Nations increase cooperation to curtail the People’s Republic of China’s territorial expansionism and threats to sovereignty
Dr. Mohan Malik
Adm. Philip S. Davidson, commander of U.S. Indo-Pacific Command (USINDOPACOM), testified in April 2019 that the People’s Republic of China (PRC) has effectively taken control of the South China Sea through military expansion in the region that includes secret island bases and construction of artificial islands. “In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States,” Davidson told the U.S. Senate Armed Services Committee.
In the past two decades, the Chinese People’s Liberation Army Navy (PLAN) continues to work to realize PRC President Xi Jinping’s goal of restoring “China’s rightful and historical position as the greatest maritime power.”
While the PLAN is militarizing the so-called first island chain of major archipelagos that extend from the East Asian continental mainland coast and include those stretching across the South China Sea, Beijing is buying off the small island states in the strategic second island chain which stretches from Japan through the Marianas and Micronesia in the Pacific Ocean. By 2020, China is projected to have the world’s largest naval and submarine fleets. Nearly two-thirds of the world’s major 50 ports are either owned by China or have received some Chinese investment. The PRC is continuing its base-buying spree to reinforce its offshore capabilities for commercial and strategic purposes, posting private security guards, noncombatant troops and providing arms to strategically located countries along sea lanes and maritime chokepoints.
The search for natural resources to fuel industrialization and domestic economic growth, overseas markets to dump manufactured goods, and forward bases to access and protect both are largely driving Beijing’s evolving maritime strategy. No other power matches the PRC’s grandiose ambitions. Claiming nearly 90% of the South China Sea and its resources exclusively for itself may be just the beginning. The PRC now refers to itself as a “near-Arctic state,” and describes the Arctic resources as the “commonwealth of mankind,” which must be shared.
PRC’s Two-Ocean Strategy
China’s maritime strategy is an integral component of Xi’s signature One Belt, One Road (OBOR) plan, which is inspired by 19th-century geopolitical thinker Halford Mackinder and maritime strategist Alfred Thayer Mahan. OBOR entails building continental land transport and trade corridors across Eurasia and developing a maritime rim port network to secure control of resources and markets. The maritime network is a logical culmination of the PLAN’s two-ocean strategy.
The PRC seeks to dominate the Pacific and become a resident power in the Indian Ocean. Retired Rear Adm. Yin Zhuo, for example, has called for building “at least five to six aircraft carriers” to maintain “two carrier strike groups in the West Pacific Ocean and two in the Indian Ocean.”
For Beijing, the Xinjiang-Gwadar railroad and pipeline and the Kunming-Kyaukpyu railway and pipeline constitute the two most critical veins of OBOR to provide access to the Indian Ocean and help Beijing overcome the risks associated with moving trade and energy resources through the Malacca Strait. Under the PRC’s Far Seas Defense doctrine, many PLAN strategists view Pakistan and Burma as constituting “the West Coast of China,” to mask any Malacca Strait strategic vulnerability.
Beijing is also building a marine expeditionary force aimed at waging amphibious warfare operations far from its shores. Apparently, Beijing wants to send a message that countries along the proposed maritime route — which promises a network of ports, railroads and coastal cities linking China with Asia, Africa and Europe — should look to China for economic growth and military security, and that any challenges to Beijing’s expanding sphere of influence will not be tolerated.
Allure of PRC Investment Traps
Given that the new great game is about supply chain geopolitics, major nations are vying for influence over the crucial industrial, technological and commercial nodes across the Indo-Pacific. In trade and commerce, most nations do not pick sides but play all sides. For countries that want to build factories, schools, roads and ports, as most emerging and advancing economies do, PRC capital and engineering offerings are enticing. The PRC’s economic heft also provides opportunities for small states to play major powers off each other to their advantage. For conflict-torn countries with autocratic regimes that cannot get funding from global financial institutions, PRC aid and investment offer a way out.
The PRC’s authoritarian fusion of state entities and corporations enables Beijing to marshal funds in a way that democratic countries often cannot match. The PRC’s cash-rich, state-owned enterprises (SOEs), backed by Chinese banks and other government institutions, can circumvent environmental, labor and human rights concerns and other international norms that, although well-intended, often prolong construction and increase costs. Chinese enterprises invested over U.S. $90 billion in OBOR countries between 2013 and 2018, the South China Morning Post newspaper reported in April 2019. Given the huge demand for infrastructure development in Asia and Africa, OBOR’s purported connectivity goals seem to conveniently align with regional connectivity plans. China has signed 173 cooperation deals with 125 countries and 29 international organizations as of April 2019, according to the state-run Xinhua News Agency.
