22vPaX

the national bureau of asian research 

asia policy 

21 

january 2016 

roundtable 

Non-claimant Perspectives on the South China Sea Disputes 

Rory Medcalf, Abhijit Singh, Ristian Atriandi Supriyanto, Yoji Koda, Lee Jaehyon, 

Jane Chan, Alice D. Ba, Mathieu Duchâtel, Thomas B. Fargo, Tiffany Ma, and Michael Wills 

essays and articles 

Taiwan and Regional Trade Organizations 

Kevin G. Nealer and Margaux Fimbres 

Challenges in China’s Reform of State-Owned Enterprises 

Wendy Leutert 

South Korea’s Strategic Dilemmas 

Ellen Kim and Victor Cha 

Is South Korea in China’s Orbit? 

Jae Ho Chung and Jiyoon Kim 

book review roundtable 

Andrew Small’s 

The China-Pakistan Axis: Asia’s New Geopolitics

asia policy 

• http://asiapolicy.nbr.org • 

a peer-reviewed journal devoted to bridging the gap between academic 

research and policymaking on issues related to the Asia-Pacific 

Michael Clarke 

National Security College, 

Australian National University 

C. Christine Fair 

Georgetown University 

editors 

C. Christine Fair and Mark W. Frazier editors 

Georgetown University The New School 

Jessica Keough managing editor 

Joshua Ziemkowski copy and style editor 

Craig Scanlan, Alex Jeffers, and Adam Khan copyeditors 

editorial advisory committee 

Mark Frazier 

The New School 

Bhubhindar Singh 

S. Rajaratnam School of 

International Studies 

Michael Wills 

The National Bureau of 

Asian Research 

Muthiah Alagappa 

Institute of Strategic and 

International Studies Malaysia 

Michael Armacost 

Stanford University 

Richard Bush 

Brookings Institution 

Steve Chan 

University of Colorado, Boulder 

Thomas Christensen 

Princeton University 

Eliot Cohen 

Johns Hopkins University 

Nicholas Eberstadt 

American Enterprise Institute 

Elizabeth Economy 

Council on Foreign Relations 

Richard Ellings (co-chairman) 

The National Bureau of 

Asian Research 

Aaron Friedberg 

Princeton University 

Paul Godwin 

National War College (ret.) 

Michael Green 

Center for Strategic and 


Stephen Hanson 

College of William and Mary 

Harry Harding 

University of Virginia 

Robert Hefner 

Boston University 

David Kang 

University of Southern California 

Mark Katz 

George Mason University 

editorial board 

David Lampton 


Nicholas Lardy 

Peterson Institute for 

International Economics 

Chae-Jin Lee 

Claremont McKenna College 

Steven Lewis 

Rice University 

Cheng Li 


Kenneth Lieberthal 


Kimberly Marten 

Barnard College 

Barrett McCormick 

Marquette University 

Rory Medcalf 

National Security College, 

Australian National University 

Rajan Menon 

City College of New York, 

City University of New York 

Vali Nasr 


Marcus Noland 

Peterson Institute for 

International Economics 

Margaret Pearson 

University of Maryland 

Minxin Pei 

Claremont McKenna College 

T.J. Pempel 

University of California, 

Berkeley 

Dwight Perkins 

Harvard University 

Kenneth Pyle (co-chairman) 

University of Washington 

(emeritus) 

Lawrence Reardon 

University of 

New Hampshire 

Robert Ross 

Boston College 

Richard Samuels 

Massachusetts Institute 

of Technology 

Andrew Scobell 

RAND Corporation 

David Shambaugh 

George Washington University 

Susan Shirk 

University of California, 

San Diego 

Sheldon Simon 

Arizona State University 

Robert Sutter 

George Washington University 

Richard Suttmeier 

University of Oregon (emeritus) 

Michael Swaine 

Carnegie Endowment for 

International Peace 

See Seng Tan 

S. Rajaratnam School of 


Ashley Tellis 

Carnegie Endowment for 

International Peace 

Robert Wade 

London School of Economics 

and Political Science 

Vincent Wang 

University of Richmond

asia policy 

number 21 • january 2016 

Contents 

u roundtable u 


raising the stakes: the interests of 

non-claimant states in the south china sea disputes. ..2 

Tiffany Ma and Michael Wills 

rules, balance, and lifelines: 

an australian perspective on the south china sea. ....6 

Rory Medcalf 

india’s strategic stakes in the south china sea. ...... 14 

Abhijit Singh 

out of its comfort zone: 

indonesia and the south china sea ................. 21 

Ristian Atriandi Supriyanto 

japan’s perceptions of and interests 

in the south china sea. ...........................29 

Yoji Koda 

south korea and the south china sea: 

a domestic and international balancing act ........36 

Lee Jaehyon 

singapore and the south china sea: 

being an effective coordinator and honest broker ... 41 

Jane Chan

asean’s stakes: the south china sea’s 

challenge to autonomy and agency. ................47 

Alice D. Ba 

europe and maritime security in 

the south china sea: beyond principled statements?. .. 54 

Mathieu Duchâtel 

walking the talk in the south china sea. . . . . . . . . . . . 59 

Thomas B. Fargo 

u essays and articles u 

taiwan and regional trade organizations: 

an urgent need for fresh ideas ....................67 


This essay assesses Taiwan’s prospects for joining the Trans-Pacific 

Partnership and recommends options for how Taiwan can overcome the 

challenges related to gaining membership. 

