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.

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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.

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“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’.”

According to the report, four countries in the region – Indonesia, Malaysia, Thailand and Vietnam – are central to Beijing’s interests.

“Indonesia, Malaysia and Thailand have not taken firm stances against Chinese territorial claims in the South China Sea, have friendly relations with China, and are among Asean’s largest, most developed economies,” the report said.

Vietnam, despite its stronger stand against Beijing’s expansionism in the South China Sea, still has strong ties to China given shared communist political ideology, the report said.

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But Beijing’s policy towards Southeast Asia was “largely one of divide and conquer”, it said.

While encouraging Asean countries with no disputes with China to stay on the sidelines, Beijing is dealing with dispute claimants on a bilateral basis in an effort to keep external players, such as the US and Japan, out of its game, it said.

“China is proceeding cautiously to prevent Asean countries from uniting against China. To dampen regional concerns of Chinese military strength, Beijing has opted to use its coastguard, not the PLA Navy, as the frontline actor in preserving Chinese territorial claims” in the South China Sea, the report said.

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China has upheld its claims in the South China while also increasing its military presence and promoting trade and investment, it said.

The report, which was published on Wednesday, comes at a time of growing tensions between China and the US. Earlier this month, US vice-president Mike Pence slammed China’s aggressive behaviour following a near collision between a Chinese destroyer and an American warship.

US Defence Secretary James Mattis is set to meet his Chinese counterpart Wei Fenghe on the sidelines of an Asean defence ministers’ meeting in Singapore on Thursday.