China’s relations with its many neighbors have undergone significant change over the past two years. A decade of warming relations with most of them, encapsulated in the phrase “China’s peaceful rise,” have become more complicated for reasons which have more to do with regional and global circumstances than any specific changes in Beijing’s policies.
The “peaceful rise” period dates from the 1997-99 Asian financial crisis when China was seen to be a helpful by not devaluing its currency – though it had devalued two years previously. This helped crisis countries recover on the basis of rapid export-led growth, since huge currency devaluations made their exports relatively cheap. China also benefited in the wake of the crisis from Asian resentment at attempts by the IMF and other western agencies to impose economic reforms.
The next phase of China’s “peaceful rise” was characterized by the rapid growth of trade both in anticipation of and then subsequent to its entry into the World Trade Organization in 2001. Some Southeast Asian countries worried that the massive inflow of foreign investment into China, much of it for export processing, damaged their own prospects for attracting such investment which had driven their rapid growth in the two decades before the crisis. But with their own trade with the West continuing to grow and their current account surpluses swelling, China’s rise was seen more as an opportunity than a threat.
China’s demand for raw materials began to rise, and the country started to play a much bigger role in East Asian manufacturing systems that increasingly underpinned world trade. Further strengthening ties was that China’s opening was an attraction for ethnic Chinese who orchestrate much of Southeast Asian business. For Japan and South Korea, China provided not just a new low-cost location for offshore manufacturing for export but an increasingly important market for capital goods and high-end consumer durables. For some neighbors, it also became a huge source of tourists.This period was further characterized by a gradual increase in China’s participation in regional organizations such as the Asian Development Bank.
Meanwhile, at the more overt political level, the rise in China’s stature in the region was greatly assisted by the post-2001 US pre-occupation with wars in Iraq and Afghanistan and its so-called “war on terror,” which to some critics seemed at times to be a war on Islam in general. These initiatives not only reduced the priority that the US gave to its strategic position in East Asia, but also soured relations with many of America’s traditional friends in the region. At the same time, Japan, the former major Asian power, was mired in self-doubt and economic problems, and inward-looking politics kept it from engaging with Southeast Asia as effectively as China or even South Korea.
Other regional conflicts worked to strengthen China’s relations with neighbors. The government in Myanmar, the object of economic sanctions by western countries, naturally looked to China for political, military and trade support. China meanwhile had good reasons for cooperating, both the economic gain to be had from helping Myanmar’s central government with military equipment and development projects, and its concerns about the escalation of the problems Myanmar experienced with minority groups inhabiting regions along its border with China.
Similarly, China found not only mutual economic interests with Russia and central Asian neighbors such as Kazakhstan with their huge natural resources, but also common political interests – with the central Asian republics in combating Islamist movements and with Russia in opposing US assumptions. These interests were formalized in the Shanghai Cooperation Organization in 1996.
So what has changed over the past two years to alter perceptions of China’s “peaceful rise”? In many respects, relations continue to deepen as Chinese companies invest abroad or undertake infrastructure projects building ports, railways and power stations. But there has been a clear change: China is no longer seen as the innocuous exporter that is interested primarily in enriching its people, not in exerting its influence.
The first reason is that China is now seen not merely as an upcoming Asian power but as a global power, second only to the US. That inevitably means on some issues China’s national interest is better served by global than regional considerations – its currency policy, for example. At the economic level it means big investments in Africa, Latin America and Europe as well as Asia.
Next is the rapid growth of China’s military power, particularly its naval capability. This may be no more than commensurate with its economy, its size and its troubled borders. But for neighbors which mostly have long had some military links with the US – such as Japan, South Korea, Singapore and the Philippines – China’s military rise poses issues of how to re-balance their own positions.
This issue is particularly awkward for Japan, which invaded China only 75 years ago and is still actively disputing rights to islands and hydrocarbon-rich seabeds in the South China Sea. In the case of South Korea, excellent trade, investment and cultural relations with China have been partly shadowed by provocative acts by North Korea, China’s ally.
Military and sovereignty issues have also come to the forefront in the South China Sea, where countries including China, Vietnam, the Philippines and Malaysia have clashed over island and rock ownership, and seabed, fishing and navigation rights. Their claims result from differing interpretations of history: Chinese claims are well established by Chinese documents and discovered artifacts. But the peoples of what are now Indonesia, Philippines, Malaysia and central Vietnam had earlier been the principal seafarers in the region, the main link from East Asia to India. Their people colonized Madagascar a thousand years before China’s Zheng He made his famous treasure ship voyages around the Indian Ocean to the east coast of Africa.
This divide over history reflects a cultural divide in Asia today. Vietnam is a different case with its Chinese cultural links, but it also has a history of difficult relations with China and a strong nationalist temperament.
The concerns of these littoral Southeast Asian countries have all been expressed in terms of improving their relations with a US which is seeking to focus more on the western Pacific as it extricates itself from its Middle East wars. Meanwhile, political change in Myanmar is strengthening its ties with the west, India and ASEAN, a rebalancing which, while not aimed at China, makes the China connection less important than in the recent past.
None of these shifts in neighbor’s view of “peaceful rise” can take away from the fact that China’s relative strength will continue to grow and that of the West to weaken. But that process creates complexities for the middle and small powers of East Asia as they try to balance their relations with each other and with China, the US, India and Australia.
Other important factors in the increasingly complex equation include the future of relations between the two Koreas, Japan’s focus on naval capability and the role of Russia, which is reviving its longstanding links with Vietnam and Indonesia and making an effort to partially rebuild its naval capability in the Pacific. Taiwan is yet another factor as it remains to be seen whether cross-strait ties will continue to improve or soon reach a plateau.
Last but by no means least is the impact of China’s domestic politics on its foreign and military policies. Will China become more nationalist? More inward-looking? More plural? More or less interested in the ethnic Chinese communities in Southeast Asia? The number of variables makes prediction impossible other than to say that the stronger China becomes, t
he more interest other players will have in trying to set limits to it.