Academic journal article The Journal of East Asian Affairs

China's Economic Leverage in Southeast Asia

Academic journal article The Journal of East Asian Affairs

China's Economic Leverage in Southeast Asia

Article excerpt

IntroduCtIon

In august 2010, China officially surpassed Japan as the largest economy in Asia and the second largest in the world after the United States. over the past decade, it has emerged as the largest trading partner for Japan, South Korea, India, Vietnam, Indonesia, Malaysia, australia, and the association of southeast Asian nations if ASEAN is treated as a single entity. it has emerged as in indispensable economic player in the region, a role which offers it an economic importance and standing that the former soviet union never enjoyed to the same extent in Asia. Just as the rise of the United States as the preeminent and preferred strategic player in East Asia was underpinned by the emergence of america as the most important trading partner for many of these countries in the 1950s, 60s and 70s, there is increased speculation that China stands poised to supplant america as the most important economic partner of key countries in southeast Asia if it has not done so already.

This has led to a common wisdom that there is a deepening and widening divergence between the security interests and preferences for southeast Asian countries (for american strategic pre-eminence) versus forced reliance on China as the economic driver of growth. (novtony 2010; reilly 2013)Yet, China's incapacity to translate its current status as Asia's greatest trading nation into strategic leverage in that region is puzzling. Despite its economic size and importance, Beijing has not been able to alter the strategic alignment of even one significant power in southeast Asia. in fact, every significant trading power in the region has moved closer to america in strategic and military terms even as their trading relationships continue to deepen with China.

How then can we explain China's strategic loneliness vis-à-vis smaller neighbours seemingly dependent on trade with China? the simple and accurate answer is that these economic partners are not as dependent on the Chinese economy as the raw trade numbers suggest. indeed, one should not overestimate the role of China in driving prosperity in the region. in reality, advanced economies and firms from those economies remain far more important to major southeast Asian countries than does the Chinese economy and Chinese firms. such a situation is likely to persist into the foreseeable future, meaning that america's economic capacity to seduce southeast Asian governments and firms will remain robust and possibly even decisive.

HEDGING AND BALANCING AGAINST CHINA IN SOUTHEAST Asia

If economic trends point to a China that is poised to dominate southeast Asia economically, the security actions of these smaller states suggest a different direction. in one sense, the security preference by key southeast Asian states for continued american strategic pre-eminence is easy to understand.

One primary reason is that hopes of China's 'peaceful rise' are fading. for much of the decade leading up to 2010, Beijing engaged in what was widely known as 'smile diplomacy' toward southeast Asia. this included years of trying to convince southeast Asian capitals that China's rise was much more of an opportunity and that the 'China threat' thesis was inaccurate and over-blown. to achieve this, Beijing courter key states in Malaysia, Indonesia, Singapore, thailand, Vietnam and the Philippines, and became extremely active in association of southeast Asian nations (ASEAN) led organisations. (Lee 2007) from the american and regional point of view, there were strong hopes that China would indeed emerge as a 'responsible stakeholder' in the pre-existing regional order. (zoellick 2005)

Yet, from 2010, China became far more assertive in pushing its various claims in the south China sea. Beijing's recent actions in this regard are well known and need not be repeated here.1 the point is that such actions have raised apprehensions in all the key states mentioned above (with the possible exception of thailand which has kept itself largely apart from these maritime disputes. …

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