NID S

C HIN AS E C U R I T Y

R E P O R T

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

National Institute for Defense Studies, Japan

NIDS China Security Report 2019

Contents
Preface························································································································ii
Summary···················································································································· iii
Acronyms and Abbreviations··················································································· v
Introduction··············································································································· 1
Chapter 1: C hina’s Foreign Strategy Causes Friction with
the Existing World Order······································································· 5
1. Xi Jinping’s Foreign Posture: Both Cooperative and Hardline························ 6
2. China’s Quest to Build a New International Order········································· 14
3. Xi Jinping’s Plan to Restructure the International Order
Faces a Tough Road························································································ 19
Chapter 2: C hina’s Formation of the Regional Order and
ASEAN’s Responses: From “Rise” to “Center”································· 25
1. ASEAN and the Rise of China·········································································· 26
2. ASEAN’s Response to Territorial Disputes in the South China Sea·············· 29
3. ASEAN Being Incorporated into the BRI························································· 37
4. ASEAN’s Attempt to “Rebalance”··································································· 44
Chapter 3: T he Belt and Road Initiative and South Asia:
Increasing Uncertainty in Sino-Indian Relations······························· 49
1. The Expansion of China’s Influence in South Asia········································· 50
2. The BRI Confronting Reality:
India’s Negative Reaction, and Its Worsening Image···································· 54
3. Current Status of CPEC··················································································· 59
4. The Future of Sino-Indian Relations and South Asia····································· 64
Column: Chinese Naval Activities and Pakistani Ports······································· 70
Chapter 4: T he Pacific Island Countries:
The Southern Extremity of the Belt and Road Initiative··················· 73
1. The Pacific Island Countries and the Belt and Road Initiative······················· 74
2. The Strategic Standpoint­­—
Activities by the People’s Liberation Army (PLA) in the Pacific····················· 78
3. The Heightened Wariness of Related Countries in the Region······················ 79
Conclusions············································································································· 81
Notes························································································································ 86iPreface
The NIDS China Security Report is published by the National Institute for Defense Studies(NIDS) to provide analysis conducted by its researchers on China’s military affairs and security from a mid- to long-term perspective. The report is widely disseminated both in Japanand overseas. Since March 2011 it has been published annually in Japanese, Chinese, andEnglish editions. The NIDS China Security Report has attracted significant interest fromresearch institutions and the media in Japan and abroad, and the analysis offered in thesereports has allowed NIDS to promote exchange and dialogue with research institutions andinterested parties in a number of countries, including China.
The China Security Report 2019, the ninth in this series and subtitled “China’s
Strategy for Reshaping the Asian Order and Its Ramifications,” analyzes the content andoutlook of China’s strategy for the international order. This report further analyzes the country’s strategy for a new international order in Southeast Asia, South Asia, and the Pacificisland countries, detailing the sort of influence that it exerts on each of those areas.
In writing this report, the authors have endeavored to present an objective analysis
while taking note of suggestions gained by exchanging opinions with researchers and stakeholders in Japan and abroad. The primary and secondary sources of information referred tofor this report are listed in the endnotes.
The China Security Report 2019 has been written solely from the viewpoints of theindividual researchers and does not represent an official view of the Japanese Government,
the Ministry of Defense, or NIDS. The authors of this report are Masafumi Iida (the leadauthor and author of Chapter 1), Tomotaka Shoji (Chapters 2 and 4) , and Masahiro Kurita(Chapter 3 and Column). The editorial team was led by Tetsuo Murooka, editor-in-chief, andincluded Koichi Arie, Hiroshi Iwamoto, Hiroaki Enta, Kazunao Ooi, Keiko Kono, Fumiyuki
Kobashi, Hiroto Sawada, Ichiro Takahashi, Yu Harada, Nobutaka Mikasa, Hiroshi Minami,
and Takayasu Yamashita.
The authors of the China Security Report 2019 hope that it will promote policy discussions concerning China in Japan and other countries, and at the same time they hope thatthe report will contribute to a deepening of dialogue and exchange as well as cooperation
between Japan and China regarding security.
February 2019
Tetsuo Murooka
Director, Security Studies Department
The National Institute for Defense StudiesiiSummary
Preface

Chapter 1 C
 hina’s Foreign Strategy Causes Friction with the Existing
World Order
Summary

The Xi Jinping administration is simultaneously pursuing two foreign policy principles, thefirst being the “path of peaceful development,” stressing cooperation, as typified by thevision of the Belt and Road Initiative (BRI), and the second being the “protection of core

Introduction

interests,” in which it does not hesitate to engage in conflict, symbolized by its heavy-handed
advance into surrounding maritime areas. China has also adopted the slogan of “majorcountry diplomacy with Chinese characteristics,” aspiring for the reorganization of the international order through the strengthening of the voice of developing countries, led by itself.

Chapter 1

China’s moves in that fashion have aroused alarm in the advanced countries, particularly theUnited States. There is also increasing suspicion among developing countries about the lackof economic rationality and transparency in the BRI. Moreover, China’s actions in pursuit of
its “core interests” have caused increasing friction with the countries on its periphery.

Chapter 2

China’s strategy for the regional order in Asia is not necessarily proceeding smoothly.

Chapter 2 C hina’s Formation of the Regional Order and ASEAN’s
Responses: From “Rise” to “Center”

Chapter 3

The Association of Southeast Asian Nations (ASEAN) has responded to the rising China by
a “two-track” strategy, trying to maintain balance between the various dualities of “engagement and constraint,” “economics and security,” and “China and the United States.” In response, by actively linking its economic influence with security, China has tried to makeColumnASEAN bend to its will regarding territorial disputes in the South China Sea, among otherissues. In its pursuit of connectivity, ASEAN has responded positively to China’s aid offensive based on the BRI. Through its great involvement in ASEAN’s development of infrastruc-

Chapter 4ture, China has expanded its political influence over ASEAN. In the sense that China is now
moving beyond being a rising power to becoming the center of the regional order, the relationship between ASEAN and China has entered a new phase. However, with the emergenceof issues such as the renegotiation of BRI-related projects by a new government in Malaysia,

Conclusions

it has become clear in 2018 that the very essence of ASEAN’s external strategy is in balance.

Chapter 3 T he Belt and Road Initiative and South Asia:
Increasing Uncertainty in Sino-Indian Relations
China’s expanding economic engagement in South Asia through the BRI may potentiallypropel its position in the region to that of a great power eclipsing the traditional regional

iii

Summary

hegemon, India. For that reason, India has developed a sense of caution regarding the BRI,
viewing it as not merely an economic project but also one that is suffused with political andstrategic intentions. Consequently, India has developed countermeasures, having reinforced
its engagement with smaller regional neighbors and promoted alternative multinational connectivity schemes, while also increasing cooperation with extraregional powers. Confronted
with such repercussions from India, China has shown signs of making concessions to thatcountry, with the intention of getting it to cooperate in the implementation of the BRI in
South Asia, and out of the need to deal with the“dept trap” allegations to the initiative causedby the effective confiscation of Hambantota Port in Sri Lanka. India has also responded inkind, which in turn has led to the latest rapprochement between the two countries since theModi-Xi summit held in April 2018. Nevertheless, the competition between China and India
over their engagement with South Asian countries will probably continue into the future. In
the long term, there is a strong likelihood that such competition will erode the traditional
nature of the overall Sino-Indian relationship as a “managed dispute.”

Chapter 4 T
 he Pacific Island Countries:
The Southern Extremity of the Belt and Road Initiative
Having set the southern extremity of the 21st Century Maritime Silk Road in its BRI at theisland countries of the South Pacific, China has significantly boosted its assistance—economic and otherwise—to those countries in recent years as part of that vision. Generally, thePacific island countries have greatly welcomed Chinese support, which has targeted economic development, and are eager participants in the BRI. Currently, Chinese engagementwith those countries on the security front has mainly been promoted on a bilateral level.
While one cannot deny the possibility that China will begin to advance in the area strategically over the medium and long term, it seems to be devoting more energy into securing its
economic interests in the region and using its economic power to boost its political influence
there. Other relevant nations, however, are becoming increasingly wary of China’s inroads
into the Pacific island countries. The leading countries of Oceania—particularly Australia
and New Zealand—are worried about the relative decline of their own influence, and France,with its sovereign territories in the area, is also enhancing its sense of vigilance.

iv

Acronyms and Abbreviations
Asia Africa Growth Corridor

AIIB

Asian Infrastructure Investment Bank

APEC

Asia-Pacific Economic Cooperation

ARF

ASEAN Regional Forum

ASEAN

Association of Southeast Asian Nations

BBIN

Bangladesh-Bhutan-India-Nepal

BCIM-EC

Bangladesh-China-India-Myanmar Economic Corridor

Introduction

AAGC

SummaryAnti-Access /Area-Denial

Preface

A2 /ADBIMSTEC	Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation
Belt and Road Forum for International Cooperation

BRI

Belt and Road Initiative

Chapter 1

BRF

BRICS	Emerging five countries (Brazil, Russia, India, China and South
Africa)Chapter 2

CEE

Central and Eastern Europe

CICA	Conference on Interaction and Confidence Building Measures in
Asia

CPC

Communist Party of China

CPEC

China Pakistan Economic Corridor

DOC

Declaration on the Conduct of Parties in the South China Sea

DSG

Defense Strategic Guidance

EDCA

Enhanced Defense Cooperation Agreement

EEZ

Exclusive Economic Zone

EU

European Union

FAC

Fast Attack Craft

FATF

Financial Action Task Force

FDI

Foreign Direct Investment

GDP

Gross Domestic Product

IAK

India-Administered Kashmir

IMF

International Monetary Fund

INSTCInternational North-South Transport Corridor

KKH

Karakoram Highway

Conclusions

Code of Conduct

Chapter 4

COC

ColumnChina National Offshore Oil Corporation limited

Chapter 3

CNOOC

v

Acronyms and Abbreviations

vi

LCS

Littoral Combat Ship

MDA

Maritime Domain Awareness

MPAC

Master Plan on ASEAN Connectivity

NSS

National Security Strategy

OPV

Offshore Patrol Vessel

PAK

Pakistan-Administered Kashmir

PIF

Pacific Islands Forum

PLA

People’s Liberation Army

PLAN

People’s Liberation Army NavyPN

Pakistan NavyPNG

Papua New Guinea

RCEP

Regional Comprehensive Economic Partnership

SCO

Shanghai Cooperation Organization

SEZs

Special Economic Zones

SLOC

Sea Lines of Communication

SOM

Senior Officials’ Meeting

TAC

Treaty of Amity and Cooperation in Southeast Asia

TPP

Trans-Pacific Partnership

UN

United Nations

UNCLOS

United Nations Convention on the Law of the Sea

US

United States

USINDOPACOM

US Indo-Pacific Command

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Introduction(Masafumi Iida)Introduction
As the world’s second-largest economic power, China has been rapidly boosting its militarystrength, increasingly developing the self-image of a “great power” in the international community. As such, it is increasingly putting forth its own arguments about how the ideal international order should be. China condemns the existing economic order as being too
advantageous to advanced countries and lacking in balance, so it is arguing for a “restructuring of global economic governance,” aiming at a stronger voice for developing countries,
including itself. The country criticizes the existing security order as well, considering it too
strongly influenced by the Cold War mentality and zero-sum thinking of certain military
powers, and instead calls for a “new security outlook” that does not depend so much on alliance-based relationships. Based on that type of thought, the Xi Jinping administration has
come up with such slogans as the construction of a “new type of international relations” andthe “community of a shared future for mankind,” stressing its position of actively promoting
reforms in the system of global governance.
Not only is China arguing for the reorganization of the international order, but is alsosteadily taking more forceful steps toward its actual realization. The paramount example ofthat is its promotion of the Belt and Road Initiative (BRI). To help strengthen infrastructureof the land and sea routes linking East Asia with Europe, China has presented two concepts—the Silk Road Economic Belt and the 21st Century Maritime Silk Road—which havebeen combined in the vision of the BRI. Backed by its economic power, China is promotingthat grand initiative through such actions as the establishment of the Asia Infrastructure
Investment Bank (AIIB), in which it is the biggest investor. China looks upon the BRI as the
manifestation of its vision of the “community of a shared future for mankind,” aiming at thereorganization of the world’s economic order by leveraging its increased economic influence
over developing countries. While initially focusing on China’s adjacent regions of Central
Asia, Southeast Asia, South Asia, and so forth, the BRI vision has now become graduallybroadened into a global concept aimed at the restructuring of the entire international order,
having come to include such other areas as Africa and Latin America.
At the same time, China has come to emphasize its policy of emphatically protecting
what it describes as its “core interests,” namely, those of territorial sovereignty along with its
maritime rights and interests. China is embroiled in confrontation with some of its neighbors, chiefly over its maritime core interests, with the Xi Jinping administration bolstering
actions to change the status quo by coercion in a way advantageous to itself, intimidating its
opponents through the exercise of military power and its maritime law-enforcement capacity. China has created artificial islands in the South China Sea and constructed military bases

2

Introduction

there, steadily building up its maritime military presence. In doing so, it has restrained thePrefaceactions of the US military, which has heretofore served as the linchpin of the region’s security order, and is overtly acting in a way aimed at weakening the US military presence.
Relying thus on its enormous economic and military power, China’s actions to reshape the existing order—both internationally and regionally—are having a big impact on

Summary

the international community. For example, some of the developing countries that have accepted projects to construct infrastructure in the BRI led by China are not only facing an
increased economic dependence on that country but also heightened political influence from

Introduction

China. China’s attempts to change the status quo by coercion are also having a negative influence on regional security. China’s intensified criticism of the existing international order
has set off warning bells in those nations that support that order, which is based on such
universal values as freedom, democracy, and the rule of law.

Chapter 1

The first aim of this report is to understand China’s current strategy for the international order. Phrased differently, the goal is to clarify China’s future targets in the regional
and international orders, and the means by which it hopes to meet those targets. The second
aim of the report, then, is to clarify how China’s policy is being perceived in those regions

Chapter 2that are at the receiving end of its strategy for the new order, and what they are doing in response. A better comprehension of China’s strategy for the international order will likely
make it also possible to evaluate its future potential influence on the security environment,
both regionally and internationally.

Chapter 3

Based on the above awareness of the issues involved, Chapter One will analyze thecontent and outlook of the Xi Jinping administration’s strategy for the international order,
which aims at the restructuring of not just China’s peripheral regions but the entire international order as well. Chapter Two, then, will study the issues caused by China’s strategy for

Columnthe regional order in Southeast Asia, where its economic influence is rapidly expanding, together with how those countries are dealing with those issues. Chapter Three will examine
how China’s expanded influence has affected South Asia, a region in which it has made re-Chapter 4markable inroads both on land and at sea, and what kind of impact that has had on IndoPakistani relations, among other things. Chapter Four, finally, will take a close look at
China’s approach as it affects the island countries of the South Pacific, which represent thesouthern extremity of the 21st Century Maritime Silk Road.

Conclusions(Author: Masafumi Iida)

3

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Chapter 1
China’s Foreign Strategy
Causes Friction with
the Existing World Order(Masafumi Iida)

Chapter 1

1. Xi Jinping’s Foreign Posture: Both Cooperative andHardline
At the 18th National Congress of the Communist Party of China (CPC), held on the November
2012, Xi Jinping was selected as the general secretary and thus China’s new leader. There,
he declared to both domestic and international audiences that China’s target for the future
was the realization of the “Chinese dream,” namely, the “great rejuvenation of the Chinese
nation.”1 Shortly after that, Xi Jinping announced two major principles in foreign policy torealize that dream: (1) creating an international environment favorable to China’s development through the promotion of cooperative relations with other countries, and (2) protecting
China’s “core interests,” even if it meant worsened relations with other countries. Thereafter,
Chinese foreign policy has developed along the lines of those two principles, and no majorchanges are expected in that situation as long as Xi Jinping leads the country.
On January 28, 2013, only two months after Xi Jinping became general secretary, thePolitburo of the CPC held a group study session on foreign policy in which he emphasized
China’s policy of continuing along a “path of peaceful development,” referring to the basic
foreign policy principle established during the years of his predecessor, former General
Secretary Hu Jintao. The main thrust of that was that “China will pursue its development by
seeking a peaceful international environment while safeguarding and promoting world
peace,” deepening its mutually dependent relations with the international community amidst
the multipolarization of international politics and the globalization of the world’s economy.2
Xi Jinping, pointing out the need for a peaceful international environment to realize the“Chinese dream” as part of the “great rejuvenation of the Chinese nation,” stated that China
had to further go along the path of peaceful development. In addition, he declared that “weneed to further consolidate our efforts to more positively engage in international approaches,to deal with global issues, and to contribute to global development, through integrating domestic development and opening-up to outside, linking China’s development with that of theworld, integrating the interests of the Chinese people with those of people from around theworld, and continuously expanding mutually beneficial cooperation with all countries.”
Furthermore, he emphasized that China, following the “path of peaceful development,” was“a practitioner of peaceful development, a promoter of joint development, a protector of themultinational trade system, and a participant in global economic governance.”3 That is tosay, Xi Jinping clearly outlined a stance in which China would promote its development andthe creation of a stable international environment through the expansion of mutually cooperative economic relations with foreign countries, while at the same time would actively
become more involved in resolving global economic issues and the creation of global rules.
Meanwhile, during the aforementioned group study sessions, General Secretary Xi

6China’s Foreign Strategy Causes Friction with the Existing World Order

Jinping also emphasized that China would adamantly protect its “core interests,” as follows:
Preface(1) state sovereignty, (2) national security, (3) territorial integrity, (4) national reunification,(5) the general stability of China’s political system established by the constitution, and overall social stability, and (6) the basic safeguards for ensuring sustainable economic and social
development.4 Based on that explanation, China’s core interests are also believed to com-

Summaryprise such problems as its relations with Taiwan, with which it aims to reunite, plus its problems in the Xinjiang Uighur Autonomous Region and Tibet Autonomous Region—theminorities of which both harbor smoldering feelings of dissatisfaction against the Chinese

Introduction

government—along with various territorial and sovereignty-related disputes, such as theland border dispute with India and issues in the East China Sea and South China Sea, as wellas any domestic or international criticism of or resistance to the one-party rule of the CPC.
While Xi Jinping said, “we will stick to the path of peaceful development,” he has also stated

Chapter 1that “we will never sacrifice our core national interests,” adding that “we will never give up
our legitimate interests.” He has stressed that “no country should presume that we will
engage in trade involving our core interests, or that we will swallow the ‘bitter fruit’ of harming our sovereignty, security or development interests.” Additionally, Xi Jinping asserted,

Chapter 2“China is following the path of peaceful development, and other countries should do thesame.” That is to say, he made it clear that the principle of the path of peaceful development,
based on cooperation, would not be applicable to any countries that were violating China’s“core interests,” and that he would not hesitate to engage in a hardline response toward them.

Chapter 3

Thereafter, it has been in its relations with its neighbors that the Xi Jinping administration has actively implemented the dual principles of its foreign policy—the promotion of
the “path of peaceful development” and the protection of its “core interests.” A typical measure of the first principle has been its proposal of the Belt and Road Initiative (BRI), a vision

Columncomprising the Silk Road Economic Belt and the 21st Century Maritime Silk Road. In
September 2013, during a visit to Kazakhstan in Central Asia, President Xi Jinping deliveredan address at Nazarbayev University, in which he declared that China was on the “path ofChapter 4

peaceful development,” and stressed that it would never seek a dominant role in regional affairs nor would it try to nurture a sphere of interest. That being said, though, he pointed outthat the firm mutual support of the important issues of its core interests—sovereignty, territorial integrity, security, and stability—were substantial and important elements of the strate-

Conclusions

gic partnership between China and the countries of Central Asia. He then went on to propose
the construction of the Silk Road Economic Belt as a new cooperative framework furthering
the economic coordination and the development of Eurasia, including China and Central
Asia. Specifically, Xi Jinping proposed the setup of a “network of transportation that connects Eastern, Western, and Southern Asia” by improving transport-related infrastructure,along with promoting regional economic development through trade liberalization and the7Chapter 1

facilitation of investment, as well as enhancing their immunity to financial crises by promoting the settlement of trade accounts in local currencies.5
Furthermore, during his visit to Indonesia the following month, President Xi Jinping
delivered an address to that country’s lawmakers in which he stressed the policy of reinforcing cooperative relations with the members of the Association of Southeast Asian Nations(ASEAN). Politically, pointing out the need to strengthen mutual trust between ASEAN and
China, he expressed his hope that the Treaty for Good Neighborliness, Friendship andCooperation would be signed with ASEAN. Economically, he spoke out on the policy ofextending the benefits to ASEAN countries of Chinese development by expanding mutual
trade through elevating the level of free-trade agreement. In addition, Xi Jinping proposed
the establishment of the Asian Infrastructure Investment Bank (AIIB), expressing his desire
to cooperate in boosting the infrastructure connectivity between ASEAN countries as wellas with other developing countries in the region. He also proposed the joint construction ofa 21st Century Maritime Silk Road and the establishment of a maritime cooperative partnership with the ASEAN countries, and also expressed his hope to construct the “China-ASEAN
community of shared destiny” with Indonesia.6
Most likely, the aim of the proposal by the Xi Jinping administration of the BRI—inparticular, its emphasis on building cooperative relations with countries on its periphery—was

Figure 1-1: C onceptual Overview of the BRI (as of March 2015)

Europe(Baltic Sea)

RussiaNew Eurasian Land Bridge
China-Mongolia-Russia Economic Corridor

EuropePersian
Gulf

West
Asia

IndianOcean

8China-Indochina
Peninsula
Economic Corridor

d EconomioaBoth the China-Pakistan and
Bangladesh-China-India-Myanmar Economic Corridors areclosely linked to the promotionof the construction of the Beltand Road Initiative.

South
Asia

Source: Xinhua Net, March 29, 2015.

c

t 21st C
Bel
e

China

S
Road ilk R
ilk

Mediterranean
Sea

CentralAsia

ry Maritime S
ntu

China-Central Asia-West Asia
Economic Corridor

Southeast
Asia

South
China
Sea

Joint construction ofsafe and efficienttransport routes on thesea with important
ports as junctions.