Infrastructure diplomacy plays to China’s strengths while at the same time helping it reshape the Eurasian continent and move toward its goal of internationalizing the yuan. By inserting itself as an inevitable gatekeeper of the region’s emerging infrastructure network, Beijing also hopes to lure nations into China’s orbit and loosen U.S. alliances. The completion of the OBOR plan would give China access to resources, enable it to export excess industrial capacity and secure a forward strategic presence to project power.
Although significant numbers of countries seeking economic growth are tilting toward Beijing, some, however, are increasingly uncomfortable with what they perceive as Beijing’s “neocolonial diplomacy” that often ends in a trail of debts, IOUs and strategic entrapment in the form of long-term PRC presence. Just as European industrializing powers’ quest for resources, markets and bases led to the colonization of Asia, Africa and Latin America in the 18th and 19th centuries, China’s quest for overseas resources, markets, bases and mercantilism now poses major challenges to the sovereignty and independence of small and weak states in Asia, Africa and Latin America. Some OBOR projects traverse contested territories and waters and undermine territorial integrity and sovereignty.
PRC geopolitical considerations to acquire strategic footholds drive many of the infrastructure projects, not sound economics. As a result, the undertakings often fail to make money, instead producing “white elephant” projects that saddle host countries with heavy debts. The greater the debt, the more leverage Beijing acquires in negotiating exclusive ownership or access to land, resources, ports and airports.
Moreover, PRC SOEs borrow from Chinese national banks in renminbi or yuan to build projects with Chinese labor and technology in strategically located countries with loans at high interest rates of 4% to 6% and expect host countries to pay them back in U.S. dollars. Beijing often seeks overseas bases (50- to 99-year leases with 75% to 85% ownership stake) to protect its overseas interests, assets and nationals and project power. As in the case of Sri Lanka and Djibouti, China’s economic domination resulted in the loss of sovereignty over host nation strategic assets, including ports, airports and critical infrastructure. One Chinese company, UDG, for example, controls nearly 20% of Cambodia’s coastline on a 99-year lease, prompting former Australian Foreign Minister Gareth Evans to describe Cambodia as “a wholly owned subsidiary of the PRC Inc.” Pakistan’s and Kenya’s examples show that rising debts often force nations to seek International Monetary Fund bailouts to pay off Chinese loans. In short, Burma, Kenya, Maldives, Malaysia, Montenegro, Sri Lanka and others have expressed unease with unequal deals that burden them with high-interest loans for buying Chinese products, services and labor, yet do not alleviate unemployment, corruption or environmental degradation.
Furthermore, China’s infrastructure largesse and economic domination of small countries constrain debtors’ foreign policy choices concerning such issues as the South China Sea, Taiwan, Tibet, the Uighur concentration camps in Xinjiang and unfair trade practices. For example, through its economic stranglehold over Cambodia and Greece, Beijing has come to possess an effective veto power over disputed South China Sea matters and the European Union’s (EU’s) stance on human rights and trade issues. China’s growing economic domination over small states has had the effect of weakening regional cohesion and organizations, including the EU, the Association of Southeast Asian Nations (ASEAN) and the Pacific Islands Forum. Economic coercion via controlled market access has eroded bilateral relations with India, Japan, the Philippines and South Korea, among other nations.
In addition, the so-called China model undermines fragile democracies and promotes authoritarianism and corruption, and its surveillance technologies curb freedoms. Easily available Chinese loans are the new opium for the corrupt elites in fragile economies with dysfunctional political systems. Concerns over China’s stranglehold over local economies often generate domestic pressure for political change. Beijing’s expanding economic footprint often weakens democratic institutions, favors strongman politics, shifts civil-military relations and increases corruption. Moreover, the China factor becomes a polarizing issue in times of regime change or general elections as seen recently in Burma, Indonesia, Maldives, Malaysia, Pakistan, Sierra Leone, Sri Lanka and Zimbabwe.
