News analysis

China's charm offensive on South China Sea claimants

Aim is to repair ties roiled by territorial disputes and focus on cooperation: analysts

Philippine President Rodrigo Duterte (far left) with Chinese President Xi Jinping during his visit to China last month. China has dished out billions of dollars worth of investments and loans during the recent visits of several leaders from Asean, in
Philippine President Rodrigo Duterte (left) with Chinese President Xi Jinping during his visit to China last month. China has dished out billions of dollars worth of investments and loans during the recent visits of several leaders from Asean, including Mr Duterte.PHOTO: REUTERS

They came in quick succession to visit, they criticised the West and praised the Chinese, and they all left with economic goodies.

The outcomes from recent visits by leaders of Malaysia, the Philippines and Vietnam - all of which have competing claims in the South China Sea with China - have led some to view them as part of China's new charm offensive towards Asean, targeted at claimants.

The aim is to repair ties roiled by the territorial disputes and keep the focus on cooperation rather than a ruling by an international tribunal in July that invalidated China's territorial claims, say analysts.

"We do not know for sure if these visits were deliberately packed together, but they look like a charm offensive," Jinan University's Sino-Asean expert Zhang Mingliang told The Straits Times.

"That is because they show a marked contrast in how China has handled relations with the Asean claimant-states. China likely adjusted its policy because it saw how the poor relations have hurt the country's interests and image."

Philippine President Rodrigo Duterte (left) with Chinese President Xi Jinping during his visit to China last month. China has dished out billions of dollars worth of investments and loans during the recent visits of several leaders from Asean, including Mr Duterte. PHOTO: REUTERS

China dished out multibillion dollars' worth of investments and loans during the visits of Malaysian Prime Minister Najib Razak, Philippine President Rodrigo Duterte and Vietnamese Prime Minister Nguyen Xuan Phuc, beginning in September. Over the past year, it has also deepened cooperation with Laos and Cambodia, both non-claimants and seen as Chinese allies.

  • Beijing's money diplomacy

  • China has handed out at least $81 billion worth of investments and loans to countries in Asean recently.

    Malaysia: Prime Minister Najib Razak signed 14 cooperation pacts worth RM144 billion (S$47 billion) during his six-day visit from Oct 31. These include their first major defence deal involving the sale of four Chinese littoral mission ships.

    The Philippines: President Rodrigo Duterte secured US$24 billion (S$33 billion) worth of funding and investment pledges on his four-day visit from Oct 18. China also cancelled a tourism advisory against the Philippines and lifted a ban on 27 blacklisted fruit exporters from the country.

    Vietnam: Prime Minister Nguyen Xuan Phuc, on his first visit to China from Sept 10 to 15, secured a US$250 million loan to partly offset the additional capital needed for a delayed urban railway project in Hanoi. The loan was among six cooperation pacts inked, though the total value is unknown.

    Cambodia: A total of 31 agreements, including soft loan deals worth some US$237 million, were signed on Chinese President Xi Jinping's two-day visit last month. Mr Xi also reportedly said China had decided to write off Cambodia's debt of 600 million yuan (S$123 million) last year.

    Laos: Both sides inked 20 agreements to promote railway, hydropower and other infrastructure projects during Chinese Premier Li Keqiang's visit in September. One of the deals will see Chinese banks granting loans for construction of the China-Laos Railway.

    Kor Kian Beng

On some of the visits, China also reportedly made concessions, like allowing Filipino fishermen to return to the disputed Scarborough Shoal, although this move cannot be put in writing as it would affect Beijing's claim to the area.

However, some, like foreign policy analyst Xue Li of the Chinese Academy of Social Sciences, do not see Beijing's latest moves as a mini charm offensive. He said China was carrying out its responsibility as a big country to help develop the region.

"We also believe in expanding the pie so everyone gets a bigger slice of it," he told The Straits Times.

Still, some Chinese media have seen the cooperation deals - including Malaysia's purchase of four Chinese littoral combat ships - and comments by visiting leaders as setbacks for the United States in its policy of rebalancing to Asia.

Datuk Seri Najib criticised former colonial powers for lecturing "once-exploited" states over domestic affairs, while Mr Duterte vowed "separation" from the US.

But observers say it is premature to say China has clinched a diplomatic win, though it has at least scored a public relations goal by improving ties and cooperation with the claimant-states. Brunei and Taiwan also have claims in the vital waterway.

For instance, analysts say practical considerations, like cost, may be the key factor why the Asean states inked some of the deals with China.

More importantly, these Asean states might be hedging their bets between the two major powers amid doubts over the US' ability to sustain its Asia pivot after its presidential election next week.

Singapore-based maritime security analyst Collin Koh of the S. Rajaratnam School of International Studies wrote in a paper this week that a 13 per cent cut to US$3.6 billion (S$5 billion) in Malaysia's 2017 defence budget might be one factor why it is buying Chinese vessels. They reportedly cost six times less than similar French-made ships.

Regional security expert Carl Thayer of the University of New South Wales said there is a demand- and-supply element as most Asean states cannot secure enough financial assistance from international lending agencies to meet infrastructure needs, while China is a major alternate source of funds.

"The trend clearly is to work with China across the board on economic, trade and investment matters, while at the same time discuss territorial disputes in the South China Sea on a bilateral basis," he said.

Also at play is domestic politics in the Asean states, say analysts.

For instance, Malaysia found a new impetus for closer ties with China from July after its relations with the US worsened when the Justice Department began investigations into its state investor 1Malaysia Development Berhad or 1MDB.

But challenges remain for China, say analysts. Analyst Ian Storey of the Iseas - Yusof Ishak Institute in Singapore said while South-east Asian states sign lucrative business deals and pledge good relations with China, "it doesn't mean they are about to compromise their sovereignty claims".

"Tensions have... subsided in the South China Sea and that is a positive development. But an incident at sea could trigger a spat between China and one of the other claimants at any time," he added.

A version of this article appeared in the print edition of The Straits Times on November 05, 2016, with the headline 'China's charm offensive on South China Sea claimants'. Subscribe