Dramatic U.S. Navy pictures recently showed a Chinese navy ship maneuvering within 45 yards of the USS Decatur. The U.S. destroyer was conducting a FONOP, or freedom of navigation operation, in the South China Sea near reefs that China has converted into artificial islands.
China claims “indisputable sovereignty over the South China Sea Islands and the adjacent waters.” Rival claimants include Taiwan, Vietnam, the Philippines, Malaysia and Brunei. All but Taiwan are members of the Association of Southeast Asian Nations (ASEAN), an organization that promotes “peace, security and stability” in the region.
ASEAN calls for “peaceful resolution of disputes” in the South China Sea, but it has been ineffective in preventing China from asserting its territorial claims. My research suggests that this is because China uses “no strings attached” financial assistance to divide ASEAN on the issue so that the organization does not work to obstruct its push for sovereignty over the South China Sea.
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The foreign ministers of China and the ASEAN countries signed a Declaration on the Conduct of Parties in the South China Sea (DOC) in 2002, which called for parties to refrain “from inhabiting the presently uninhabited islands” and to resolve disputes “in accordance with international law.” The agreement also called for a code of conduct to “further promote peace and stability in the region.”
It took 15 years for ASEAN and China to agree on a framework for the code of conduct. During that time, China violated the 2002 agreement by strengthening its hold over much of the region. China projected its military power by building artificial islands. But Beijing also projected its relatively greater financial power to divide ASEAN — to prevent rival claimants from negotiating collectively to enhance their bargaining power.
Authoritarian governments often prefer Chinese financial assistance
My book explores China’s relations with ASEAN members Cambodia, the Philippines and Myanmar, also known as Burma. I find that Chinese finance secures greater influence over authoritarian governments vs. democracies — because dictators rely on a fairly small group of elites to maintain power. In a relatively poor country with a corrupt system, the leader can use foreign aid and investment to provide financial incentives such as access, bribes and business opportunities for key supporters, including military and security officials, business people and other potential political rivals.
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Given the “no strings attached” nature of Chinese aid and loans, which don’t require the political or economic reforms often attached to assistance from Western donors, authoritarian leaders often prefer Chinese funding. For example, Cambodian leader Hun Sen flatly stated, “When China gives, it doesn’t say do this or that. We can do whatever we want with the money.”
To measure Chinese influence abroad, I looked at whether controversial Chinese infrastructure projects were approved and implemented; such project agreements are vehicles through which a country can funnel financial resources to gain foreign influence. Although in all three cases I studied, China was able to reach agreements on massive projects in the years following the signing of the DOC, the rate of completion of those projects largely has been a function of the type of government system in the country receiving the financing from China. Here’s how this has played out:
1. Cambodia has implemented eight Chinese-funded dams and other controversial projects.
Cambodia’s government, ruled for decades by Prime Minister Hun Sen, includes a rubber-stamp National Assembly and courts controlled by the dictator. The government has both approved and implemented nearly all major Chinese projects there, including eight highly controversial dams.
The lone exception occurred when the prime minister felt political pressure after the opposition’s strong showing in the 2013 elections and agreed to cancel the Chhay Areng hydropower project. Hun Sen subsequently banned the opposition party and jailed its leader.
Sino-Cambodian ties have since grown even closer, and Hun Sen’s government has acted as a proxy for China’s position on the South China Sea in ASEAN. Cambodia has opposed language critical of China’s actions in joint communiques following ASEAN ministers meetings in 2012 and 2016. Cambodia also opposed a joint statement after a 2016 ruling by the Permanent Court of Arbitration at the Hague against many of China’s claims and activities.
2. The Philippines canceled major Chinese-funded projects.
From 2003 to 2007, the Arroyo administration signed a number of major agreements with China — but the country’s democratic system allowed for debate in the legislature, court rulings nullifying some contracts and substantial media coverage of the agreements. This opposition forced the president to cancel all of the major deals. These included an early effort to cooperate on development of oil and gas resources in the South China Sea, known as the Joint Marine Seismic Undertaking, as well as the NorthRail and National Broadband Network projects.
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Sino-Philippine relations have warmed under Philippine President Rodrigo Duterte. However, even the independent-minded Duterte has been constrained in how close he can take ties with China, particularly as his once sky-high popularity with the Philippine people has begun to slip.
3. Myanmar had long been a “blood brother” — until 2011.
Myanmar, for decades under military rule, termed its relations with China as “Pauk-Phaw,” which China translates as “blood brothers.” But political liberalization beginning in mid-2011 took the lid off opposition to many Chinese projects. The new, more responsive government canceled the giant Myitsone hydropower project and postponed several other deals with China.
Although Aung San Suu Kyi’s current government continues to court improved relations with China, Mynanmar has renegotiated massive Chinese infrastructure agreements and has not adopted the former military regime’s support for the Chinese line toward the South China Sea dispute.
Protecting the new status quo
Since I completed my book, the opposition in Malaysia has won power for the first time since independence. New Prime Minister Mahathir Mohamad has canceled several massive Chinese infrastructure projects. Malaysia also now appears more willing to assert its South China Sea claims against China.
Undoubtedly, the Philippines, Myanmar and Malaysia will continue to seek improved economic relations with China, the region’s economic powerhouse. But for China, these relations are not key to preventing ASEAN members from working together against China’s assertiveness in the South China Sea. Because the “ASEAN Way” is to operate on consensus, China needs the support of just one member government, such as authoritarian Cambodia, to prevent the organization from taking a common stance against China’s assertiveness in the South China Sea.
Having used its financial power to divide ASEAN and change the status quo in its favor since the signing of the DOC in 2002, China is now more willing to use its military power to protect the rocks and reefs it is transforming into islands in the South China Sea.
Daniel C. O’Neill, an associate professor of political science in the School of International Studies at the University of the Pacific, is the author of “Dividing ASEAN and Conquering the South China Sea: China’s Financial Power Projection” (Hong Kong University Press, 2018).