South China Sea is Beijing’s top foreign policy priority with developing nations, US think tank says

Southeast Asia is the top priority in Beijing’s foreign policy with the developing world despite its unresolved territorial disputes over the South China Sea, a US-based think tank said.

While the United States and China are competitors on the world stage and appear to be working separately, the two powers that are currently locked in a trade war, may be able to collaborate outside Asia where they have fewer overlapping interests, the California-based Rand Corp said in a study of China’s policies with the developing world.

Southeast Asia, with its close political, economic and cultural ties, is the most important developing region for China despite its long-standing territorial disputes with Vietnam, the Philippines, Malaysia and Brunei over the South China Sea.

China has been Asean’s top trading partner for the past eight years and also its third-largest source of foreign direct investment. In 2017 China’s trade with Asean was US$514 billion, with Vietnam, Malaysia and Thailand being its biggest trading partners, according to official figures from Beijing.

According to the Rand report, 21 of China’s 39 maritime trade routes and 60 per cent of Chinese trade pass by the Spratly Islands, a disputed group of islands claimed by China, Malaysia, the Philippines and Vietnam.

“Unlike other developing regions, China’s trade with the region is weighted much more heavily towards two-way trade in manufactured items rather than by China’s purchase of raw materials,” the report said.

“All 10 members of the Association of Southeast Asian Nations [Asean] are among the 57 founding members of the China-led Asian Infrastructure Investment Bank, which is widely seen as a vehicle for funding the ‘Belt and Road Initiative’.”