During his remarks at the 18th ASEAN-China Summit last November in Kuala Lumpur, Chinese Premier Li Keqiang lauded the “new progress” that could be made in the relationship between the two sides as they prepared to commemorate the 25th anniversary of their dialogue partnership in 2016 (Ministry of Foreign Affairs, November 22, 2015). But with uncertainty still hanging over some of China’s new economic initiatives and a much-awaited ruling on China’s South China Sea territorial claims last month going decisively against Beijing, it is unclear how friendly relations between the ASEAN states and China will be.
Economics continues to be the heart of ASEAN-China relations. China has been ASEAN’s largest trading partner since 2009, and ASEAN has been China’s third largest since 2010. Last year, both sides agreed to double their bilateral trade to $1 trillion as well as to upgrade the ASEAN-China Free Trade Agreement (FTA), the world’s largest such agreement by population.
Both sides have focused on a few priority areas this year. One of them is production capacity cooperation, which has emerged as a key focus of China’s economic diplomacy. Beijing sees this as a way to both deal with the surplus of production capacity in the Chinese economy while also meeting the demand for more investment, technology and labor in emerging markets including Southeast Asia (Xinhua, June 15, 2015). ASEAN and China are expected to ink a joint statement on this issue later this year.
Meanwhile, at the sub-regional level, China has been focusing on developing its new Lancang-Mekong Cooperation (LMC) Framework with mainland Southeast Asian countries along the Mekong River. Beijing has characterized the initiative as designed not just to promote its own economic interests, but to help narrow development gaps within ASEAN and to support the building of an ASEAN community. In March at the inaugural LMC leaders’ meeting in Sanya, Hainan province, Chinese Premier Li Keqiang said that China had committed to $11.5 billion in loans and credit for Mekong countries (Ministry of Foreign Affairs, March 23).
ASEAN countries are also benefiting from the rollout of new Chinese economic initiatives such as the Asian Infrastructure Investment Bank (AIIB) and the One Belt One Road (OBOR). According to Citibank, Southeast Asian infrastructure is already emerging as a major beneficiary of OBOR, with Chinese companies accounting for 17 percent of infrastructure investment across the region in 2015 (Supply Chain Asia, July 11). Last month, Indonesia also became one of the first four recipients of AIIB projects (Jakarta Globe, June 26). Other ASEAN states are keen to follow suit.
China-ASEAN Security Cooperation
On the political-security side, while observers tend to overwhelmingly focus on the South China Sea issue, there is in fact a whole series of areas where ASEAN and China already cooperate, particularly in non-traditional security areas like natural disaster response, transnational crime and countering drug trafficking. Over the past few years, Beijing has also been attempting to deepen its ties with ASEAN as a whole as well as with individual Southeast Asian states. Last year, ASEAN and China held their first ever informal defense ministers’ meeting in Beijing, which was viewed as a landmark development.
China has been looking to deepen ties even further this year. At the sixth China-ASEAN Defense Ministers’ Informal Meeting in Vientiane in May, Chinese State Councilor and Defense Minister Chang Wanquan said that China intended to strengthen cooperation with ASEAN in several areas (China Daily, May 26). Of particular note was his mention of greater anti-terrorism cooperation in terms of intelligence sharing and exercises, given that a number of maritime Southeast Asian states—most notably Malaysia, Indonesia, Singapore and the Philippines—have grown increasingly wary of the threat of the Islamic State to their national security. Chang also said that Beijing would be willing to enhance collaboration between the People Liberation Army’s Southern Theater Command and the militaries of ASEAN nations in a wide range of fields including border and coastal defense, maritime security and anti-terrorism.
ASEAN and China have also looked to better manage the South China Sea issue. One of the concrete outcomes expected for the year is an ASEAN-China joint statement on the implementation of the Code for Unplanned Encounters at Sea (CUES)—a series of protocols for the safety of naval vessels initially negotiated at the 2014 Western Pacific Naval Symposium. A number of members including Singapore, the country coordinator for 2016, are looking to advance this as a way of better managing potential tensions.
