Catching the Dragon´s Tail: China and Southeast Asia in the 21st Century

Abstract

Introduction: China's Role in the Post-Cold War Era One of the most enduring confrontations of the last half of the twentieth century was that which pitted non-communist Southeast Asia, backed by the United States, against communist China and its proxies. Europe had its iron curtain, so Asia had the so-called bamboo curtain. Tens of thousands of men and women died in wars and insurgencies that supposedly kept China in check. Military governments were promoted and. protected; dictators were coddled, and freedoms were suppressed -- all in the name of battling communism. The Cold War maybe over, but China's presence looms if anything larger and a key question for everyone is what a stronger, wealthier, and developed China means for the region. If history is any guide, there is more to gain and less to worry about. For centuries the old Southeast Asian kingdoms and principalities regarded powerful imperial China as a source of prosperity and lucrative trade rather than an expansionist threat. Although they bridled at Chinese imperial arrogance and paternalism -- the rituals of tribute and recognition that were central to Chinese dealings with its barbarian fringe -- countries in the region enjoyed formal relationships with China that generally resulted in commercial gain. (1) The end of formal imperial rule in China and the long period of turmoil that eventually led to communist rule first modified and then, briefly, interrupted this profitable exchange. Not insignificantly, this was also a period when large numbers of Chinese migrated to the region, settled, and integrated with their host societies. With the opening of China's economy from the late 1970s, commercial ties resumed. Today, trade between the ASEAN states and China is on track, being greater in some countries of the region than trade with Europe and the United States. (2) Yet, as the ASEAN countries hurry to cement commercial ties, seek investment opportunities, and tap into China's vast market, contrasting views of this development persist. On the one hand, there are those who see Southeast Asia's economic future umbilically tied to China. Then there are those who warn that sovereignty and prosperity may be threatened by drawing too close to a nascent empire reinventing a 2,500 year old autocracy to control its population and hector non-Chinese neighbouring peoples. (3) These contrasting views of China's burgeoning ties with Southeast Asia, one exuberant and hopeful, the other dark and full of foreboding, mask more sober perceptions commonly heard within the region s business community. Firstly, the region has never relied on a sole market or source of trade, well-positioned as it is to benefit from the flow of trade between east and west. Moreover, no one assumes that China's market alone will guarantee everyone's economic security. The United States remains the region's single biggest destination for exports, and will be for some years to come. China's economy is still only about 10 per cent of the total size of the U.S. economy. Moreover, problems of market saturation, price wars, and the rise of able local competitors are all seen on the horizon in China. Much as the region's large conglomerates like to see China as a real opportunity, they are equally interested in exploring opportunities in India. Nor would it be prudent to bank on China's enduring political and econom ic stability. China faces the daunting task of cleaning up a hugely indebted banking system within the next five years, before WTO (World Trade Organization) rules force open the financial sector. Both a cyclical economic downturn and a mini-financial crisis are possible. Set against these economic pressures, it is hard to imagine that the Chinese Communist Party can maintain its monopoly on power forever. With political change and reform, some form of federalism or devolution of power could fragment and dilute the current scope of Chinese power. …