On 3rd November 2016, the People’s Daily in China crowed happily that “State Department Official Struggles with Facts: As US Pivots to Asia, the Region Turns to China”. In a remarkable turnaround it seemed as if every South-East Asian leader was making a beeline to China in an effort to placate the Chinese leadership. First it was the Philippines President Duterte who set the ball rolling, followed by the Myanmar Defence Chief, General Min Aung Hliang and then the Malaysian PM Razak. Not far behind was the new Vietnamese PM, Nguyen Xuan Phuc who stressed to President Xi of China that “maritime cooperation through friendly negotiations” was the best way forward. Even Singapore reportedly declined to refer to the PCA ruling and the UNCLOS provisions in a joint statement when their PM visited India recently. The Thai generals turned towards China after their 2014 coup was criticized by Washington. None of the South East Asian leaders, it seems, remembered the PCA ruling on the South China Sea [SCS] dispute. Or was it diplomatic amnesia? It was only a few months ago, July 2016 to be precise, when the ASEAN FMs had voiced “serious concern” over “land reclamation and escalation of activities” in the South China Sea [SCS]. What has changed so dramatically that has allowed China to slip away from a totally disadvantaged position to one where most of the South-East Asian States are now abjectly toeing the Chinese line?
A foremost factor has been that neither of the two US Presidential candidates has supported the Trans Pacific Partnership [TPP] which means that, unless there is a dramatic reversal, this pivot [the TPP] of US policy in the Asia-Pacific is doomed to pass into history. As per Chapter 30 of the TPP ‘final provisions’, all countries need to ratify the agreement within two years of signing, or it shall enter into force 60 days after expiry of this period if at least six of the original signatories which account for 85%of the combined GDP of the original signatories approve. In other words, without US ratification of the TPP as its GDP is 40% of the total, the TPP initiative is doomed. Most South East Asian leaders have duly noted US policy shenanigans, as practiced by its leaders and have ostensibly come to the conclusion that it would be extremely unwise to annoy China under the given circumstances. If there is no TPP, what would the US economic profile in the Asia-Pacific look like?
Secondly, President Xi Jinping has very deftly used this opportunity to demonstrate that being “friendly” with China has certain distinct advantages. Take the Philippines and the Malaysian case as examples. President Duterte came away from his visit to China with loans and grants totaling US$13.5billion, a promise that the over one million illegal Filipino maids working in China would not be disturbed; and most important of all, China opened the gates to the Scarborough Shoal to allow Filipino fishermen a share of the lucrative fishing available there. China did not dilute its position on the Scarborough Shoal, but compromised on ground reality. The Philippines have a 64 year old security agreement with the US and the previous Filipino President had allowed US naval warships access to five bases for the first time since the end of the cold war.
The Malaysian PM signed 14 agreements worth about US$34.28 billion. China is Malaysia’s largest trading partner and has replaced the US to become the largest investor since 2015. In addition, Malaysia signed the first significant arms deal with China by agreeing to purchase 4 naval vessels to operate close to the Malaysian shore. But what has buoyed the Malaysian PM considerably, was the fact that the Chinese made no reference to the on- going US Justice Department investigation into Malaysia’s Sovereign Wealth Fund; where persons close to the Malaysian PM are alleged to have siphoned off US$ 1 billion to buy personal assets in the US. Thus in a few weeks, the Chinese demonstrated that showing the cheque book could cause even the closest US allies in South East Asia to wilt and perhaps move away from their pro-US orbits.
But it is time for caution also. The fact that the US is the world’s sole super power with the ability to reach and influence any part of the world just also cannot be wished away. The US remains by far the more important source of foreign direct investment into ASEAN. Last year US FDI into the region was US$ 13.6 billion, as opposed to China’s US$8.3 billion. But in diplomacy sometimes perception more than reality plays an important part. And the perception is that American public opinion just will not countenance any further US military engagement overseas, nor will public opinion favor that the US go to the aid of its Asian allies in their territorial disputes, until and unless the American mainland itself is under threat. The Chinese too realize this and therefore its diplomacy is orientated towards widening this drift away from the US.
President Xi Jinping has emerged strengthened from the 6th Plenum of the CCP, where he was designated as the “core” of the Chinese leadership. As he plans ahead for the next Party Congress due in autumn next year, the Chinese leadership has concentrated on reclaiming its “historic” rights to maritime territory as marked by the nine-dash line. China has sought to blunt the PCA ruling with a strategy aimed at “shelving” the dispute, maintaining its position; but allowing for “joint” development of resources in the disputed area. Thus both the Filipino President as well as the Malaysian PM, during their visits to Beijing, deferred to the Chinese position and did not press for the PCA ruling to be implemented in exchange for promised trade and investment deals. The stress now is on bilateral negotiations. A far cry from what was on the ASEAN table just a few months ago. China it seems is getting better at playing the geo-political game and using its very considerable economic heft for strategic gain.
Thus as the new US President assumes office in January 2017, the US has some very pressing issues to attend to. First it would have to convince the South East Asian leaders that despite not being able to ratify the TPP, it is here to stay and that its security umbrella is for real. It is indeed a tall order what with the Syrian crisis on hand as well as the pressing need to develop a viable strategy to engage the Russians. Meanwhile it would be prudent for other regional players to watch very carefully on going developments in the South China Sea area and not commit themselves till the counters of the evolving Sino-US relationship become clear under the new US leadership.