South
Pacific

China’s Foreign Strategy Causes Friction with the Existing World Orderto parlay its own burgeoning economic power into the establishment of better relations with
Preface

its neighbors by providing economic benefits to them, thereby both stabilizing its peripheryand boosting China’s economic, political, and security-related influence with its neighbors.
At the Periphery Diplomacy Work Conference held in October 2013, General Secretary Xi
Jinping delineated the “strategic goal” of its diplomacy with neighboring countries, explain-

Summary

ing that “it must consolidate its relations with neighboring nations,” to be accomplished by“protecting sovereignty, security, and development interests, further consolidating friendly
relations with neighbor countries, making them economically more closely tied, and deepen-

Introduction

ing security cooperation.” Furthermore, he asserted that in the development of good-neighbor relations with neighboring countries, “we must strive to make peripheral countries kinderand more intimate to China and meanwhile recognize and support China more, thereby increasing China’s affinity and influence.” The conference confirmed China’s policy of becom-

Chapter 1

ing more actively involved in regional economic cooperation through the promotion of the
BRI in its neighboring countries, along with the establishment of the AIIB and expansion of
free-trade zones. In addition, on the security front, China aimed at advancing security cooperation with its neighboring countries by taking a leading role in that involvement, based on

Chapter 2

a “new outlook on security, featuring mutual trust, reciprocity, equality, and coordination.”
Furthermore, it set the target of ensuring that a “community of shared destiny” would takeroot among China’s neighbors by widely proclaiming the new policy abroad.7
From that point on, China actively pursued various policies toward the realization ofChapter 3

the targets first demonstrated at the Periphery Diplomacy Work Conference in Beijing.
Prominently emerging on the economic front was China’s initiative in organizing a financing
framework to be utilized when advancing its BRI. At the Asia-Pacific Economic Cooperation(APEC) summit held in Beijing in November 2014, President Xi Jinping announced the es-

Columntablishment of the Silk Road Fund, with a capitalization of US$40 billion dollars, to promote
the BRI. The projects to receive funding from that fund—established with China as the soleinvestor—would be determined by the Chinese government. Meanwhile, China continued

Chapter 4

negotiations with relevant countries toward the establishment of the AIIB, having signed aconsensus document in Beijing for the bank’s establishment along with 21 other countries.
Later, such countries as the United Kingdom, France, and South Korea also signed up, expanding the list of founding members to 57 when the agreement for AIIB’s establishment

Conclusions

was finally inked in Beijing in June 2015. AIIB represents the first international financial
institution in which China exerts powerful ascendancy, having proposed the bank’s establishment, serving as the bank’s top investor nation, and placing the bank’s headquarters in
Beijing, among other things. AIIB’s establishment can fairly be described as a landmark
event demonstrating the rise of China’s economic influence in Asia.
On the security front, meanwhile, notable actions taken by China have been its

9Chapter 1

Figure 1-2: AIIB Member Countries and Shareholding Ratios (as of Sept. 2018)
Overview of Shareholding StructureMembers
Regional
Afghanistan
Australia
Azerbaijan
Bahrain
Bangladesh
Brunei Darussalam
Cambodia
China
CyprusFiji
Georgia
Hong Kong, China
India
Indonesia
Iran

IsraelJordanKazakhstan
Korea
Kyrgyz Republic
Lao PDR
Malaysia
Maldives
Mongolia
MyanmarNepal
New Zealand
Oman
Pakistan
Philippines

Qatar
RussiaSamoa
Saudi Arabia
Singapore
Sri Lanka
Tajikistan
Thailand
Timor-Leste
TurkeyUAE
Uzbekistan
Vanuatu
Vietnam

Prospective
Regional

Members
Non-regional

Armenia
Cook Islands
KuwaitLebanon
Papua New
GuineaTonga

Austria
CanadaDenmark
Egypt
Ethiopia
FinlandFranceGermany
Hungary
Iceland
Ireland
Italy
Luxembourg
Madagascar
Malta

Shareholding ratios of top ten contributors

OthersTurkey28.92%

2.69%
3.15%

30.68%

China

8.62%

UK
3.46%
India
Indonesia
3.48%
6.73%
4.62%
3.80%
France3.85%
RussiaAustralia
Germany
Korea

Source: AIIB presentation, September 201810

Prospective
Non-regional
Netherlands
NorwayPolandPortugal
Spain
SwedenSwitzerland
UnitedKingdom

Argentina
BelarusBelgium
Bolivia
BrazilChile
Ecuador
GreeceKenya
Peru
RomaniaSouth Africa
Sudan
Venezuela

China’s Foreign Strategy Causes Friction with the Existing World Orderdevelopment of a distinctive notion of Asian security and its clear statement of its intention
Prefaceto build a multinational security cooperation framework centered on Asian countries. In aspeech delivered at the fourth Conference on Interaction and Confidence Building Measuresin Asia (CICA) summit, held in Shanghai in May 2014, President Xi Jinping declared that
Asian security was still stuck in the old era of “Cold War mentality” and zero-sum thinking,Summarywhich needed to be replaced by a “new vision of common, comprehensive, cooperative, andsustainable security” for Asia. He also stated that “to beef up and entrench a military alliancetargeted at a third party is not conducive to maintaining common security,” criticizing theIntroduction

network of alliances maintained by the United States in Asia. He went on to say, “in the final
analysis, it is for the people of Asia to uphold the security of Asia,” arguing for the necessityof the creation of a new framework for security cooperation focusing on Asian countries.
Specifically, he proposed that CICA be expanded and strengthened, and that “an examina-

Chapter 1tion ought to be made of building a new framework for regional security cooperation resting
upon that foundation.”8 In his address, Xi Jinping criticized Asia’s existing security order,
supported by the powerful presence of the US military and the network of alliances centeredon that country, and declared his intention to shepherd the creation of a new multinational

Chapter 2

security framework built on a security philosophy that he himself was espousing.
At the same time, the Xi Jinping administration also implemented hardline policies
along its periphery to defend what it sees as its “core interests.” He has put particular emphasis on securing and expanding “maritime rights and interests” such as territorial sovereignty

Chapter 3

and economic interests, reinforcing the presence of the People’s Liberation Army (PLA) andmaritime law enforcement agencies in the seas surrounding China, and increasingly taking
coercive actions there. At the Politburo group study session on maritime policy held in July
2013, he pointed out, “in order to protect our national maritime rights and interests, we must

Columnmake overall plans and take all factors into consideration. While we love peace and will
firmly adhere to the path of peaceful development, we can never abandon our legitimate
rights, and even more importantly, we will never give up our core national interests.” In ad-

Chapter 4

dition, he declared, “we must firmly prepare to cope with complexities, enhance our capacity
in safeguarding our maritime rights and interests, and resolutely safeguard our country’s
maritime rights and interests.”9 In other words, having positioned “maritime rights and interests” as an element of China’s core interests, he has ordered that they be resolutely safe-

Conclusions

guarded, to which end its necessary capacities need to be enhanced.
Indeed, China has ramped up the activities of the PLA Navy and maritime law enforcement agencies in its surrounding seas—namely, the South China Sea and the East
China Sea—and has applied pressure on countries on its periphery with which it has disputes
regarding territorial sovereignty, maritime resources, and the like, promoting the securement
and expansion of its maritime rights and interests through a reliance on force. In the South11

Chapter 1

China Sea, China has disputes with Vietnam, the Philippines, Malaysia, and others overisland claims and exclusive economic zones (EEZs), among other things. In May 2014,
China’s state-owned China National Offshore Oil Corporation Limited (CNOOC) started
exploratory drilling in the sea area south of the Paracel Islands, using the semi-submersible
oil drilling platform called the Hai Yang Shi You 981 rig. Vietnam, which claims the same
area as its own EEZ, reacted against China’s unilateral exploratory drilling, sending in maritime police patrol ships and fishing boats to the sea area in protest. In response, China foughtback using a multitude of vessels, primarily government ships operated by the China Coast
Guard. The Chinese patrol vessels repeatedly sprayed water cannons against the Vietnamese
patrol ships and fishing boats, also ramming them, causing some of them to capsize andseveral crew members to get injured.
China is also boosting its military presence in the South China Sea. From the end of2013 it began large-scale reclamation on seven maritime features in the Spratly Islands,
constructing artificial islands there. China has built large port facilities and runways on several of those islands, increasing the suspicion that it plans to use them militarily. Moreover,the PLA Navy has started to obstruct activities by US forces in the South China Sea. In
December 2013, the USS Cowpens, a Ticonderoga-class guided missile cruiser, which was
navigating the sea area to the south of Hainan Island, was approached by a tank landing ship
belonging to the PLA Navy and had its path blocked, obstructing its safe navigation. In
August 2014, a J-11 fighter jet belonging to the PLA flew dangerously close to a US Navy
P-8 patrol aircraft on a mission over the South China Sea, approaching it in an unusual
manner. Both of those incidents occurred outside of China’s territorial waters and airspace,and both the Cowpens and the P-8 had been carrying out the freedom of navigation and thefreedom of overflight, respectively, as recognized by international law. The obstructive actions by the PLA against the US forces in the South China Sea can only be described as
challenges to the existing maritime order by coercion.
China has also promoted the expansion of its self-declared “maritime rights and interests” in the East China Sea by coercion. It has unilaterally declared a territorial claim on the
Senkaku Islands, which are an integral
territory of Japan. Ever since September
2012, vessels of China’s maritime law
enforcement agencies have almost permanently established a presence in thevicinity of the Senkaku Islands, repeatedly making incursions into Japanese
territorial waters and threatening Japan’s
territorial sovereignty. The PLA has also12

China’s Foreign Strategy Causes Friction with the Existing World Order

Figure 1-3: Chinese Military Bases in the South China Sea
China

Preface

TaiwanLaos
Woody Island

Paracel Islands

Philippines

SummarySouth China
Sea

ThailandSubi Reef

Cambodia

Spratly Islands

Gaven Reefs

Mischief Reef

Fiery Cross Reef
Cuarteron Reef

Johnson South Reef
Chapter 1

Airfields

Introduction

Vietnam

Malaysia

Source: Compiled by the author from media reports.

Chapter 2

stepped up its activities in the East China Sea, putting more pressure on Japan. In January
2013, a frigate of the PLA Navy locked a fire-control radar onto a Japan Maritime SelfDefense Force destroyer in a dangerous and provocative move. Furthermore, in November
2013, China unilaterally declared the establishment of the “East China Sea Air Defense

Chapter 3

Identification Zone (ADIZ),” including areas around the Senkaku Islands that are Japanese
territorial airspace. It has made statements in violation of existing international law recognizing the freedom of overflight in skies above the high seas, such as ordering all aircraft
flying in this ADIZ to submit their flight plans to the Chinese authorities, and declaring theColumnpossibility of taking “defensive emergency measures” using force against aircraft that refuse
to follow its instructions. China thus can be said to be promoting changes to the existingorder in the East China Sea as well, against the backdrop of its military power.

Chapter 4

As seen above, the initial focus of the foreign policy of the Xi Jinping administration
was on its neighboring regions. In November 2013, Chinese Minister of Foreign Affairs
Wang Yi pointed out that “our periphery is where our country rests its body and soul, and is
the foundation of our development and prosperity.”10 Through its proposal of the BRI in ac-

Conclusions

cordance with the “path of peaceful development,” China aims to deepen and stabilize its
relations with the countries of Central Asia and Southeast Asia, promoting the constructionof a new security framework for its peripheral regions by advocating an “Asian security
concept.” At the same time, in line with its policy of emphasizing the protection of its “coreinterests,” China has accelerated its advance into surrounding sea areas capitalizing on its
military power and its maritime law enforcement power, aiming to change the status quo by

13

Chapter 1

coercion in disputes over territorial sovereignty issues and marine resources. During that
period, China has increased its economic and military presence supported by its growing
national power, boosting its influence on its surrounding regions, with the likely aim of creating a regional order advantageous to its own economic development and the protection ofits security and “core interests.”

2. China’s Quest to Build a New International Order
China has gradually broadened the scope of its diplomacy—which had originally targeted
the expansion of influence on its periphery and the revamping of its regional economic andsecurity-related order—to include the whole world. By expanding its influence, not just on
its periphery but also worldwide, the country aims to seize the initiative in reorganizing theexisting international order.
In November 2014, the Central Conference on Work Related to Foreign Affairs washeld within the CPC, at which General Secretary Xi Jinping declared that China needed topromote reforms in the international order, with the recognition that it was in the midst of amajor transitional stage. He said that the twin trends of the multipolarization of the world
and the globalization of the economy would continue into the future, and that “the international system and international order are going through deep adjustment,” leading to the“need to take a full view of the long-term nature of the conflict over the international order.”He also underlined the “importance of pursuing win-win cooperation and promoting a new
type of international relations featuring win-win cooperation,” doing so by “promoting reforms in the international system and global governance, and increasing the representationand voice of our country and a broad swath of developing countries.” Simultaneously, Xi
Jinping reasserted the position that while the “path of peaceful development” would be pursued unwaveringly, “we will never relinquish our legitimate rights and interests, or allow
China’s core interests to be undermined,” also emphasizing that “territorial sovereignty andmaritime rights and interests must be firmly upheld, as well as the integrity of the nation.” In
addition, he said that it was “necessary for China to develop a distinctive diplomatic approach,” pointing out that “we should conduct diplomacy with saliently Chinese characteristics and a Chinese vision,” proposing the creation of a “major-country diplomacy with
Chinese characteristics,” the pillars of which would be the construction of a “new type ofinternational relations” and the protection of “core interests.”11
Underlying the Xi Jinping administration’s reinforced moves to restructure the international order—advancing the creation of a “new type of international relations”—is the perception of an emerging international power balance increasingly favorable to China, with the
decline in the relative national power of Western advanced countries along with the rapid rise14

China’s Foreign Strategy Causes Friction with the Existing World Orderof the power of emerging markets and developing countries, including China. At the group
Prefacestudy session on global governance by the Politburo of the CPC Central Committee held in
October 2015, General Secretary Xi Jinping remarked, “the rise of emerging markets anddeveloping countries has brought revolutionary changes to the world order, along with theuninterrupted strengthening of their international influence, causing a revolutionary shift in

Summary

the international power balance that has existed in the modern era.” Also, he said that it has
resulted in “a gradual shift from several centuries of struggles among the big powers for profits and hegemony—through the formula of wars, colonization, and the division into spheres

Introductionof influence—toward a formula in which countries coordinate their relations and profits
through rules and mechanisms.” He also asserted that “emerging markets and developing
countries must strengthen their representation and voice” to “promote reform in their unjust
and improper arrangements position in the global governance system” and “strive for a more

Chapter 1balanced reflection of the majority’s hopes and profits in the global governance system.”12
In that manner, the “new type of international relations” desired by China involves arevision in the existing international order—which it sees as “unjust” and “improper,” andadvantageous to developed countries—as well as an expansion in the influence of develop-

Chapter 2

ing countries, starting with China, in the formation and management of the international
order. Meanwhile, China has demonstrated an indifferent posture toward the universal values
within the existing international order: namely, freedom, democracy, and human rights. In aspeech delivered at the United Nations (UN) General Assembly upon the 70th anniversary

Chapter 3of that institution, President Xi Jinping emphasized the importance of the principle of sovereign equality within the UN Charter, stating that it should not only be applied to respect for
the integrity of sovereignty and territory and noninterference in internal affairs, but also to a
country’s choice of the path it takes for its social systems and development, as well as re-Columnspect for the way a country realizes the improvement of socio-economics and public welfare.
He stressed, “we should inherit and advocate the purpose and principles of the UN Charter,
establish a new type of international relations with win-win cooperation at its core, and forge

Chapter 4

a community of a shared future for mankind.”13 In other words, there would be a very strongemphasis on equality among countries and noninterference in internal affairs, both in the“new type of international relations” and the “community of a shared future for mankind”
promoted by China. On the other hand, it gave short shrift to qualitative aspects in that gov-

Conclusions

ernance, such as the promotion of free and democratic politics, and respect for human rights.
With the major goal of China’s diplomacy having expanded from the establishment ofa desirable regional order in its neighborhood to a revamping of the global order, the BRI has
also undergone major changes. The original focus of that initiative was the reinforcement ofconnectivity in Eurasia, linking East Asia to Europe. According to the first public documentby the Chinese government regarding the BRI, released in March 2015, the Silk Road

15

Chapter 1

Economic Belt put emphasis on three routes: one linking China to Europe through Central
Asia and Russia, one linking China to the Persian Gulf through Central Asia and West Asia,and one extending from China to Southeast Asia, South Asia, and the Indian Ocean. Also, the21st Century Maritime Silk Road focused on two routes: one linking China’s coastal areas toEurope through the South China Sea and the Indian Ocean, and the other linking China’s
coastal areas to the South Pacific through the South China Sea.14 Later, China went on to
expand the regions targeted by the BRI to also encompass Africa, Latin America, and more.
In May 2017, China sponsored the Belt and Road Forum for International Cooperation
in Beijing, with twenty-nine national leaders attending, who came largely from Eurasia, butalso included the leaders of Ethiopia and Kenya in Africa and Argentina and Chile in SouthAmerica. In his keynote address to the forum, President Xi Jinping declared that “all nations
must respect each other’s different core interests and major concerns” in the creation of a
new type of international relations featuring win-win cooperation to promote the BRI.15
Also, in an interview given after the forum drew to a close, Xi Jinping gave high marks to themeeting, saying, “the countries sent a positive signal that they would cooperate in promoting
the BRI, joining their hands together in the creation of a community of a shared future formankind.”16 In the Africa Policy Paper it released in December 2015 and its Policy Paper on
Latin America and the Caribbean released in November 2016, China had already called forthe creation of a “community of a shared future” in both regions, so its invitation to theforum of leaders from those regions was a manifestation of that objective. In Chinese diplomacy today, the BRI is positioned as an “important exercise in the construction of a ‘community of a shared future for mankind’.”17 It is absolutely necessary for China, which isaiming to restructure the international order, to get the cooperation of as many developing
countries as possible. Most likely, it has enlarged the scope of its BRI to include Africa andLatin America because those continents both contain many developing countries, and that
initiative has become, through the provision of economic opportunity, the means by which
China can get support from such countries for the new international order that it advocates.
Meanwhile, China has stepped up the deployment of its military power overseas, especially advancing into maritime areas, in line with its espousal of “major-country diplomacy with Chinese characteristics” stressing the protection of its “core interests.” China has
completed building artificial islands in the South China Sea through land reclamation, andhas gone on to pursue their conversion into military bases. Specifically, it constructed 3,000meter class runways on Fiery Cross Reef, Subi Reef, and Mischief Reef and has started
flying military transport planes there. In addition, it has installed various types of equipment
such as radars and anti-aircraft missiles on the reefs, as well as constructing a hospital andthe like there, with the aim of reinforcing their functionality as military bases. China is
steadily enhancing its military presence in the South China Sea, leveraging its existing bases

16China’s Foreign Strategy Causes Friction with the Existing World Orderon the Spratly Islands. In addition, when the arbitral tribunal, adjudicating in a suit filed by
Prefacethe Philippines, made an arbitral award invalidating China’s so-called “nine-dash line”(which delineates its claims in the South China Sea), not only did China ignore it as a “merescrap of paper,”18 but also took such actions as sending in bombers to patrol the South China
Sea and carrying out live-fire exercises by surface vessels, all in open defiance of interna-

Summary

tional law by coercion.
China has additionally made further inroads into the East China Sea and the Western
Pacific, both adjacent to Japan. In June 2016, a PLA Navy frigate entered the contiguous

Introduction

zone of the Senkaku Islands for the first time. Two months later, several hundred Chinese
fishing boats swarmed into the waters around the same islands, along with a dozen or sogovernment ships belonging to China, repeatedly intruding into the contiguous zone andJapanese territorial waters. China is also sending in more and more military planes to overfly

Chapter 1

the East China Sea, forcing the Japan Air Self-Defense Force to step up the frequency of its
scrambling against the Chinese aircraft. Furthermore, the PLA has increasingly ventured
into the Western Pacific via the East China Sea and South China Sea. In December 2016, a
PLA Navy carrier fleet led by the aircraft carrier Liaoning, while on an exercise, made its

Chapter 2

way from the East China Sea through the Miyako Strait (between Miyako Island and Okinawa
Island) into the Western Pacific, later passing through the Bashi Channel (between thePhilippines and Taiwan) for the South China Sea. The PLA has also boosted the frequencyof flights by its bombers and early warn-

Chapter 3

ing aircraft above both of those waterways for the purpose of exercise for
deployment in the Western Pacific. The
PLA’s increased activity in the Western
hance its A2 /AD (Anti-Access /Area
Denial) capabilities so as to constrain the

The Liaoning cruising in sea area south of Yonaguni
Island in Japan (Joint Staff, Japan Ministry of
Defense, “Movements by Chinese Naval Vessels,”
April 20, 2018)

ColumnPacific is likely being carried out to en-

Chapter 4

activities of the US forces in that oceanarea and airspace.
The PLA has also expanded its
presence even further afield, having built

Conclusions

its first-ever military base overseas inAugust 2017 in the African country of
Djibouti. Although the PLA Navy had
participated in an anti-piracy mission in
the Gulf of Aden way back in December
2008, the establishment of the Djibouti

An H-6 bomber flying in the Western Pacific (Joint
Staff, Japan Ministry of Defense, “Flights by
Chinese Aircraft in the East China Sea and thePacific,” May 11, 2018)

17

18

■

●

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Madrid ●

■

■

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■
■■

■

■

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●

■ ■

●

■

■

■

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■

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●

●

●
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Africa

●

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■
■ Mombasa■■

Addis Ababa

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Tehran■●Djibouti ●■●Moscow

Mediterranean
■
Sea

■●

EuropePiraeus ■

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■

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■

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China

Sittwe■●ÜrümqiHambantota

■
■

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■■ Singapore

●

■■

■

●

HaikouSihanoukville●●21st Century Maritime Silk Road

Economic Corridor●

Beijing ●

Xi’an

●

● Kunming

Chengdu ●●Irkutsk ●Silk Road Economic Belt

Port

Railroads

China-India-AfricaMediterranean Blue
Economic Corridor■●

Planned /underconstruction

Indian Ocean■

GwadarTashkent ●Existing●●●

Arctic Ocean

■

●

●

■

■
●■
■

Pacific Ocean

Darwin■■ Melbourne■

China-Oceania-South PacificBlue Economic Corridor

Shanghai

●
●

●

●

●

China-Arctic-Europe
Blue Economic Corridor

Oceania

Extension to
Latin America

三条蓝色经济通道 [Vision for Maritime Cooperation under the Belt and Road Initiative: To Establish the Three Blue Economic Passages],” Sohu, June 21, 2017;and other sources.

Source: Compiled by the author from Mercator Institute for China Studies, “China Creates a Global Infrastructure Network,” July 6, 2018; “一带一路海上合作设想 ：建设

Dakar

●

■

■

Atlantic
Ocean

Paris●■

London ●■■■●Hamburg

Figure 1-4: Expanding BRI
Chapter 1

China’s Foreign Strategy Causes Friction with the Existing World Order

Figure 1-5: Japan Self-Defense Forces Scrambles against Chinese Aircraft2009

Preface

Fiscal year (Apr-Mar)
38

2010

96

2011

156

Summary

2012

306

2013

415

2014

464

2015
2016

Introduction

571
851

2017

500
0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850 900(Frequency)

Chapter 1

Source: Compiled by the author from materials released by the Joint Staff, Japan Ministry of Defense.

Base has made it easier for the PLA to
Chapter 2

conduct such activities, as well as humanitarian assistance, more smoothly.19
Elsewhere, the PLA Navy and RussianNavy conducted combined exercises in

Chapter 3

the Baltic Sea in July 2017 with the threeparticipating PLA Navy vessels having
traveled from the Indian Ocean via the
Atlantic Ocean to Kaliningrad, where

Columnthey took part in such activities as air-defense exercises and search and rescue exercises
jointly with Russian Navy vessels.20 According to a Chinese national defense white paper, the“protection of the security of overseas interests” is now a strategic duty of the PLA.21 In line

Chapter 4

with the promotion of the BRI, there has been a surge in the number of Chinese corporations
and workers active overseas, and China’s expansion of its military presence in the Indian
Ocean as well as in the direction of Africa and Europe can also be viewed as aiming to ensure
China’s burgeoning “overseas interests” in those regions.

Conclusions

3. Xi Jinping’s Plan to Restructure the International
Order Faces a Tough Road
In October 2017, Xi Jinping was reelected general secretary at the 19th National Congressof the CPC. Having consolidated his political authority within the party, he declared the19Chapter 1

policy of further promoting “major-country diplomacy with Chinese characteristics” withhimself as the advocator. In a report to the party congress, Xi Jinping presented his assessment of the current world situation, saying that “changes in the global governance system
and international order are speeding up,” stressing the need to promote the “creation of a new
type of international relations characterized by mutual respect, fairness, justice, and win-win
cooperation,” and calling for the creation of a “community of a shared future for mankind.”
In addition, he declared that “the active encouragement of international cooperation in the
BRI would enable China to fulfill its role as a responsible great power, taking an active partin reforming and creating the global governance system, and contributing its wisdom andstrength.”22 As far as the BRI was concerned, moreover, the CPC Constitution, revised at thefirst meeting of the 19th National Congress of the CPC, also clearly stipulated the “pursuitof the BRI.”23
Judging from those circumstances, an important element of Xi Jinping’s political authority has been “major-country diplomacy with Chinese characteristics,” which aims to restructure the international order, and the banner policy for Xi Jinping’s diplomacy has been
the BRI, which represents the concrete means for its realization. At the first session of the
13th National People’s Congress that convened in March 2018, Foreign Minister Wang Yi,
speaking at a press conference, described President Xi Jinping as the “chief architect ofmajor-country diplomacy with Chinese characteristics.”24 At a meeting of the Central
Conference on Work Related to Foreign Affairs held in June of the same year, General
Secretary Xi Jinping reconfirmed the importance of constructing and promoting the BRI,
along with “reforming the global governance system,” building the “community of a shared
future for mankind,” “protecting core interests,” and so forth. Yang Jiechi, director of the
Office of the Foreign Affairs Commission of the CPC Central Committee, pointed out that“the most important outcome of this conference is that it established the guiding position ofXi Jinping thought on diplomacy.”25
President Xi Jinping himself has actively been engaged in carrying out diplomacy inemerging-market countries and developing countries, eager to demonstrate positive resultsfor his “major-country diplomacy with Chinese characteristics.” In June 2018, the 18th
Meeting of the Council of Heads of Member States of the Shanghai Cooperation Organization(SCO) was held in Qingdao, China. At the summit—which was the first time for the leadersof India and Pakistan to participate since their countries officially joined the SCO, besides
participating by Russia and the countries of Central Asia—an appeal was made for the necessity to “unflaggingly continue reforms in the global governance system,” with the assertion made that the SCO member countries should cooperate in promoting the creation of a“new type of international relations” to build an “SCO community of a shared future.”26 In
July 2018, the eighth ministerial meeting of the China-Arab States Cooperation Forum took20

China’s Foreign Strategy Causes Friction with the Existing World Orderplace in Beijing, in which Xi Jinping stressed that “Arab countries are natural partners ofPreface

China in the joint construction of the BRI,” and expressed his idea of constructing a “ChinaArab community of a shared future” leveraged by the BRI.27 Xi Jinping also made a tour ofseveral countries in the Middle East and Africa while on his way to and from the BRICS
summit of five emerging countries (Brazil, Russia, India, China, and South Africa) in South

Summary

Africa. On that occasion, he visited the United Arab Emirates, Senegal, Rwanda, andMauritius, signing agreements with each concerning the BRI. At the BRICS Business Forum
held in Johannesburg, South Africa, Xi Jinping asserted, “the next decade will be a crucial

Introduction

one with faster changes in the international landscape and the international alignment offorces,” as well as one with a “profound reshaping of the global governance system,” emphasizing that the BRICS countries ought to play a constructive role in bringing about a “newtype of international relations” and developing a “community of a shared future for man-