Negative portrayals of the Chinese government are rising in conjunction with its increased involvement in other countries. Economic dependency begets despondency, as history reveals. As small and weak states seek to play one great power against the other, they often fall prey to intrigue and external intervention in domestic affairs. In Asia and Africa, the PRC is perpetuating what powerful European powers did to China and others in their moment of weakness in the 18th and 19th centuries. Xi’s OBOR plan appears to have morphed at best into “One Base, One Road” and at worst into “One Debt, One Road” (ODOR). The result is the return of mercantilism, protectionism, trade wars and a Cold War-like base race to build, acquire or access forward bases from the Western Pacific to Western Indian Ocean.
Although Beijing claims to be building infrastructure for connectivity to promote a “community of common destiny” for growth and prosperity, it now faces major pushback from not only small and middle powers along the intended OBOR route but also from the EU, India, Japan and the U.S. Several countries that attended the first OBOR forum in 2017 chose not to participate in the second such forum in 2019. These include Argentina, Fiji, Poland, Maldives, Spain, Sri Lanka, Turkey and the United States.
In response to growing criticism of OBOR, Beijing promised course correction at the second forum held in April 2019 by promoting corruption-free, environmentally conscious and transparent ventures. The resistance against Xi’s project of the century is no longer limited to Western countries or China’s Asian rivals but has spread to countries such as Burma, Maldives, Malaysia, Nepal, Pakistan, Sri Lanka and Thailand.
Skeptics, such as Wang Jun, a former director of the Information Department at the China Center for International Economic Exchanges, argue that Beijing will only “make tactical adjustments, not strategic.” Therefore, the EU, India, Japan, the U.S. and others should jointly insist on supporting only those OBOR connectivity projects that follow these rules:
- Uphold territorial integrity and sovereignty.
- Provide funding by multilateral financial institutions like Asia Infrastructure Investment Bank, Asian Development Bank, not just Chinese banks, and follow international lending standards and norms.
- Promote good governance and curb corruption.
- Generate employment via use of local, not Chinese, labor.
- Invite competitive bidding from all, not just Chinese SOEs, in a transparent manner.
- Offer fiscal sustainability and commercial viability.
- Don’t incur unsustainable debt burdens that lead to strategic entrapment (via long-term leases) or constrain foreign policy choices.
- Allow dispute settlement in international courts, not just Chinese courts.
- Promote environmental responsibility.
Mercantilist policies, unresolved territorial and maritime disputes and strategic mistrust of China present Australia, the EU, India, Japan and the U.S. with strategic opportunities.
Many nations are already offering better alternatives to the PRC’s OBOR. Their programs enable stable development without financial and political debt traps. Examples include Japan’s Asia-Africa Growth Corridor, India’s Security and Growth for All in the Region, Indonesia’s global maritime fulcrum, the EU’s Europe-Asia Sustainable Connectivity plan, and the U.S.’ free and open Indo-Pacific strategy.
Beijing’s efforts to acquire sea-denial and sea-control capabilities have prompted leading maritime powers, including Australia, India, Japan and the United States, to cooperate in unprecedented ways to ensure that the South China Sea and the northern Indian Ocean do not fall under PRC hegemony.
A complex web of security relationships is beginning to emerge in the Indo-Pacific. The future of regional security cooperation is likely to be in the trilateral or triangular, quadrilateral and multilateral formats. Over time, various trilateral (for example, Japan-Vietnam-the Philippines, the U.S.-Japan-India, Australia-Indonesia-India, India-Japan-Vietnam, France-Australia-India) and informal multilateral efforts to constrain China’s maritime expansion could coalesce into a maritime coalition or the Indo-Pacific Maritime Partnership. Should Beijing continue with its unlawful activities in the South China Sea, a multinational task force may be needed to keep the South China Sea open and free, and more importantly, to disabuse Beijing of the notion that “the South China Sea belongs exclusively to China.”
Examples of such coalitions are already emerging. Australia, India, Japan and the U.S. are now coordinating on tactics and strategy to offer an alternative vision of development finance to ensure that the end of China’s century of humiliation does not usher in a century of humiliation for poor developing counties led by corrupt, unsavory regimes. Consequently, China’s power-and-hierarchy-based OBOR vision is now pitted against the law- and rule-based visions for a free and open Indo-Pacific.
Hopefully, more countries, including New Zealand and Canada, will further join these efforts to help sustain the trilateral, quadrilateral and multilateral cooperation at the regional level required for a rules-based order that maintains a fairer competitive environment for all states regardless of size.