challenges ahead in china’s reform 

of state-owned enterprises. ....................... 83 

Wendy Leutert 

This essay analyzes three challenges ahead in reforming China’s centrally 

owned companies, known as yangqi: determining how and when to give 

market forces a greater role, aligning mismatched executive incentives, 

and overcoming complicating factors within firms. 

between a rock and a hard place: 

south korea’s strategic dilemmas with 

china and the united states. ..................... 101 


This essay examines four strategic dilemmas that the Republic of 

Korea (ROK) faces vis-à-vis China and discusses their implications for 

regional and U.S.-ROK relations.

is south korea in china’s orbit? 

assessing seoul’s perceptions and policies. ......... 123 


This article examines South Korea’s perceptions of and policies toward 

China, particularly since President Park Geun-hye’s inauguration in 

2013, and assesses the thesis that Seoul is in the Chinese orbit. 

u book review roundtable u 


The China-Pakistan Axis: Asia’s New Geopolitics 

keeping pakistan as a balancer 

while courting indian friendship. ................ 148 

John W. Garver 

the strange tale of sino-pakistani friendship. ...... 151 

Daniel Markey 

sino-pakistani relations: axis or entente cordiale?. . 155 

Feroz Hassan Khan 

where is the china-pakistan relationship 

heading—strategic partnership or 

conditional engagement? ....................... 160 

Meena Singh Roy 

friends in need… .. ........................... 164 


author’s response: beyond india-centricity— 

china and pakistan look west. .................... 167 

Andrew Small

asia policy 




guidelines for submission 

Asia Policy is a peer-reviewed journal devoted to bridging the gap between academic 

research and policymaking on issues related to the Asia-Pacific. The journal publishes 

peer-reviewed research articles and policy essays, roundtables on policy-relevant topics 

and recent publications, and book review essays, as well as other occasional formats. 

I. General Requirements 

Asia Policy welcomes the submission of policy-relevant research on important issues in 

the Asia-Pacific. The journal will consider two main types of submissions for peer review: 

research articles that present new information, theoretical frameworks, or arguments and 

draw clear policy implications; and policy essays that provide original, persuasive, and 

rigorous analysis. Authors or editors interested in having a book considered for review 

should submit a copy of the book to the managing editor at NBR, 1414 NE 42nd Street, 

Suite 300, Seattle, Washington 98105. Submissions may be sent to . 

Asia Policy requires that all submitted manuscripts have not been previously 

published in any form, either in part or in whole, and are not currently under 

consideration by any other organization. All prior use of arguments found in the 

manuscript—whether for publication in English or any other language—must be properly 

footnoted at the time of submission. The author should also describe the background 

of the manuscript upon submission of the first draft, including whether the manuscript 

or any component parts have been presented at conferences or have appeared online. 

II. Manuscript Format 

• The manuscript should be in Times New Roman, 12-point font with 1.5-line spacing. Research 

articles should range from 8,000 to 12,000 words, and policy essays should range from 4,000 to 

6,000 words. 

• In order to be easily accessible to policymakers, each manuscript must include (1) a Title Page, 

(2) a one-page Executive Summary, and (3) a concise Introduction according to the requirements 

listed below. 

1) The Title Page should include only the article title, author’s name, a list of five keywords, 

and a short biographical statement (under 50 words) that lists the author’s e-mail address.

2) To help bridge the policy and academic communities, all research published by NBR 

must include a one-page Executive Summary of approximately 275 words that includes: 

• a Topic Statement 

• the Main Argument 

• the Policy Implications 

A sample Executive Summary is provided in Section III below. 

3) The Introduction of all NBR publications should not exceed two pages in length and 

should plainly describe: 

• the specific question that the paper seeks to answer 

• the policy importance of the question 

• the main argument/findings of the paper 

• Tables and figures should be placed at the end of the document, with “[Insert Table X here]” 

inserted in the text at the appropriate locations. Do not include tables and figures in the 

introduction. All figures and maps should be provided in electronic form. 

• Authors are encouraged to consult recent issues of Asia Policy for guidance on style and 

formatting. For matters of style (including footnotes), NBR largely follows the 16th edition of 

the Chicago Manual of Style (Chicago: University of Chicago Press, 2010). 