Chapter 1

kind.” He also declared, “I hope that the BRICS countries and African countries, along withthe emerging-market countries and developing countries more broadly, will all join the network of partners for the joint construction of the BRI.”28
Although China has been pursuing diplomacy on a grand scale in that way under the

Chapter 2

aegis of President Xi Jinping, aiming at the restructuring of the international order, and withthe construction of a “new type of international relations” and a “community of a shared
future for mankind” as its pillars, the outlook for that policy is hardly rosy, as the pursuit of“major-country diplomacy with Chinese characteristics” has brought several issues into

Chapter 3

relief. The first issue is the fact that it has triggered warning bells and a backlash on the partof the advanced democratic countries, particularly the United States. China criticizes theexisting international order, with the advanced countries at its helm, as being “unjust andimproper,” and has argued for the creation of a “new type of international relations” that

Columnwould empower the voice of developing countries. From the standpoint of the advanced
democratic countries, however, which have striven hard to maintain and reinforce a free andopen international order as a global commons, such a remark by China comes off as provoca-

Chapter 4

tive. Above all, the United States has become increasingly wary of China’s actions concerning the international order, given that it has been confronted by specific Chinese moves tochange the status quo by coercion, such as the upgrading of its A2/AD capabilities vis-à-vis
the United States in East Asian waters. The US National Security Strategy released inConclusions

December 2017 explicitly painted China as a force seeking to change the status quo of theexisting international order by coercion, harshly criticizing it as “seek[ing] to displace theUnited States in the Indo-Pacific region.”29 That heightened strategic sense of caution toward
China on the part of the United States has probably served as a backdrop for the harsh position adopted by the Donald Trump administration in trade issues with that country. There isalso concern in Western Europe that China’s growing influence on the countries of Central

21Chapter 1

and Eastern Europe (CEE) may detract from the EU’s centripetal force. At the China-CEE
16+1 Summit held in Bulgaria in July 2018, Chinese Premier Li Keqiang, while promoting
the construction of the BRI in the region, also tried to alleviate Western Europe’s concerns
about China by stressing that the project would benefit the whole continent, helping the “balanced development in the region and the European integration process,” and said that the
16+1 cooperation would help shrink the developmental gap among individual European
countries.30
The second issue is the growing suspicion on the part of developing countries concerning China’s promotion of the BRI. Although China has been pursuing the projectsmoothly in many parts of the world, there has also been an increasing incidence of trouble,
the most notable of which was the construction of Hambantota Port in Sri Lanka. The port
facilities in that project have been developed thanks to heavy financing by China, but as the
project lacked economic rationality, among other reasons, Sri Lanka found it difficult to
repay the loans, so Chinese companies ended up taking out a 99-year lease on the port. That
has led to the criticism of such projects as “debt traps,” a situation in which developing countries are lent an excessive amount of debt to undertake unsustainable economic projects, andthen are forced to hand back those projects to China on account of their inability to pay themoney back.31 Moreover, another reason for the growing distrust toward China is its pursuitof the BRI in a way that overlooks the democratic processes in its partner countries, thus
lacking in transparency. Several instances have occurred already in which projects in the
BRI have come under critical scrutiny as new leaders take the reins of government. When a
new president was elected in Sri Lanka in 2015, he heaped heated criticism on the projects
within the BRI that were promoted by the previous administration. After the Malaysian election of 2018, also, the new Mahathir bin Mohamad administration said it would reconsider
projects that the previous administration had agreed upon with China, such as the construction of a railway, pronouncing the debt burden too large. China’s tendency to rely on its relations with authority figures to promote its BRI causes it to pay scant regard to democratic
decision processes and accountability to citizens, so is starting to serve as a hindrance.
The third issue, then, is the way that China’s stance of adamantly insisting upon theprotection of its “core interests” has hampered improved relations with its neighbors. The Xi
Jinping administration views both territorial sovereignty and maritime rights and interests as
its “core interests,” and is moving ahead with their securement and expansion with the backdrop of its military power. China has fortified its military bases in the South China Sea, andstepped up activities by its warships and aircraft in the East China Sea and the Western
Pacific, as well as triggering a military standoff with India over the Doklam plateau (claimed
by both China and Bhutan). What China regards as its “core interests” are also vital national
interests for the other countries involved in disputes, making it quite difficult for them to22China’s Foreign Strategy Causes Friction with the Existing World Ordermake concessions to China. The more China attempts to ram through changes in the status
Prefacequo backed by its military strength, the greater the distrust toward China grows in the othercountries. At first, the Xi Jinping administration professed the target of building a “community of a shared future among its neighbors,” then went on to call for the creations of a “community of a shared future for mankind.” However, given that the “community of a shared

Summary

future among its neighbors” cannot be built without gaining the trust of the countries on its
periphery, the same applies even more so for the “community of a shared future for mankind,” the realization of which can only be described as impossible.

Introduction

A turning point has likely been reached in the “major-country diplomacy with Chinesecharacteristics” under President Xi Jinping, which has promoted the targets of revamping theinternational order and protecting China’s “core interests.” If China is earnest about its aimof revamping the international order, it needs not only to emphasize the confrontation be-

Chapter 1

tween advanced and developing countries, but also to strive to acquire the understanding andcooperation of the advanced countries, which have played a role in the maintenance of theexisting order. Also, to bolster coordination with developing countries, it is important for
China to gain the trust not only of certain leaders from those countries but also their citizens

Chapter 2

at large. For China to exhibit leadership in reforming global governance, it must first solidify
the support of the countries in its surrounding regions. Much attention will be focused in the
coming years on whether the Xi Jinping administration can deftly balance the two principlesof the “path of peaceful development” and the protection of its “core interests” by first es-

Chapter 3

tablishing a true “community of a shared future among its neighbors.”(Author: Masafumi Iida)

ColumnChapter 4
Conclusions

23

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Chapter 2
China’s Formation of theRegional Order and
ASEAN’s Responses:
From “Rise” to “Center”(Tomotaka Shoji)Chapter 2

1. ASEAN and the Rise of China
Southeast Asia occupies a geopolitically important location as a junction between the Pacificand Indian oceans at almost the center of the Indo-Pacific region. This region also covers
major international sea lanes such as the South China Sea and the Strait of Malacca. For
China, Southeast Asia is not just a vital strategic point in these sea lines of communication
linking it with the Middle East, Africa, and Europe. While southern China adjoins the countries of continental Southeast Asia, with which it has close economic ties, the continental
part of Southeast Asia is important for the security of China. For these reasons, Southeast
Asia is a geopolitically vital region for China and an essential piece in the jigsaw puzzle of
China’s concept of the regional order represented by the “Belt and Road.”
For similar geopolitical reasons, Japan and the United States also view Southeast Asia
as a region where they have important strategic interests. In addition to Japan’s continuing
economic cooperation, the Abe administration has been greatly strengthening its security
cooperation with the Association of Southeast Asian Nations (ASEAN) countries, and visitsby leading statesmen between Japan and ASEAN countries have increased significantly inrecent years. In the United States, former President Barack Obama’s policy of “rebalancing
toward the Asia Pacific” identified ASEAN as one of its targets for stronger cooperation.
Based on this rebalancing, the United States stated that, in addition to its traditional allianceswith the Philippines and Thailand, it would promote security cooperation with Indonesia andVietnam as new partners.
While China promotes its Belt and Road Initiative (BRI), Japan and the United States
have been striving to maintain and enhance a regional order that emphasizes democracy andthe rule of law based on the vision of a “Free and Open Indo-Pacific.” As a result, disputes
are arising between China on one side and Japan and the United States on the other regarding
the future order of the Indo-Pacific region. Caught in the middle of this conflict between two
regional orders, how is ASEAN responding and what position does it aim to occupy within
the region? Bearing these issues in mind, this chapter examines China’s pursuit of a new
regional order and ASEAN’s responses, with particular focus on the two aspects of security
issues regarding the South China Sea and economic cooperation represented by the BRI. In
this analysis, the key words are the various “dualities” and “balances” that have characterized the relationships of ASEAN countries with China.
China has always been an important external country for the ASEAN members.
Bilateral relations between each member and China, as well as multilateral relations with
China based on ASEAN, have continually had a great impact on the international politics ofSoutheast Asia and domestic politics in each country. After the end of the Cold War, thesignificance of China in the region changed dramatically and steadily increased. China was26

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

transformed from a supporter of communist guerillas in Southeast Asia and an “exporter ofPrefacerevolution” to destabilize countries’ political systems into a mutually beneficial partner that
extended its reform and opening-up policy overseas and promoted economic cooperation. In
particular, the turning point that greatly changed ASEAN countries’ perception of China was
its response to the Asian financial crisis of 1997. Experiencing relatively little direct impact,

Summary

China decided against devaluing the yuan and carried out a policy of stimulating domestic
demand to promote imports from ASEAN countries, leaving the abiding impression of acountry that had contributed to the economic recovery of ASEAN, which had suffered

Introduction

greatly from the crisis.1
At the same time, security issues arose between China and ASEAN. Around the endof the Cold War, China made aggressive incursions in the South China Sea, where various
disputes over territorial sovereignty, maritime resources, and the like, existed between China

Chapter 1

and ASEAN countries. This led to incidents that had a direct impact on ASEAN security—
military conflict with Vietnam over the Spratly Islands in 1988 and the establishment in 1995
of a Chinese base on Mischief Reef, over which the Philippines claimed ownership—leading to growing concerns about China in ASEAN countries. These incursions by China arose

Chapter 2

from the “power vacuum” in the strategic environment of the region after the end of the Cold
War, when the United States pursued a policy of “disengagement” from Southeast Asia symbolized by the withdrawal of its military bases from the Philippines.2
From that time onwards, ASEAN has been forced to respond to the rising China from

Chapter 3

the two occasionally contradictory aspects of economics and security. The method ASEAN
developed to deal with this situation may be described as a “two-track strategy,” which employed the approaches of both engagement and constraint. While deepening cooperative relations through active engagement with Beijing, ASEAN has tried to constrain China’s

Columnbehavior through non-confrontational means and tried to prevent China from gaining excessive influence over ASEAN.3 The aspect of engagement has mainly consisted of promoting
economic cooperation, but ASEAN hopes that persuasion through diplomatic negotiations

Chapter 4

and confidence-building measures concerning security can prevent security issues from deteriorating. On the other hand, while ASEAN has mainly employed constraint when dealing
with security issues, this includes the approach of trying to prevent the expansion of China’s
economic influence and the resulting excessive economic dependence of ASEAN on China.

Conclusions

The two-track strategy, including engagement and constraint, is based on three kindsof balance. The first, as stated above, is balance between economics and security. While
ASEAN promotes economic cooperation with China with the aim of contributing to its own
economic development, it strives to respond appropriately to security challenges such as
those in the South China Sea. With the rise of China, ASEAN has continued to pursue both
economics and security. When contradictions arise in the course of this dual pursuit, it has

27

Chapter 2

taken a fair and just approach without indicating a clear order of priorities. ASEAN is a useful
multilateral framework when pursuing a balance between economics and security. ASEAN’s
multilateral frameworks for cooperation and dialogue and the frameworks between ASEAN
and China can be described as serving as a protective wall that prevents the direct exertion ofChina’s massive influence on the small and medium-sized countries of ASEAN.
The second balance of the two-track strategy is balance of external relations. Like
China, the United States has exercised strong influence on ASEAN from the time of the Cold
War through the post-Cold War period to the present. Standing between these two great
powers, ASEAN countries have sought to maintain balance in their relations with both,
avoiding having to choose one over the other. While striving not to let either great powerexert excessive influence over any country or the region as a whole, they have adopted theposture of maintaining US engagement from the security standpoint, particularly in view of
the China’s rising power, and constraining China.4
ASEAN has also made use of its frameworks to maintain balance in its external relations. The ASEAN countries have promoted the engagement in ASEAN of not only theUnited States and China, but also the other major external players—Japan, India, andAustralia. ASEAN’s objective in building cooperative relationships in all directions is theresult of its need to have as many “pivots” as possible in its external relations, without relying excessively on the United States or China, or becoming paralyzed through being caught
in the middle of tense US-China relations. In these ways, ASEAN countries have “hedged”
against China.5 Through ASEAN’s multilateral frameworks, they have successively established and operated cross-sectoral and comprehensive cooperative frameworks centering on
external dialogue partners including the United States and China. At the bilateral level too,they have responded to both economic and security issues on the basis of cooperation anddialogue.
Thus ASEAN countries have striven to maintain their strategic autonomy while promoting economic growth by pursuing balances between the dualities of “engagement andconstraint,” “economics and security,” and “China and the United States.” ASEAN’s successor failure in establishing these balances depends greatly on the foreign policy environment
surrounding it, particularly the policies of China and United States towards ASEAN. Fromthe second half of the 1990s to the first half of the 2000s, ASEAN’s approach of engagement
towards China was dominant and the relationship between them strengthened. In 2002,
ASEAN and China concluded the Framework Agreement on Comprehensive Economic
Cooperation, which included concrete measures promoting a free trade agreement, such as
tariff reductions, taking the first step in the formation of a China-ASEAN free trade area. In
2003, China became the first dialogue partner to become a member of the Treaty of Amity
and Cooperation (TAC) in Southeast Asia, concluding a strategic partnership with ASEAN

28

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

as well as displaying a positive attitude to building a comprehensive relationship with it,
Prefaceincluding political cooperation.
ASEAN’s two-track strategy also demonstrated its effectiveness regarding the South
China Sea. In response to China’s active incursions in this sea area from the second half ofthe 1980s to the first half of the 1990s, ASEAN succeeded in building a framework, with

Summaryitself at the center, for promoting engagement and dialogue regarding post-Cold War regional security with the main external countries by establishing in 1994 the ASEAN Regional
Forum (ARF), a security cooperation framework for the Asia-Pacific region which included

Introduction

the United States and China. In addition, a Track II level workshop on South China Sea
issues was set up in 1990, particularly through the initiative of Indonesia. In these ways,
ASEAN established a framework, albeit unofficial, for regular discussions with China regarding the South China Sea.

Chapter 1

After that, South China Sea issues came to be discussed by ASEAN and China at the
Track I level in senior officials’ meetings (SOM), foreign ministers’ meetings, and summit
meetings, and discussions proceeded concerning the establishment of a code of conduct(COC) in the South China Sea. This led to the signing of the Declaration on the Conduct ofChapter 2

Parties in the South China Sea (DOC) by ASEAN and China in 2002. In addition to declaring that the parties would promote cooperation in the peaceful resolution of disputes, selfrestraint by the parties concerned toward the stabilization of situations, and marine scientificresearch, the DOC stated that “The Parties concerned reaffirm that the adoption of a code ofChapter 3

conduct in the South China Sea would further promote peace and stability in the region andagree to work, on the basis of consensus, towards the eventual attainment of this objective.”6
China’s agreement to hold multilateral discussions with ASEAN concerning South China
Sea issues showed the prioritization of its objective of strengthening its relationship with

ColumnASEAN with a focus on economic ties over its concerns about the complication of negotiations. At this time, China’s posture was in accord with ASEAN’s policy of separating andbalancing economics and security.

Chapter 4

2. ASEAN’s Response to Territorial Disputes in theSouth China Sea

Conclusions

After the signing of the DOC, ASEAN seemed to take a further step towards peaceful resolution of South China Sea issues by aiming to develop it into a legally binding COC. However,
the issues entered a new phase around 2010 and disputes over the South China Sea escalated
and became more complicated. The primary factor behind this was that China, which had
greatly strengthened its naval power and the capabilities of its maritime law enforcement
agencies against the background of its economic growth, once again made active incursions

29

Chapter 2

Figure 2-1: T erritorial Disputes in the South China Sea
TaiwanChina

Paracel Islands

Scarborough Shoal

VietnamSpratly Islands

Philippines

Malaysia

Natuna Islands

BruneiIndonesia

Source: Compiled by the author.

into the South China Sea. The target of its first confrontation was Vietnam. In addition to successive seizures of Vietnamese fishing boats operating in the vicinity of the Paracel Islands by
patrol boats of the China’s maritime law enforcement agency, an incident occurred in which
the cables of a Vietnamese oil exploration vessel were cut by the Chinese authorities. As aresult of repeated incidents such as these, Vietnam came to have deep security concerns.
The oil drilling platform incident of 2014 was particularly shocking for Vietnam. In
May 2014, China set up a massive semi-submersible oil drilling platform and began exploration operations in the seas off the Paracel Islands, over which Vietnam and China dispute
territorial sovereignty, although China has de facto control. Viewing this as an act tostrengthen China’s control over the Paracel Islands by creating a fait accompli, Vietnam
protested strongly and resisted, dispatching coast guard patrol boats to the site. Although thesituation calmed down after China withdrew the oil rig in July, the incident demonstrated toVietnam the limitations of trying to deal with such an incident on its own. Vietnam came tounderstand that, however much it tried to stabilize relations with China on a bilateral level,
it could not prevent China’s infringement of its sovereignty and maritime rights. Since then,Vietnam has made more positive, albeit cautious, efforts to promote security cooperation
with other major external powers, particularly the United States and Japan.7
In 2012, the Scarborough Shoal incident occurred between China and the Philippines
under the Benigno Aquino administration. In April of that year, the Philippine navy

30

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

discovered and tried to arrest Chinese fishermen operating at Scarborough Shoal about 200
Prefacekilometers west of the island of Luzon in the Philippines. Two patrol boats of the Chinese
maritime law enforcement agency responded by blocking the approach of the Philippine
vessel, resulting in a standoff at the shoal. The standoff lasted for two months, during which
China put economic pressure on the Philippines, imposing import restrictions on bananas,

Summary

its main export product, and suspending travel tours of Chinese to the Philippines. It was
the understanding of the Philippines that the two sides had both agreed to withdraw fromthe shoal in the subsequent negotiations. However, in spite of the Philippines’ withdrawal,

Introduction

Chinese patrol boats returned to the vicinity of the shoal and prevented Philippine vessels
from approaching while Chinese fishing boats continued operations there. China had put
Scarborough Shoal under its de facto control.
As these clashes with Vietnam and the Philippines showed, China had begun to chal-

Chapter 1

lenge the existing maritime order and regional order by attempting to change the status quo
by force in the South China Sea. When responding to China’s actions, ASEAN tried to promote separation and balance between economics and security, but China actively linked thetwo. Specifically, China converted its economic power into political influence and some-

Chapter 2

times tried to make ASEAN bow to its wishes in security disputes by means of intimidating
economic diplomacy. The economic measures China used against the Philippines in the
Scarborough Shoal incident were typical of this approach.
In the background of China’s political use of economic power against ASEAN coun-

Chapter 3

tries was the expansion of its economic influence. As a result of the ASEAN-China Free
Trade Agreement of 2002, the trade amount between them increased dramatically, and by themid-2000s China had become ASEAN’s largest trading partner. Accordingly, China became
indispensable to ASEAN’s economy, while the fact that the Chinese economy was not so

Columndependent on ASEAN gave China the leeway to adopt a tough political and diplomatic stancetowards ASEAN. This is also the reason why China came to take a bold and aggressive approach to ASEAN countries with the use of physical force in the South China Sea.

Chapter 4

In addition to this intimidating economic diplomacy, China used its economic power
to pursue a “divide and rule” policy towards ASEAN. While it put economic pressure on
ASEAN countries that defied its wishes, it provided economic support to those that werecompliant. A typical example of this is Cambodia. Cambodia has had a historically close

Conclusions

relationship with China, and in recent years it has received massive economic support.
Accordingly, the Hun Sen regime has consistently supported China’s position in regional
disputes, including South China Sea issues.
This policy gave rise to a conflict of opinions within ASEAN concerning its response
to China over South China Sea issues. The effects of China’s ASEAN “divide and rule”
policy and the limitations of ASEAN’s formation of a unified position regarding the South

31

Chapter 2

China Sea were revealed by the Cambodian chairmanship issue in 2012. At the ASEAN
Foreign Ministers’ Meeting in July 2012, the participants failed to agree on a joint communiqué for the first time in ASEAN’s history and no communiqué was issued. The reason forthis was that, while the Philippines and Vietnam requested the inclusion of a specific statement about the Scarborough Shoal incident rather than an allusion to it, Cambodia, then the
ASEAN chair, consistently rejected this and the discussions finally broke down.8 The
strengthening of ASEAN economic engagement with China had ironically weakened theeffects of constraint, leaving less room for maintaining a unified ASEAN stance concerning
South China Sea issues.
One of the balances ASEAN has pursued, the balance between external powers, particularly between its relations with the United States and China, has been maintained tosome extent, partly because of the United States’ active engagement in South China Sea
issues. When these issues reoccurred, unlike in the 1990s, the United States adopted theclear posture of being a stakeholder. At the ARF held in July 2010, for example, Secretary ofState Hillary Clinton clearly stated that the United States had a strategic interest in the South
China Sea. Furthermore, the Pentagon announced its new Defense Strategic Guidance(DSG) in January 2012, formularizing its “rebalancing” toward the Asia Pacific. ASEAN
interpreted this “rebalancing toward the Asia Pacific” as the strengthening of US engagement in South China Sea issues and of its military presence in Southeast Asia, particularly
through the rotational deployment of US Marines to Darwin, Australia, and the plan to
deploy littoral combat ships (LCS) to Singapore.9
In response to the US rebalancing policy, the Philippines promoted discussions regarding the strengthening of the presence of US armed forces in the Philippines through rotational deployment, and the two countries signed an Enhanced Defense Cooperation
Agreement (EDCA) in April 2014. The objectives of the EDCA were the enhancement of themaritime security and maritime domain awareness (MDA) of the Philippine armed forces,
the rotational deployment of US forces to locations in the Philippines agreed by the twocountries, and the implementation of joint exercises and training utilizing these locations.10
At around the same time, Vietnam also embarked on security cooperation with the UnitedStates in earnest. In addition to strategic dialogues, joint exercises, visits to Vietnam by US
navy vessels, the first visit to the United States by the General Secretary of the Vietnamese
Communist Party took place in July 2015. The US announcement of the complete lifting of
its arms embargo when President Obama visited Vietnam in May 2016 strongly reinforced
the impression of rapprochement between the two countries based on political trust.11
With the United States’ active engagement, South China Sea issues became more
complex as they expanded from diplomatic problems between ASEAN and China in the
1990s into tensions and conflicts, including military aspects, between the great powers of the32

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

United States and China. Caught between the United States and China, ASEAN welcomed
Preface

US engagement as a means of restraining China’s excessive military influence, but as military tensions increased between the United States and China, it was also concerned that it
might destabilize the region. While the tug of war between the United States and China
caused divisions within ASEAN, the attempts by ASEAN to maintain its integrity amid

Summarythese divisions created an overall balance. This balance played the role of preventing ASEAN
from becoming biased towards either the United States or China.
With the inauguration of the Donald Trump administration in the United States inIntroduction

January 2017, the security outlook for Southeast Asia, including the South China Sea,
became shrouded in uncertainty. Rather than the Trump administration, however, it was thebirth of the Rodrigo Duterte administration in the Philippines in June 2016 that caused amajor structural shift in ASEAN’s response to the South China Sea. The Duterte administra-

Chapter 1tion completely changed the South China Sea policy of the preceding Aquino administration, shifting from a posture of confrontation with China to one of dialogue. The primaryreason for this policy shift was a rebalancing between security and economics. For thePhilippines, like other ASEAN countries, although the South China Sea is an important chal-

Chapter 2

lenge, cooperation and aid from China for the construction of infrastructure and economic
development is indispensable. President Duterte’s policy priorities are domestic public orderand economic measures. It was also necessary for him to promote a restoration of balance
between security and economics to ensure the continuous support of the people. The Duterte

Chapter 3administration softened the Philippines’ posture of confrontation in the South China Sea inorder to improve relations with China and secure its economic cooperation.12
The Philippines has also attempted to rebalance its relationship with the United Stateswith its relationship with China. President Duterte made wide-ranging changes in alliance

Columnrelations with the United States, reducing the frequency and scale of various joint exercises,
terminating the joint Philippine-US naval patrols in the South China Sea, and alluding to thepossible revision of the EDCA.13 Behind this policy shift lay Duterte’s personal mistrust of the

Chapter 4

United States based on his experience when he was mayor of Davao and his doubt about the
US-Philippine alliance that the United States would actually have a showdown with China toprotect the sovereignty of the Philippines. This led to his strategic calculation that a confrontational posture toward China in the South China Sea was not a good policy for his country.14

Conclusions

President Duterte actually had direct talks with President Xi Jinping in October 2016, and thefact that Philippine fishermen were able to operate in the vicinity of Scarborough Shoal demonstrates to some extent the effectiveness of his conciliatory attitude towards China.15
This shift in the South China Sea policy of the Duterte administration had a great influence on ASEAN’s response. Firstly, it had an impact on the arbitral ruling regarding theSouth China Sea. In January 2013, the Philippines under the previous Aquino administration

33

Chapter 2

instituted arbitral proceedings based on the United Nations Convention on the Law of the
Sea (UNCLOS) regarding the sovereign rights claimed by China in the South China Sea.
Three and half years later, on July 12, 2016, the arbitral tribunal handed down its ruling. Thisruling stated that there was no legal basis for the historical rights claimed by China such as
the “nine-dash line,” that none of the islands in the South China sea were “islands” according
to the UNCLOS definition, and that China was violating the Philippines’ exclusive economic zone (EEZ) and its sovereign rights on the continental shelf. In short, the ruling recognized almost all of the Philippines’ claims and rejected almost all the rights claimed by
China.16 China refused to take part in the arbitration process from the beginning, claimingthat there was a defect in the proceedings, and it strongly opposed the ruling and announced
its refusal to accept it.
The Philippines had won its “legal warfare” with China, but the Duterte administration, which was inaugurated at almost the same time as the issuance of the arbitral ruling, inconsideration of its relationship with China, responded cautiously to the ruling. Most
ASEAN countries, including Vietnam, rather than calling upon China to follow the ruling,
made moderate announcements calling for the self-restraint of the countries involved and thepeaceful resolution of the disputes. Furthermore, Cambodia refused to declare its standpoint
regarding the ruling, stating that the arbitral proceedings had nothing to do with ASEAN,
while Laos and Brunei did not make any announcement at all.17 Faced with China’s strong
opposition and having had the rug pulled from under it by the Philippines’ extremely cautious response, ASEAN missed its opportunity to make positive use of the arbitral ruling toresolve the South China Sea issues. The Chairman’s Statement of the ASEAN Summit heldin Vientiane in September 2016 made no mention of the ruling.
When the Philippines was the ASEAN chair in 2017, it further promoted this policyof not discussing the arbitral ruling in ASEAN. At the press conference before the ASEAN
Summit in April 2017, President Duterte showed his negative attitude by stating that it wasa “waste of time” to discuss the ruling at the meeting, and the matter was not put on theagenda at any of the ASEAN-related meetings in 2017.18 Thus it became “established policy”
not to deal with the arbitral ruling within ASEAN. This tacit permission for China to ignore
the ruling could be viewed as ASEAN’s acceptance of China’s attempts to change the status
quo in the South China Sea in opposition to the existing order based on international law.
The second impact of the Philippines’ policy shift was on the Chairman’s Statement of
the ASEAN Summit. As the ASEAN chair in 2017, the Philippines greatly reduced and diluted references in the Chairman’s Statement to the South China Sea. For instance, comparedto the Chairman’s Statement of the previous ASEAN Summit held in September 2016, with
Laos as the ASEAN chair, the number of paragraphs related to the South China Sea in the2017 statement decreased greatly from eight to two. Furthermore, unlike the 2016 statement,

34

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

it did not contain any restraining words or phrases referring to the reclamation or militarizaPreface

tion of islands in the South China Sea, such as “land reclamation,” “escalation of activities,”and “non-militarization”. Speaking on behalf of China’s claims even more forcefully thanLaos, which had been considered pro-China, the behavior of the Philippines as the ASEAN
chair created a magnetic field that drew the whole of ASEAN strongly towards China.

