China's grip on Southeast Asia tightens as U.S. influence wanes

At the opening of a conference on Chinese politics in Hanoi late last year, the Vietnamese host was quick to reassure the delegates. "Talking about a country's political system," she said, "is not the same as interfering in a country's political system."

Few countries know China as well as Vietnam and are as adept at handling it, with skills learned over hundreds of years of managing cross-border trade and skirmishes and, sometimes, war -- on land and at sea.

Yet the fact that the Vietnamese felt compelled to open a closed-door talkfest on Xi Jinping and his mastery over the Chinese Communist Party with a disclaimer underlines how southeastern nations are struggling with Beijing's growing strength and assertiveness.

U.S. President Joe Biden will travel to Vietnam in the coming weeks in an effort to upgrade Washington's ties with Hanoi and provide the country with additional weight to balance relations with Beijing.

Southeast Asia is the cockpit of a geopolitical rivalry between China and the U.S. It is a region that Beijing considers to be its backyard and natural sphere of influence, but which Washington, along with its allies and partners, is determined to contest.

Each of the 10 member states of the Association of Southeast Asian Nations has its own bilateral dynamic -- and set of problems -- with China.

China is the biggest trading partner of all 10 and the largest single provider of development aid to the region, dispersing an annual $5.5 billion or so in real terms since 2015. China's economic strength, and its high-profile investments in the region under the banner of the Belt and Road Initiative, inevitably raise the question: Is a post-American world in Southeast Asia inevitably a Sinocentric one?

On top of deepening economic links, Beijing is attempting to embed an immutable cultural narrative into regional relationships, based on the idea that China and fellow Asian nations should naturally work together. That means excluding outsiders, like the U.S.

General Li Shangfu, China's defense minister, said at the Shangrila Dialogue in Singapore in early June that China was bound through "geography, culture and family bonds" to its neighbors. "We treat each other like brothers and sisters," he said.

There is, however, another side to China's relations with its near neighbors.

Beijing is embroiled in multiple, seemingly intractable sovereignty disputes with surrounding countries, mainly over maritime boundaries, and faces charges of political meddling through ethnic Chinese communities. Beijing's mistreatment of its Uyghur Muslim minority in Xinjiang rankles in Islamic states like Indonesia and Malaysia.

Indeed, General Li's remark at the Shangrila conference prompted not warm applause but a scatter of guffaws and catcalls.

Li's speech was followed by hostile questions from Filipinos and Vietnamese in the audience, some of whom were angry at incursions by Chinese vessels into their sovereign waters. Li brushed their questions aside.

Balancing act

Learning how to deal with more powerful neighbors and interlopers is nothing new for Southeast Asia. As the late Australian foreign policy scholar Allan Gyngell wrote, the nations have all "brought to their statecraft centuries-long experience of responding to and absorbing the clashing interests of dynasties and empires," from China, India, Europe and, most recently, the U.S. and Japan.

But rarely have the countries faced the stark dilemma that they face today, of having to choose in big and small ways between two superpowers, which are tied through trade but have radically different governing systems and regional agendas.

The region's struggle to deal with a rising China -- to embrace the economic benefits while minimizing political interference -- was evident during my recent trip around Southeast Asia and multiple meetings with top policymakers and scholars.

Many ministers, officials and academics are highly critical of China in private and often urge their interlocutors to speak frankly about Beijing's behavior. In public, they are, by and large, much quieter.

There are exceptions. The Philippines has embraced a closer relationship with Washington since Ferdinand "Bongbong" Marcos became president in June 2022, going out of its way to highlight what it says are regular incursions into its sovereign waters by Beijing's vessels.

On some occasions, Vietnam allows its disputes with Beijing to be played out in public, as a way of pressuring China and harnessing relationships with Beijing's rivals. Mostly, however, Hanoi works behind the scenes, through its ruling Communist Party's close ties with its counterpart in Beijing.

