NEWS ANALYSIS

China continues S-E Asia charm offensive

Beijing moves to soften its image with maritime, trade agreements

ON MONDAY night, Chinese Premier Li Keqiang stopped by a small shop in Hanoi. The shop, which was about to shut, stayed open for its VIP customer.

As Mr Li bought some tea, he asked the shop owner not to give him a discount and said that "we are making a fair trade".

The exchange, which the Chinese state media highlighted with several photos of an affable-looking Mr Li in the shop, gave a sideways glimpse of China's latest efforts to soften its image and win over its neighbours anew.

In recent years, the region has grown leery of the country's assertiveness and territorial ambitions, particularly in the resource-rich South China Sea - a sentiment which Beijing has tried to soothe in the past two weeks.

At the East Asia Summit in Brunei, Mr Li called for claimant states not to let territorial disputes overshadow opportunities for economic cooperation.

A few days later, while on a visit to Thailand, he extended support for the kingdom's plans to build a high-speed rail network and pledged to grow imports of rice and rubber. Thailand has been finding it a struggle to raise the prices and exports of these two products.

Chinese President Xi Jinping made similar economic and political overtures when he visited Indonesia and Malaysia separately earlier this month.

But China's greatest challenge in mending regional ties lies arguably in Vietnam, where distrust stemming from historical enmity and recent flare-ups over the South China Sea disputes run deep.

China has occupied the Paracel Islands - known as Xisha to the Chinese - since 1974, after a brief war with Vietnam. In recent years, confrontations over this patch of sea have heated up.

Earlier this year, in June, over 100 protesters gathered at central Hanoi's Hoan Kiem Lake to hold anti-China demonstrations after Chinese boats allegedly collided with Vietnamese fishing vessels near the disputed Paracel Islands.

Against this backdrop, Mr Li earlier this week made a three-day trip to Hanoi from Sunday. He met the top Vietnamese leaders during the visit and expressed condolences to the late Vietnamese independence hero Vo Nguyen Giap.

Mr Li also oversaw the signing of agreements to form joint working groups to increase cooperation on the maritime, land and financial fronts.

Chinese state media hailed the maritime deal as a "substantial breakthrough" in the South China Sea row.

But analysts were more circumspect.

Vietnam National University lecturer Le Hong Hiep said that the latest maritime working group will be the third such group set up on South China Sea matters and it was far from clear whether it would be any more successful than the other two.

Professor Zhang Mingliang, who is a South-east Asian expert at China's Jinan University, acknowledged that it remained a tall order to break down mutual distrust between the two countries.

On the bright side, the Sino-Viet agreement on financial cooperation involves the promotion of bilateral trade and investment projects, and mutual acceptance of the Chinese yuan and Vietnamese dong in border trade, a welcome prospect given that Hanoi is eager to grow its economic ties with its neighbour.

Said Prof Le Hong Hiep: "Economic ties now constitute the most important aspect of bilateral relations as they are perceived to be bringing palpable benefits to both countries while serving as a cushion to absorb potential tensions arising from the South China Sea disputes."

On China's end, growing economic ties with regional neighbours would give it diplomatic advantage, said International Institute for Strategic Studies analyst Alexander Neill.

"It's pretty dexterous diplomacy, to inextricably bind neighbours into trade and maritime agreements," he said.

tanhy@sph.com.sg