Another expected outcome is the establishment of a hotline between foreign ministries to manage maritime emergencies. As a confidence-building measure, China has also proposed a joint exercise with militaries from ASEAN nations including maritime search and rescue, disaster relief and application of CUES. Beijing proposed the exercise be held in Zhanjiang, Guangdong province—the headquarters of the South Sea Fleet—and its coastal waters in the second quarter of 2017.
The two sides also continue to work toward the implementation of the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC) and the conclusion of a binding code of conduct (COC). At the 12th ASEAN-China Senior Officials’ Meeting (SOM) on the Implementation of the DOC in Vietnam in June, ASEAN countries once again stressed the need for the early adoption of an effective COC, including through increasing the frequency of the SOM as well as joint working group meetings on the implementation of the DOC (Vietnam News, June 10). The next round of meetings will be held in China this month.
The third and final component both sides have emphasized this year is people-to-people ties. A number of activities are planned for the rest of the year in this realm, including the organization of an ASEAN-China Young Entrepreneur Forum as well as a Second ASEAN-China Youth Exchange Visit. This year, the focus has been on education, with both sides designating 2016 as the Year of China-ASEAN Education Exchange. Yang Xiuping, the Secretary General of the ASEAN-China Center, reiterated last month at the ASEAN-China Forum of Youth and Humanities in Jilin province that the target for the next few years is to have 100,000 ASEAN students studying in China by 2020 (Embassy of the Philippines, June 20).
Another important field within the people-to-people realm is tourism. At a speech on July 12 in Jakarta to commemorate the 25th anniversary of China-ASEAN dialogue relations, China’s ambassador to ASEAN, Xu Bu, said that the two sides were considering the possibility of designating 2017 as the Year of China-ASEAN Tourism Cooperation (Ministry of Foreign Affairs, July 11). Though China has already emerged as the largest source of foreign tourists to ASEAN countries, a number of Southeast Asian countries have expressed interest in further increasing that number. Indonesia’s Tourism Minister Arief Yahya, for instance, has said that he wishes to double the number of Chinese tourists visiting Indonesia at the earliest possible date.
While there are advances that both sides intend to make in their relationship this year, it is clear that significant challenges remain. Despite some progress, there are still some challenges to China’s broader economic objectives in Southeast Asia. Beijing’s long-term goals for infrastructure development within the framework of the broader OBOR project include the ambitious plan to build a Pan-Asia Railway Network that will see three 4,500—5,500 kilometer railway lines link China with Southeast Asia. Central, western and eastern routes of this planned railway network will run from Kunming through Laos, Thailand, Myanmar, Vietnam and Cambodia and Malaysia and Singapore. However, such a large scale and ambitious project has predictably run into trouble in the negotiation of its details between Beijing and the seven governments upon whose land the rail lines will be built.
For example, in March, Thai Prime Minister Prayut Chan-o-cha announced that the Thailand-China high-speed rail project would be canceled due to disagreements over terms. Though the Thai government has said it will proceed with the 250 kilometer section of the rail line that links Bangkok to the northeastern city of Nakhon Ratchasima, it was nonetheless a serious blow to Beijing, as Bangkok is the planned center for all three of the lines (Bangkok Post, March 24). Similar hiccups and delays have also occurred previously in Myanmar and Laos. Beyond political issues in individual countries, there are also structural and engineering concerns in building such an extensive network including challenging landscapes, different railway gauges and poor track conditions.
Meanwhile, as China seeks to boost its economic ties with ASEAN states, there continues to be unease in some Southeast Asian capitals about their implications. Though China has argued that its economic initiatives can help forge ASEAN unity, some fear that the gravitational pull of Beijing will lead individual Southeast Asian states to put their relationship with China ahead of regional interests. Cambodia has been repeatedly accused of toeing Beijing’s line in recent years, while the rhetoric of the new Philippine president Rodrigo Duterte has led some to believe that he may advance an economics-first approach that makes Manila overly dependent on Beijing (Rappler, July 8). In April, prominent Malaysian commentator Tan Sri Munir Majid rather soberly wrote “Like individuals, some countries may sell their soul for money. Others may even trade territorial integrity” (The Star, March 26).
