Regional and Geopolitical Risks in China
Regional and Geopolitical Risks in China
January 21, 2015
This article has been produced by the efforts of the following team members:
Julia Zanetti – Research Assistant
Louis-Claude Perrault-Carré – Team Leader for China-Industry
China, particularly under the leadership of President Xi Jinping, has viewed itself as the primary engine for economic growth for the entire Asia-Pacific region, declaring that the dominance of China will bring about more opportunities and benefits to all countries within the region.[1]
During the 2014 APEC Summit, China laid out multiple future strategies, all of which combine to demonstrate its intent to assume a stronger leadership role in the Asia-Pacific region. One avenue in which China aims to achieve this regional success is through infrastructure reconstruction by instituting a project called the Silk Road Economic Belt, headed by President Xi.[2] The Silk Road would consist of a vast network of railroads, pipelines, and highways and would facilitate trade between China and the rest of the world, especially Europe, through more direct and accessible routes, while situating China at the centre of Asian trade.[3]
China has also demonstrated its commitment to creating a free-trade zone within this region. The Free Trade Area of the Asia-Pacific (FTAAP), an initiative aiming to be launched this year, would achieve greater regional economic integration and would circumvent the multiplication of sub-regional preferential trade agreements that currently exist.[4] This plan also hedges Sino American tensions within a constructive, mutually beneficial framework in which both would gain billions of dollars in export revenues.[5] That being said, there are still very strong tensions and uncertainties in the region, involving China and its neighbours, which will be analyzed below.
Sino-Japanese interactions have been for years a source of continual conflict and threatened security relations, despite rising bilateral trade and economic interdependence between these two Asian powers.[6] This includes, but is not limited to the pre and post-WWII territorial and political disputes, as well as tensions surrounding the Diaoyu and Senkaku Islands, fishing rights and energy resources within those areas.[7] Thus, while trade between China and Japan has tripled since 2000 to over $300 billion, surpassing that of Japanese-American trade, this only speaks of the heightened economic cost of failing to resolve these disputes due to lingering nationalist sentiments within both nations.[8]
The Cross-Strait Relations, between China and Taiwan, has been a topic of contention since the 1949 Civil War. China has claimed that there is only “one China” and that Taiwan remains an inalienable part of it.[9] There remains an attitude of evasion from Chinese influence in Taiwan, and there is concern that China will use its growing economic superpower status to undermine the democratic system at work in Taiwan.[10] Hefty American arms sales to Taiwan have also contributed to this state of heightened China-Taiwan tensions.
The South China Sea tensions and territorial disputes, in relation to natural resources, located in a contested area between China, Vietnam, Malaysia, Philippines, Taiwan, and Japan.[11] The South China Sea holds oil reserves of seven billion barrels, which is viewed as a colossal profit-making opportunity for smaller Asian nations such as Malaysia or the Philippines, while a source of stable energy security for the growing economy of China.[12] The resulting inter-state competition over these areas has been worsened by China’s assumed control over the islands, and its refusal to deal with the territorial disagreements in any sort of constructive international forum.
This paints a picture of China as a sort of Asia-Pacific “bully” figure, using its larger size and strength to act without any regard for the wishes and interest of other nations. These ongoing and escalating maritime disputes have resulted in the militarization of a number of smaller Southeast Asian nations, including military buildups by Vietnam and Malaysia, which indicate higher stakes in case of a South China Sea blow-up and potential armed conflict.[13] These tensions thus have serious implications for overall peace and stability in the region.
For Southeast Asian countries, their increasing economic dependency on a trading and business relationship with China makes interactions with this Asian power extremely difficult. Although there has been no clear anti-China policy emerging in any of these smaller Asian nations, there have been episodic anti-Chinese riots in countries like Malaysia, Indonesia, and the Philippines.[14] China, although not lacking in its strength and superiority, does not seem to have friendly diplomatic relations with many, if any, nations within its region. The only ally China seems to have with a neighbouring nation is the amicable and mutually beneficial economic and diplomatic ties it has forged with President Putin’s Russia, which have only grown stronger since the Russian invasion of Crimea.[15]
Thus, China’s clearly ambitious moves within its region of fulfilling the “Asia-Pacific dream”, facilitating a Silk Road trade infrastructure, and constructing the FTAAP in order to heighten trading relations between Asia and the rest of the world with China at the centre, have created a regional environment of concerns and fears about the increasingly predominant leader of the Asia-Pacific. The increasingly turbulent state of relations between China and its neighbouring countries, especially Japan, Taiwan, and other South China Sea actors, adds another layer of uncertainty in the region and possible spark of turmoil.[16]
China’s neighbours are not used to such a large country dominating the Asia-Pacific region so rapidly. Fears and uncertainties have the potential to lead to increased nationalization and containment within these smaller nations and a setback in the proposed liberalization goals of this region. China’s explosion in economic strength, combined with military modernization has created concern amongst her neighbours. Robert Zoellick, former US Deputy Secretary of State, has said that if China is unable to demonstrate its aims in its ascent to power in the regional context, people will be concerned, “not necessarily because China has bad intentions, but there will be uncertainties”.[17]
