important ASEAN-centered meetings, like the EAS. In fact, most of ASEAN’s major states have welcomed many outside actors, like Australia and India, into the EAS, potentially to hedge against China. As one government official in the Philippines said: “We want to make use of all worlds—Japan, China, Taiwan. It’s promiscuous diplomacy. . . .You invite everyone in, and make a deal with everyone.”
Southeast Asian states are also attempting to consolidate their own power so they can better adapt to China’s growing influence. Often criticized for its sloth, ASEAN is debating a charter that will probably include provisions for the establishment of a regional human-rights body. If it overcomes resistance from Myanmar, this move would weaken ASEAN’s non-interference principle. The new charter also may bolster ASEAN’s weak secretariat, allow its secretary-general to play a bigger role on the world stage and strengthen its decision-making process, now hampered by a reliance on consensus for nearly every major choice. In the longer term, ASEAN will need this powerful document to present the kind of united front it has lacked in the past. However, many Southeast Asians remain skeptical about whether the economically and politically diverse ASEAN, which contains both first-world Singapore and fourth-world Myanmar, can produce a strong charter. At the same time, the organization will need to move faster toward an intra-ASEAN free-trade zone, a long-promised development that would put the region in a more competitive economic position.
China’s trust deficit offers a window for the United States and Japan, long the major political and economic actors in Southeast Asia. Since the Second World War, the United States has built a web of alliances and defense relations in Southeast Asia, while Japanese aid and investment has powered the region’s growth. Today, despite the legacy of World War II, opinion leaders across the region generally still trust Japanese firms far more than Chinese partners and realize that Washington and Tokyo respond quickly and transparently to crises like the 2004 tsunami. Southeast Asian companies respect Japanese firms’ treatment of local partners, who are readily consulted and whose advice is often acted upon. Civil society organizations in particular continue to trust Japan, which is viewed as a leader on environmental management and labor relations. Even civil-society groups in the Philippines, where local NGOs often distrust foreign investors, are more willing to accept Japanese investment in the country’s critical and heavily state-protected mining sector.
Unfortunately, the United States has not embraced this opportunity. The State Department and the National Security Council have demonstrated to Southeast Asia that they want to place a higher priority on the region. The State Department has created a new position of ambassador to ASEAN, and Secretary of State Condoleezza Rice has announced an initiative to transfer more diplomats from developed regions like Western Europe to developing nations, which likely would increase the Foreign Service presence in Indonesia. After signing a free-trade deal with Singapore, the United States has tried to pursue FTAs with Malaysia and Thailand. However, these FTAs have not been completed and—given the growing protectionist climate in America—are unlikely to become priorities for the next U.S. administration. Nevertheless, Washington has been willing to develop trade-and-investment framework agreements, a kind of first step toward an FTA, with other Southeast Asian nations, though these too are only in preliminary stages. The United States and Japan have also proposed an informal community of democracies in Asia, though this idea needs to be fleshed out and funded and also does not appear to be high on the agendas of congressional Democrats or presidential candidates.
Washington has also not responded. Despite promising a summit with eight Southeast Asian nations, President Bush abruptly postponed the idea this summer because of the focus on Iraq. Meanwhile, Secretary of State Rice declined to attend Southeast Asia’s most important security forum in favor of a trip to the Middle East. Though the United States and Japan have embraced bilateral trade deals in the region, they have lagged behind China’s multilateral trade diplomacy.
China’s shortcomings will delay its political ascent in Asia, but not indefinitely. One leading Indonesian scholar, Makmur Keliat, puts China’s true regional emergence at around 2020. Recounting a conversation he had with his country’s top diplomat, he said:
I told our foreign minister that we need to speed up the process of our East Asian community. He responded that the China of today will soon be unrecognizable.
China is changing rapidly. He added,
In 15 years, China will try to project its power.
This is one reason why Southeast Asian states are trying to promote closer unity. If the United States has not re-engaged with Southeast Asia by that time, countries in the region will have no choice but to acquiesce to China’s rise.
Joshua Kurlantzick is a visiting scholar at the Carnegie Endowment’s China Program. Devin Stewart is a program director at the Carnegie Council for Ethics in International Affairs.
1 See, for example, “China’s ASEAN Invasion” by John Lee and “Agreeing to Agree (and Disagree)” by Robert J. Art from the May/June 2007 issue.