South China Sea Dispute: The Elephant in the Room
On the security side, the South China Sea issue has been the proverbial elephant in the room in 2016, even before the verdict this month. For instance, multiple diplomatic sources confirmed that at the ASEAN-China Foreign Ministers’ Meeting in Yuxi in June, China made a heavy-handed attempt to pressure ASEAN to adopt Beijing’s preferred stance on the South China Sea and then divided the grouping when it was going to act against Chinese interests, thereby preventing it from issuing a joint statement (The Diplomat, June 21).
Even though this statement was not eventually adopted, its nature and content revealed the seriousness of the South China Sea issue for Southeast Asian states. Apart from the fact that the statement was unprecedentedly set to be issued solely by ASEAN rather than in concert with Beijing, the language was also as close as ASEAN has ever come to a direct rebuke of China on the South China Sea question: “We expressed our serious concerns over recent and ongoing developments, which have eroded trust and confidence, increased tensions and which may have the potential to undermine peace, security and stability in the South China Sea.” 
Across regional capitals, Yuxi was seen as an early warning for ASEAN ahead of the 49th ASEAN Foreign Ministers’ Meeting (AMM) in Vientiane (PacNet, June 24). Though the AMM did see ASEAN avoid a repeat of Phnom Penh in 2012—where disagreements over the South China Sea prevented the issuance of a joint communique for the first time in the grouping’s history—the statement was also weaker than even the minimum standard of what was expected. Most clearly, the phrase “full respect for legal and diplomatic processes,” a reference to the ruling included in both the U.S.-ASEAN Sunnylands Statement and the Yuxi non-statement, was removed from the South China Sea section of the statement and shifted to the introductory part to accommodate Cambodia’s South China Sea-specific concerns. While Beijing once again denied a hand in Phnom Penh’s obstructiveness, its announcement of $600 million in aid to Cambodia just days ahead of the AMM did not help its case.
Although China continues to insist that the South China Sea issue ought to be kept in perspective and not undermine broader ASEAN-China relations, Beijing’s own actions—be they its assertive actions or its efforts to undermine regional consensus—have themselves heightened regional anxieties and led ASEAN to have to speak out even as it tries to advance ties with the Asian giant. As the ASEAN statement at Yuxi noted, “[W]e also cannot ignore what is happening in the South China Sea as it is an important issue in the relations and cooperation between ASEAN and China.” How China chooses to respond on the South China Sea issue following the ruling will play a major role in how the issue affects ASEAN-China relations in the coming months. .
Beyond the South China Sea issue, structural limits on how far ASEAN-China security ties can advance have continued to play themselves out in 2016. Southeast Asian states are only beginning to see the benefits of joint exercises with China, and even so, they are fully aware that their militaries do not gain nearly as much practical experience or technical expertise as when they conduct such drills with the United States. Following the visit of Xu Qiliang, Vice-Chairman of China’s Central Military Commission, a Malaysian defense official noted this was “why you see how slow [Sino-Malaysian defense ties] moved since we started.” 
Furthermore, most ASEAN countries have tended to source their military equipment from Western countries or Russia, which raises issues of compatibility, interoperability, or familiarity when it comes to entertaining Chinese proposals in areas such as defense purchases or industry collaboration. For instance, despite China’s unlikely victory over Germany and South Korea in the race to build Thailand’s first submarines in June, Bangkok continues to face questions about its choice, ranging from the reliability of Chinese equipment to the effects that further Chinese involvement in the country’s defense industry could have on its alliance with the United States (Bangkok Post, July 1).
To be sure, some of these challenges can be overcome by ASEAN and China in the coming months and years. Overall, there is still optimism about ASEAN-China relations in spite of lingering uncertainty in both the economic and security realms. However, after 25 years, it is still unclear how sunny the future of the China-ASEAN dialogue will be.
Prashanth Parameswaran is Associate Editor at The Diplomat magazine and a Ph. D. candidate at the Fletcher School of Law and Diplomacy at Tufts University based in Washington, D.C. His research and writing focuses on Southeast Asia, Asian security affairs and U.S. foreign policy in the Asia-Pacific.
- Interview, June, 2016.
- Author’s copy of the statement.