Preferred Options to the PRC’s One Belt, One Road
Australia: Expanding Security Partnerships
Australia has expressed concern over the People’s Republic of China (PRC) “ensnaring small Pacific states in a debt trap with ‘white elephant’ projects.” Canberra has taken steps to preempt Beijing’s moves to build fiber-optic cable from the Solomon Islands to Papua New Guinea (PNG) and Australia and build naval bases in PNG, Vanuatu and at Black Rock camp in Fiji. Australia has stepped up aid and diplomatic engagement with island states by allocating U.S. $2.18 billion in infrastructure loans and grants. Australia and the U.S. are jointly building the Manus naval base in PNG. Maritime cooperation (through joint naval exercises and patrols) with France, India, Indonesia, Japan, the Philippines, the United Kingdom and Vietnam is also increasing.
European Union: Countering PRC Connectivity
China’s maritime expansion and attempts to establish an empire of “exclusive economic enclaves” is bringing former European imperial navies — the French and British — back into Asia in defense of international law, notably this time with the support of their former colonies (Australia, India, Malaysia and Vietnam). In 2018, 27 of 28 European Union (EU) ambassadors in Beijing — except Hungary’s — denounced One Belt, One Road (OBOR) for not being in line with “international standards regarding the environment or labor,” hampering free trade and giving an unfair advantage to PRC state-owned enterprises. The EU sees Beijing pursuing a “divide and dominate” strategy as exemplified by the China-led 16+1 union (summits involving the PRC and Central and Eastern European countries such as the Czech Republic, Hungary and Serbia), which further weakens EU cohesion and regional unity. Beijing has had notable successes in luring small Southern and Central European countries (for example, Austria, Greece, Hungary, Italy, Portugal and Serbia) into the OBOR orbit, prompting the EU to call for a tougher stand on China to address mounting trade, technology and geostrategic concerns. In March 2019, the EU, for the first time, labeled China an “economic competitor” and “a systemic rival promoting alternative models of governance.” The EU has proposed the Europe-Asia Sustainable Connectivity plan of 300 billion Euros from 2021 to 2027 for investors building infrastructure projects.
India: Acting East, Looking West, Providing Secure Growth Plans
India, China’s old rival in Asia, is the only major country that boycotted the PRC’s OBOR forum in May 2017, and again in April 2019. New Delhi takes comfort that many of India’s initial concerns about the viability and sustainability of OBOR projects have not only been vindicated but also have shaped other countries’ criticisms of OBOR. Several countries, such as Burma, Malaysia, Maldives, Pakistan, Sierra Leone, Sri Lanka and Thailand, have either canceled or renegotiated contracts with Chinese companies over the past couple of years. Given Beijing’s refusal to address India’s concerns regarding the China-Pakistan Economic Corridor (CPEC), which passes through disputed Kashmir and is seen as undermining India’s sovereignty and territorial integrity, New Delhi remains adamantly opposed to the CPEC. However, India supports east-west corridors that connect India with Burma and Thailand (via the India-Myanmar-Thailand highway, the Kaladan Multimodal Transit Transport Project, and ports in Bangladesh and Burma). In the west, India has built a trade and transport (railroad and port) corridor with Afghanistan via Chabahar in Iran. India has reportedly committed U.S. $25 billion to U.S. $30 billion in credits and grants to its extended neighborhood from East Africa to Southeast Asia and offered an alternative vision to the PRC’s maritime rim port network with the Security and Growth for All in the Region project, declaring that the “responsibility for peace, prosperity and security rests with those who live in the Indian Ocean.” This is not only Modi’s riposte to Xi’s “Asia for Asians” rhetoric but also an attempt to revive India’s ancient trade routes and cultural linkages around the Indian Ocean region. Militarily, Beijing’s maritime network has prompted the Indian Navy to unveil a three-pronged strategy: fortifying its defenses in the Indian Ocean by acquiring privileged access to bases in Indonesia, Iran, Madagascar, Mauritius, Oman, Reunion and Seychelles; conducting joint naval exercises in the East and South China seas; and launching an ambitious naval expansion (from a 138- to 212-ship navy with three aircraft carriers and 24 attack submarines by 2030). As the People’s Liberation Army Navy (PLAN) goes south to the Indian Ocean, India’s Navy is increasingly going east to the Pacific Ocean. Faced with Beijing’s ever-expanding presence all around its periphery, India is tilting toward the U.S., Japan and other like-minded countries in a balancing-without-provoking posture toward China.