Summary

The third impact was on COC discussions. Although the conclusion of the COC in the
DOC of 2002 had been highly acclaimed, COC discussions had hardly advanced at all inalmost 15 years since the conclusion of the DOC. This was mainly due to China’s negative

Introduction

attitude, but at the time of the ASEAN-China Foreign Ministers’ Meeting held at the end of
July 2016 immediately after the arbitral ruling, China’s Foreign Minister Wang Yi announced
his wish to speed up the COC discussions, stating that he wanted to bring discussions on theframework of the COC to a close by the middle of 2017.19 This shift by China towards a posi-

Chapter 1tive attitude was the result of the arbitral tribunal’s urging of China to aim for some form of
resolution of South China Sea issues with ASEAN. At the ASEAN-China SOM in May
2017, the two parties reached an agreement on a COC framework, and at the ASEAN-China
Foreign Ministers’ Meeting in August a framework agreement was endorsed. The specific

Chapter 2

conditions of the framework agreement have not been publicly disclosed, but according tosome media reports and research, it is insufficient in that it lacked provisions concerning
legally binding force, the geographical scope of the agreement, or enforcement and arbitration mechanisms. On the other hand, it included new statements concerning the prevention

Chapter 3

and management of incidents and a stronger commitment was made to maritime security andfreedom of navigation.20
After the framework agreement, discussions again came to a halt, but in late June
2018, about a year after the agreement, the 15th ASEAN-China SOM on the Implementation

Columnof the DOC took place in Changsha in Hunan Province.21 On that occasion discussions were
held between ASEAN and China on the specific contents of the COC, but it remains unclear
as to what COC will be determined and when the COC will be concluded. However, China

Chapter 4

may insist that, since the COC discussions are being continued, it is possible that the South
China Sea problem can be resolved bilaterally with ASEAN and that there is no need forcountries outside the region, such as the United States and Japan, to become involved.
Moreover, in view of concerns that the COC will consist of rules under which China take theConclusions

lead and ASEAN has a subordinate position, it is possible that the COC discussions may
become part of China’s efforts to establish the regional order. Indeed, China’s proposal at theASEAN-China Foreign Ministers’ Meeting in August 2018 to conduct regular joint military
exercises in the South China Sea and its refusal to permit joint exercises with any countries
outside the region without the prior agreement of the countries concerned suggest just thiskind of Chinese approach.

35

Chapter 2

Table 2-1: Comparison of Chairman’s Statements of ASEAN Summits concerning the South China Sea(underlining by the author)
1.	Chairman’s Statement of the 28th and 29th ASEAN Summits,
September 2016 (Chair: Laos)
121. We remain seriously concerned over recent and ongoing developments
and took note of the concerns expressed by some Leaders on the land
reclamations and escalation of activities in the area, which have eroded
trust and confidence, increased tensions and may undermine peace, security and stability in the region.
122. We reaffirmed the importance of maintaining and promoting peace,security, stability, safety and freedom of navigation in and over-flight above
the South China Sea.
123. We further reaffirmed the need to enhance mutual trust and confidence, exercise self-restraint in the conduct of activities and avoid actions
that may further complicate the situation, and pursue peaceful resolution of
disputes in accordance with international law, including the 1982 United
Nations Convention on the Law of the Sea (UNCLOS).
124. We emphasized the importance of non-militarization and self-restraint
in the conduct of all activities, including land reclamation that could further
complicate the situation and escalate tensions in the South China Sea.
125. We underscored the importance of the full and effective implementation of the DOC in its entirety, and while noting the momentum and newphase of consultations, urged all parties to work expeditiously for the early
adoption of an effective Code of Conduct (COC), including through increasing the frequency of ASEAN-China Senior Officials’ Meetings and Joint
Working Group Meetings on the Implementation of the DOC.
126. We highlighted the urgency to intensify efforts to achieve further
substantive progress in the implementation of the DOC in its entirety as wellas substantive negotiations for the early conclusion of the COC including
the outline and timeline of the COC.
127. Pursuant to the full and effective implementation of the DOC in its
entirety, and pending the early adoption of an effective COC, we stressed
the importance of undertaking confidence building and preventive measures
to enhance, among others, trust and confidence amongst parties.
128. We welcomed the adoption of the Joint Statement of the Foreign
Ministers of ASEAN Member States and China on the Full and Effective
Implementation of the Declaration on the Conduct of Parties in the South
China Sea and also welcomed the Joint Statement on the Application of theCode for Unplanned Encounters at Sea (CUES) in the South China Sea andthe Guidelines for Hotline Communications among Senior Officials of the
Ministries of Foreign Affairs of ASEAN Member States and China in
Response to Maritime Emergencies in the Implementation of the Declarationon the Conduct of Parties in the South China Sea which will be adopted by
the 19th ASEAN-China Summit to Commemorate the 25th Anniversary of
ASEAN-China Dialogue Relations.

2.	Chairman’s Statement of the 30th
ASEAN Summit, April 2017 (Chair:
The Philippines)
120. We reaffirmed the importance of
maintaining peace, stability, security andfreedom of navigation and over-flight inand above the South China Sea. We
welcomed the operationalization of the
Guidelines for Hotline Communications
among Senior Officials of the Ministries ofForeign Affairs of ASEAN Member States
and China in Response to Maritime
Emergencies in the Implementation of the
Declaration on the Conduct of Parties in
the South China Sea and look forward to
the early operationalization of the otherearly harvest measure which is the Joint
Statement on the Application of the Codefor Unplanned Encounters at Sea (CUES)
in the South China Sea. We took note ofconcerns expressed by some Leaders
over recent developments in the area. We
reaffirmed the importance of the need toenhance mutual trust and confidence,
exercising self-restraint in the conduct ofactivities, and avoiding actions that may
further complicate the situation, andpursuing the peaceful resolution of
disputes, without resorting to the threator use of force.
121. We underscored the importance ofthe full and effective implementation of
the Declaration on the Conduct of Parties
in the South China Sea (DOC) in its
entirety. We took note of the improving
cooperation between ASEAN and China.
We welcomed the progress to complete aframework of the Code of Conduct in theSouth China Sea (COC) by middle of thisyear, in order to facilitate the early conclusion of an effective COC. We recognized the long-term benefits that would
be gained from having the South China
Sea as a sea of peace, stability andsustainable development.

Source:	ASEAN, “Chairman’s Statement of the 28th and 29th ASEAN Summits, Vientiane, September 6-7, 2016: Turning Vision into
Reality for a Dynamic ASEAN Community”; ASEAN, “Chairman’s Statement, 30th ASEAN Summit, Manila, April 29, 2017:
Partnering for Change, Engaging the World.”

36

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

Active Group

Neutral Group

Preface

Figure 2-2: D ifferences of Attitude toward the South China Sea of ASEANCountries (with the Philippines under President Aquino)

Passive Group

Indonesia

Malaysia
Cambodia

Laos
Singapore

BruneiIntroduction

Philippines

Summary

MyanmarVietnamThailand

Chapter 1

Source: Compiled by the author.

Figure 2-3: D ifferences of Attitude toward the South China Sea of ASEANCountries (with the Philippines under President Duterte)
Chapter 2

Passive Group
Neutral Group

Malaysia

MyanmarBrunei

Laos

Philippines

Thailand

Chapter 3?

Active Group
Indonesia
Vietnam

Cambodia

Singapore

ColumnChapter 4

Source: Compiled by the author.

Conclusions

3. ASEAN Being Incorporated into the BRI
While ASEAN has followed a very loose process with China for resolving disputes in theSouth China Sea, China has in recent years been further deepening its rapid economic involvement in ASEAN by promoting its BRI. “Belt and Road” is an initiative in which China
aims to create comprehensive cooperative relationships with Asia, Europe, and Africa. One
of its main pillars is Chinese aid for the construction of infrastructure. China has been37

Chapter 2

providing simultaneous and parallel support to countries in the region for the construction of
all kinds of infrastructure from massive infrastructure such as ports, railways, and expressways to industrial parks, and hydroelectric and thermal power generation facilities. Southeast
Asia is one of the priority regions in the BRI. Since advocating this initiative, China has been
accelerating its support for the construction of various infrastructure centering on the countries of continental Southeast Asia.
ASEAN’s response to China’s aid offensive based on the BRI has basically been positive. This is because ASEAN has always desired funds and technological support from outside the region in order to develop infrastructure within it. From the policy viewpoint, this ismanifested in “ASEAN Connectivity.” At the ASEAN Summit in 2009, ASEAN announced
its concept of connectivity officially and comprehensively in the ASEAN Leaders’ Statement
on ASEAN Connectivity. As policies to contribute to the strengthening of connectivity, thestatement pointed out the need for the development of transportation infrastructure, such as
roads, railways, and sea and air transport routes, to provide physical links within the regionof Southeast Asia and the building of networks among the various means of transportation.22
In the following year of 2010, ASEAN announced the Master Plan on ASEAN Connectivity(Hanoi Master Plan) and indicated three directions for the strengthening of connectivity that
ASEAN should achieve through the realization of the ASEAN Community by 2015, namely,
infrastructure development (physical connectivity), effective systems and mechanisms (institutional connectivity) and promotion of exchange among people (people-to-people
connectivity).23
ASEAN’s project to enhance connectivity identified the development of physical infrastructure as its highest priority and required massive funds, and it was assumed that positive support from countries outside the region would be essential to procure these funds. In
this regard, the BRI, which promotes infrastructure development in each country and region
through support from China, including the provision of capital, was intrinsically linked with
ASEAN Connectivity. The fact that all the ASEAN member countries, including Vietnam
and the Philippines under the Aquino administration, even though both were in
sharp confrontations with China in theSouth China Sea, participated in the
Asian Infrastructure Investment Bank(AIIB), which had been set up through
China’s initiative, from the time it was
launched vividly shows ASEAN’s need
for Chinese support and its positive attitude toward it.

38

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

China’s advocacy of the BRI coincides with the launching of the ASEAN Community
Prefaceat the end of 2015. After the launch of the ASEAN Community, the Master Plan on ASEAN
Connectivity 2025 (New Master Plan) was announced in August 2016 as a revision of the
Hanoi Master Plan. The New Master Plan synthesized all the initiatives for strengthening
connectivity up to that time and formulated plans for projects after the establishment of theSummary

ASEAN Community. While promoting the three types of connectivity—physical, institutional and people-to-people—indicated in the Hanoi Master Plan, it determined five strategicareas: (1) sustainable infrastructure, (2) digital innovation, (3) seamless logistics, (4) regula-

Introduction

tory excellence, and (5) people mobility. Since the development of sustainable infrastructure
was placed at the top of the list, the New Master Plan showed once again that ASEAN’s
highest priority was the development of physical infrastructure such as roads, railways, andports. As part of ASEAN’s specific project plans, the Plan stipulated its provisional calcula-

Chapter 1tion that an annual investment in the region of at least US$110 billion was needed and emphasized that it would be essential to explore various ways to procure such massive funds,
including support from the governments of countries outside the region.24
The Joint Statement of the ASEAN-China Summit held in Vientiane in September

Chapter 2

2016 stated: “We will continue to strengthen cooperation in the area of connectivity that willbring mutual benefits, including through capacity building and resource mobilization for the
Master Plan on ASEAN Connectivity 2025 (MPAC 2025), exploring ways to improve connectivity between both sides by synergizing common priorities identified in the MPAC 2025

Chapter 3

and China’s Belt and Road initiative, and encourage the active involvement of relevant multilateral financial institutions.”25
The Chairman’s Statement of the Summit stated: “The ASEAN Leaders appreciatedChina’s continued support for enhancing connectivity within ASEAN and the region, throughColumnsupporting the implementation of the Master Plan on ASEAN Connectivity 2025. We looked
forward to the active involvement and contribution of the Asian Infrastructure Investment
Bank (AIIB) in promoting enhanced ASEAN and regional connectivity. We were further de-

Chapter 4

termined to maximize the utilization of existing mechanism and committed resources as wellas to explore cooperation to enhance connectivity between ASEAN and China.”26
In these ways, ASEAN has explicitly and organically linked connectivity with the
BRI and has made clear its intention to realize its own project plan within China’s initiative.

Conclusions

Against the background of this combination of ASEAN Connectivity and the BRI, ASEAN’s
top leaders displayed a posture of positively accepting support from China at the bilaterallevel. Malaysia and Cambodia were particularly positive. Malaysian Prime Minister Najib
Razak, in an interview when he took part in the Belt and Road Forum for International
Cooperation in Beijing in May 2017, emphasized that the relationships between China andthe countries participating in the BRI was mutually beneficial, reflecting his great

39

Chapter 2

expectations of support from China for ASEAN-related projects such as the China-Laosrailway, high-speed railways in Indonesia and Thailand, and the East Coast Rail Link in
Malaysia.27 At a press conference at the same Belt and Road Forum, Cambodian Prime
Minister Hun Sen expressed strong support for China’s initiative, saying that the Belt andRoad funding from China gave hope to ASEAN countries.28 In addition, Myanmar’s State
Counsellor Aung San Suu Kyi had a meeting with President Xi Jinping at the time of theForum and commented, “The Belt and Road initiative will bring peace, reconciliation, andprosperity to the region and the world.”29
The various infrastructure construction projects supported by China in ASEAN countries are being conducted under government-led planning and construction has alreadybegun on some of them. However, China’s formation of a regional order through support for
infrastructure construction goes beyond initiatives centering on building physical structures
such as the BRI. Entry by Chinese companies into the communications sector in Southeast
Asia is also conspicuous. Giant Chinese IT e-commerce companies such as Alibaba andTencent are rapidly expanding their share in Southeast Asia, as are the Chinese cellphone

Figure 2-4: Infrastructure Construction Support for ASEAN Countries Based on China’s BRI
Malaysia East Coast Rail Link

Ports
Railways

Kelantan

Myanmar
Laos
ThailandKyaukpyu

CambodiaSihanoukville

Malaysia
Laos-Thailand Railway Project(Plans for Railways Linking China
and Southeast Asia)
Under
construction
PlannedKunming

KuantanKoh Kong
Klang
MalaccaIndonesia

Luang Prabang
Vientiane
Bangkok

NakhonRatchasima

Jakarta-Bandung High-speed Railway

JakartaBandung
Kuala Lumpur
Singapore

Source: Compiled by the author.

40

CirebonSemarang

SurabayaPort Klang

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

brands Huawei and Xiaomi. Considering that ASEAN’s connectivity enhancement projectPrefaceincludes the IT sector, these developments can be viewed as part of China’s formation of aregional order through ASEAN connectivity. At the same time, this expansion of China’s
influence in cyberspace in Southeast Asia may also have an impact on political security fromthe standpoint of acquiring and collecting information.

Summary

Apart from these economic links, the relationship between ASEAN and China has
become increasingly close in recent years as ASEAN becomes subsumed into the BRI throughconnectivity. In the sense that China has moved beyond being a rising power and is now be-

Introduction

coming the center of the regional order, the relationship between the two has reached a newstage. For ASEAN, China has evolved from being a presence that brought merely economic
benefits to a more comprehensive power with great political influence. For ASEAN, whichhas pursued various balances concerning its external relationships, including its relationship

Chapter 1

with China, this new stage is making it increasingly difficult to promote such balances.
The first impact of this concerns the separation and balance between economics andsecurity. In addition to ASEAN’s economic dependence, China’s political influence over
ASEAN has expanded through its great involvement in the infrastructure development

Chapter 2

ASEAN is promoting. In most countries of mainland Southeast Asia, particularly Cambodia,
Laos, and Myanmar, this Chinese influence is already giving rise to phenomena that arehaving an impact on political decisions at the level of policymaking in each country, as well
as decision-making in ASEAN exemplified by the behavior of Cambodia when it chaired

Chapter 3

ASEAN in 2012. In the sense that China’s economic presence could even exert an influence
on ASEAN’s response to South China Sea issues, this is turning into security concerns. Thisdifficulty of attaining separation and balance between economics and security may lead to a
determination of political priorities that puts economics ahead of security.

ColumnIndeed, that influence extends even to countries involved in disputes in the South China
Sea, such as Malaysia and Brunei. Malaysia’s Najib Razak administration showed great consideration for its biggest trading partner and investor, China, strictly controlling the govern-

Chapter 4

ment’s statements concerning the South China Sea and further strengthening its wait-and-see
approach to the problem.30 Brunei, concerned about the tapering off of fiscal revenue accompanying the decrease in its oil production, has maintained silence about its own South China
Sea issue in return for massive economic aid from China, and it has even been suggested thatConclusions

it is acting against the manifestation of any negative mood towards China within ASEAN.31
The shift in the South China Sea policy of the Philippines under Duterte can also be
understood in this context. The 180-degree policy shift following the inauguration of theDuterte administration—which reversed the Philippines’ stance as the standard-bearer ofcriticism of China in ASEAN at the time of the Aquino administration—created a mood that
instantly promoted ASEAN’s inclination towards China. In addition to being a personal

41

Chapter 2

preference of President Duterte, this showed that the economic benefits China (supposedly)
brings can exceed the strategic advantages in terms of security. From the viewpoint of engagement and constraint, this means that it has become even more difficult for ASEAN to
apply checks against China.
The second impact is that, among ASEAN’s relations with external powers, the balance between its relationships with China and the United States is breaking down. However,this is not simply the result of the expansion of China’s influence over ASEAN, but also dueto the United States’ posture under the Trump administration, which is pursuing an “America
first” principle. The fears about whether the United States will continue to be a fair and impartial superpower that is responsible for the global order, arising from its withdrawal fromthe Paris Accord, its Israel-biased Middle East policy, protectionist trade policies, and trade
war with China, are reducing ASEAN’s trust in the United States. For ASEAN, the US withdrawal from the Trans-Pacific Partnership (TPP) in particular greatly damaged the image of
the United States as a defender of the regional order of East Asia. As opposed to the US
withdrawal from the TPP, China’s promotion of the Regional Comprehensive Economic
Partnership (RCEP) has increased trust in it as a “guardian of free trade.” The Trump administration, which has implemented freedom of navigation operations in the South China Sea
more frequently than the Obama administration, appears to be stepping up its involvement.
However, in the strategic competition with China, an involvement that heightens tensions byplacing emphasis only on the military aspect is not the US approach that ASEAN desires andhas rather served to increase concerns about the United States.
One cause of these concerns is the fact that the Trump administration’s ASEAN policy
has remained unclear. The section on the Indo-Pacific in the National Security Strategy(NSS) announced in December 2017 made the following statements about ASEAN and
ASEAN countries.
•	The Philippines and Thailand remain important allies and markets for Americans.
•	Vietnam, Indonesia, Malaysia, and Singapore are growing security and economic
partners of the United States.
•	ASEAN and Asia-Pacific Economic Cooperation (APEC) remain centerpieces of
the Indo-Pacific’s regional architecture and platforms for promoting an order basedon freedom.32
While the NSS positively evaluates the United States’ relationship with ASEAN
countries in these simple statements, words and phrases emphasizing their economic value
are prominent, and it has to be said that it lacks a comprehensive and strategic vision like thepolicy of “rebalancing toward the Asia Pacific.”

42

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

This US posture is providing opportunities for China to increase its presence in
Preface

ASEAN as a major power with a vision, like the BRI, for a new order in the region. From thestart ASEAN had feelings of rejection towards Western values regarding human rights anddemocracy, viewing them being imposed unilaterally by the West without consideration ofAsia’s particular situation. This was exemplified by ASEAN’s discussions of “Asian values”

Summaryin the 1990s. In this sense, the Asian values of the 1990s can be reinterpreted and leeway iseven emerging for the spread of the vision of a China-centered regional order.
The third impact, which is linked to the second, is the provision by China of new

Introduction

values concerning the order of priorities of the policy challenges for the region. The conceptsof support based on non-interference in domestic affairs and an order that does not necessarily prioritize human rights and democracy have great appeal for the statesmen of several
ASEAN countries. The concept of “sharp power” that China is said to have nowadays is

Chapter 1

giving rise to lively debate. According to the definition of its advocates, “sharp power” is thepower through which an authoritarian regime takes advantage of the openness of the democratic nations it targets to interfere in politics and manipulate information to form a favorable
view of its country and exert political influence in the target country so that it follows the

Chapter 2

policies of the authoritarian regime.33
China’s strategy towards ASEAN countries is somewhat different from this. It is apolicy through which China uses money power to directly influence the governments, andparticularly the heads of government, of ASEAN countries, which have fragile democratic

Chapter 3

systems or authoritarian systems. In this regard, there are cases in which the development of
the target country is promoted through economic aid, including infrastructure construction,
increasing popular support for the government of the country concerned and stabilize its
structure, and there are cases of support which directly contributes to the economic benefit

Columnof individual politicians.
These kinds of Chinese influence are not limited to the creation of a relationship between the supporting and supported country through the medium of economic aid. In the

Chapter 4

event of criticism or sanctions by Western countries against an attempt by a government,
particularly an individual political leader, to maintain or strengthen their power or regime, italso serves as a protective wall for such governments or leaders. A striking example of thistrend was the rapid approach to China of the military government of Thailand after it came

Conclusions

to power by a coup d’état in 2014. At present, the Hun Sen regime in Cambodia, which is
attempting to maintain its power by authoritarian means, is building a very close relationshipwith China. In Malaysia, the honeymoon relationship of the Najib Razak administration
with China was also conspicuous.
Even when Western countries step up their criticism of these countries or impose
sanctions on them, the effects have become diluted because they have another source of43

Chapter 2

support in China. This does not simply compensate for the losses arising from economic
sanctions, but is more comprehensive and powerful support in the sense that it provides themwith a political shield in the international community. It could be said that China is aiding
the retreat of democratization in Southeast Asia. From another perspective, this situationshows that the US-centered regional order is now in a period of transition as a result of thestrengthening of relations with China by ASEAN countries that have been traditional alliesof the United States, such as Thailand and the Philippines, as discussed above.

