By Huong Le Thu
China’s applies simultaneously dual tactics of coercion and inducement to assert its position regionally and globally. Demonstrations in Vietnam and the Philippines only confirm that the harder China pushes, the more agitated responses from the coerced actors. Pursuing coercion tactics on individual actors is a long-term process and requires supportive conditions, like the case of Vietnam and the Philippines showed.
China’s applies simultaneously dual tactics of coercion and inducement to assert its position regionally and globally. In its direct neighbourhood – Southeast Asia – these practices are most evident in region’s collective response (or lack of it) towards some key security issues. As a result, the faith in the Association of Southeast Asian Nations’ (ASEAN) regional role and relevance are diminishing. The dual tactics combines the economic inducement through a variety of trade, infrastructure and investment projects with coercive action – be it threat of use of force or more diplomatic and psychological pressure.
Neighbouring countries, such as Vietnam, know that China has a long tradition of exploiting potential force for political purposes. An example close to date is the Chinese deployment on May 2, 2014 of the Haiyang Shiyou 981 (HYSY-981) oil rig – known in Vietnamese as Hai Duong 98 (HD-981) – within Vietnam’s claimed Exclusive Economic Zone (EEZ). The deployment provoked strong reactions in Vietnam and across the Asia-Pacific. The positioning of HYSY-981 by the China National Offshore Oil Corporation (CNOOC) 120 nautical miles off Vietnam’s mainland coast (and 18nm off Triton Island in the Paracel Islands group) sparked a national security alert. There existed a tangible threat of escalation into an open confrontation. The oil rig deployment was considered the worst incident in the South China Sea since China’s occupation of Mischief Reef in 1995 and also the worst incident in the Hanoi-Beijing relationship since the normalisation of ties in 1991. The incident drew global attention due to the high potential of escalation. The leaders of the U.S. and Japan expressed their concerns about the challenge to regional stability posed by China’s increasingly assertive maritime strategy at the Shangri-La Dialogue in Singapore in late May 2014 (Le Thu, 2016). I argue that this case can be seen as Vietnam’s partial attempt to counter-coerce with efforts to purse a coercive equilibrium by internationalising the incident and involving other parties. Beijing subsequently accelerated the removal of the oil rig in July after 10 weeks of intense standoff and international media scrutiny. The threat of potential costs of escalation remain a lasting coercive mechanism that China can further abuse even after the oil rig crisis was resolved.
The Philippines was another claimant that experienced China’s hard line politics in the maritime domain, including the Scarborough Shoal fishermen confrontations (Baviera, 2014). However, unlike Hanoi, Manila, having a formal alliance with the U.S., being less economically tied to China and in not sharing direct borders with it, has more room to manoeuver and arguably tried dismissing the coercion threat. The Philippines launched a formal legal case in the Arbitration Tribunal against China, claiming that the Professional Regulation Commission (PRC)’s nine-dash-line claims were a violation of the United Nations Convention on the Law of the Sea (UNCLOS). On July 14, 2016 the ruling was announced a favourable decision for the Philippines confirming that China’s claim does not have legal ground (PCA News Press, 2016). Contrary to the expectations of what an ostensible spirit of regional unity might suggest, instead of celebrating a fellow ASEAN member’s judicial victory, or expressing a sense of relief in having at least legal clarity after decades of dispute, the regional reaction was ambivalent. A hesitant reception, including from the Philippines itself, was accompanied by further divisions at the following Special ASEAN-China Foreign Ministers’ Meeting in June (Bloomberg, 2016a) and the ASEAN Foreign Ministers’ Meeting in July (Bloomberg, 2016b).
Individual coercion can invite pushback. Demonstrations in Vietnam and the Philippines only confirm that the harder China pushes, the more agitated responses from the coerced actors. Territorial disputes, but also some economic and environmental controversies, support the nationalist sentiments in those societies. As a result, societal pressure will push governments – even if to some degree disinclined to escalate – to have accountable responses to coercion. That said, Vietnam – on top of many considerations, including geographic, lack of formal alliances, economic ties and other political connections – is not a democratic political system, hence the societal pressure have its limit. The Philippines – although reassurance in the form of alliance with the U.S. – with the change of president to a populist leader has opted for economic boost from China, even at the expense of the territorial claims as well as the alliance with the U.S. Nevertheless, pursuing coercion tactics on individual actors is a long-term process and requires supportive conditions, like the case of Vietnam and the Philippines showed. Otherwise, strong coercion would result in costly counter-coercion, which in this case could potentially transform into an elaborated conflict – which is not necessarily within China’s tolerance.
Hence, there needs to be the other spectrum – the economic inducement. From that angle, China’s worldwide power projection has been largely successful. For the neighbouring Southeast Asian countries, China’s rise presents opportunities that may outweigh concerns. Along with the coercive signals, there are economic promises and inducements. The varying ratios of coercion and inducement are the source of the divergent options that the Southeast Asian states chose. However, one conviction is rather uncontested: their perception that, either way, China’s influence will prevail. The economic might of China is recognized rather unambiguously across the region – there is little if any contestation about this. It is fair to say that the Southeast Asian economies watch Chinese economic growth with some degree of anxiety, but certainly with admiration. “The belief that China’s economic importance in the region will translate into greater strategic clout seems self-evident. After all, the highest priority for Southeast Asian states is prosperity and economic growth” (Lee, 2015; 7). Given the level of development in Southeast Asia and common needs – foreign investment, market access and infrastructure – China’s wealth and might is very attractive. PRC-led initiatives outshine the ASEAN-led initiatives, including the ASEAN Economic Community (AEC), as the pictures of individual gains allegedly would top the collective regional ones. These have contributed to reinforcing China’s new role as a regional “provider”.