III. Sample Executive Summary 

Executive Summary [total length 

not to exceed 275 words] 

executive summary 

This essay examines the linkages between China’s national economy and 

foreign policy over the past 30 years, and assesses the claim that Chinese 

foreign policy has undergone an important shift in which domestic demand 

for energy and other raw materials heavily influence foreign policy decisions. 

main argument 

Article Topic [preferably 

Assessments of Chinese foreign policy intentions and goals no often longer conclude than 2–3 lines] 

that the need to gain more reliable access to oil and other natural resources is 

Main Argument [preferably 

a central aim of Chinese foreign policy and overall strategic considerations. 

no longer than 6–10 lines] 

This essay argues that the coherence of China’s economic goals and the 

coordination needed to achieve them are eroding as multiple competing 

interests within the Chinese polity emerge to pursue and protect power and 

resources. This fragmentation of economic policy into multiple competing 

agendas has to be understood alongside assessments that resource needs 

drive Chinese foreign policy. The essay first surveys how shifting economic 

priorities have influenced Chinese foreign policy over the past 30 years. A 

second section discusses China’s shift from an export-led, resource-dependent 

growth model to one that is more balanced toward domestic consumption. 

The essay concludes by noting that China’s search for a rebalanced economy 

and for a new growth model creates opportunities and constraints on Chinese 

foreign policy. 

policy implications 

• While China’s domestic economic Policy goals have Implications always been [preferably an important in the form of 

factor in foreign policy, Chinese diplomatic bulleted initiatives “if … then globally …” statements and its policies that spell 

toward oil-producing states are driven out by the a far benefits more complicated or problems convergence associated with 

of factors than a simple narrative of “oil specific diplomacy” policy options would suggest. rather than stating that 

• China’s pluralized political economy the makes government such rebalancing “should” take much a certain more action] 

difficult politically, given the potential winners and losers in this process. 

Those who now urge China to make a shift away from an export-heavy 

growth pattern are likely to grow increasingly frustrated unless they 

understand that the central leaders do not possess the instruments to 

quickly transform the Chinese economy. 

• Given that China, like no other economy, has benefitted from the institutions 

of the global economy, China has a strong interest in maintaining these 

institutions and their liberal principles, even as the Chinese government 

seeks to play a stronger role in their operation and governance.

IV. Note Format and Examples 

Citations and notes should be placed in footnotes; parenthetical notation is not accepted. For 

other citation formats, refer to the Chicago Manual of Style. 

Part 1: English-Language Sources 

• Book (with ISBN): Author[s]’ first and last name[s], title (city of publication: publisher, year), 

page number[s]. 

H.P. Wilmot, Empires in the Balance: Japanese and Allied Pacific Strategies to April 1942 (Annapolis: U.S. Naval 

Institute Press, 1982), 146–48. 

• Edited volume (with ISBN): Editor[s]’ first and last name[s], ed[s]., title (city of publication: 

publisher, year), page number[s]. 

Ashley J. Tellis and Michael Wills, eds., Strategic Asia 2004–05: Confronting Terrorism in the Pursuit of Power (Seattle: 

The National Bureau of Asian Research, 2004), 22–42. 

• Chapter in an edited volume (with ISBN): Author[s]’ first and last name[s], “title of article,” 

in title of edited volume, ed. editor[s]’ first and last name[s] (city of publication: publisher, year), 

page number[s]. 

Graeme Cheeseman, “Facing an Uncertain Future: Defence and Security under the Howard Government,” in The 

National Interest in the Global Era: Australia in World Affairs 1996–2000, ed. James Cotton and John Ravenhill 

(Melbourne: Oxford University Press, 2001), 207. 

• Journal article (in a journal with ISSN): Author[s]’ first and last name[s], “title of article,” title 

of journal [vol. #], no. [#] (year): page number[s]. 

Jingdong Yuan, “The Bush Doctrine: Chinese Perspectives and Responses,” Asian Perspective 27, no. 4 (2003): 134–37. 

• Reports (no ISBN or ISSN): Author[s]’ first and last name[s], “title of report,” publisher, report 

series, date of publication, page number[s]. 

Joshua Kurlantzick, “China’s Charm: Implications of Chinese Soft Power,” Carnegie Endowment for International 

Peace, Policy Brief, no. 47, June 2006. 

• Newspaper or magazine article: Author[s]’ first and last name[s], “title of article,” name of 

newspaper/magazine, date of publication, page number[s]. 

Keith Bradsher, “U.S. Seeks Cooperation with China,” New York Times, July 24, 2003, A14. 

• Electronic documents and website content: Author[s]’ first and last name[s], “title,” URL. 

Footnote citation should emulate the corresponding print-source category if possible. 

“Natural Resources,” Office of Conflict Management and Mitigation of USAID, http://www.usaid.gov/our_work/ 

cross-cutting_programs/conflict/focus_areas/natural_resources.html. 

• Public documents: Government department or office, title of document, [other identifying 

information], date of publication, page number[s]. 

House Committee on Interior and Insular Affairs, Subcommittee on Energy and the Environment, International 

Proliferation of Nuclear Technology, report prepared by Warren H. Donnelly and Barbara Rather, 94th Cong., 

2d sess., 1976, Committee Print 15, 5–6. 