4. ASEAN’s Attempt to “Rebalance”
However, it became clear again in 2018 that balance is the essence of ASEAN’s external
strategy. For the ASEAN countries, it is still very risky to unconditionally accept the regional
order presented by China. In the vertical regional order with itself at the center that China
favors, there are fears that China’s influence would become excessive and this would leave
ASEAN with less room for strategic autonomy. Excessive economic dependence on China,
particularly the expansion of the trade deficit of each member country with China, is also a
cause for concern.34 In 2018, ASEAN’s sense of balance is once again reviving and it has
started moving towards “pushbacks” in its various China-related policies.
Firstly, this trend can be seen in ASEAN politics. As described above, when it was theASEAN chair in 2017, the Philippines showed excessive consideration towards China. In response to this, the chair in 2018, Singapore, restored ASEAN’s collective view to its former
standpoint. In the background to this development was China’s further militarization of islandsin the South China Sea, deployment of missiles in the Spratly Islands, and implementation of
take-off and landing exercises of H-6K bombers capable of carrying nuclear warheads in the
Paracel Islands. It seems that even ASEAN could not overlook such threatening behavior.
The Chairman’s Statement of the 32nd ASEAN Summit held in April 2018 returned tothe direction of clearly expressing its concerns about China’s actions, stating, “We discussed
the matters relating to the South China Sea and took note of the concerns expressed by someLeaders on the land reclamations and activities in the area, which have eroded trust and confidence, increased tensions and may undermine peace, security and stability in the region.” Italso stressed “the importance of non-militarization and self-restraint.”35 However, this response by ASEAN did not go further than the repetition of these words, without expressing
its concerns in stronger language. This is ASEAN’s limit at present, and it shows how difficult
it is for ASEAN to take decisive action even in determining the official language.
On the diplomatic front, ASEAN has strengthened its relationship with major external
powers apart from the United States, such as India and Australia, in order to maintain a balance with China. In January 2018, the leaders of the ASEAN10 countries met with the44

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

Indian Prime Minster Narendra Modi in Delhi at commemorative summit to mark the 25th
Prefaceanniversary of the India-ASEAN dialogue relations. In March 2018, the first-ever summit
meeting between ASEAN and Australia was held in Canberra. These moves can be interpreted as the strengthening of “hedges” against China by ASEAN.
The second pushback is ASEAN’s response to the Free and Open Indo-Pacific

Summary

Strategy, which Japan began to advocate in 2016. This Strategy consists of the three pillars
of promoting the rule of law, pursuing economic prosperity, and realizing peace and stability,with the aim of promoting the stability and prosperity of the entire region. One of the main

Introduction

focuses of the Strategy is support for infrastructure construction. In June 2018, Prime
Minister Abe announced a plan to build a US$50-billion funding framework with the aim ofbuilding infrastructure in the region.36 Both the United States and India have expressed theirsupport for the Strategy.

Chapter 1

ASEAN countries have generally shown interest in the Free and Open Indo-PacificStrategy and several of them have expressed support for it. For instance, at a summit meetingwith the Prime Minister Abe in August 2017, Prime Minister Hun Sen of Cambodia statedthat he “welcomes and supports” the Strategy.37 However, there are also vague concerns

Chapter 2

about the Strategy in ASEAN, partly because its contents are still uncertain and partly because the “Quad” strategic dialogue among Japan, the United States, Australia, and India
was launched at the same time. ASEAN countries are wary that, by participating in theStrategy, they may play a part in the formation of an encircling net around China by the

Chapter 3

Quad.38 Here, too, ASEAN’s sense of balance comes into play, resulting in a tendency to
avoid the “ultimate choice” between the United States and China. Furthermore, Indonesia,
the Philippines, and Thailand have been showing interest in participation in the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership (TPP11). In addition to the BRIColumnChapter 4
Conclusions

45

Chapter 2

and RCEP, this is an attempt to form a multilayered economic order by taking part in multiple economic cooperation frameworks. Their interest in TPP-11 can be interpreted as amanifestation of their feeling that they should aim for a balance between frameworks.
The third pushback is the trend towards the reconsideration of Belt and Road-related
projects in ASEAN countries. The general election in Malaysia in May 2018 resulted in thefirst regime change in the country’s history. After the new prime minister, Mahathir Bin
Mohamad, took office, his administration announced the revision of infrastructure projects
the previous administration had concluded with China. The new prime minister proceeded
to renegotiate the East Coast Rail Link from the viewpoint of profitability and expressed thewish to postpone the project for the construction of a high-speed railway between Kuala
Lumpur and Singapore.
In Myanmar, too, fears were expressed that the costs of the project to develop
Kyaukpyu port were too high and there have been moves towards reviewing the project. In
Indonesia, the construction period of the Jakarta-Bandung railway project has been greatly
delayed, and in Thailand discussion with China concerning loan interest rates for the extended section of a rail line project with Thailand have reached a deadlock. This trend ofrevision of Belt and Road-related projects in ASEAN countries seems to have been greatly
influenced by the case of Sri Lanka. After becoming saddled with a massive debt from thedevelopment of Hambantota Port, Sri Lanka found itself unable to repay the debt and wasforced to hand over the port to China under a 99-year lease. This showed ASEAN countries
the danger of the “debt bomb” arisingfrom the construction of infrastructureby China and has led to their revision ofprojects in order to protect their nationalsovereignty. These revisions of Belt andRoad-related projects are no more thanrenegotiations based on considerationsof profitability and the possibility of repaying debts, and do not signify any decrease in economic cooperation with
China. However, it is clear that there is atrend in ASEAN towards avoiding onesided dependence on China and restoring balance.
The fourth trend towards pushback is the possibility that the issue ofChina’s support for authoritarian regimes

46

China’s Formation of the Regional Order and ASEAN’s Responses: From “Rise” to “Center”

may become prominent. In Cambodia and Thailand, there have already been strong reacPreface

tions against politicians. In countries under authoritarian regimes there is always the possibility of sharp confrontations between government and the people, and citizens in thesecountries do not always support China’s commitment to the government. Although support
from China enriches politicians in ASEAN countries, it may also lead to increasing dissatis-

Summaryfaction among the general public, such as cases where the influx of Chinese workers makes
it more difficult for indigenous workers to find work in an area of development, or land
prices rise rapidly as a result of its expropriation. In the Cambodian general election of July

Introduction

2018, the Hun Sen regime thoroughly suppressed the opposition party and cracked down on
opposition groups. In Thailand under military rule, a general election is planned for 2019,
but there are fears of political instability due to confrontations between politicians and thepeople. In the Philippines, the conciliatory attitude of the Duterte administration towards

Chapter 1

China has also been criticized for encouraging China’s maritime incursions regarding theissue of Benham Rise off the east coast of Luzon and the reoccurrence of harassment ofPhilippine fishermen in the South China Sea. It cannot be denied that the expansion ofChina’s economic influence has also given rise to new political problems.

Chapter 2

As we have seen, ASEAN has tried to respond to the rise of China by methods that
promote balances between the dualities of “engagement and constraint,” “economics andsecurity,” and “China and the United States.” To make balance possible between each duality, a certain external environment is necessary, and ASEAN is well aware that it does not

Chapter 3

have the power to achieve this on its own. Indeed, in a situation where ASEAN is being
subsumed into China’s sphere of influence as it promotes the BRI, ASEAN’s strategic options are becoming even narrower. However, it cannot be said that the regional vision presented by China is always attractive to ASEAN, and the vertical order that China prefers is

Columnnot compatible with the ASEAN’s traditional ideals of equality and consensus. Accordingly,
ASEAN has sought the appropriate involvement of external powers like Japan and the UnitedStates. As it continues to pursue this two-track strategy, ASEAN is exploring points of com-

Chapter 4

promise for balance, but the problem is that these points of compromise are forever changing
according to the external environment, nor is it clear whether their usefulness will be maximized. It is all a matter of how skillfully ASEAN can swim in a strategic environment determined by external powers, particularly the United States and China.

Conclusions(Author: Tomotaka Shoji)

47

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Chapter 3
The Belt and Road Initiativeand South Asia: Increasing
Uncertainty in Sino-Indian
Relations(Masahiro Kurita)Chapter 3

1. The Expansion of China’s Influence in South Asia
Traditionally, China was not a major player in South Asia. Since the end of the Second
World War, South Asian regional order had developed with India assuming the central position as the region’s dominant power, and rejecting any involvement by external powers in theregion, which India regards as its sphere of influence. It is true that small regional countries,
when experiencing friction with India, often appealed for support from the nearest extraregional power, China. However, during the years when China’s power was limited, its presence in South Asia never achieved a position greater than that of serving as an antithesis to
Indian pressure. Even in the case of Pakistan, which has been embroiled in a territorial dispute with India as China has and hence established close relations with China that have been
described as a quasi-alliance, its greatest patron in reality had always been the United States.
China’s expanding economic engagement in South Asia, which gained momentum
around 2010 and is now being implemented under the banner of the Belt and Road Initiative(BRI), can have the effect of boosting China’s position within South Asia to that of a great
power that equals India’s position, at the least, and may even surpass it. In South Asia, thatprocess, for the time being, is not being spearheaded by a blatant military approach in which
China is literally establishing naval bases in the countries adjacent to the Indian Ocean.
Rather, what has been steadily progressing in the region at the current stage is (1) the expansion of China’s economic influence, through large-scale economic engagement centered on
infrastructure development, including ports that are potentially available for military use, and(2) the expansion of China’s latent political influence leveraging that economic influence.
On the flip side of the same coin, the expansion of China’s influence in that way signifies the relative decline in the influence previously enjoyed by India, the traditional dominant
power in South Asia. That development is particularly prominent in the smaller nations of
the region: Sri Lanka, Maldives, and Nepal.

(1) Sri Lanka
Sri Lanka, which is positioned along important sea lines of communication (SLOC) in the
Indian Ocean, has historically built up a close, multifaceted relationship with India, despitesome pending concerns such as the Tamil ethnic issue. For its part, India has also perceived
Sri Lanka to be part of its own sphere of influence. Nonetheless, Sri Lanka started deepening
its relations with China in 2005 under the tenure of President Mahinda Rajapaksa (20052015). While Sri Lanka’s relations with both India and Western countries stagnated overalleged human rights violations by the government in the civil war that persisted through2009, China gradually expanded its influence there through economic and military assistance. From 2005 to 2017, Sri Lanka accepted almost US$15 billion in capital from China

50

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

largely to promote the construction of large-scale infrastructure by Chinese corporations, in
Prefaceorder to rebuild the nation’s economy ravaged by the civil war.1
However, the infrastructure projects advanced by the Rajapaksa administration did
not produce economic growth sufficiently robust to allow it to repay the massive debts assumed thereby. In particular, Hambantota Port development, into which much money was

Summary

poured in spite of its dubious economic rationale having been pointed out from the outset,2
ended up being a total commercial failure, along with the development of the adjacent international airport. Meanwhile, Sri Lanka’s external debt, which had stood at US$10.6 billion

Introduction

in 2006, had mushroomed to US$25.3 billion by the end of 2016, corresponding to 34 percent of its gross domestic product (GDP). Of that figure, US$3.3 billion was accounted forby China.3
Owing to mounting concerns over the situation, the opposition candidate Maithripala

Chapter 1

Sirisena, who had criticized the Rajapaksa administration for leaning toward China, achieved
victory in the presidential election of January 2015. Immediately after assuming office,Sirisena carried out such actions as suspending the Colombo Port City Project that the previous administration had agreed upon with China, leading to growing speculation that he

Chapter 2

would rethink the country’s growing proximity to China. However, on account of the massive debt already owed to China, and the inability to find any other lenders, the new president
had no choice but to request China to reschedule the debt payments and to extend new loans
to Sri Lanka, making it effectively impossible for the country to distance itself from China.

Chapter 3

By 2015, it is said that 95 percent of Sri Lankan governmental annual revenues were being
applied to servicing its debt.4 Although
the Sri Lanka government had initiatedtalks with China in 2016 to alleviate its

Columndebt, China refused to simply reduce thedebt, so in July 2017, Sri Lanka ended
up signing a debt-equity swap contract

Chapter 4

valued at US$1.1 billion to lease
Hambantota Port and 60 square kilometers of the surrounding area to China fora period of 99 years. The deal became

Conclusions

effective the same December.5(2) Maldives
The Maldives, an island nation lying to the southwest of India, always used to consider India
its most important partner. India had quashed the coup d’état attempt in that country in 1988,
and later extended its emergency assistance in the form of humanitarian assistance after the51

Chapter 3

Indian Ocean tsunami of 2004. Besides that, India extended various kinds of assistance tothe Maldives, including public finance, in return for which the Maldives put the highest priority on its relations with India. That was the way the relationship between the two countries
used to work historically.
On the other hand, the country’s relations with China started to rapidly expand under
the authoritarian leadership of the pro-China President Abdulla Yameen, who took office in2013. The following year, the Maldives publicly announced its support of the 21st Century
Maritime Silk Road, part of the BRI, with large-scale infrastructure development subsequently starting by Chinese firms. The number of Chinese tourists visiting the Maldivescame to exceed that of Europeans, who had previously held the top spot, and at the end of
2017, the Yameen administration ran around domestic opposition to sign its first free trade
agreement with China. At the same time, though, voices of concern are being raised in theMaldives about drawing so rapidly toward China. The former President Mohamed Nasheed,
who had served until 2012 and is now in exile, having opposed President Yameen, haspointed out that: (1) it will be difficult for the Maldives to repay its debt to China, now
mounting to US$1.5 to 2.0 billion; (2) most of that amount was spent on building infrastructure that was unnecessary in the first place; (3) China has purchased 16 or more Maldivian
islands under the Yameen administration; and (4) the whole country could be taken over if
the Maldives fails to repay its loans.6
Against that backdrop, the Maldives went through a political crisis from February to
March 2018, resulting from President Yameen’s refusal to abide by the country’s Supreme
Court decision ordering, among other things, the dismissal of charges against Nasheed andeight others as having violated the Anti-Terrorism Act. In concert with the United Nations,the United States, and the United Kingdom, India also expressed its support of the Maldivian
Supreme Court’s ruling, but President Yameen still did not yield, instead declaring a state of
emergency, arresting Supreme Court judges, thereby further aggravating the crisis.
Former President Nasheed requested India to make a similar military intervention tothe one it had conducted to quash the Maldives coup d’état attempt of 1988. In response, theIndian Armed Forces made preparations to send transport assets and special forces,7 but it
was ultimately decided to avoid military intervention and just to apply diplomatic pressure
instead. Analysts on the outside have said that India’s inaction was related to Chinese
moves.8 Right after the crisis erupted, President Yameen dispatched a special envoy toChina, with Beijing then issuing a statement calling for respect for Maldivian sovereignty
and for non-intervention by foreign powers. Meanwhile, a Chinese naval fleet, composed ofseveral destroyers and at least one frigate, entered the Indian Ocean for the first time in four
years, despite the 5,000-km maritime distance involved—an event that was prominently
reported by Indian media.

52

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

The crisis in the Maldives drew to a close with the expiration of the state of emerPreface

gency on March 22. Still, the government has continued to refuse to abide by the Supreme
Court ruling, effectively ignoring the will of India, which traditionally was regarded as its
most important partner.

Summary(3) Nepal
While Nepal and India have not always been on the best terms with each other, India has
undeniably been the most important country for Nepal. Even today, India is its biggest trade

Introduction

partner, and Nepal depends on its open border with India, which allows for the free movement of people, goods and services, both socially and economically.9 Because of its geographical setting, almost all of Nepal’s trade with the outside world has, for many years,
been forced to transit India. Although the Nepalese side is dissatisfied with its inequality, theChapter 1

two countries still maintain a special relationship based on the India-Nepal Treaty of Peaceand Friendship of 1950, and India regards Nepal as part of its sphere of influence.
Meanwhile, China, as a neighbor to Nepal, had also engaged in the Himalayan nation
since the 1960s in order to gain influence. However, it was the virtual economic blockade ofChapter 2

the country, reportedly imposed by India, for five months starting in September 2015, owing
to the controversy over Nepal’s new constitution, that triggered Nepal’s inclination toward
China that has frequently been mentioned in recent times. The resulting shortages of fuel,foodstuffs, medicine, and other materials sparked rising anti-India sentiment in Nepal, andChapter 3

the government at the time, led by Prime Minister K.P. Sharma Oli, sought help from China.
That ended up breaking India’s long-maintained monopoly on the supply of fuel to Nepal,
as well as shoring up Nepal’s confidence in China. The following year, Nepal signed anagreement with China allowing imports from third countries into Nepal to be shipped via

ColumnTianjin Port.10
With Nepal’s signing in May 2017 of a memorandum declaring its participation in the
BRI, some outside observers pointed out that this move was a signal to leave India’s sphere

Chapter 4of influence.11 At the Nepal investment summit that preceded the signing of the memorandum, China pledged a sum of US$8.3 billion to be invested in different sectors includinghydropower and railway, compared with a paltry US$317 million pledged by India.12 Also,in June 2018, Nepal and China signed a memorandum regarding the construction of a rail-

Conclusions

way from Tibet to Kathmandu, the feasibility studies for which had been conducted for somewhile. India, on the other hand, promised Nepal a hydroelectric plant and an upgrade of therailway between Jainagar in India and Janakpur in Nepal, but progress on that front has reportedly been minimal.13 Meanwhile, in June 2017, an India-friendly Nepali Congress government was formed, which led to scrapping a dam deal with China that constituted part ofthe BRI. In the election at the end of the same year, though, a leftist alliance led by pro-

53

Chapter 3

Chinese Prime Minister Oli took back control of the Nepalese government.

2. The BRI Confronting Reality: India’s Negative
Reaction, and Its Worsening Image(1) India’s Perception of the BRI
China’s expansion of political and economic influence in South Asia through stepped-up
economic engagement, as described above, has set off loud warning bells in the regionalhegemon, India.
As symbolized by its refusal to participate in the Belt and Road Forum for International
Cooperation (BRF), held in May 2017, India is currently opposed to the BRI. The reason
most often cited for its opposition is the fact that the China Pakistan Economic Corridor(CPEC), which forms part of the BRI, includes projects within Pakistan-administered
Kashmir (PAK), to which India asserts a territorial claim, making it a sovereignty issue thatIndia deems unacceptable. However, India’s position toward the BRI before BRF had been
ambiguous, although it clearly opposed CPEC. Moreover, as one notable Indian strategist
points out, the Karakoram Highway (KKH) as a joint Sino-Pakistan infrastructure project in
PAK has been there since the 1960s, but India has not made a big issue of that.14 In consideration of such points, India’s ongoing opposition to the BRI involves issues that go beyond
just the sovereignty concern surrounding CPEC.
One of those issues is the fear that China’s expansion of political influence in South
Asia threatens India’s status as the dominant power in the region. India was not always antipathetic toward China’s infrastructure investments in the region, as well as toward the promotion of connectivity by China per se. Since the 1990s, India has been involved in theconception of Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC), now incorporated by China into the BRI. Moreover, India is a founding member of the AsianInfrastructure Investment Bank (AIIB) that supports the initiative, and is the country with thesecond-highest stake in that bank, as well as its biggest borrower. On the other hand, however, the expansion of Chinese economic engagement in South Asia, no matter what thecountry’s intentions may be, signifies to India an erosion of its own status as the regionalhegemon, given that economic influence can easily be translated into political influence. In
particular, if smaller regional states borrow heavily from China to fund economic cooperation with it, the resultant debt burden can act as strong political leverage for Beijing over therecipient countries. The principles raised by India in its criticisms of the BRI—namely,
considerations of openness and transparency in the promotion of connectivity, as well as thefinancial health of the countries involved—can be seen as a reflection of its concerns that
South Asian countries with meager democratic governance, by agreeing to economic

54

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

cooperation with China for projects that have questionable economic rationality, end up carPreface

rying unsustainable levels of debt that place them under China’s strong political influence.
In addition to that, China’s recent moves in the region involving the BRI are thought tohave exacerbated India’s wariness. To wit, when it announced the BRI, China made elaborate
behind-the-scenes consultation with Russia, but not with India, a slight that is said to have

Summarycaused offense to the latter.15 It can be conjectured that India construed the move (i.e., talking
only with Russia) as evidence of China’s intention not to respect its status as South Asia’s hegemon. Furthermore, Sri Lanka, Maldives, and others have gradually increased the amount ofIntroduction

debt—latent political leverage—owed to China, and India also found itself unable to applypressure effectively against Nepal from September 2015 onward, on account of China’s intervention. In May 2017, an article in the Global Times, a subsidiary of the People’s Daily, themouthpiece of the Chinese Communist Party, suggested that China, in response to its increased

Chapter 1

overseas investments in the BRI, should actively get involved in the resolution of South Asian
regional disputes, such as the Kashmir issue, in which India had vehemently rejected thirdcountry intervention. Some believe that it was that article which spurred India’s resentment.16
Another issue is India’s wariness about the possible strategic implication of China’s

Chapter 2

economic engagement in the region. Namely, it fears that China’s construction of ports thatare militarily utilizable, along with the acquisition of the management rights for them, willlead to the expansion of its military presence in the Indian Ocean. From the very beginning,
India had been seriously concerned about the “string of pearls” theory, advanced in the

Chapter 3

United States, according to which China would attempt to construct a network of naval bases
along the perimeter of the Indian Ocean. China then went ahead to pursue the developmentof Hambantota Port in Sri Lanka and Gwadar Port in Pakistan—both of which were suggested as candidate sites for possible conversion to Chinese military bases—in its BRI, andColumnsince 2014, China has made submarine port calls in both of those countries (though not in
those two ports per se). Also, apart from economic engagement, China agreed with Pakistan
in 2015 and with Bangladesh in 2016 to provide those countries with conventional subma-

Chapter 4rines. Such supply of Chinese-made equipment makes it easier in the long run for the Chinese
Navy itself to be serviced in the ports of the recipient countries. It is reasonable to assume
that these moves have exacerbated New Delhi’s concern about Beijing’s strategic intentions
behind its economic projects under the banner of the BRI, and it is also likely that New Delhi

Conclusions

viewed the handover of Sri Lanka’s Hambantota Port in a similar vein.
As will be stated later, China—at least as of the current stage—has not yet necessarily
been actively exploiting the strategic implication of the BRI in South Asia, nor has it been
willfully aiming to erode India’s position as the regional hegemon through an expansion of
its political influence. Despite that, to date, the Indian policy community has largely solidified
the view that the BRI is not a mere economic project but also something imbued with a politi-

55

Chapter 3

cal and strategic design.17 India’s wariness has been growing because of such a view.

(2) India’s Countermeasures to the BRI
Driven by those concerns, India has been developing countermeasures along various levels
in recent years. The first pillar has been its active engagement with smaller regional neighbors: a priority policy of the Narendra Modi administration since its launch in May 2014.
Within this context, a notable case is Bangladesh. In its relationship with Dhaka, New Delhi
settled the decades-old border dispute in 2015, and in 2017, it agreed to give Dhaka a US$5
billion line of credit, including US$500 million for the purchase of military equipment. At
present, Bangladesh has increasingly come to occupy an important position in the Bay of
Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) andthe Bangladesh-Bhutan-India-Nepal (BBIN) framework, both of which are now being advanced by India to counter the BRI.18 China is also increasing its engagement with
Bangladesh, with that country promising to participate in the BRI during a visit by President
Xi Jinping in 2016, when China offered US$24.45 billion assistance and Chinese companies
signed agreements with Bangladesh entities involving US$13.6 billion.19 In advance of that,
however, Bangladesh withdrew its plan to build Sonadia port with China’s cooperation due
to pressure from India and others, instead adopting a plan proposed by Japan to construct
Matarbari Port. Thanks to such developments, India views its engagement with Bangladesh
as a “successful example” of its “neighbourhood first” policy.20
Elsewhere, India twice extended US$500 million in credit to Mauritius—in 2015 andagain in 2017—with an additional US$100 million in credit extended in 2018 for that country to procure an offshore patrol vessel (OPV) from India, as well as funding construction ofa light-rail network in Mauritius, built by Indian multinational company, with nearly US$300
million in grants.21 As for the Seychelles, while there has been little progress in implementing the plan—hammered out in 2015—for India to construct joint-use military facilities inthat country, a summit meeting held in June 2018 between the leaders of India and the
Seychelles produced an agreement for the former to extend the latter a line of credit of some
US$100 million, along with India donating the Seychelles its second Dornier 228 maritime
patrol aircraft.22 In 2014, both Mauritius and the Seychelles joined the maritime security
cooperation framework established by India, Maldives, and Sri Lanka, and in 2017, Mauritius
signed a bilateral maritime security cooperation agreement with India.
India is also endeavoring to make a comeback in those countries where China has
already made conspicuous inroads. With Sri Lanka, India is working on a deal to take over
the Mattala Rajapaksa International Airport in Hambantota, which, as with the adjacent port,
was built with Chinese assistance with little economic justification. It is also supporting thedevelopment of Kankesanthurai Port in northern Sri Lanka. Accommodating India’s

56

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

concern, Sri Lanka’s Sirisena government, even during its debt talks with China, refused
Prefacepermission for a Chinese submarine to dock at Colombo port, unlike its predecessor who
had allowed a similar visit in 2014.23 The administration also assured India that it would notallow the Hambantota Port, even after being handed over to China, to be used for military
purposes. Moreover, when Prime Minister Narendra Modi traveled to Nepal in May 2018,

Summary

he stressed the importance of the two countries’ cultural ties, and promised to resolve pending bilateral issues by September, thus succeeding in making some course correction in theirrelations.24 The leaders of India and Nepal held another summit in August of the same year,

Introduction

signing a memorandum to link Kathmandu by a new railway with Bihar State in India. In theMaldives, the China-friendly incumbent President Yameen was defeated in the presidential
election of September 2018, turning the tide in India’s favor.
The second pillar of India’s countermeasures against China’s BRI is the pursuit ofChapter 1

alternative multinational connectivity schemes. Within the aforementioned BBIN framework, the three countries, except for Bhutan (i.e., just India, Bangladesh, and Nepal), havealready agreed on operating procedures for movement of passenger vehicles in the sub-region under the BBIN motor vehicles agreement (BBIN-MVA), facilitating the cross-border

Chapter 2

movement of vehicles. Although there had previously been little progress with BIMSTEC,
which envisages the development of an economic sphere linking South Asia with Southeast
Asia, India worked to shore things up by inviting the leadership of member countries to the
BRICS (Brazil, Russia, India, China, and South Africa) summit held in Goa in 2016.