Indonesia: Becoming a Global Maritime Fulcrum
Malaysian leader Mahathir Mohamad’s critique of the PRC’s OBOR as “neocolonialism” coupled with the unresolved maritime disputes in the South China Sea induce caution in maritime Southeast Asia. Although Indonesian leader Joko Widodo sought to downplay Chinese-funded projects in recent elections, he will continue the current stance of attracting Chinese capital for development while reinforcing defenses around the Natuna islands against PRC encroachments and illegal fishing. As a counter to China’s maritime route, Jakarta has proposed a plan to make Indonesia the “global maritime fulcrum,” given the country’s location as a quintessentially Indo-Pacific state. As China continues with its maritime expansion in the eastern Indian Ocean, the Indonesia-Australia-India maritime trilateral, formed in 2014 in the aftermath of the PLAN’s first naval exercise in the Sunda Strait, could play a more activist role. Concerns about PLA naval expansion have already pushed Jakarta and New Delhi to cooperate on the Sabang port development project.
Japan: Extending Partnership and Asia-Africa Growth Corridor
Despite the hype over Chinese overseas investments, Japan still remains a major player in infrastructure development and a bigger international creditor. As a counter to China’s OBOR, Japan announced a U.S. $210 billion extended partnership for quality infrastructure, with very low interest rates (at 1% to 2% in contrast with Chinese interest rates of 4% to 6%), funded through the Asian Development Bank. Japan is increasing its aid and investments in building east-west corridors from Vietnam to Burma in competition with China’s north-south railroads to Southeast and South Asia. Significantly, the Japan International Cooperation Agency is funding ports in Bangladesh, Burma, Djibouti, Kenya, India, Madagascar, Mozambique and Oman. Japan set up its first post-World War II overseas base in Djibouti long before Beijing established its presence on the Red Sea. In addition, Tokyo unveiled the Asia-Africa Growth Corridor with India and advanced trade partnerships. Japan has also stepped up its naval cooperation with Australia, India, Indonesia, Malaysia, the Philippines, Sri Lanka and Vietnam as well as the U.S. Tokyo has offered Vietnam six patrol vessels worth U.S. $338 million, part of a U.S. $1 billion Japanese aid package to support Vietnam’s “maritime law enforcement capability,” and provided the Philippines with massive infrastructure aid — U.S. $8.66 billion over the next five years. For Indonesia’s undeveloped coastal areas, Japanese Prime Minister Shinzo Abe has pledged U.S. $640 million. Tokyo and Jakarta have also agreed to establish a Maritime Security Forum and 2+2 (foreign and defense ministers) dialogue.
U.S.: Developing a Free and Open Indo-Pacific
The U.S. National Security Strategy portrays China as a revisionist state engaged in predatory economics, with senior officials warning countries to beware “a new imperial power [offering] short-term gains for long-term dependency … reminiscent of European colonialism.” The U.S. regional strategy has transitioned from a pivot or rebalance to a free and open Indo-Pacific strategy. The principles of reciprocity and equality, not multinational corporations’ profits, now underpin the U.S.-China policy. While the world is open to China for business, China remains closed to the world. Beijing does not allow foreign investment or stake in strategic industries and critical infrastructure that its SOEs seek in other countries.
Under the U.S.-Japan-Australia infrastructure initiative and Build Act of 2018, the United States has set up a U.S. $60 billion International Finance Development Corp. to streamline joint infrastructure investments. The Indo-Pacific Economic Vision outlined with Japan and Australia aims to check China from leveraging its economic largesse to undermine democracies. U.S. President Donald Trump administration’s Asia Reassurance Initiative Act reaffirms old alliances with Australia, Japan, South Korea and the Philippines while calling for deeper ties with India and Taiwan. As strategic competition with Beijing intensifies, Washington has turned its attention to small island states in the Pacific island chain area, unveiling the Southeast Asia Maritime Security Initiative and plans to build a 355-ship navy to maintain a robust power balance. Trade, tariff and tech wars, the spotlight on China’s gross human rights violations in Xinjiang and elsewhere, intellectual property thefts and cyber espionage all seek to maintain maximum pressure at multiple points on China to change its behavior and moderate its ambitions.