• Personal communication and interview: Author[s]’ [personal communication/e-mail/ 

telephone conversation/interview] with [first and last name], place, date. 

Author’s interview with Hamit Zakir, Los Angeles, July 17, 2003.

Part 2: Foreign-Language Sources 

When writing the foreign-language title of a language that uses a non-Roman script, please 

adhere to one of the standard Romanization formats. NBR prefers Pinyin for Chinese, Hepburn 

for Japanese, and McCune-Reischauer for Korean. 

• Book: Author name[s], foreign language title [English translation of title] (city of publication: 

publisher, year), page number[s]. 

Sotōka Hidetoshi, Nichi-Bei dōmei hanseiki: Anpo to mitsuyaku [Half-Century of the Japan-U.S. Alliance: Security 

Treaty and Secret Agreements] (Tokyo: Asahi Shimbunsha, 2001), 409–35. 

Note: When the work is written in a foreign language, a foreign publisher’s name should not 

be translated, although the city should be given in its English form. 

• Journal article: Author name[s], “foreign language article title” [English translation of article 

title], foreign language journal title [vol. #], no. [#] (year of publication): page number[s]. 

Liu Jianfei, “Gouzhu chengshu de Zhongmei guanxi” [Developing a Mature Sino-U.S. Relationship], Zhongguo kexue 

xuebao 78, no. 2 (June 2003): 73–87. 

• Sources translated into English from a foreign language: credit the translator by inserting 

“trans. [translator’s first and last name]” after the title of the publication. 

Harald Fritzsch, An Equation that Changed the World, trans. Karin Heusch (Chicago: University of Chicago Press, 

1994), 21. 

Part 3: Subsequent Citation 

Use author[s]’ last name and shortened titles (four words or less) for previously cited sources. 

“Op. cit.” and “loc. cit.” should not be used. 

First use: Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order (New York: Touchstone, 

1996), 136–37. 

Subsequent use: Huntington, Clash of Civilizations, 136–37.

strategic asia 

“NBR’s Strategic Asia series is an unparalleled resource for the classroom, 

the board room, and the situation room. My staff used it at the NSC, and it 

serves as a core text for courses I now teach at Georgetown.” 

—Michael J. Green 

Former Senior Director for Asian Affairs, National Security Council 

Professor, Georgetown University 

MISSION • The Strategic Asia Program aims to strengthen and 

inform policy decisions by providing innovative research on challenges 

and opportunities for U.S. national interests in the Asia-Pacific region. Its 

three objectives are to: 

• offer an authoritative assessment of Asia’s evolving strategic environment 

• look forward five years, and in some cases beyond, to contemplate the 

future of the region 

• maintain a record of data and analysis on trends in Asia’s changing 

strategic landscape 

SCOPE • The Asia-Pacific region represents 

the center of world power. Guided by Research Director 

Ashley J. Tellis (Carnegie Endowment for International 

Peace), this ongoing research initiative publishes an 

annual edited volume and executive brief and organizes 

tailored briefings for a broad range of U.S. government 

agencies, policymakers, and leaders of industry to 

inform U.S. foreign policy toward the Asia-Pacific. 

IMPACT • The annual Strategic Asia 

publication is broadly disseminated to members of 

the government and to the corporate and academic 

communities. The research and scholars are leveraged 

to enhance decision-making capabilities through 

tailored briefings and strategic planning exercises for key 

committees of Congress; the Departments of Defense, 

Energy, and State; the National Security Council; the 

intelligence community; and business leaders. 

Learn more at www.nbr.org. 

Strategic Asia 2015–16: 

Foundations of National 

Power in the Asia-Pacific 

examines how the region’s 

major powers are building 

their national power as 

geopolitical competition 

intensifies.

asia policy, number 21 (january 2016), 1–65 


roundtable 


Tiffany Ma 

Michael Wills 

Rory Medcalf 

Abhijit Singh 


Yoji Koda 

Lee Jaehyon 

Jane Chan 

Alice D. Ba 



© The National Bureau of Asian Research, Seattle, Washington

asia policy 

Raising the Stakes: 

The Interests of Non-claimant States in the South China Sea Disputes 

Tiffany Ma and Michael Wills 

The geopolitical game playing out in the South China Sea is becoming 

more complicated. China’s increasingly provocative actions are 

forcing regional players—from near and far—to make clear their interests 

and positions on the ongoing territorial disputes. In December 2015, the 

commander of the U.S. Pacific Fleet issued a tough warning against China’s 

attempt to establish “so-called military zones” around its artificial islands 

and criticized its unilateral assertiveness as unacceptable. 1 Although 

a non-claimant, the United States, given its role as a regional security 

guarantor, has long been an important stakeholder in the management 

and settlement of the disputes. However, China’s recent escalatory actions 

and behavior are leading more regional players to engage directly on South 

China Sea issues, both in the diplomatic arena and in the contested waters. 