Chapter 3

Construction is now progressing on a 1,400-km trilateral highway linking India, Myanmar,
and Thailand, which is slated to open for actual operation by the end of 2019.
Additionally, India is developing Chabahar port in Iran, along with advancing theInternational North-South Transport Corridor (INSTC) concept in cooperation with Russia

Columnand Iran. These projects are for India to gain access to Afghanistan, Central Asia, Russia,
and Europe via Iran. In May 2016, India declared it would invest US$500 million in the
port’s development, and acquired management rights in February 2018, with operation ofChapter 4

the port targeted to begin by 2019. With the historical backdrop of India’s access to
Afghanistan and Central Asia having been blocked by Pakistan, INSTC and Chabahar allow
India to compete with Pakistan’s vision of turning itself into a regional transport hub through
CPEC, including Gwadar Port, and are also meaningful in terms of enabling India to dem-Conclusions

onstrate its capability of carrying out mega-infrastructure projects jointly with other countries.25 Moreover, to enhance the convenience of INSTC, in 2011 India joined the Ashgabat
Agreement among Iran, Oman, Turkmenistan, and Uzbekistan, which aims to facilitatetransport between Central Asia and the Gulf region.
As the third pillar, India—given the difficulty of opposing the giant power of China on
its own—has increased cooperation with major external powers. While most of India’s recent

57Chapter 3

moves to deepen cooperation with external powers, especially the United States and Japan,
have been driven by its concern on China at least to some extent, what is noteworthy in relation
to the BRI is the Asia Africa Growth Corridor (AAGC), announced in May 2017. The AAGC,
which aims for Japan and India to jointly develop “high-quality infrastructure” to improveconnectivity between Asia and Africa, leveraging India’s experience in Africa along withJapan’s technological and financial capabilities, is often cited by India’s strategic community
as a competitive alternative to the BRI. India and Japan are also holding trilateral consultation
with the United States on cooperation in the area of connectivity and infrastructure.

(3) The Worsening Image of the BRIIn South Asia, the expansion of China’s influence through economic engagement is encountering the kind of reaction and countermeasures from India as seen above. In addition, China
faces another conundrum: how to deal with the diffusion of the negative image of the BRI.
China’s economic engagement under the BRI has increasingly come to be associatedwith the phrase “debt-trap” diplomacy—and not just in South Asia. Generally speaking, it isthe discourse that, as its basic modus operandi in economic engagement with other countries, “Beijing typically finds a local partner, makes that local partner accept investment
plans that are detrimental to their country in the long term, and then uses the debts to either
acquire the project altogether or to acquire political leverage in that country.”26 People withsimilar viewpoints contend that China’s engagement amounts to economic colonialization,or that it is a strategic attempt aiming at the expansion of a military presence using ultimately
irrational economic projects as a cloak or cover-up.
While that kind of criticism is not new, what fueled it was Sri Lanka’s experience with
Hambantota Port. As demonstrated earlier, as a result of economically unviable investments
in infrastructure projects by a pro-Chinese administration, the debt owed by Sri Lanka to
China snowballed, and even when a new government was elected that tried to alter the policy’s course, there was no alternative but to re-borrow funds from China so as to deal with theexcessive amount of debt, making any attempt by the new administration to “move awayfrom China” end in failure. In the end, in return for reducing those debt levels, China effectively took over the port in which it had invested in—a facility that had been rumored to beconverted into a Chinese naval base at some future point. Even if China had not originallyplanned on things turning out that way, the case of Hambantota Port ended up being a classic
example verifying the discourse of the “debt-trap” diplomacy.
Because of the spread of such a negative image surrounding the BRI, smaller South
Asian states have grown increasingly anxious and negative toward Chinese economic engagement today. In Sri Lanka, the talks about Hambantota Port’s handover have incited
demonstrations condemning it as a “sell-out” of sovereignty, and tensions have even risen in

58

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

Pakistan domestically over the swelling debts and China’s role in managing them.27 Similar
Prefaceconcerns about a “debt trap” are starting to rise in Nepal as well.28

3. Current Status of CPEC
Summary(1) CPEC Entering a Difficult Phase
Under such circumstances, CPEC, which was touted as the “flagship project” of the BRI,
and which involves an overwhelming amount of Chinese capital, has entered a difficult

Introduction

phase. CPEC, a large-scale development project launched after a memorandum was signed
between China and Pakistan in July 2013, revolves around the development of Gwadar Port
on Pakistan’s Arabian Sea coast, from where a transport network will be constructed to
Kashgar in China’s Xinjiang Uyghur Autonomous Region, with energy projects to be devel-

Chapter 1

oped along its perimeter, along with the establishment of special economic zones (SEZs).
Since the signing of the memorandum, the Pakistani government has forcefully promoted
the project, seeing it as a “game changer” that will totally transform its economy.
CPEC is a long-term project, stretching to 2030. China’s projected investment of

Chapter 2

US$46 billion, initially announced in April 2015, has leaped to US$62 billion, of whicharound US$34 billion is earmarked for energy-related projects, such as the construction of
power plants.29 Moreover, the bulk of those energy projects has been designated as “early
harvest” projects, with their completion slated for 2017-18. CPEC’s Long-term Plan (CPEC-

Chapter 3

LTP) has positioned the period through 2020 as a time to eradicate social and economic
bottlenecks in Pakistan’s development. Along with those energy-related projects, the construction and improvement of major roads is supposed to be carried out in this period.30 On
account of such scheduling, some 22 projects worth US$28.6 billion were in their imple-

Columnmentation stage as of July 2018.31
While the plan’s execution has not necessarily gone according to the blueprint—with
delays and cancellations plaguing many individual projects—CPEC has already had some

Chapter 4

positive influence on Pakistan. In the 2017-18 fiscal year, Pakistan achieved a GDP growth of
5.8 percent, its highest level in thirteen years.32 The International Monetary Fund (IMF) has
also painted a rosy outlook for Pakistan’s short-term economic growth, citing CPEC-related
investments and the improvement in the power supply as some of the main reasons.33

Conclusions

The problem, however, lies in what happens after that. CPEC is starting to shift
away from its initial stage, focusing on energy and roads, to one centered on the establishment of SEZs and industrial cooperation. That is the stage which will potentially yield thelargest impacts for Pakistan from the standpoints of economic growth and employment. In
Islamabad’s calculation, the export growth stemming from success in this stage is crucial
to repay its massive debts. The same stage, however, has also sparked caution among the59

Chapter 3

Pakistani business community, as there seems to be no way for it to proceed smoothly.
Although the Pakistani government plans to extend various forms of preferential treatment
to the Chinese companies operating in the projected SEZs, opposition has come from the
Pakistani business community, as they fear that if those Chinese corporations—whichboast greater cost-competitiveness in the first place—get additional preferential treatment,
there is no way for local companies to compete with them, resulting in the possible demiseof local industry.34
If the SEZs and industrial cooperation fail to materialize as hoped, exports will also
fail to grow as expected, possibly leading to delays in discharging the country’s debt obligations and/or an unsustainable balance of payments deficit. In fact, such problems are alreadysurfacing. At the end of 2017, Pakistan’s debt-to-GDP ratio had swollen to 66.3 percent

Figure 3-1: Major CPEC Projects
Suki Kinari hydropower station(870 MW: US$1.8 bln)

CapitalExisting Highway
Continued Construction Project
Priority Project
Short-term ProjectMid- and Long-term Project
SEZ

Kashgar

KKH phase II(Havelian-Thakot section)(118 km: US$1.37 bln)

Xinjiang Uyghur
Autonomous Region (China)

Peshawar-Karachi Motorway(Multan-Sukkur section)(392 km: US$2.98 bln)

Cross-border
optical fiber cable(820 km: US$44 mln)

GilgitUpgrade of N-50 Highway phase I(Dera Ismail Khan-Zhob section)(210 km: US$200 mln)

UEP wind farm
(99 MW: US$250 mln)

Pakistanadministered
Kashmir

Peshawar

Sachal wind farm
(49.5 MW: US$130 mln)

Kohala hydropower station(1,100 MW: US$2.36 bln)

Islamabad
Rawalpindi

Three Gorges second/third wind farm
(99 MW: US$150 mln)

Dera Ismail
Khan
Zhob

Hydro China Dawood wind farm
(50 MW: US$110 mln)

QuettaHUBCO coal-fired power plant(1,320 MW: US$1.91 bln)

Khuzdar

Expansion and reconstruction of existing line ML-1
(1,830 km: US$8.17 bln)

Gujranwala

MultanDera Ghazi
Khan

Karot hydropower station(720 MW: US$1.7 bln)

LahoreFaisalabad

Bahawalpur

Orange line (Lahore)(27 km)Sahiwal coal-fired power plant(1,320 MW: US$1.91 bln)
Quaid-e-Azam solar power park
(1,000 MW: US$1.3 bln)

SukkurRahimyar Khan coal-fired power plant(1,320 MW: US$1.6 bln)

N-30 Highway (Khuzdar-Basima road)(110 km:US$80 mln)

TurbatGwadar-related projects (US$800 mln)
• Gwadar East-bay expressway• New Gwadar international airport• Construction of breakwaters• Dredging of berthing areas andchannels• Infrastructure for SEZ and others

KKH (Thakot-Raikot section)
remaining portion(136 km: US$720 mln)

Pasni
JiwaniGwadarOrmaraMatiari-Lahore transmission line
(US$1.66 bln)

Hyderabad

Matiari-Faisalabad transmission line
(US$1.5 bln)

KarachiThar Block-VI coal-fired power plant(1,320 MW: US$1.3 bln)
Thar Block-II coal-fired power plant(1,320 MW: US$2 bln)

Gwadar coal-fired power plant(300 MW: US$600 mln)

Port Qasim coal-fired power plant(1,320 MW: US$1.98 bln)

Thar Block-I coal-fired power plant(1,320 MW: US$2 bln)

Source: Compiled by the author from Pakistani government materials.

60

Thar Block-I coal mine extraction(US$1.3 bln)

Thar Block-II coal mine extraction(US$1.47 bln)

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations(22.8 trillion Pakistani rupees) on account of, at least partially, CPEC-related borrowing.35
PrefaceIts repayment of CPEC-related loans is scheduled to begin in 2019, with the yearly amount
set to steadily increase after that. By the 2023-24 fiscal year, the IMF has projected that
Pakistan’s annual loan repayment amount will reach some US$3.5 billion to 4.5 billion.36
Moreover, the country’s international balance of payments is currently deteriorating to a

Summary

serious degree. Although it is often expected that CPEC may facilitate the flow of foreign
direct investment (FDI) into Pakistan, in reality, that has been canceled out by the increasein machinery imports from China for transport infrastructure and energy-related projects,

Introduction

resulting in a growing deficit in Pakistan’s international payment balance.37 Even if thoseimports were to level off, there will continue to be various factors burdening Pakistan’s international balance of payments, such as its loan redemptions, profit repatriation by Chinesecompanies, and the import of fuel for power plants being set up under CPEC.38 As of July

Chapter 1

2018, the situation has already begun to show indications of a balance-of-payments crisis.
Facing a severe shortage of foreign reserves, the State Bank of Pakistan devalued the
Pakistani rupee four times between December 2017 and July 2018, but the majority view isthat it will be unavoidable for Islamabad to request the IMF a bailout packages.

Chapter 2(2) CPEC’s Strategic Implication and India-China-Pakistan Relations
As touched on previously, there are also concerns within Pakistan about the negative influences wrought by CPEC. Even before CPEC, there used to be a consensus in the Pakistani

Chapter 3business community that China regarded Pakistan merely as a market for its exports, without
any interest in investing in areas that would increase Pakistan’s export competitiveness or inearning profits by establishing joint ventures on the ground.39 With that background, concerns
have been raised among the country’s business circles and experts that CPEC is beneficial

Columnonly for China, enabling it to export its domestic excess productive capacity and manpower,
whereas Pakistan would be debt-ridden and in the end subjugated to China both politicallyand economically.40 That sort of concern was further heightened by a report made by a local

Chapter 4

newspaper in May 2017 of the existence of a draft document of the long-term plan of CPEC,
drawn up by China, detailing China’s deep penetration into Pakistan’s economy and society.
On the other hand, there has also been much discussion in Pakistan about the strategic
benefits of CPEC. One typical example is the view that, by enhancing Pakistan’s value toConclusions

China, CPEC enables Islamabad to reinforce its relationship with Beijing and thereby gain
leverage in its strategic competition with New Delhi. In a similar vein, it is also a common
view that China positions CPEC in the traditional context of its support to Pakistan as a partof its anti-India containment strategy, and some people even suggest that it can be expectedthat China will be lenient about Pakistan’s repayment of loans, on account of the importanceit places on Pakistan in that respect.41 Also, frequent reference has been made to the61Chapter 3

additional strategic benefits of the corridor for China, such as enabling it to escape from theMalacca Dilemma—the vulnerability of its vital energy shipments from the Gulf in wartime
since the bulk of the shipments pass through the Malacca Strait which the US Navy caneasily choke off—by giving it an alternative shipping route, as well as in the way it enables
China to establish a naval presence near the strategically important Gulf region.42
Debates about such potential strategic aspects of the corridor have similarly come togain credence among experts and the media outside of Pakistan, making CPEC the one project generally regarded as entailing Beijing’s strategic design, under the cover of “economic
development,” more than any other elements in the entire BRI scheme. Underscoring the
spread of such thinking is likely the long-standing Sino-Pakistan “quasi-alliance” relationship, which has historically developed around security and diplomatic cooperation.
As such views on CPEC have spread, India, being worried about the BRI as seen in
the previous section of this chapter, has inevitably heightened its concern about the corridor.
India especially fears China’s turning Gwadar Port into a naval base, which would allow thatcountry to protect its own Indian Ocean SLOC and exercise influence in the Gulf region.
Still, in view of the actual facts on the ground, the possibility of Gwadar being converted into a Chinese naval base had already been pointed out as early as the turn of the
century, when China began construction on it as a commercial port, and in the more than 15
years since then, there have been no concrete signs of its conversion of the port into a naval
base, nor is there any hard information publicly available that shows that Chinese naval vessels have made port calls there. Both the Chinese and Pakistani governments have repeatedly
denied that China will convert Gwadar Port into a naval base, saying that it is purely a commercial port, and even the Indian Navy recognizes it as commercial at least for now.43 Though
China’s original intentions are unclear, it is probably even more difficult for Beijing to turnGwadar Port into a naval base now than it had been before CPEC and the BRI were originally developed. With Gwadar Port having become one of the pillars of CPEC, the risk can
no longer be ignored—for the future economic success of the port and CPEC as a whole—of
third countries avoiding commercial use of the port if it is effectively made into an “Chinese
military port.” Moreover, if China converts Gwadar Port—the symbol of CPEC,
which it positions as the pilot project of
the BRI—into a military base, that would
only fuel the criticism that the BRI is
nothing but a politico-strategic scheme inthe disguise of “economic development”
and could instigate greater global opposition and resistance to the initiative.

62

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

Meanwhile, regardless of the ground reality in military utilization of the corridor projPreface

ect to date, it suits Pakistan’s interest that India is preoccupied with and is heightening its
concern on the alleged strategic intent for CPEC, for that country has found its own strategic
benefit in CPEC: drawing China to its side by making the “China and Pakistan versus India”
structure much more entrenched, thereby gaining the upper hand against India. Pakistan’s

Summary

intention to make that alignment more solid can also be seen in its increasingly vociferous
claims in recent years that India, in order to derail CPEC, has been carrying out covert operations within Pakistan such as supporting terrorism and insurgency.44 While India may indeed

Introduction

be in contact with anti-state armed groups within Pakistan that are hostile toward CPEC, one
can conclude that Pakistan is, by trumpeting that claim, trying to portray India as an enemy
to CPEC—a joint Sino-Pakistan undertaking—in order to draw China in closer as an ally.
At the same time, however, Pakistan’s stance of utilizing CPEC strategically in its

Chapter 1

competition with India, including the above-mentioned approach, is not necessarily something that China wants. There is a fundamental divergence of views between China andPakistan about the desirable form of relations among China, India, and Pakistan. China hashistorically supported Pakistan as a counterweight to India, and in that context, a stable andChapter 2“strong” Pakistan is desirable, with that country’s further economic development through
CPEC contributing to that. However, China does not share Pakistan’s goals concerning the
Kashmir issue, and Pakistan’s taking the offensive toward India—with Pakistan’s recognition that its support from China has been reinforced by the deepening of Sino-Pakistani rela-

Chapter 3

tions through CPEC—hurts China more than it helps the country. The actions that Pakistan
is likely to adopt in such a case—additional military pressure on India, such as increasing the
support to terrorism in India—would have unpredictable consequences, force Beijing towaste its political capital to defend Islamabad diplomatically in the international commu-

Columnnity, and, above all, complicate China’s management of its own relations with India. As to be
explained later, China hopes to gain India’s cooperation in the promotion of the BRI.
It is undeniably true that Pakistan’s role in counterbalancing India is necessary for

Chapter 4

China. However, the desirable form of Indo-Pakistani relations for China is not one marred
by Pakistan’s unabated support for terrorism and relentless cross-border shelling on bothsides, but rather a “managed dispute” like that which has existed between China and India
for the past 30 years, and therefore, China has encouraged Pakistan to build a profitable

Conclusions

economic relationship with India.45
China’s recent moves in relation to CPEC include certain elements that can be interpreted as its attempts to bring about a certain course correction, given that the alleged “strategic implication” of CPEC, strongly hoped for by Pakistan, have pushed the relations among
China, India, and Pakistan toward an undesirable direction for China. China has repeatedly
cast “amorous glances” toward India in the attempt to get it to participate in CPEC and the63Chapter 3

BRI, and has also carried out diplomatic efforts to get India to cooperate with Pakistan incountering regional terrorist threats.46 China’s ambassador to India has said that if India
takes part in the BRI, it might change CPEC’s name, as well as establish an alternative corridor to CPEC through Indian-administered Kashmir (IAK).47 In 2018, China’s Ministry ofForeign Affairs proposed open consultations with India concerning CPEC. At the same time,
while Pakistan is trumpeting India’s covert operations against CPEC as a common threat toChina and Pakistan, China has reportedly started to engage in direct talks—bypassing
Pakistani authorities—with anti-government insurgent groups hostile to CPEC in Pakistan’s
Balochistan Province, the very group about which Pakistan has voiced its strongest suspicions on alleged links to Indian intelligence agencies.48
Moreover, as previously mentioned, there are some in Pakistan who have pinned theirhopes on China’s generosity regarding such matters as the repayment of Pakistani debts, but
the Chinese response to the current balance of payments crisis seems to have thrown cold
water on such hopes. Ever since 2017, Pakistan has appealed to China for help amidst a worsening deficit in its current balance of payments, arguing that a bailout package from the IMF
must be avoided as it could adversely affect CPEC.49 While China did, however, end up extending Pakistan a certain degree of support during the 2017-18 fiscal year, it did so only
sparingly. The Global Times printed an article concerning that assistance, saying that thesustainability of China’s financial support was an important issue. It noted that since China’sloans were based on market principles, Pakistan’s capacity to meet its debt obligations would
be called into question, and that Pakistan had to implement economic reforms.50

4. The Future of Sino-Indian Relations and South Asia
China’s course correction on CPEC in that way can be seen as constituting part of its attempt
to effect a course correction in broader Sino-Indian relations. China is said to have been
startled at the unprecedented resoluteness India showed during the Doklam standoff thattook place from June to August 2017, triggered by a border issue between China and Bhutan,
with Chinese and Indian troops confronting each other. Some believe that one of the factors
behind that incident was India’s concern over the growing Chinese influence in the region.51
Indian people have a general tendency to regard China’s actions as willfully ignoring India’s
interests and concerns.52 However, at least as far as the standoff is concerned, it does notappear to be the case that China had foreseen such a strong reaction against it by India andwas willing to accept the resultant consequence, given that China attempted to show consideration toward India once the standoff ended, in an endeavor to repair relations. At the
BRICS summit of September 2017, China endorsed a joint statement which condemnedsome allegedly Pakistan-supported terrorist groups targeting India by name. In February

64

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

2018, moreover, China removed its objections to putting Pakistan on the gray list of nations
Prefacenot doing enough in combating terrorist financing monitored by the Paris-based Financial
Action Task Force (FATF) on Money Laundering. Two months later, China invited Prime
Minister Modi to an informal summit, something that it had normally done only with theleader of the United States.

Summary

The result of the summit was described as a “reset” of Sino-Indian relations, which
had been fractious until then, with both sides agreeing to carry out joint economic projects in
Afghanistan, a country China is considering for inclusion in the CPEC. In June 2018, India’s

Introduction

Minister of Defence declared that India would not view Sino-Indian relations through thelens of Sino-Pakistani relations, though it would not alter its opposition to CPEC as a sovereignty issue.53
That does not mean, however, that the competition will end between China’s expand-

Chapter 1

ing economic engagement in South Asia, increasingly prominent in recent times, and India’s
countermeasures against it. Even after the “reset,” India has been maintaining its stanceagainst the BRI, and, in spite of Indian objections, the rest of South Asia will not change
their stance of accepting China’s economic engagement. Aside from their demand for infra-

Chapter 2

structure that cannot be met without Chinese capital, the stance of the smaller regional countries stems from the nature of the relationship traditionally built up between China and South
Asia. Except for India and Bhutan, which is effectively India’s protectorate, none of theother countries in South Asia has regarded China as an adversary in any political dispute, nor

Chapter 3

have they seen it as a security threat. For the smaller countries in the region, rather, it haslargely been India that traditionally acted as such a “bully,” and they have resented India’s
attitude of trying to maintain the regional order to its liking, even to the point of interferingin their domestic affairs.54 In contrast, those countries have often played the “China card” toColumnavoid various kinds of Indian pressure. Given that situation, it is difficult to contemplate ascenario in which the other countries in the region will follow India’s position and reject the
BRI. Conversely, though, India has retained strong political influence on those countries,

Chapter 4

despite not always being loved, owing to the long-standing relations it has built up withthem, which are far more multifaceted than any China has established with them. Even if
China wanted to do so, therefore, there are limitations as to how much it can violate India’s
wishes when influencing those countries, except for Pakistan. From the standpoint of thoseConclusions

nations, the most profitable policy option for them is obviously to let China and India compete against each other and then to skillfully maneuver between the two giants.
In view of that, what both China and India are probably trying to get out of their“reset” is not the termination of their competition regarding engagement in South Asia, butrather to subsume it into the modus operandi of Sino-Indian relations that has been maintained over the past three decades—one that can be best described as a “managed

65

Chapter 3

dispute”—in which the friction based on individual disputes has been managed within an
overarching cooperative relationship. At least since the end of the 1980s, the two countries—
while grappling with multiple controversies such as border issues, Sino-Pakistani relations,and India’s association with the Tibet problem—have striven not to let those problems
greatly undermine the overall Sino-Indian political relationship, in consideration of benefits
they can accrue from their cooperation in various fields, such as economic interaction andthe multipolarization of the western-centric international order. Although Chinese economic
engagement in South Asia itself, together with the fact that regional countries desire it as away to evade Indian pressure, is not necessarily a new phenomenon, its rapid expansion inrecent years—which has instigated India’s concern about the erosion of its traditional sphereof influence—has added Sino-Indian competition regarding engagement with regional countries to the list of bilateral “thorny problems.” What is to be seen is whether it will really bepossible for Beijing and New Delhi to subsume that new dispute within the traditional modality of their “managed dispute.”
Such an attempt is not necessarily doomed to fail, in view of the will of both countries
actually demonstrated by their “reset.” China’s economic engagement in South Asia may
also serve as a supporting factor to the cooperative aspects of the Sino-Indian relationship.
Beijing’s repeated invitations for New Delhi to participate in the BRI can be seen as being
underscored by actual economic motives, rather than just representing a political pose. For
instance, were the BCIM-EC, which has failed to move forward due to India’s reluctance, tobe realized, it would connect China’s southwestern provinces with both India and Bangladesh,creating a market on the scale of some 400 million people.55 Even today, moreover, IndiaPakistan trade is said to have the room to grow as much as seventeen times,56 and tappingthat potential is an attractive option for China and Pakistan to realize their blueprint for thelatter’s export growth through SEZs and industrial cooperation, as delineated by CPEC.
More than anything, India has a surfeit of infrastructure demand in which Chinese capitalcan definitely play a role. At the same time, India can also gain benefits from China’s economic engagement in the region. Although India has maintained its opposition, in principle,
to the BRI, it has actively accepted investments from China. In 2016, cooperation agreements were signed in such areas as a high-speed railway network and renewable energies.
The amount of Chinese investment in India reached more than US$8 billion by the end of
2017.57 During the strategic economic dialogue between the two sides in April 2018, discussions were made about China’s assistance in speeding up India’s Bangalore-Chennai railway
corridor.58 While India has justified such economic involvement by China as lying outside
the BRI framework, China does not necessarily view the situation in the same way.59
Additionally, the two countries now have a joint development project in Afghanistan agreed
upon at their recent summit.

