Beijing Unveils New Strategy for ASEAN–China Relations

Publication: China Brief Volume: 13 Issue: 21

Earlier this month, Chinese President Xi Jinping and Premier Li Keqiang embarked on high-profile trips to five Southeast Asian nations to attend the latest round of Asian summitry and commemorate a decade of the strategic partnership between China and ASEAN (the Association of Southeast Asian Nations) (South China Morning Post, October 17). During their respective tours of the region, the two also revealed the new leadership’s policy declaration on Southeast Asia for the next decade, known as “the 2 + 7 cooperation framework”. But while Beijing’s diplomatic offensive provided a good window into the new leadership’s thinking about Southeast Asia and also produced some impressive initial results, there remain limits to ASEAN–China relations in both the economic and security dimensions that could continue to bedevil ties for years to come.  

ASEAN–China relations have improved dramatically over the past decade since the inking of their strategic partnership on August 29, 2003. Two-way trade increased more than six-fold over the last ten years to top $400 billion last year, while investments exceeded $100 billion during the same period (Xinhua, October 17). As of last year, China was ASEAN’s largest trading partner for the third year in a row, while the region was Beijing’s third largest trading partner (China Daily, September 4). More generally, ASEAN–China cooperation has grown to cover over 20 areas from agriculture to disaster relief, and the two sides have set up 12 ministerial mechanisms and a range of cooperative platforms like the China–ASEAN Expo and the China–ASEAN Business and Investment Summit (The Jakarta Post, November 19, 2012). Though differences still exist on some issues, most prominently over Beijing’s handling of the territorial disputes in the South China Sea, Chinese officials have repeatedly emphasized that these should not overshadow what is otherwise a largely successful relationship.

At the ASEAN–China Summit in Brunei on October 9, Chinese Premier Li Keqiang put forward the “2 + 7 cooperation framework,” a new policy declaration on developing ASEAN–China relations over the next decade. It consists of a two-point political consensus and seven proposals for cooperation. The two-point political consensus held that the basis for promoting cooperation is deeper strategic trust and good neighborliness, saying that the key to deepening cooperation is focusing on economic development and expanding mutual benefit (Xinhua, October 10). The seven-point proposal included some interesting ideas for further cooperation, including inking a treaty on good-neighborliness, upgrading the China–ASEAN Free Trade Area (CAFTA) to raise trade to one trillion dollars by 2020, setting up an Asian infrastructure bank to finance mushrooming regional connectivity projects, and building a 21st-century “maritime Silk Road” (Xinhua, October 10). 

While the specifics of these proposals are still unclear, Premier Li and President Xi have already begun to expand cooperation bilaterally with several ASEAN countries during their Southeast Asia trips. Premier Li’s three-country tour saw the birth of new cooperative endeavors with respect to joint exploitation of energy resources in Brunei, high-speed rail technology in Thailand, and potentially even maritime exploration in the disputed South China Sea via a newly conceived working group in Vietnam (Xinhua, October 11). Meanwhile, President Xi’s visits to Malaysia and Indonesia resulted in an elevation of Beijing’s relations with the two countries to the level of a comprehensive strategic partnership, with notable improvements not only in economic ties but defense and security cooperation and people-to-people links as well (Xinhua, October 9). The optics of the visits reinforced their substance, with Premier Li and President Xi delivering rare, high-profile addresses to the Thai and Indonesian parliaments respectively.

The initial reception of ASEAN states to the economic components of the 2 + 7 cooperation framework has been largely positive. In particular, both Indonesia and Brunei welcomed China’s proposal for an Asian infrastructure investment bank prioritizing ASEAN projects, even though it came a little earlier than expected. It was originally scheduled to be announced next year when China hosts APEC (Xinhua, October 3, October 11; South China Morning Post, October 11). That is no surprise, since China’s initiative dovetails with ASEAN’s effort to enhance physical connectivity among its members through a series of infrastructure projects (ASEAN Secretariat). As one seasoned ASEAN observer pointed out, as of late last year, the grouping was only been able to raise a few hundred million dollars for the Master Plan for ASEAN Connectivity, far short of the Asian Development Bank projections, which say the region needs a whopping $60 billion a year over the next decade to make the proposal a reality (Bangkok Post, September 17, 2012). 

The other two economic ideas in the cooperation framework have already been discussed previously and are considered important by Beijing and Southeast Asian states as they build on previous achievements in ASEAN–China relations. While CAFTA has been successful thus far in reducing tariffs, both sides agree that there is much room for improvement, whether through cutting non-tariff barriers or focusing more on the areas of services and investment (Xinhua, October 8). At the Special China–ASEAN Foreign Ministers Meeting in August, Singapore’s foreign minister K. Shanmugam said that all ASEAN members supported the initiative (Xinhua, August 30). The proposal to further enhance ASEAN–China financial cooperation, which initially grew out of the 1997 Asian financial crisis, has also been welcomed, particularly in the wake of economic uncertainty amid the European debt crisis and a slow U.S. recovery (Caixin Media, October 16; China Radio International, October 15).   

But while Southeast Asian countries may laud some of Beijing’s fresh initiatives, their view of the long-term trajectory of ASEAN–China economic relations is also tinged with caution, for two reasons. First, as the Singaporean commentator Simon Tay has noted, China’s economic size and power has grown tremendously relative to Southeast Asia since the 1990s, and this asymmetry alone worries some in the region today (Japan Times, August 15). Second, and on a related note, ASEAN countries may worry that being overly dependent on China economically would allow Beijing to use its dominance to undermine their foreign policy autonomy. The consequences of overdependence on China were on full display during ASEAN deliberations in Cambodia in July 2012, when Phnom Penh was pressured by its largest trading partner and investor to shape the agenda which eventually resulted in the organization’s unprecedented failure to issue a joint communiqué (Asia Times, July 27). Given these fears, some Chinese commentators and diplomats have emphasized that boosting economic ties with ASEAN requires more than just new economic proposals, but “enhancing political mutual trust” as well (Global Times, October 15; Xinhua, October 8).