Going forward, these non-claimant parties will likely play a greater role in 

influencing events in the South China Sea. 

This Asia Policy roundtable provides a timely survey of regional 

perspectives from the most involved non-claimant states, Australia, India, 

Indonesia, Japan, Singapore, South Korea, and the United States—as well as 

two multilateral organizations, the Association of Southeast Asian Nations 

(ASEAN) and the European Union. Despite their geographic, political, 

and economic differences, it is clear that very real strategic interests drive 

all these non-claimant stakeholders when it comes to developments in the 

South China Sea. 

This is perhaps unsurprising given regional stakeholders’ dependence on 

critical sea lines of communication for shipping. The South China Sea contains 

the main arteries of global trade, with more than $5 trillion of the world’s 

tiffany ma is Director of Political and Security Affairs at The National Bureau of Asian Research. 

She can be reached at . 

michael wills is Senior Vice President for Strategy and Finance at The National Bureau of Asian 

Research. He can be reached at . 

1 Jane Perlez, “U.S. Navy Commander Implies China Has Eroded Safety of South China Sea,” New 

York Times, December 15, 2015 u http://www.nytimes.com/2015/12/16/world/asia/us-navycommander-implies-china-has-eroded-safety-of-south-china-sea.html. 

The full speech is available 

at http://www.cpf.navy.mil/leaders/scott-swift/speeches/2015/12/cooperative-strategy-forum.pdf. 

[ 2 ]

oundtable • non-claimant perspectives on the south china sea 

seaborne trade passing through its waters every year. 2 These are also vital energy 

lifelines, providing transit for a third of global crude oil and half of global 

liquefied natural gas. 3 For East Asian countries like South Korea and Japan, 

dependence is particularly acute with approximately 66% and 60%, respectively, 

of their energy imports passing through the South China Sea. 4 Given vested 

economic interests, these regional stakeholders are wary of disruptions to trade 

from a geopolitical crisis, or outright conflict, over the contested waters. 

Another commonality among the non-claimant states is a fundamental 

interest in maintaining freedom of navigation and the rights of passage 

and overflight in the South China Sea. All of the non-claimants also call 

for peaceful resolution of the disputes in accordance with international 

norms and law. This is particularly true for the two multilateral institutions 

examined here. ASEAN, as Alice Ba argues, needs to see a peaceful, 

negotiated outcome to the disputes; anything less would threaten the 

organization’s fundamental approach of pursuing consensus-based 

solutions in the face of great-power interests. For the European Union, 

which, as Mathieu Duchâtel notes, sees itself as a normative power, failure 

to support international legal outcomes would similarly threaten the 

institution’s approach to collective security. Efforts by non-claimant parties 

to uphold a rules-based order and preserve access to the maritime commons 

can help consolidate a broader understanding of acceptable actions by the 

claimant states. Over time, this may reinforce pressure on any claimants 

that choose to engage in unacceptable behavior. 

Beyond diplomatic statements calling for de-escalation and peaceful 

resolution of the disputes, several of the non-claimant states have undertaken 

specific maritime deployments in the South China Sea to signal their 

interest, concern, and resolve. These range from the high-profile freedom 

of navigation operations undertaken by the United States, which Admiral 

Thomas Fargo describes, to quieter missions undertaken by Australia, which 

Rory Medcalf notes signal that Canberra will continue to assert its rights 

and encourage a rules-based approach. India, Abhijit Singh writes, has also 

increased its operational presence in the South China Sea, with a contingent 

2 Tim Kelly, “U.S. Navy Commander Warns of Possible South China Sea Arms Race,” Reuters, 

December 15, 2015 u http://in.reuters.com/article/southchina-usa-idINKBN0TY03F20151215. 

3 “The South China Sea Is an Important World Energy Trade Route,” U.S. Energy Information 

Administration, April 4, 2013 u http://www.eia.gov/todayinenergy/detail.cfm?id=10671. 

4 Robert D. Kaplan, “Why the South China Sea Is So Critical,” Business Insider Australia, February 20, 

2015 u http://www.businessinsider.com.au/why-the-south-china-sea-is-so-crucial-2015-2. 

[ 3 ]

asia policy 

of four frigates completing a two-month tour in June 2015 and one frigate 

making a subsequent deployment to the Philippines in November. 

Several non-claimant states have also stepped up their military 

cooperation with and arms sales to some of the Southeast Asian claimants. 

India has strengthened its military engagement with Vietnam and Malaysia. 

Japan, Admiral Yoji Koda notes, has commenced initiatives to improve the 

maritime and coast guard capabilities of some of its Southeast Asian partners, 

including Vietnam and the Philippines, to help alleviate political and military 

pressure from China. Several European countries are also helping strengthen 

the maritime and coast guard capabilities of the Southeast Asian claimants. 