66

The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

Also, China, for the time being, is expected to have to deal with the worsening image
Prefaceof the BRI on account of the developments surrounding Hambantota Port. The repercussionsof that incident have spread globally, especially triggering severe reactions against the BRI
in Southeast Asia, a region that is politically and strategically important to China because of
the South China Sea issue. In view of those circumstances, it will be reasonable for China

Summary

for a while to avoid actions that highlight the political and strategic implication of the BRI
in South Asia, where it currently has no serious political disputes or security issues with regional states except India and Bhutan and therefore the political and strategic priority is rela-

Introduction

tively low. That should contribute, as a result, to calming down India’s response to China’s
engagement in South Asia.
In the longer term, though, the prospect is not so bright that China and India will beable to continue to properly manage the friction arising from their competition over their

Chapter 1

engagement in South Asia for several reasons. First of all, it is probably unlikely that they
will ever reach either a tacit or explicit mutual understanding about what actions would be“permitted” in letting the competition continue without adversely affecting overall SinoIndian relations. Theoretically, one prospective criterion for drawing the line between “per-Chapter 2

mitted” and “prohibited” actions in that competition will be whether they can have political
and/or strategic ramifications—which invite India’s concern—or not. However, in reality,
India views the entirety of the BRI through a political and strategic lens. That position isgrounded on New Delhi’s abstract recognition that India’s political and economic influence

Chapter 3

in its own sphere of influence is being eroded by Beijing, based on the assumption that every
instance of China’s economic engagement can potentially be translated into political influence. Consequently, every aspect of the BRI can be a source of concern for India at one levelor another. Of course, that does not mean that India can and actually will counter every

Columnsingle instance of China’s economic engagement in South Asia: the choice of whether it
adopts countermeasures or none at all, as well as the determination of their extent, depends
on the context of each individual case. That, in turn, makes things far less predictable for

Chapter 4

China. Hence, as time passes, even though both countries may maintain the will to manage
that competition, it is not hard to imagine a scenario where incidents continue to occur inwhich the Chinese side unwittingly crosses India’s “red line” and trigger an unexpectedly
strong backlash from India, with each side thereby becoming increasingly suspicious of theConclusions

other’s “cooperative” intentions.
Second, if future Sino-Indian cooperation in the fields of connectivity and infrastructure—which is presumed to undergird the cooperative aspects of the relation—does not go
well, it can conversely lead to increasing doubts on both sides about the other’s intent tocooperate. The potential cause for setbacks in bilateral cooperation is not limited to a “hidden
political and strategic intent,” or suspicions about that. For example, India has had concerns

67

Chapter 3

about BCIM-EC—a possible candidate for future cooperation between China and itself—
worrying that the project could trigger a large-scale influx of cheap goods from China, which
would in turn adversely affect its domestic industries. The same situation also applies to thevision for a new corridor, proposed by China in April 2018, that would link China and India
through Nepal.60 If China muscles such projects through to completion, that would serve
only to bolster India’s distrust even further, and would be easily seen as underscoring theportrayal in India of the BRI as having a political and strategic design. Meanwhile, should
China fail to see any concrete progress in Sino-Indian cooperation, it may end up concludingthat India has no intention of cooperating with it at all.
Third, as the BRI continues to build up steam globally, with China’s economic interests expanding abroad, the need for it to maintain a naval presence in the Indian Ocean will
also likely increase, gradually adding to its incentive to secure bases along the coasts of theSouth Asian countries facing the Indian Ocean for the purpose of supporting its presence.
Combined with the other two factors mentioned above, that heightened incentive will workto push China toward cashing in on the strategic implication of the BRI, no matter how much
India might oppose such a move. Besides, the need for China to deal with the worsening
global image of the BRI after the Hambantota Port incident—which is bound to hamper its
actions for the time being—will eventually lessen with time. While that case was met bystrong international condemnation, involving as it did China’s so-called confiscation of aport about which rumors had swirled for some time of a military base conversion, there areother ways in which China can acquire bases for sustaining its naval operations more “modestly,” even though they are not “military/naval bases” in a literal sense. For instance, inrecent years, both China and Pakistan have ramped up their rhetoric about the need for naval
cooperation between the two to protect CPEC, carrying out joint exercises conceptualizingthat situation. Moreover, Pakistan itself is currently boosting its defensive posture to protect
CPEC including Gwadar Port. Given those developments, it is conceivable that China will
adopt an approach of gradually establishing a permanent naval presence by incrementally
stepping up cooperation with the efforts of the recipient country Pakistan, using other ports
in that country on an ad-hoc basis—particularly Karachi, which China’s navy has alreadybeen using for refueling in the Indian Ocean, and Ormara, a Pakistani naval base—and
follow the same example in countries besides Pakistan.
Finally, the fourth reason is that China is expected to increasingly regard India as asecurity threat with the passage of time, forcing China to take an even stricter position toward
India. Traditionally, China never saw India as a serious security threat, owing to its perceived
military superiority over India.61 However, because of India’s rise in recent years, entailingthe growth of its military capabilities, China has come to gradually sense an increasing needto take India’s military threat more seriously—a trend that is expected to continue into the68The Belt and Road Initiative and South Asia: Increasing Uncertainty in Sino-Indian Relations

future. Once China’s evaluation of the gravity of India’s threat, based on its capabilities,
Prefacecrosses a certain threshold, the chances are high that China will start to take actions to contain India, rather than holding back out of a sense of consideration toward it, by exercising
the latent political influence fostered through its economic engagement in the region andcapitalizing on the strategic implication of the BRI-related projects. The “generosity” dis-

Summary

played by China toward India so far probably reflects the extra leeway that it feels based on
its superiority.
In South Asia, China and India are expected to continue such competition over their

Introduction

engagement with smaller regional countries well into the future, while those smaller countries will probably try to maximize the benefits they can gain therefrom. Meanwhile, New
Delhi and Beijing will strive to manage the friction deriving from that competition. As they
are both influenced by certain common external factors—including the uncertainties of the

Chapter 1

trade policies of the United States—they may be able to contain such friction in the shortrun. Still, given the factors outlined above, the competition about their engagement in South
Asia—along with the border issue, which has been intensifying in recent years—is likely togradually undermine the traditional nature of the Sino-Indian relationship as time passes, theChapter 2

norm of which had been not to let friction arising from individual issues impinge upon theoverall political relationship. In that process, it is likely that incidents will occur that produce
tensions in the bilateral relation—either stemming from that competition itself, or else theborder issue—and deals or agreements are made to settle them temporarily, such as the latest

Chapter 3“reset.” Nonetheless, there is little prospect of the fundamental problems being resolved. In
this region, the BRI—China’s grand strategy and vision for reshaping the world order in its
favor—has triggered India’s resistance, which is driven by its deep-rooted fear about the
decline of its own influence in a region where it had previously enjoyed the position of he-

Columngemon. That is effectively a situation in which both sides’ overarching foreign policies andthe fundamental ways of thinking underlying those policies are incompatible with eachother, making it difficult to look forward to the kind of resolution beyond a temporary and/

Chapter 4

or tactical shelving of the issue.
(Author: Masahiro Kurita)

Conclusions

69

Column

Chinese Naval Activities and Pakistani Ports
At least since the early 2000s, it has been rumored that China would turn Gwadar Portin Pakistan into a naval base. In recent years, however, both Beijing and Islamabad
have denied that possibility, proclaiming that the port is purely commercial.
Meanwhile, Pakistan has been reinforcing the port’s security arrangement under
the rubric of protecting Gwadar Port and CPEC. In January 2016, it was reported that
the Pakistan Navy (PN) was in the process of shifting some of its assets from its largest
1

naval base in Karachi to Jinnah Naval Base in Ormara near Gwadar. In March 2017,
the PN fully activated a task force in charge of the seaward security of Gwadar port
and the protection of connecting channels, equipped with frigates, fast attack craft(FAC), aircraft, drones, and others. A special marine battalion was also raised in 2013
for the protection of Gwadar port, and the Pakistan Maritime Security Agency, a coast
guard equivalent, has inducted four patrol boats from China since the end of 2016,
with a view to boosting the security of the port. Although the only naval base in Gwadar
operated by the PN is the modest PNS Akram, set up in the 1980s, serving as a surveillance station monitoring the port itself as well as the northern Arabian Sea, the2defense of Gwadar Port is covered by a network of neighboring naval bases. In
Jiwani—near the border with Iran—the PN has another surveillance station, along withan airfield, which is also in charge of coordinating with the maritime headquarters in
Karachi, and the naval aviation has an airbase in Pasni, with a new airbase starting
3

operation in Turbat from May 2017.

Against that backdrop, a senior official from Pakistan’s Ministry of Foreign Affairs,
in an interview with a local newspaper in January 2018, voiced confidence in the PN’s
ability to ensure the security of Chinese shipments under CPEC, while also expressing
a positive attitude about cooperating with China to ensure such security, referring to
the joint naval exercises as well as to the continuing visits by Chinese naval vessels to
4

the Pakistani coast. In November 2016, also, an anonymous Pakistani naval official
mentioned that Chinese naval vessels would also be deployed in coordination with the5

PN for the protection of Gwadar Port and maritime trade under CPEC.

As can be read from these references, while both the Chinese and Pakistaniauthorities have invariably denied the possibility of China’s establishment of a naval
base on Pakistan’s coast, including Gwadar, whenever someone points out such a
possibility, they have never explicitly ruled out China developing a naval presence inthe northern Arabian Sea in the name of the defense of CPEC and Gwadar.
Also, Chairman Dostain Khan Jamaldini of the Pakistani government’s Gwadar Port
Authority, the body in charge of the port’s overall development, has said that naval vessels from all countries typically call at every port worldwide for bunkering, repairs and6

services, clearly distinguishing such activities from the establishment of naval bases.

It has been pointed out that what China desires on the Indian Ocean coast is not so70Column

Prefacemuch “bases,” in which troops would be permanently stationed and which can sustain
wartime military operations, but rather “places” where its naval vessels engaging inmilitary operations other than war, such as noncombatant evacuation operations andmaritime security operations, could make ad-hoc visits for supply and maintenance7

Summary

purposes. Judging from the comments of the officials from both countries, they seemto have cautiously left open the possibility of Gwadar being used as such a “place.”
That does not necessarily mean, however, that Chinese People’s Liberation Army
Navy (PLAN) will be using Gwadar in such a capacity any time soon. The more theport’s military use becomes prominent, the more it will whip up allegations that the

Introduction

CPEC and the BRI are just cover-ups for a strategic scheme, thereby worsening theimage of the project, as well as inspiring negative reactions not just by India but also
the United States, even if China avoids turning the port into a naval or military “base”
in a literal sense. Gwadar Port has been getting too much attention—and suspicion—

Chapter 1

in that context.
As long as China pays heed to such points, it would be a more rational option for
it—though a matter of degree—to use other ports in Pakistan. The PLAN—operating in
the Indian Ocean already for such missions as dealing with piracy in the Gulf of Aden—
has a record of using Karachi, Pakistan’s largest dual-use port, for ad-hoc supply, andChapter 2

there is a strong likelihood that it will continue to do so from now on. If China is averseto the congestion in Karachi and seeks an alternative port that could be used by its
navy more proactively, the most likely choice would be the Ormara military port lying
285 km to the east of Gwadar Port, where the PN has already established the Jinnah

Chapter 3

Naval Base, with berths for ships and submarines. The above-mentioned senior officialfrom Pakistan’s Foreign Ministry indicated, in his reference to the security of Chinese
shipments and Gwadar, the prospect that all kinds of naval cooperation would take8

place at Ormara. In addition, while the veracity of the story is not certain, a conservative media outlet of the United States reported in January 2018 that the Chinese andColumnPakistani governments were in consultation about further developing the aforemen9tioned Jiwani Port, in the vicinity of Gwadar, for use as a Chinese military facility. Rightafter that, a similar story was reported by a Hong Kong newspaper, saying that China
was planning to establish a facility for use in supplying and maintaining its naval vessels
10

Chapter 4

in a location near, but separate from, the commercial port of Gwadar.

Even if it were to enhance its military presence in the Arabian Sea using Pakistani
ports, China, on account of its experience with Hambantota Port and consideration to
managing its relationship with India, is likely to advance both cautiously and incremen-

Conclusions

tally. There is the possibility that focusing on Gwadar Port alone may not necessarily
reveal the total picture, making it necessary for us to follow China’s actions along theentire Pakistani coast more broadly.
(Author: Masahiro Kurita)

71

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Chapter 4
The Pacific Island Countries:
The Southern Extremity of
the Belt and Road Initiative(Tomotaka Shoji)Chapter 4

1. The Pacific Island Countries and the Belt and Road
Initiative
The Pacific island countries are composed of fourteen countries in Micronesia, Melanesia,
and Polynesia, along with several French-owned islands scattered throughout the region,
including New Caledonia.1 In its Belt and Road Initiative (BRI), China has demarcated thesouthern extremity of its so-called “21st Century Maritime Silk Road” at those states, andhas been broadly strengthening its support to them, economically and otherwise, in recent
years as part of that vision. Accompanying the expansion of China’s economic influence has
been its mounting political influence on those states as well. Faced with the expansion ofChina’s comprehensive presence, the major countries of Oceania—namely, Australia and
New Zealand—which had theretofore wielded substantial influence on the Pacific island
countries, are viewing it problematically as a relative decline in their own influence, andhave even started to entertain security concerns. In addition, other countries that had historically established themselves in the region, and which still maintain tight economic and security relations with the Pacific island countries, such as Japan and the United States, arecarefully watching China’s moves there.

Figure 4-1: The Pacific Island Countries

International Date LineJapan

SaipanGuam

Palau

HawaiiMarshall Islands

Federated States ofMicronesia
Papua New Guinea

Melanesia
Micronesia
Polynesia
Kiribati

Nauru

SolomonIslands

EquatorTuvaluSamoa

VanuatuFijiAustralia

Cook
Islands

Tonga

New Caledonia

Niue

New Zealand

Source: Compiled by the author from the Japan Ministry of Foreign Affairs website.

74

Tahiti

The Pacific Island Countries: The Southern Extremity of the Belt and Road Initiative

Figure 4-2: China’s Support for the Pacific Island Countries
Preface(million US$)
700
600

Summary

500
400
300

Introduction

200
100

Fe

la
nd
s

iu
e

Is
k
oo

Sa
m
oa

ji
Fi

ng
a
To

N
C

de

Va
nu
at
u

e
-L
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or
m
Ti

Chapter 1of rate
M d
ic St
ro at
ne es
si
a
Pa
pu
a
G Ne
ui
ne w
a

0

Source: Lowy Institute, “Chinese Aid in the Pacific.”
Chapter 2

On a basic level, though, the Pacific island countries heartily welcome the support
that they receive from China and are positive toward participation in the BRI. That stems
from the fact that most of the countries, aside from such middle-income and high-income

Chapter 3

states as Palau and Nauru, are still quite poor, and desire to develop their economies throughthe support of China. Moreover, the scale of Chinese assistance is relatively greater than thatreceived from other countries, and it comes with very few collateral conditions (i.e., strings
attached), which constitutes another reason that such states welcome it. China has extended

Columnits assistance to all the Pacific island countries almost uniformly, without exception. Its assistance to those states in the region with relatively large-scale economies—namely, Fiji andPapua New Guinea (PNG)—has come to exceed that extended to other countries, as if in

Chapter 4

proportion to their greater scale, suggesting that both countries have become special focusesof China’s support.
In the case of Fiji, after a military government was established in that country following a coup d’état in 2006, Australia swiftly called for a restoration of the civilian government

Conclusions

and applied economic sanctions. In response, Fiji chose to adopt the method of alleviating theeffect of those sanctions by diversifying its foreign relations, one of the new partners of which
was China. In 2010, it hammered out its “Look North” policy, clarifying its position ofstrengthening relations with China in place of the major countries of Oceania. Thanks to its
increased assistance to Fiji in response to those calls, the total amount of support extended by
China to that country in the decade running up to 2015 came to exceed that given by Australia.2

75Chapter 4

China had already established the precedent of emphasizing the principle of noninterference
in internal affairs when drawing close to those nations in which the government had taken
power through nondemocratic means and then found itself subject to criticism and sanctions
from the West. Following that script, and similar to the case in Thailand, where a military
government took power in 2014 after a coup d’état, China was successful in developing more
intimate and stronger relations with Fiji. That has now become one of China’s most powerful
methods of expanding its own political influence in the international community.
Thereafter, Sino-Fijian relations have been progressing smoothly. In November 2014,
China’s President Xi Jinping made a visit to Fiji, during which time both countries signed
five agreements related to economic and defense cooperation. China also agreed to provide
material assistance to help Fiji cope with climate change, as well as green-lighting visa exemptions for Fijians traveling to China. Also, Fijian Prime Minister Josaia Voreqe
Bainimarama attended the Belt and Road Forum for International Cooperation held in
Beijing in May 2017, demonstrating its posture of playing its part in the BRI.3 Today, both
China and Fiji are accelerating talks toward the conclusion of a memorandum of understanding on cooperation based on the BRI.
Meanwhile, PNG has also been deepening its relations with China. While maintaining its traditional cooperative relations with Australia in the economic and security spheres,it has also been active in diversifying its foreign relations, just as Fiji has. One of its mostinfluential partners in that effect has been China. The development of mines for such minerals as nickel and cobalt has been the prime area of cooperation between the two countries.4
When PNG Prime Minister Peter O’Neil visited China in June 2018, the two countries reaffirmed a strategic partnership, with agreements on an expansion in China’s economic cooperation based on the vision of the BRI, as well as the development of PNG’s natural gas, theconstruction of industrial parks, and an invitation to attract more Chinese tourists to thecountry.5 Currently, both countries are conducting negotiations toward the conclusion of abilateral free-trade agreement.
The first goal of China’s boosting
economic assistance to the Pacific island
countries, centering on the main pillars
of infrastructure improvement, resource
development, and the attraction ofgreater numbers of Chinese tourists, hasbeen to expand China’s influence in theinternational community. On account of
its implementation of both bilateral andmultilateral

76

comprehensive

support,The Pacific Island Countries: The Southern Extremity of the Belt and Road Initiative

including its participation in the PostPreface

Forum Dialogue of the Pacific Islands
Forum (PIF), China has come to expand
its influence throughout all the Pacificisland countries. Nevertheless, those

Summary

states remain just another peripheral
region as far as Chinese foreign policy isconcerned. Rather than representing a

Introduction

deliberate strategy aiming at the establishment of hegemony over the region,
China’s activities in the region constituteone link in the chain of China’s expansion of global influence, similar to its activities being

Chapter 1

carried out in the other developing regions of Asia, Africa, Latin America and the Middle
East. Thus, it can be described as the outcome of an opportunistic inroad.6
China’s second goal in the region, as seen in the case of PNG, has been to gain preferential access to the abundant national resources controlled by the Pacific island countries.

Chapter 2

Besides PNG, China has been promoting the support of similar development elsewhere in
the region, working toward securing such resources as bauxite in Fiji, timber in the Solomon
Islands, and fishing resources in all of the states. From the perspective of exporting thoseresources to China, such developmental assistance has been promoted in tandem with as-

Chapter 3

sistance in the improvement of port-related infrastructure.
China’s third goal is to take countervailing action against Taiwan, which currently
maintains diplomatic relations with six of the Pacific island countries, namely, Kiribati, theSolomon Islands, Nauru, Tuvalu, Palau, and the Marshall Islands. During the years ofColumnTaiwan’s Ma Ying-jeou administration (2008-16), China took a back seat on the issue inview of its emphasis on maintaining friendly relations with that government, but since thelaunch of the Tsai Ing-wen administration in 2016, China has become more aggressive in

Chapter 4

trying to win over the Pacific island countries diplomatically. For example, it is increasing
its economic engagement in those states with which it does not maintain diplomatic relations, such as the Marshall Islands and Palau, through trade and increased numbers ofChinese tourists.7

Conclusions

Historically, the Pacific island countries have long been a region with many immigrants from mainland China. Currently, some twenty thousand Chinese nationals and ethnic
Chinese who have taken up local nationality live in the region. In relation to that, and as the
fourth goal in the Pacific, China is interested in the Chinese diaspora in the region. That includes rescuing Chinese nationals in emergency situations, such as anti-Chinese riots, alongwith promoting trade utilizing the networks of the Chinese diaspora, as well as expanding its

77

Chapter 4

political influence locally through such people.8

2. The Strategic Standpoint—Activities by the People’s
Liberation Army (PLA) in the Pacific
The Pacific island countries also constitute an important region geopolitically. In China’s
strategic “Second Island Chain” concept, they are strategically important as the terminal
point of the string of islands stretching from Japan through Guam and Saipan to PNG, andalso serve as a key spot along the shipping lanes stretching from the Indian Ocean and South
China Sea toward the Pacific. Moreover, the Pacific island countries lie immediately adjacent to an important bridgehead of the US Navy—Guam and the Northern Mariana Islands—
and are not so far from the headquarters of the US Indo-Pacific Command (USINDOPACOM)
situated in Hawaii. From that perspective, it is clear that the Pacific island countries bearstrategic importance should China ever attempt to check the US Navy from the south.9
Currently, China’s security engagement with the Pacific island countries has been
primarily conducted on a bilateral level. For example, a Chinese space surveillance ship
makes port calls in Fiji once or twice annually for the purpose of refueling. In addition, Fijiplans to introduce a surveillance and hydrographic vessel from China in the future, which
will be employed for the improvement of that nation’s maritime domain awareness (MDA).10PNG is also conducting cooperative activities in the non-traditional security sphere with
China, such as a visit by a Chinese hospital ship to the country in July 2018, which provided
medical services to local inhabitants and held training seminars for local medical personnel.
Thereafter, the same hospital ship successively toured Vanuatu, Fiji, and Tonga, after which
it went off to Latin America11
In April 2018, Australian media reported that China was planning to construct a military base in Vanuatu.12 As diplomatic officials from both Vanuatu and China immediately
dismissed those reports, their veracity remains unclear. Nonetheless, amidst the steady expansion of the Chinese presence in the Pacific island countries, the suspicions that the PLA
may be planning to launch full-fledged activities in the region—as the logical next step ensuing the country’s economic advance—is spreading among the major countries of Oceania,
including Australia, as well as the United States. The reports at that time are believed to havereflected such suspicions.
Some argue that China’s BRI has a hidden “strategic objective” of eventually countering US hegemony by building upon its development of port facilities, promoted as economic
assistance, to bring the PLA in and construct naval bases. Still, as mentioned earlier, there isno definite evidence at the current moment that China has a clear strategy aiming to checkthe United States, at least as far as the case of the Pacific island countries is concerned.13 The

78

The Pacific Island Countries: The Southern Extremity of the Belt and Road Initiative

pattern of China’s advance into the Pacific island countries, rather, seems opportunistic.
Preface

China is not making any concrete moves, for example, to utilize such countries strategically,
even in Fiji and PNG, with which it is rapidly deepening its relations. While one cannot deny
the possibility that it will initiate strategic advances in the region over the medium and/orlong term, China seems to be first focusing on securing its economic rights and interests in

Summary

the region, then heightening its political influence using its economic strength.

Introduction

3. The Heightened Wariness of Related Countries in
the Region
Related countries in the region are becoming increasingly wary of China’s advances into the
Pacific island countries, with the major countries of the region—Australia and New Zealand—

Chapter 1

concerned about the relative decline of their own influence. Australia, which has been heavily
involved in the economic, political and security aspects of those states as the great power ofthe region, and which has maintained its influence there, has particularly heightened its senseof crisis. A study by the Lowy Institute, an Australian think tank based in Sydney, determined

Chapter 2that were China actually to execute all the assistance it has promised the Pacific island countries, the total amount of that assistance would exceed the support extended by Australia,
currently the largest donor country in the region.14 Also, regarding the reports of the PLA
constructing a base in Vanuatu, Australia’s then-prime minister Malcolm Turnbull declared,

Chapter 3“We would view with great concern the establishment of any foreign military bases in those
Pacific Island countries and neighbours of ours.” However, there are limitations as to how
strongly Australia can adopt a firm attitude against China insofar as that country’s influenceon those states is concerned, given its own high economic dependency on China.15

ColumnThe United States is also making no secret of its wariness of China’s inroads into the
Pacific, mainly from a strategic standpoint. For instance, a report released by the congressional US-China Economic and Security Review Commission in June 2018 expressed secu-

Chapter 4rity concerns about China’s rapidly increasing investment in Micronesia from the perspectiveof the access by the United States to Micronesia and Guam. Also, given that the United States
maintains missile-defense testing facilities in the Marshall Islands, as well as its announcement of plans in August 2017 to install a radar system in Palau to track missiles launched byConclusions

North Korea, it is also concerned about China’s influence on those military facilities.16
France, with its sovereign right in the area, has also become more concerned, with
China’s expansion of economic influence in New Caledonia representing a particular sourceof worry. That is not merely an economic issue, as there are signs that the independence
movement in New Caledonia is picking up steam, although in the most recent national referendum conducted in November 2018, the majority of people voted against independence.