ASEAN’s reaction to some of the political-security initiatives in the 2 + 7 cooperation framework has been more cautious. Its response to the newly proposed Treaty of Good Neighborliness, Friendship and Cooperation exclusively between China and ASEAN in the ASEAN–China Summit joint statement was a nuanced one, noting it with appreciation but also signaling a preference for a more open and inclusive agreement by mentioning Indonesia’s hope for a similar pact that includes “a wider Indo-Pacific region, beyond ASEAN and China” (ASEAN Secretariat). ASEAN Secretary General Le Luong Minh also later told The Straits Times in an interview that the Chinese proposal “has to be studied carefully first” (The Nation [Thailand], October 15). ASEAN also appeared cool to Beijing’s proposal for an informal ASEAN–China defense ministers meeting in China, choosing to leave this to “a convenient time in the future” in the statement (The Straits Times, October 11). And while the Chinese proposal to strengthen exchanges and relations in the security field may be a good idea in general, experts noted that even the recent enhanced defense ties Malaysia and Indonesia agreed to with Beijing during President Xi’s trip represent more continuity than change in what is still nascent cooperation (The Diplomat, October 16).

ASEAN’s caution is not surprising. Greater economic cooperation with Beijing since the 1990s has failed to spill over into the political-security realm, and Southeast Asian states continue to be concerned to varying degrees about China’s growing military capabilities and its lack of transparency about its intentions. Beijing’s renewed assertiveness over territorial and maritime disputes with ASEAN countries in the South China Sea since 2009, including the imposition of unilateral fishing bans, harassment of vessels from other nations, and its saber-rattling at sea with the Philippines over the Scarborough Shoal, has only compounded these fears (see M. Taylor Fravel, Contemporary Southeast Asia, December 2011). This unease has manifested itself in various forms over the last few years, from Singapore’s founding father Lee Kuan Yew’s speech in October 2009 urging the United States to balance a rising China to investments in naval capabilities by South China Sea claimants Vietnam, the Philippines, and most recently Malaysia (Lee Kuan Yew, speech at U.S.–ASEAN Business Council Anniversary Gala Dinner, October 27, 2009; The Economist, March 24, 2012; IHS Jane’s Defense Weekly, October 15).

Meanwhile, totally absent from China’s new framework was any mention of dealing with the South China Sea with ASEAN as a region, although this dispute has been the main irritant in Beijing’s relations with Southeast Asia. Instead, Chinese officials at the recent round of Asian summitry repeated their mantra: that the disputes should be addressed bilaterally and that other external actors should not interfere (The Straits Times, October 11). Beyond the rhetoric, Beijing’s actions on the issue over the past few weeks have been worrying to say the least. Beijing disinvited Philippine president Benigno Aquino from the ASEAN–China Expo in Nanning, in apparent punishment for his government’s decision to turn to the United Nations to challenge China’s extensive maritime claims (South China Morning Post, August 2). More generally, experts say China has continued its foot-dragging on a binding code of conduct with ASEAN. Chinese officials continue to say that consultations should only be pushed forward in a step-by-step fashion, even as they work to delay meaningful progress by insisting that the issue be tackled by lower-level officials within the ASEAN–China Joint Working Group and proposing the establishment of an experts’ group to address technical issues (The Straits Times, October 1). But as one Chinese commentator correctly noted, distrust of China will linger in Southeast Asia unless Beijing demonstrates its willingness to address key security issues head-on rather than hoping that economic cooperation will spill over into other areas (Global Times, October 15).  

While these are serious obstacles to better ASEAN–China relations, they are not insurmountable and the new Chinese leadership is at least trying to overcome them. One way to mollify concerns about China’s economic might, for instance, is to grant partners generous and customized concessions like the early harvest program Beijing offered to Southeast Asian states before the initial conclusion of the CAFTA. Premier Li appeared to employ a similar tactic on his visit to Thailand when he said Beijing would buy Thai rice and rubber—both of which the government has been struggling to sell (Associated Press, October 11). And in the security realm, progress on Beijing’s proposed working group on joint exploration in dispute areas with Vietnam could at least demonstrate that there are alternative ways to approach the South China Sea issue aside from confrontations at sea or contentious arbitration the United Nations.

Ultimately though, if Beijing truly wants to forge an ASEAN–China “community of common destiny,” as President Xi told Indonesia’s parliament, then it will require much more. The two-point political consensus embedded in the new leadership’s cooperation framework holds that promoting cooperation should be based on strategic trust and good neighborliness, while deepening cooperation should be focused on advancing joint economic development. The problem for China, simply put, is that its relationship with ASEAN lacks strategic trust due to lingering security concerns, while prospects for joint economic development are limited by ASEAN’s fear of domination by its larger neighbor. At the ASEAN–China Expo earlier this year, Chinese premier Li Keqiang described the past decade of ASEAN–China relations as a “golden decade” and said both sides have the power to create a “diamond decade” in the next ten years (The Jakarta Post, September 6). But all that glitters is not gold. Indeed, China’s diamond decade may quickly lose its shine if Beijing does not address ASEAN’s concerns in a comprehensive fashion.