Vietnam has placed orders to purchase frigates from the Netherlands and 

anti-ship cruise missiles from France, while the Philippines is importing 

French and Italian armed light helicopters. These still-modest measures are 

not attempts to take sides or encourage militarization of the disputes. Rather, 

they are part of non-claimants’ efforts to shore up important relationships, 

prevent the escalation of tensions, and signal concern to China. 

However, there are other factors beyond these shared economic and 

security interests driving the non-claimants’ overall positions. As noted 

by several of the contributors to this roundtable, some non-claimants hold 

unique geostrategic concerns. For Japan and South Korea, as Lee Jaehyon 

argues, the outcome of the South China Sea disputes could set a precedent 

for the separate territorial disputes in which each is embroiled—Japan with 

China over the Senkaku/Diaoyu Islands in the East China Sea, and South 

Korea with Japan over the island grouping of Dokdo/Takeshima in the 

Sea of Japan. For India, as Singh notes, China’s actions in the South China 

Sea are perceived as part of a broader strategy to establish a Chinese naval 

presence in the Indian Ocean, and Indian concern about this helps inform 

New Delhi’s responses to the disputes. These distinct national interests add 

a challenging dimension to the already strong interests in trade and freedom 

of navigation that drive these major powers’ approach to the disputes. 

For most of the non-claimants studied here, the South China Sea disputes 

are also viewed through the lens of regional geopolitics. China’s increasing 

assertiveness in the South China Sea, coupled with its growing power and profile 

on the global stage, seems designed to challenge the U.S.-led regional order that 

has prevailed since the end of World War II. This perception has implications 

for U.S. treaty allies Japan, South Korea, and Australia, as well as for ASEAN. 

As the sovereignty disputes divide China and ASEAN claimants, 

non-claimant ASEAN member states are seeking to bring the China-ASEAN 

relationship back on track. Jane Chan notes that Singapore is working to 

[ 4 ]


ensure that ASEAN remains cohesive by serving as an “honest broker.” 

Similarly, Ristian Atriandi Supriyanto emphasizes how Indonesia leverages 

its non-claimant status—even downplaying the ambiguities of its own 

maritime boundaries with China—to elevate its diplomatic prestige in order 

to deal more effectively with the claimants (an important national interest, 

given Indonesia’s role as primus inter pares within ASEAN). 

Another geopolitical concern is the broader U.S.-China strategic rivalry 

in the Asia-Pacific. When the South China Sea dispute is seen as a proxy for 

U.S.-China strategic competition, states begin to weigh their interests and 

decisions in the context of their alliance or partnership arrangements (in 

most cases with the United States) and their (generally extensive) trade and 

economic relationships with China. This is a delicate balancing act for U.S. 

allies and non-allies, as well as claimants and non-claimants, alike. 

The result, for most, is a strategic dilemma in which a determination to take 

a more vigorous stance on international norms and rules is tempered by the 

potential economic costs of aggravating China—especially when the anticipated 

costs of doing so might outweigh the perceived ability to influence China’s 

behavior. The result during the past year or so, when China’s island-building 

and other activities have been increasingly provocative, has been to temper the 

response of both claimant and non-claimant states, further complicating their 

considerations and resulting in attempts to avoid making definitive statements. 

Yet, as Medcalf cautions, doing nothing is sometimes the most harmful course. 

Even the most deliberate and pragmatic hedging strategy may be difficult to 

sustain if events unfold beyond the non-claimants’ control. 

International legal considerations, which all non-claimant states have 

declared to be one of their highest priorities in relation to the disputes, 

are likely to force governments to make clearer decisions in the coming 

year. As noted in several essays, the Philippines’ case against China at the 

International Tribunal for the Law of the Sea is currently under consideration, 

and the ruling is expected in 2016. Assuming there is a clear and definitive 

outcome, the ruling will likely force all the non-claimants to think carefully 

about the decisions each will have to make, depending in part on the behavior 

and responses of the two parties. China has already stated that it does not 

recognize the disputes as falling within the jurisdiction of the tribunal and 

that it has no intention of honoring the ruling. But given the importance that 

each of the non-claimants examined here has placed on peaceful resolution 

of the disputes, and the broader strategic stakes each has in maintaining a 

rules-based international system, their support for this ruling will be an 

important indicator of the kind of order that is emerging in East Asia. 

[ 5 ]

asia policy 

Rules, Balance, and Lifelines: 

An Australian Perspective on the South China Sea 

Rory Medcalf 

superficial reading of the South China Sea issue, informed by 

A Beijing’s propaganda line that the disputes amount simply to bilateral 

differences over principally Chinese maritime territory, would suggest that 

it is none of Australia’s business. In reality, Australia has substantial stakes 

in what happens in these waters, where assertiveness and the manufacture 

of militarized islands have raised concerns about coercion and conflict. 