The countries that do speak up are realistic about where it gets them. "In 2022, we issued 198 note verbales (diplomatic complaints) about China's behavior in our waters," said a senior Filipino diplomat. "But whenever we call up the hotline with Beijing, nobody answers."

The 'ASEAN way'

A surefire way to track the new regional politics of Asia is to watch how regional nations talk about the two competing superpowers.

Many regional leaders and their officials, and local scholars, are willing to criticize the U.S., as doing so comes at little diplomatic and economic cost. With China, it is the opposite. In Southeast Asia, officials and scholars have increasingly internalized the dangers of publicly speaking out against Beijing.

"There is a clear asymmetry of incentives" for regional leaders and scholars, says Richard Heydarian, of the University of the Philippines, Manila.

"Speaking tough vis-a-vis the West often allows them to both burnish their 'nationalist' credentials at home as well as solicit positive attention from Western counterparts," he said.

"Meanwhile, openly criticizing authoritarian superpowers could mean, at the very least, loss of access and grants or, worse, ending up as a target of disinformation campaigns and attacks by local proxies. This is true even in broadly West-leaning countries such as the Philippines."

An adviser to the Malaysian foreign minister lamented that Kuala Lumpur should be complaining to Beijing about the South China Sea, Xinjiang, BRI infrastructure problems and Jho Low (a Malaysian fugitive believed to be in China). "But we don't," the adviser said, speaking on the understanding that he would not be named. "We approach China in the 'ASEAN way.' In other words, we don't make any noise in public."

Sticking together?

This reticence is in part an exemplar of the "Asian values" of the kind that were espoused in the 1990s by Singapore's Lee Kwan Yew and Malaysia's Mahathir Mohamed, both prickly but intellectually formidable leaders who used the idea to batter critics of their governments.

The idea that "Asia should be run by Asians " -- that it should conduct diplomacy collegiately and quietly among its own officials -- long had currency in the region. The notion dates back to colonial times and tracks all the way to the postwar era of Pax Americana, during which the U.S. was the most powerful force in the region.

The idea had strong support in Japan for many years, though less so now. The capital of Asia once might have been Tokyo. Now, it is firmly in Beijing. Having overtaken Tokyo, Beijing would now like to push the U.S. off its dominant perch in the region as well.

China is right that it is connected to the region through "geography, culture and family bonds," as General Li said in Singapore in June. Every Southeast Asian nation has a sizable ethnic Chinese population. Geography is also a potent factor.

Wang Yi, China's most senior diplomat and a Politburo member, delivered a more racially tinged version of Asian solidarity at his trilateral meeting with Japanese and South Korean foreign ministers in Qingdao earlier this month.

"No matter how yellow you dye your hair, or how sharp you make your nose, you'll never turn into a European or American, you'll never turn into a Westerner," said Wang, who heads the ruling party's foreign affairs commission. "One needs to know where one's roots are."

Wang emphasized the exclusiveness of the club that he was proposing: "Only a region that is united and self-reliant can eliminate external interference and achieve sustainable development," he said.

However self-serving Wang's statement may have been, such ideas can pack more of a punch than China's critics like to acknowledge, as residual anti-Western, anti-colonial sentiment retains real force in regional politics.

But the way the region tiptoes around China is less about "Asian values" and more about raw power, and what the geopolitical market will bear. "China pretends to be an equal, but it insists on having its 'major power interests' served," an Indonesian Foreign Ministry official said. "If we were shy about Russia's invasion of Ukraine, what do you think we will say about Taiwan?"

Beijing has shown it is willing to impose costs on nations that displease it by introducing punitive measures against Japan, South Korea, the Philippines, Vietnam and Australia, to name a handful, in the past decade. China's narrative is underpinned by the belief, propagated by Beijing itself, that its dominance of Asia is inevitable, and resistance to this historical trend is futile. Or, to answer the question posed at the start of this article in the affirmative, the post-American order in the region will be Sinocentric.

