An Outlook onChina-Southeast Asia Relations in 2016

By Dr. Xue Li, Associate Professor (Senior Research Fellow), Director of Department of International Strategy at Institute of World Economics and Politics(IWEP), Chinese Academy of Social Sciences(CASS) and Dr.Xu Yanzhuo, Assistant Professor for Department of International Strategy, IWEP/CASS

China’s ties with the members of the Association of Southeast Asian Nations (ASEAN) remain stable and bilateral cooperation will likely deepen in the coming year.Anupgraded version of the ACFTA, was signed in November, 2015,. However, negotiations onthe Regional Comprehensive Economic Partnership (RCEP)amongASEAN members and the regional bloc’s existing FTA partnerswillmake limited advancesto finalize an agreement, because some countries, like India, is reluctantto further openup its domestic market andsome economies who have not established bilateral FTA, like China-Japan, S.Korea-Japan and India-Australia,are considered as another obstacle. Meanwhile, tensions in the South China Sea may continue to flareup in 2016, but not as intensely as in 2015. The main reason to regional tension will shift from land reclamation to Freedom of NavitationOperartionlaunched by the US.Generally, China-Southeast Asia relations will be improved next year, more economic and culturalcooperation will be conducted between China and ASEAN. Multilateral security cooperation,like joint military exercise based on the existing military exercise between China and Malaysia,are probably to be hold. And China is willing to keep SCS disputes in a stable situation.

China is likely to accelerate its One Belt, One Road strategy, which will inevitably require cooperation with ASEAN countries. Negotiations on the Code of Conduct in the South China Sea might make some progress in 2016. If Tsai Ing-wen, chairwoman of Taiwan’s Democratic Progressive Party,is electedtobeTaiwan’s leaderin January, she will no doubt pursues de jure independence. In this case, China’s maritime priority will shift to the East ChinaSea, especially, the Taiwan strait, which means China will take on a more restrained approach in the South China Sea: finishing construction on civilian facilities on extended reefs and rocks to provide public goods to the region, including the two lighthouses brought into service this year. However, the possibility of further massive land reclamation is extremely low.  (Note: Dear Eleanor, please keep my  original description ofTaiwanese leader and his/her authority.It seems to me that it is an author’s entitlement)

In the first half of 2016, the Arbitration tribunal will makedecision on the case launched by the Philippines. The tribunal is likely to support some of its claims, which could trigger a new diplomatic crisis between Beijing and Manila. At the same time, the United Stateswill likely support the Philippines, its treaty partner,to some extent, while ASEAN’s members will remain at odds on whether to support the international court’s decision.Laos, which maintains friendly ties with China, will take over ASEAN’s rotating presidency in 2016 and is unlikely to comment on the disputein ways such as chairman’s statement(like what it happened in Kuala Lumpur in 2015). Additionally, anew Philippine president will take office in June 2016;a leader who might take measures to ease the current tensions with China, which could bring both parties back to the negotiating table.

The United States will continue to carry out freedom of navigation operationsin the region, especially in the first half of 2016, which could strain China-U.S. relations and spark further debate on the legal status of the disputed waters: are they territorial seas, exclusive economic zones (EEZ), or international straits? In turn, China may respond with a more assertive approach because it regards such  U.S. military behavior as escalatory action.

Since HD-981 oil rig incident, the SCS issue has developed into three layers, the balance between great powers, mainly China and US; the relations between China and ASEAN as a whole, as well as the disputes between China and ASEAN claimant states. Currently, it become a phenomenon featured by “ASEAN claimants stay behind the scene while the US stand on the stage”, which means US changed its stance on SCS from taking no positions to in favor of some claimant states. And Washington’s role in this water has shifted from director to actor and director. Since 2015,it is further to push China to clarify its claims in SCS through a series of FONOP. It reveals Washington’s misjudgment towards China’s SCS policy.

Washington should realize that China’s ambitions in SCS is limited and was conducted in a restraint approach for a long time. As it never explored any oil and gas in the Spratly Islands maritime zone and tolerated the claimants to drive, to arrest even to shoot Chinese fishermen. Currently the land reclamation is a compensation,in order for China’s appropriate presence in this area, which lays a foundation for further solution, compromise and cooperation. Beijing never means to escalate the disputes, as it may impact the implementation of B&R strategy, especially maritime silk road in Southeast Asia.

China is learning to be a great power, and maintaining freedom of navigation and flyoveris compatible with its national interests. It is also willing to play a greater role in the solution of SCS disputes, such as the negotiation of COC. Only that it prefers to hold talks with ASEAN’s members (rather than ASEAN as a whole), and sign the COC based on the concensus, instead of negotiating with the drafts discussed by US and ASEAN in advance, hence to improve the weakness in China-ASEAN relations.