As a major trading nation, the world’s thirteenth-largest economy, a 

regional maritime player in the Indo-Pacific, a middle power that benefits 

from the protection of norms and international law, a partner to its Asian 

neighbors, and an ally of the United States, Australia has myriad reasons 

to engage on this important strategic challenge. Historically, it has enacted 

and gained from freedom of navigation and commerce through this 

sea and air route. It also has a good record of multilateral diplomacy to 

reduce regional dangers. Reports of the Royal Australian Air Force quietly 

exercising freedom of navigation in late 2015 suggest that Canberra will 

continue to assert its rights and encourage a rules-based international 

response to tensions. 1 There remains some uncertainty, however, about 

how far Australia is prepared to go, including in the context of its weighty 

economic relationship with China. 

This essay provides an overview of Australian views on the South China 

Sea and discusses a range of options available for Australia to protect its 

interests in this important region. 

Looking Back: The Evolution of Australian Views on the 

South China Sea 

Australia is no stranger to the South China Sea. Its air force has 

exercised rights of overflight and surveillance in these waters since the 

1970s, including in support of allied operations to track Soviet ships and 

rory medcalf is a Professor and Head of the National Security College at the Australian National 

University, Canberra. He can be reached at . 

1 See, for instance, Brendan Nicholson, “RAAF’s China Sea Flight Warning,” Australian, 

December 16, 2015. 

[ 6 ]


submarines during the Cold War. 2 Its decades of trading relations with 

North Asia have involved heavy reliance on these sea lanes. As an early 

contributor to regional security diplomacy, including the Association 

of Southeast Asian Nations (ASEAN) Regional Forum and other 

ASEAN-centric institutions, Canberra has sustained serious efforts to 

build the regimes of confidence building, transparency, and conflict 

prevention that Asia has long needed to maintain stability and guard the 

gains of prosperity. 

Even so, until the upsurge of tensions and assertiveness over the past 

five years, the South China Sea did not feature prominently in official 

public documents about Australian foreign and defense policy. A brief 

survey of the past two decades is illuminating. In the 1980s, despite 

simmering territorial differences and occasional conflict between China 

and Vietnam, Australia saw the South China Sea essentially in a Cold 

War context: the 1987 defense white paper referred to it only as a zone 

for Australian surveillance flights from a forward base in Butterworth, 

Malaysia. 3 By the 1994 white paper, with the end of the Cold War, 

Canberra began to acknowledge concern about “competing territorial 

claims” among “well-armed nations.” 4 The situation was still seen as one 

among many regional problems to be “handled carefully” rather than as a 

major threat. This of course was still an era when China’s growing military 

power and economic heft were of concern mainly because the country was 

growing so rapidly, not because of demonstrations of coercive behavior or 

a perceived ambition to seek to eclipse the U.S.-led alliance system. 

Australia’s deepening security anxieties around China’s military power 

and U.S.-China strategic competition were made plain in the 2009 defense 

white paper. 5 Yet although worries about China’s maritime ambitions 

clearly informed this blueprint for a strong Australian navy, the focus was 

not specifically the South China Sea, which was left unmentioned. This was 

in marked contrast with a series of policy statements in subsequent years. 

As territorial tensions rose, and China’s stance from 2009 onward took 

on characteristics of assertiveness, risk-taking, and sometimes coercion, 

Australia’s policy position of general concern became sharper and more 

explicit. In September 2011, Australia and the United States signed on to an 

2 Department of Defence (Australia), The Defence of Australia (Canberra, 1987), 7, 15, 16. 

3 Ibid. 

4 Department of Defence (Australia), Defending Australia (Canberra, 1994), 10. 

5 Department of Defence (Australia), Defending Australia in the Asia Pacific Century: Force 2030 

(Canberra, 2009). 

[ 7 ]

asia policy 

unusually detailed iteration of their annual joint Australia–United States 

Ministerial (AUSMIN) communiqué, underscoring a national interest in 

freedom of navigation, peace and stability, respect for international law, 

and unimpeded lawful commerce in the South China Sea. 6 No position 

was taken on competing territorial claims. The use of coercion or force was 

unequivocally opposed. Subsequent AUSMIN communiqués reaffirmed or 

built on these formulations. 

The refinement and explication of Australia’s policy perspective 

on South China Sea security issues were not, however, left to alliance 

declarations alone. The 2012 defense white paper presented a 

comprehensive vision for engagement with Asia. While its principal lens 

was on economic opportunity, the paper aired concerns about the “risk of 

mistakes and misadventure” in the South China Sea. 7 A new defense white 

paper the following year repeatedly noted similar concerns and put them 

in the context of Australia’s characterization of its region as an Indo-Pacific 

strategic and economic system, a global center of gravity dependent on 

maritime commerce, especially through the waters of Southeast Asia. 8 For 

Australian foreign and defense policymakers, the South China Sea was 

now a major challenge that simply could not be ignored, although precisely 

what to do remained unclear. 

Australian Interests in the South China Sea 

A rules-based order. Australian policymakers currently cite multiple 

reasons that the South China Sea issue engages Australian interests. 