The development finance battle

An examination of the regional power balance -- military, diplomatic and economic -- however, shows a much more complex picture.

A good proxy for the economic battle playing out in Southeast Asia is development funding, as it represents the level of commitment of foreign governments, and, in the case of China, the party-controlled, state-owned enterprises, to building a stake in the region.

Here, according to recent research by the Lowy Institute in Sydney tracking development spending and aid in Southeast Asia over six years from 2015, the figures show a region that is highly contested, rather than dominated by China.

Beijing was the region's largest development partner during this period, but most of the funds it disbursed were concentrated in three countries: Indonesia, Laos and Cambodia. About 90% of China's loans were non-concessional, and nearly all were used to finance infrastructure.

Traditional partners, including advanced economies like Japan, the U.S., Germany and more recently South Korea, "provide more balanced support across the region and development sectors, with a heavier focus on governance," the Lowy report says.

China also promises much more than it delivers. From 2015 to 2021, China signed projects in the region worth about $12 billion a year, which was more than double the amount of money actually disbursed. "China is consequently by far the dominant player in terms of commitments across most infrastructure sectors," according to Lowy, "but in terms of disbursements or projects delivered, China faces significant competition."

Often forgotten in geopolitical calculations, the World Bank and the Asian Development Bank (ADB) remain large providers of loans in the region, just behind China, with much of their funds directed to poorer countries. The ADB played an outsized role in providing funds during the COVID pandemic, when China went financially missing.

In recent years, the biggest trend, in the region and globally, has been the sharp fall in Chinese lending. COVID played a role, but so did Beijing's mounting problems as an overextended creditor in Africa and Asia, and internal criticism at home about BRI corruption and waste.

Chinese investment and lending in Southeast Asia, like the Chinese economy itself, has yet to find a post-COVID settling point. Beijing will remain a significant player whatever happens, but the frothy, early days of the BRI are behind us.

The sharper focus on the region from the U.S., Japan and South Korea, and also potentially Australia, which is preparing a new regional economic engagement strategy to launch in September, means Beijing will not have the field to itself.

Still, it may be difficult to shift the sense of inevitability in Southeast Asia that China will emerge as the dominant force in the region.

"History is never preordained, but there is an increasing fatalism in Southeast Asia about China's rise to become a regional hegemon," said Ben Bland, the director of the Asia-Pacific program at Chatham House in London. "If Southeast Asian nations want to prevent this from happening, they will need to develop a stronger collective bargaining position, which has not been possible in the past because of their reluctance to pool sovereignty in the way that, say, the European Union does."

The stability of the leadership in many ASEAN nations has probably helped Beijing sell its message and solidify ties.

The Sultan of Brunei, Lee Hsien Loong of Singapore, Hun Sen (who effectively handed over office to his son in Cambodia after managed elections in July), Joko Widodo of Indonesia, Prayut Chan-O-Cha of Thailand (who is due to retire) and Nguyen Phu Trong of Vietnam have all been in power for most of Xi Jinping's time in the highest office.

"To some extent, the relatively high degree of continuity in Southeast Asian elite politics has aided relationship building with senior Chinese leaders," said Bland.

There are a number of wild cards, which mostly favor Beijing. The most important is the seriousness and staying power of Washington's commitment to Southeast Asia, as Trumpian domestic politics increase pressure to pull resources home.

Southeast Asian nations' military alliances with Japan, South Korea, the Philippines and Australia have all been strengthened in recent years. The ability of the U.S. to commit more economic resources to the region, though, is limited.

While countries like Cambodia are acutely sensitive to being seen as subordinate to China, they seem resigned to playing that role. Few are caught up in the kind of ideological debates that prevail in Washington.

The catchphrase that one hears throughout Southeast Asia to describe foreign policy is "friends to all, enemies to none," which is another way of telling the U.S. the nations will sit out of any conflict.

"We don't see China from an ideological perspective," said one Indonesian official, "but as just another country."