79Chapter 4

Nevertheless, the French government fears that the pro-independence faction will gain momentum with China’s backing.17
During a visit by French President Emmanuel Macron to Australia and New Caledonia
in April 2018, he made France’s awareness of that issue especially evident. In Canberra, headvocated the creation of a “Paris-Delhi-Canberra Axis,” arguing for the establishment of a
new security cooperation framework in
the Indo-Pacific, which also envisions
the participation by such ASEAN states
as Malaysia and Singapore, as well as byJapan.18 Preceding his official Oceania
visit, President Macron also visited Indiaa month earlier, agreeing to reinforce security cooperation with that country. The
backdrop to that move was China’s expansion of influence in the Indian Ocean,
where France controls the sovereign territory of Reunion Island. France has also
boosted its interest in the South China
Sea, probably owing to the fact that thearea is intimately related to the securityof the French islands scattered throughout the broad maritime region stretchingfrom the Indian Ocean to the Pacific.
(Author: Tomotaka Shoji)

80

NIDS China Security Report 2019
China’s Strategy for Reshaping the Asian Order and Its Ramifications

Conclusions(Masafumi Iida)

Conclusions
The strategy for a new international order envisioned by the Xi Jinping administration restson two pillars. The first has been to rely on China’s power as the world’s second-largest
economy to expand mutually cooperative relations—primarily those with developing countries—through which it can promote its own economic development in a stable international
environment while playing the leading role in the formation of the regional and international
order. The specific policy aiming at its realization has been the vision of the Belt and Road
Initiative (BRI) proposed and promoted by China. In its early stages, the BRI put emphasis
on China’s surrounding regions, such as Central Asia and Southeast Asia, with the goal of
creating a regional order desirable for China’s development and stability. However, as thecountry came to promote the creation of a new international order in which developing countries have a greater voice, China’s BRI has transformed into a global concept that also targets
a broader area encompassing Africa, Latin America, and the like.
The second pillar of Xi Jinping’s strategy for a new international order has been thereliance on China’s rapidly growing military power so as to apply pressure on and force
concessions from other countries concerning the issues of territorial sovereignty and maritime rights and interests—positioned by Beijing as its “core interests”—and occasionallyexerting coercion to expand its control, through which it aims to achieve the securement andexpansion of those interests. Indeed, Beijing has promoted the expansion of its “core interests” by actively dispatching the PLA into nearby seas and changing the status quo by coercion. In the South China Sea, it has constructed military bases and used coercion to reject theexisting order based on international maritime law. In the East China Sea and Western
Pacific, as well, it has boosted its military presence, not only to coerce Japan, but also to attempt to restrain the activities of the US forces. In addition, China has advocated a new“Asian security concept” that rejects the formation of alliances, and promoting the construction of a new security order in Asia.
This report has analyzed China’s strategy for a new international order in Southeast
Asia, South Asia, and the Pacific island countries, detailing the sort of influence that it exerts
on each of those areas. China now constitutes the largest economic partner for most of thecountries in Southeast Asia, with its economic influence rapidly growing in conjunction withthe promotion of its BRI. Beijing has also leveraged its substantial economic assistance tosteadily expand its political influence in the authoritarian countries of Southeast Asia, suchas Cambodia and Laos. By applying pressure on those countries, China has successfully
split the ASEAN member states’ position toward South China Sea issues, thereby steadily
succeeding in its efforts to parlay its existing economic influence into political influence82

Conclusions

with the aim of creating a regional order advantageous to itself.
Preface

Meanwhile, the expansion of Chinese influence in Southeast Asia has triggered acounterreaction by ASEAN, which is endeavoring to balance such influence with that ofextraregional powers. Although ASEAN had once temporarily avoided expressing concern
about China’s militarization of the South China Sea, it has since restored its unified voice

Summaryand started to express its concerns once again. ASEAN member states are also becoming
wary about China’s intentions to remake the regional order through the BRI, with moves
seen to achieve a balanced position through the support of the “Free and Open Indo-Pacific”

Introduction

vision being promoted by the United States, Japan, and others. At the same time, those countries in which projects are currently being implemented in the BRI, under China’s direction,
are increasingly rethinking the nature of those projects, due to concerns about their profitability, excessive debt burden, and Chinese influence on domestic politics, among other

Chapter 1things. While China has indeed boosted its influence in Southeast Asia, it is also true that it
has not yet reached the point where it has secured the assent of the region’s states in reshaping the regional order in a way that it desires.
In addition, China’s reliance on coercion to protect its “core interests” in Southeast

Chapter 2

Asia, coupled with its advocacy of a new security order there that rejects the formation of alliances, has also triggered heightened wariness by the United States, which has played a majorrole in forming and maintaining the current regional order. Above all, Beijing’s steady militarization of the South China Sea has threatened the existing maritime order, symbolized by the

Chapter 3

freedom of navigation, and is regarded as aiming at weakening the US military presence, causing that country to reinforce its own countermeasures. China’s heavy-handed advance into its
surrounding seas, relying on coercion and aiming at securing and expanding its “core interests,” seems to have triggered strategic competition with the United States for Southeast Asia.

ColumnChina has been significantly boosting its economic presence in South Asia as well,successfully consolidating its relations with countries in the region. Support from China has
been particularly effective in advancing economic development in the medium-sized andChapter 4

smaller countries of the region, which have tended to look toward stronger ties with China asa counterpoise in their relations with the region’s major power, India, and have positively
welcomed the BRI being promoted by China. Even India has emphasized maintaining cooperative relations with China in the economic sphere, having adopted a positive stance toward

Conclusions

China’s efforts to remake the economic order, including having become one of the founding
members of the Asian Infrastructure Investment Bank (AIIB) and promoting coordination
with China within the BRICS framework.
On the other hand, Beijing’s hardline posture toward expanding its “core interests”
has set off strong alarm bells in India in strategic terms. Against the backdrop of Beijing’s
lack of respect for India’s status as the great power in the region, along with such moves as

83

Conclusions

the ramping up of activities by the PLA in its advance into the Indian Ocean, India has cometo view China’s BRI as the means by which that country aims to undermine India’s strategic
superiority in South Asia. New Delhi has clearly expressed its opposition to the BRI, perceiving it as a security threat, especially insofar as the CPEC is concerned, which involves acountry with which India is in conflict. At the same time, Islamabad entertains high hopes
for the strategic significance of the CPEC, as it wants to reinforce its coordination with
China in its conflict with India—a state of affairs that has aggravated India’s wariness about
China even further. The growing involvement by China in South Asia has spawned more
intense anti-Chinese wariness by New Delhi than China ever expected, setting off competition between the two countries in the region.
China has intensified its economic involvement in the Pacific island countries as well,grounded primarily in its BRI, and has achieved positive results in boosting its relations withthe countries of the region. Many of the Pacific island countries still maintain diplomatic
relations with Taipei, so Beijing has been stepping up its diplomatic pressure on Taiwan byboosting its political influence on them. However, China’s expanding influence on the Pacificisland countries has ended up accentuating the apprehension against China felt by such nations as Australia and France, which maintain strong ties with those states and have played
a role in stabilizing the regional order.
Based on the analysis of this report, one can conclude that China’s strategy for theinternational order has achieved a certain level of success, having strengthened its economic
influence among developing countries and converting that into political influence, using the
BRI as its centerpiece policy, and mustering those countries toward the goal of constructing
the kind of new international order that China is arguing for. Meanwhile, China’s promotionof BRI projects that are unprofitable or lack transparency, combined with its moves to rely
on coercion in securing and expanding its “core interests,” have caused a heightened wariness toward China among developing countries in neighboring regions. At the same time, its“major-country diplomacy with Chinese characteristics,” which loudly professes the building of a “new type of international relations” and a “community of a shared future for mankind,” has aroused bad feelings among the other great powers, which emphasize themaintenance of the existing order. Taking those factors into account, the international environment surrounding China has not necessarily become one that is advantageous to it. Alleyes are on the way in which China will respond from now on to the various issues surrounding its strategy for the international order.
(Author: Masafumi Iida)

84

Notes

Chapter 1
1People’s Daily, November 16, 2012.

2

People’s Daily, December 23, 2005.

3

People’s Daily, January 30, 2013.

4

People’s Daily, September 7, 2011.

5

People’s Daily, September 8, 2013.

6

People’s Daily, October 4, 2013.

7

People’s Daily, October 26, 2013.

8

People’s Daily, May 22, 2014.

9People’s Daily, August 1, 2013.

10

People’s Daily, November 22, 2013.

11

People’s Daily, November 30, 2014.

12

People’s Daily, October 14, 2015.

13

People’s Daily, September 29, 2015.

14

People’s Daily, March 29, 2015.

15

People’s Daily, May 15, 2017.

16

People’s Daily, May 16, 2017.

17

People’s Daily, March 9, 2017.

18

People’s Daily, July 10, 2016.

19

People’s Daily, August 2, 2017.

20

PLA Daily, July 28, 2017.

21

People’s Daily, June 27, 2015.

22

People’s Daily, October 28, 2017.

23

People’s Daily, October 29, 2017.

24

People’s Daily, March 9, 2018.

25

People’s Daily, June 24, 2018.

26

People’s Daily, June 11, 2018.

27

People’s Daily, July 10, 2018.

28

People’s Daily, July 26, 2018.

29

The White House, National Security Strategy of the United States of America, December 18,

30

People’s Daily, July 8, 2018.

31

Devin Thorne and Ben Spevack, “Harbored Ambitions: How China’s Port Investments Are

2017, p. 25.

Strategically Reshaping the Indo-Pacific,” C4ADS, April 17, 2017.

Chapter 2
1

Tomotaka Shoji, “Pursuing a Multi-dimensional Relationship: Rising China and Japan’sSoutheast Asia Policy,” in Jun Tsunekawa ed., The Rise of China: Responses from Southeast Asia
and Japan, NIDS Joint Research Series No. 4, 2009, pp. 164-167.

2

Tomotaka Shoji, “Minamishinakai no Ryoyuken Mondai: Chugoku no Saishinshutsu to
Betonamu wo Chushin tosuru Tonanajia no Taio [Territorial Disputes in the South China Sea:

86

NotesChina’s Re-entry and the Responses of Southeast Asia Centering on Vietnam],” NIDS Journal of
Defense and Security, Vol. 14, No. 1, December 2011, pp. 2-3.
3

Alice D. Ba and Cheng-Chwee Kuik, “Southeast Asia and China: Engagement and Constrainment,”in Alice D. Ba and Mark Beeson eds., Contemporary Southeast Asia, 3rd Edition, Palgrave, 2018,
pp. 236-240.

4

Evelyn Goh and Sheldon W. Simon, “Introduction,” in Evelyn Goh and Sheldon W. Simon eds.,
China, the United States, and Southeast Asia: Contending Perspectives on Politics, Security, andEconomics, Routledge, 2008, pp. 1-2.

5Cheng-Chwee Kuik, “How Do Weaker States Hedge? Unpacking ASEAN States’ Alignment
Behavior towards China,” Journal of Contemporary China, Vol. 25, No. 100, 2016, pp. 510-513.

6

ASEAN, “Declaration on the Conduct of Parties in the South China Sea,” November 4, 2002,
Phnom Penh.

7

Tomotaka Shoji, “Betonamu no Anzenhosho: ‘Mittsu no No’ no Ronri to Jissen [Vietnam’s
Security: The Theory and Practice of the ‘Three Nos’],” Kokusai Seiji, No. 189, October 2017,
pp. 155-156.

8

Today (Singapore), July 14, 2012.

9National Institute for Defense Studies ed., East Asian Strategic Review 2013, p. 221.

10

Government of the Philippines, “Agreement between the Government of the Republic of thePhilippines and the Government of the United States of America on Enhanced Defense
Cooperation.”

11

Tomotaka Shoji, “Betonamu no Taibei Anzenhosho Kyoryoku: Rekishitekikeii, Genjo to
Shoraitenbo [Vietnam’s Security Cooperation with the United States: Historical Background,
Current Situation and Future Prospects],” NIDS Journal of Defense and Security, Vol. 20, No. 2,
March 2018, pp. 9-11.

12

National Institute for Defense Studies ed., East Asian Strategic Review 2017, p. 132.

13

Renato Cruz de Castro, “The Duterte Administration’s Appeasement Policy on China and the
Crisis in the Philippine-US Alliance,” Philippine Political Science Journal, Vol. 38, Issue 3,
2017, pp. 9-12.

14

Aileen Baviera, “President Duterte’s Foreign Policy Challenges,” Contemporary Southeast Asia,
Vol. 38, No. 2, August 2016, pp. 203-205.

15

The Philippine Star, November 1, 2016.

16“Special Issues on the South China Sea Arbitration: Responses and Implications,” ASEAN Focus,
ISEAS Yusof Ishak Institute, July 2016, pp. 3-5.

17

National Institute for Defense Studies ed., East Asian Strategic Review 2017, p. 134.

18

Reuters, April 27, 2017.

19

The Straits Times, July 26, 2016.

20

Ian Storey, “Assessing the ASEAN-China Framework for the Code of Conduct for the South
China Sea,” Perspective, ISEAS Yusof Ishak Institute, No. 62, August 8, 2017.

21

Ministry of Foreign Affairs of the People’s Republic of China, “Foreign Ministry Spokesperson

22

ASEAN, “ASEAN Leaders’ Statement on ASEAN Connectivity,” October 24, 2009, Cha-am

Lu Kang’s Regular Press Conference on June 28, 2018.”
Hua Hin, Thailand.

87Notes23

ASEAN, “Master Plan on ASEAN Connectivity,” October 28, 2010, Hanoi, p. i.

24

ASEAN, “Master Plan on ASEAN Connectivity 2025,” pp. 9-10, 24, 43.

25

ASEAN, “Joint Statement of the 19th ASEAN-China Summit to Commemorate the 25th
Anniversary of ASEAN-China Dialogue Relations,” September 7, 2016, Vientiane, Lao PDR.

26

ASEAN, “Chairman’s Statement of the 19th ASEAN-China Summit to Commemorate the 25th
Anniversary of ASEAN-China Dialogue Relations,” September 7, 2016, Vientiane, Lao PDR.

27

South China Morning Post, May 12, 2017.

28

CCTV.com, May 12, 2017.

29

Ministry of Foreign Affairs of the People’s Republic of China, “Xi Jinping Meets with State
Counselor Aung San Suu Kyi of Myanmar,” May 16, 2017.

30

Asia Times, March 23, 2017.

31

Luke Hunt, “Has China Bought Brunei’s South China Sea Silence?” The Diplomat, February 14,
2018.

32

The White House, National Security Strategy of the United States of America, December 18,
2017, p. 46.

33

National Endowment for Democracy, “Sharp Power: Rising Authoritarian Influence,” December
2017.

34

Sanchita Basu Das, “Do the Economic Ties between ASEAN and China Affect Their StrategicPartnership?” Perspective, ISEAS Yusof Ishak Institute, No. 32, June 21, 2018.

35

ASEAN, “Chairman’s Statement of the 32nd ASEAN Summit, Singapore, 28 April 2018,” pp.

36

Nihon Keizai Shimbun, June 11, 2018.

37

Ministry of Foreign Affairs, “Japan-Cambodia Summit Meeting,” August 7, 2017.

38

The Australian, March 18, 2018; Tan Ming Hui and Nazia Hussain, “Quad 2.0: Facing China’s

9-10.

Belt and Road?” RSIS Commentary, No. 33, February 28, 2018; Alan Chong and Wu Shang-su,“‘Indo-Pacific’ vs ‘Asia-Pacific’: Contending Visions?” RSIS Commentary, No. 34, February 28,
2018.

Chapter 3
1Darren J. Lim and Rohan Mukherjee, “Does Debt Pay? China and the Politics of Investment in
Sri Lanka,” The Diplomat, January 20, 2018.

2

The New York Times, June 25, 2018.

3

Umesh Moramudali, “Sri Lanka’s Debt and China’s Money,” The Diplomat, August 16, 2017.

4

Jonathan Hillman, “Games of Loans: How China Bought Hambantota,” CSIS Briefs, March

5

The New York Times, June 25, 2018.

6

Nihon Keizai Shimbun, February 13, 2018.

7

Reuters, February 9, 2018.

8

Timothy Saviola and Nathan Swire, “Water Wars: Conflict in the Maldives between Major

2018, p. 3.

Powers,” Lawfare, March 19, 2018.
988

Ankush Ajay Wagle, “Nepal, India and China: A Trilateral Equation,” ISAS Insights, No. 492,

NotesMay 22, 2018, pp. 4-6.
10

Sudha Ramachandran, “Sino-Nepali Relations: Scaling New Heights,” China Brief, Vol. 18,
Issue 6, April 9, 2018, p. 18.

11

The Wire, July 25, 2017.

12

Hindustan Times, March 4, 2017.

13“The New Reality of the India-Nepal Relationship,” South Asian Voices, May 10, 2018.

14

Manoj Joshi, “The Belt and Road Initiative aka One Belt One Road Scheme,” Observer Research
Foundation, January 24, 2018, p. 33.

15

Andrew Small, “The Backlash to Belt and Road,” Foreign Affairs Snapshot, February 16, 2018.

16

Mari Izuyama, “Minami Ajia ni Okeru Chugoku, Indo no Kyoso—Bodaa, Renzokusei,
Seiryokuken [Sino-Indian Competition in South Asia: Borders, Connectivity, and Spheres ofInfluence],” Kokusai Mondai [International Affairs], No. 669, March 2018, p. 31.

17

Jabin T. Jacob, “What Does India Think of China’s ‘Belt and Road’ Initiative?” Institute ofChinese Studies, Delhi, December 2017, p. 1.

18

Vinay Kaura, “Grading India’s Neighborhood Diplomacy,” The Diplomat, January 1, 2018.

19

The Daily Star, October 17, 2016.

20

Kaura, “Grading India’s Neighborhood Diplomacy.”

21

Financial Times, October 5, 2017; Defence Web, April 11, 2018.

22

Harsh V. Pant, “Making No Assumptions: India’s Seychelles Conundrum,” The Diplomat, June27, 2018.

23

South China Morning Post, May 12, 2017.

24

Harsh V. Pant, “India’s Nepal Challenge Intensifies,” The Diplomat, June 30, 2018.

25

Christian Wagner and Siddharth Tripathi, “India’s Response to the Chinese Belt and Road
Initiative: New Partners and New Formats,” SWP Comment, January 2018, p. 3.

26

Financial Times, December 11, 2017.

27

Hillman, “Game of Loans,” p. 2; John Hurley, Scott Morris, and Gailyn Portelance, “Examining
the Debt Implications of the Belt and Road Initiative from a Policy Perspective,” CDG Policy
Paper, No. 121, March 2018, p. 2.

28South China Morning Post, February 25, 2018.

29

Pakistan Today, April 12, 2017.

30“CPEC Project Progress Update,” CPEC website.

31

Business Recorder, July 15, 2018.

32

The News International, April 27, 2018.

33

Dawn, March 8, 2018.

34

The Express Tribune, January 27, 2017.

35

Dawn, April 27, 2018.

36

The Express Tribune, December 7, 2017.

37

Adnan Aamir, “The CPEC and Pakistan’s Foreign Debt Problem,” China US Focus, July 3, 2018.

38

The Express Tribune, December 7, 2017.

39

Fazal-ur-Rahman, “Pakistan-China Trade and Investment Relations,” paper presented at the seminar on “Pakistan-China Relations — 2011: Year of Friendship,” organized by the Institute ofStrategic Studies, Islamabad, January 11-12, 2011, p. 4.

89Notes40

Economic Times, May 8, 2017.

41

Nikkei Asian Review, March 28, 2018.

42

Pakistan Today, November 20, 2016.

43

Deccan Chronicle, December 1, 2017.

44

The Economic Times, July 12, 2018.

45

Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics, Hurst & Company, 2015, p.
54; “Andrew Small on China’s Growing Economic Engagement with Pakistan,” Asia Experts
Forum, October 17, 2016.

46

Voice of America¸ June 29, 2018.

47

Business Standard, November 24, 2017.

48

Financial Times, February 19, 2018.

49

Financial Times, July 6, 2018.

50

Global Times, May 27, 2018.

51

Anubhav Gupta, “India Takes a Bold Approach in Border Standoff with China, but the Endgame
Is Unclear,” World Politics Review, August 7, 2017.

52

Jacob, “What Does India Think of China’s ‘Belt and Road’ Initiative?” p. 2.

53

The Indian Express, June 8, 2018.

54

Rohan Mukherjee, Darren J. Lim, “‘India is Our Brother, China is Our Friend’: Navigating GreatPower Rivalry in Southern Asia,” War on the Rocks, September 22, 2017.

55

Gal Luft, “Silk Road 2.0: US Strategy toward China’s Belt and Road Initiative,” Atlantic

56

Sanjay Kathuria ed., A Glass Half Full: The Promise of Regional Trade in South Asia, WorldCouncil, October 2017, pp. 26-27.
Bank Group, 2018, p. 37.
57

Times of India, April 26, 2018.

58

The Economic Times¸ April 15, 2018.

59

Simon Shen, “All-rounded Sino-Indian Competition?: China’s Belt and Road Initiative and its
Implications for South Asia,” in Jagannath P. Panda and Titli Basu eds., China-India-Japan in
the Indo-Pacific: Ideas, Interests and Infrastructure, Institute for Defence Studies and Analysis,
2018, p. 81.

60

Nikkei Asian Review, April 20, 2018.

61

Xiaoping Yang, “China’s Perceptions of India as a Nuclear Weapons Power,” Regional Insight,
June 30, 2016.

Column90

1

The Express Tribune, January 27, 2016.

2

Dawn, March 15, 2017.

3

Dawn, May 25, 2017.

4

Pakistan Today, January 6, 2018.

5

The Express Tribune, November 25, 2016.

6

Business Recorder, January 23, 2017.

7

Virginia Marantidou, “Revisiting China’s ‘Strings of Pearls’ Strategy: Places ‘with ChineseNotesCharacteristics’ and Their Security Implications,” Issue & Insights, Vol. 14, No. 7, June 2014, p.
12.
8

Pakistan Today, January 6, 2018.

9The Washington Times, January 4, 2018.

10

South China Morning Post, January 5, 2018.

Chapter 4
1

The fourteen nations in the South Pacific are Kiribati, the Cook Islands, Samoa, the Solomon
Islands, Tuvalu, Tonga, Nauru, Niue, Vanuatu, Papua New Guinea, Palau, Fiji, the MarshallIslands, and the Federated States of Micronesia.

2Michael O’Keefe, “The Strategic Context of the New Pacific Diplomacy,” in Greg Fry andSandra Tarte eds., The New Pacific Diplomacy, ANU Press, 2015, pp. 130-131.

3

Fiji Times, May 18, 2018.

4

Peter J. Connolly, “Engaging China’s New Foreign Policy in the South Pacific,” Australian
Journal of International Affairs, Vol. 70, Issue 5, 2016, p. 13.

5

Post Courier, June 25, 2018.

6

Terence Wesley-Smith, “China’s Rise in Oceania: Issues and Perspectives,” Pacific Affairs, Vol.
86, No. 2, June 2013, pp. 360-361.

7

Masaaki Yatsuzuka, “Chugoku no Taiheiyo Toshokoku e no Shinshutsu to ‘Ittai Ichiro’ Koso
[China’s Advance into the Pacific Island Countries and the Belt and Road Initiative],” NIDS
Commentary, No. 73, May 25, 2018, pp. 1-2.

8Denghua Zhang, “China’s Diplomacy in the Pacific: Interests, Means and Implications,” Security
Challenges, Vol. 13, No. 2, 2017, pp. 41-42.

9

Yatsuzuka, “Chugoku no Taiheiyo Toshokoku e no Shinshutsu to ‘Ittai Ichiro’ Koso,” p. 2.

10Ankit Panda, “China to Gift Hydrographic and Surveillance Vessel to Fiji,” The Diplomat, July18, 2018.

11

Radio New Zealand, July 18, 2018; Xinhuanet, July 15, 2018.

12

ABC News, April 10, 2018.

13

Connolly, “Engaging China’s New Foreign Policy in the South Pacific,” pp. 2-4.

14

CNN, August 9, 2018.

15

Bastien Vandendyck, “Le développment de l’influence chinoise dans le Pacifique Océanien,”
Asia Focus, Institut de Relations Internationales et Stratégique, No. 61, February 2018, p. 23.

16

U.S.-China Economic and Security Review Commission, “China’s Engagement in the PacificIslands: Implications for the United States,” June 14, 2018, pp. 11, 19.

17

Le Figaro, May 3, 2018.

18

Les Echos, May 3, 2018.

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