China remains the biggest trading partner of five of the ten ASEAN countries. As of 2015, trade with China constitutes 15.2 percent of ASEAN trade, only second to intra-ASEAN trade (24 percent) (ASEAN Statistics 2015). The ASEAN-China Free Trade Area (ACFTA) is another strong binding factor, along with several other ASEAN Plus and East Asian initiatives. For example, an East Asia Free Trade Area (EAFTA) – involving ASEAN Plus Three countries (China, Japan, and South Korea) – was first suggested in 2001 by the Asia Vision Group. ASEAN’s response to the China-driven process of EAFTA was the Regional Comprehensive Economic Partnership (RCEP), covering ASEAN Plus Six states (additionally India, Australia and New Zealand) in 2012. Nevertheless, China is still considered as playing the role of “dominant economic powerhouse” in RCEP (Kumar 2014), for this FTA network will further tie the ASEAN economies closer to China. While all ASEAN countries look forward to strengthening East Asian regional cooperation and increased trade networks like RCEP materialising, many of them also welcome other initiatives especially given that China is not the only power that is interested in exercising its influence in the region. The economic relations between China and Southeast Asian states go beyond trade: concessional project loans, grants for infrastructure projects, special economic zones and industrial parks etc. are often involved.
By the sheer scale of economy, China can create the impact with the way she manages trade deals. Either expanding or limiting the trade deals with a given country, China can in relatively short period of time create fluctuation and economic impact she wants to make. Both Vietnam and the Philippines have experienced economic punishment from China for enacting their maritime claims. One of the most often quoted cases of economic fallout from the Philippines’ standoff with China over the Scarborough Shoal in 2012 was the “banana war”. China boycotted the import of Filipino bananas overnight cause a damage for farmers estimated at $US 380 million and reaching 90 percent of banana production of the Mindanao region and potentially affecting some 200,000 livelihoods (Hingis, 2012). Similar tactics were applied to Vietnamese lychees in the summer of 2014 after Hanoi protested against Chinese oil rig. The season for lychee is short and usually some 60 percent of total production of lychee in Vietnam is directed at Chinese markets. That summer transports of lychee were stopped at the border and left to rot causing massive lost. Blocking agricultural product is a powerful tool, given that majority of Southeast Asian countries still heavily depend on agriculture.
Beijing’s new economic initiatives on a regional and trans-regional scale, such as Belt Road Initiative (BRI), more popularly known as One Belt One Road (OBOR 一代一路) and the Asian Infrastructure Investment Bank (AIIB) are very attractive, including for the Southeast Asian states. The OBOR was initially proposed in October 2013 during Xi Jinping’s visit to Indonesia. China has pledged $US 40 billion to revive economic cooperation and connectivity inspired by the ancient Silk Road trading routes. Along with the Asian Infrastructure Investment Bank (AIIB), which promises to provide for infrastructure in the Asia-Pacific, China embarked upon a strong economic “offensive” in the region (Summers, 2015). The AIIB’s future activities stretch beyond Asia-Pacific to parts of Europe, South America and Africa. It is thought to be a Chinese response to the International Monetary Fund (IMF), the World Bank and Asian Development Bank (ADB) that are dominated by American, European and Japanese interests. The AIIB has received considerable global attention, having almost 85 members at the time of writing (AIIB, 2016), but it has also sparked concern about China using its economic incentives to leverage its own political-strategic agenda.
There are indeed some concerns attached to Chinese economic presence in the region. Substantial economic benefits are not devoid of political expectations. This is well-observed in of the area of political controversies or disputed issues that China cares about, including territorial ones. David Arase pointed out that ASEAN states will “endorse her economic, political and security leadership agendas” (Arase, 2015; 21). Such forms of economic leverage create cleavages amongst the ASEAN members, because the benefits that China offers differ significantly from one country to another. China’s economic initiatives cannot be separated from the importance it assigns the South China Sea question. Thus OBOR’s strategic objectives are at least on par with the economic ones. Under the Maritime Silk Road initiative, new high-speed railways, motorways, pipelines, and sea ports are envisioned across the larger Asian region to reinforce China’s idea of “shared interests, destiny and responsibilities” (Zhao, 2015). It is very difficult for any country, especially the smaller Southeast Asian ones, to resist China’s economic appeal. Even those with conflicting territorial claims, like Vietnam or the Philippines, are keen to be involved with China when it comes to economic and development initiatives. A conditionality of their participation, however, will be some sort of compromise on their maritime claims.
China’s modes of coercion are sophisticated – a combination of threat and inducement in the right proportions because repetitive coercion would invite consolidated response. Repetitive inducement, on the other hand, is costly and likely not to be efficient. The proportion of coercion and inducement also needs to be varied in applying to a larger group. If all feel coerced, and hence threatened, it is likely to invoke joint effort and unity against a larger coercer. The sense of inducement, on the other hand, is a more effective divider.
This article has been adapted from the academic journal article “China’s dual strategy of coercion and inducement towards ASEAN”, The Pacific Review, January 2018.
Featured Image: China is in conflict with the Philippines. A Chinese broadcasting station team recently landed and flipped the Chinese flag. http://news.zum.com
About the Author
Dr. Huong Le Thu is a senior analyst at Australian Strategic Policy Institute and associate fellow at the Coral Bell School of Asia-Pacific Affairs, Australian National University. You can follow her work on Twitter: @le2huong
