China: the paramount power

Much has been written about China's growing economic power. But what about relationships in its own backyard? Dr Milton Osborne of the Lowy Institute examines how China's relations with Southeast Asia have dramatically changed for the better in the last ten years, with "free trade  agreements and strategic partnerships" replacing "decades of mistrust and uncertainty." The Paramount Power: China and the countries of Southeast Asia (PDF) argues that China is now the paramount power in Southeast Asia, "with significant soft power resources and regional goodwill, posing new challenges for Japan and the United States."

Over the past decade, China’s relations with the countries of Southeast Asia have changed substantially, even dramatically. Nowhere is this more apparent than in the fact that China now has close and productive dealings both with the Association of Southeast Asian Nations (ASEAN), an organisation founded in 1967 in large part in opposition to China, and with the individual countries making up that organisation. Allowing for the considerable diversity that exists in its relations with each individual Southeast Asian country, China has now assumed a position as the paramount regional power. This paper seeks to describe how this came about and reflects on contemporary Southeast Asian attitudes towards China, based in part on the writer’s discussions in eight ASEAN capitals in November 2005.

Economic relationships with China have improved:

China’s economic development, once seen as a threat by Southeast Asians is now generally regarded as an opportunity, a fact reflected in what is already a substantial increase in trade between the region and China and has led to the conclusion of a framework agreement on free trade between ASEAN and China in 2002, which will come into effect in 2010. One year later China agreed to sign ASEAN’s Treaty of Amity and Co-operation, a decision greeted with the greatest warmth in Southeast Asia.

As US hegemony has waned:

Seen from the perspective of Southeast Asian countries, China’s actions are both welcome and, for a number of them, a contrast with the policies of the United States. Although there is a recognition that the United States is unquestionably more powerful than any other state, in terms of its capacity to project power into the Southeast Asian region, some aspects of American policy are distinctly  unpalatable to regional populations, particularly in those countries with Muslim majorities, such as Indonesia and Malaysia. The United States preoccupation with the ‘war on terror’ is also seen as diverting American attention away from Southeast Asia, while there is a reaction against Washington’s belief ‘that democracy is the best possible form of government, anytime anywhere’, and its tendency to couch policies in terms of moral absolutes. There is little sympathy in Southeast Asia for any suggestion that the appropriate policy to follow in relation to China is that of ‘containment’, and affirmations by the United States that it does not have this policy are regarded with some scepticism.

While there are grounds for debating the degree to which Southeast Asian states are pursuing their interests through varying degrees of hedging in their dealings with China and the United States, there is no doubt that all countries of the region see their interests served through engagement with China. As expressed to me in various ways in my recent discussions in the region, China has become a power whose interests cannot be ignored. This is what is signified by the concept of paramountcy. And notably, confirming its paramount—rather than its hegemonic or dominating—position is the fact that Beijing has made clear that it accepts that other states have a right to exert influence in individual states. China’s position in relation to Cambodia is a particularly striking example of this fact.

Comments

[A. PERLA]

It is perhaps unreasonable to project too far into the future how China will employ its newfound geopolitical clout. Despite its current highly favourable trade balance, the country has serious internal problems. These problems concern its leaders far more so, I suggest, than the subtle geopolitics (of which the book mentioned seems to be concerned) around its borders.

There are two serious challenges facing China and only one of them indirectly involves the US. The first is that in its rush to riches China has lamentably forgot to give proper attention to health services in the countryside. Its rural population is suffering systematically of diseases and maladies that would only baffle any advanced western nation. Basic health services have seriously disintegrated under the weight of an ossified central management from Beijing.

These difficulties are creating a social tension that is practically untenable, with the young rushing off to the cities to find jobs almost as a matter of survival. (Free circulation around China is not permitted because all social services, such as medicine and schooling, are given in the region within which people are registered.)

The second problem, a corollary to the above, is that China must create jobs, to meet the demand by this shifting mass of population, at the rate of many thousands per day. This means it is on a trade treadmill, that is, it must generate more trade to create more jobs to satisfy a growing demand sustained by a rural exodus of massive proportions.

The fact that the "sleeping giant" would one day "awaken" was first posited by Alain Peyrefitte in his 1973 book "Quand la Chine s'éveillera..." (When China will awaken). His prophecy has proved to be very accurate.

But, its consequences are far less easy to predict. All we can hope for is a "soft landing", but how and where remain a mystery. It must develop, obviously, an internal consumer economy that is relatively independent from external demand for Chinese goods.

In any event, there is little or no reason to particularly fear China and its need to resolve a purely internal problem. The error is made possibly in projecting those problems beyond China's borders ... which is not a linear forecast.

[hru]

A. PERLA:

I agree with you. As a Chinese PhD candidate in economics in a US economic department, I have to say many Chinese intellectuals think they have lots of internal problems. The instituitions in China are quite weak. No independence of justice, corruption and very serious nepotism in all level of the government, low social capital all will become a big barrier for sustainable growth of economy.