Prominent among these is reference to a “rules-based order,” a phrase that 

crops up consistently in speeches and statements by ministers and senior 

officials as well as bilateral and trilateral communiqués. 9 As a middle 

6 “Australia–United States Ministerial Consultations (AUSMIN) 2011 Joint Communiqué,” 

U.S. Department of State, Media Note, September 15, 2011 u http://www.state.gov/r/pa/prs/ 

ps/2011/09/172517.htm. 

7 Department of Defence (Australia), Australia in the Asian Century (Canberra, 2012), 236. 

8 Department of Defence (Australia), Defence White Paper 2013 (Canberra, 2013), 7–8, 11. 

9 See, for example, Dennis Richardson, “The Strategic Outlook for the Indo-Pacific Region” 

(Blamey Oration, Sydney, May 2015), available at http://www.smh.com.au/national/defencesecretary-dennis-richardsons-blamey-oration-20150528-ghbf7w.html; 

Kevin Andrews (speech 

to the 14th IISS Asia Security Summit, Singapore, May 2015) u http://kevinandrews.com.au/ 

latest-news/2015/05/31/114th-iiss-asia-security-summit-the-shangri-la-dialogue; and “Japan- 

U.S.-Australia Defense Ministers Meeting Joint Statement,” Department of Defence Ministers 

(Australia), May 30, 2015 u http://www.minister.defence.gov.au/2015/05/30/minister-for-defencejapan-us-australia-defense-ministers-meeting-joint-statement. 

The trilateral communiqué, in 

particular, provides one of the strongest, most comprehensive statements of Australian security 

concern about the South China Sea to date. 

[ 8 ]


power that does not and cannot generally advance its interests through 

force, Australia has obvious reason to want to preserve and shape a 

regional system characterized by respect for international law, the equality 

of nations, restraint from coercion, and norms of predictable, cooperative 

behavior. More specifically in relation to the situation in the South China 

Sea, the concern seems primarily about Chinese respect, or apparent 

lack thereof, for widely accepted interpretations of the United Nations 

Convention on the Law of the Sea (UNCLOS). Australia is concerned 

about preserving long-standing and legitimate freedom of navigation and 

overflight for its navy and air force, as well as ensuring that the seaborne 

commerce on which its economic health acutely depends remains free 

from interference. 

Australia is also worried about precedents in which the geopolitical 

status quo is altered using coercive means. The way China behaves in the 

South China Sea when its interests brush up against those of small powers 

provides a test case for how a more powerful China may act when it does 

not readily get its way. In the words of Australia’s 2013 defense white paper, 

“events in the South China Sea may well reflect how a rising China and its 

neighbors manage their relationships.” 10 

Indo-Pacific lifelines. For a nation of only 23 million people, 

Australia’s interests are far-flung and extensive. Australia benefits from 

exceptional connectedness with the world, including through flows of 

trade and energy. Its vital maritime lifelines flow through the waters of 

Southeast Asia, and around 54% of Australia’s total international trade 

passes through the South China Sea. 11 Yet Australian concern about the 

continued freedom to use international waters in a rules-based context 

relates to a wider recognition that its prosperity and security are bound up 

in the emergence of the Indo-Pacific region as the global economic center 

of gravity. 12 Increasingly, Australian policymakers recognize the sea lines 

of communication through Southeast Asia, including the South China 

Sea, as the core of the Indo-Pacific. 

The concern is not solely that Australia depends directly on commerce 

through the South China Sea and other regional waters; the issue is also 

that Australia’s trading and security partners rely on these sea lanes, 

10 Department of Defence (Australia), Defence White Paper 2013, 12. 

11 Richard Keir, “What Are Australia’s National Security Interests in the South China Sea?” Australian 

Defence College, Centre for Defence and Strategic Studies, Indo-Pacific Strategic Papers, August 2015, 1. 

12 Rory Medcalf and James Brown, “Defence Challenges 2035: Securing Australia’s Lifelines,” Lowy 

Institute, Analysis, November 2014, 4–5. 

[ 9 ]

asia policy 

and this in turn affects Australia. Even one of Australia’s most prominent 

advocates of a more accommodating approach to the rise of China, Hugh 

White, has acknowledged that to concede control of the South China Sea 

to Beijing “would be to concede more than is compatible with the vital 

interests of other great powers, especially Japan.” 13 

The U.S. alliance and Asian security partnerships. A third set of 

considerations framing Australia’s engaged perspective on the South 

China Sea relates to its security alliance with the United States and its 

burgeoning partnerships with a range of Asian countries, including Japan. 

Australian observers recognize that the tensions in the South China Sea 

are testing the United States’ resolve, credibility, and diplomatic dexterity. 

From strong foundations, the U.S.-Australia alliance has become even 

stronger still in recent years. It draws wide public support in Australia 

and provides benefits in intelligence, military capability, and technology 

that this middle power could not otherwise attain. 14 Australia has moved 

in recent years to support and facilitate the U.S. rebalance to Asia, 

including through the rotational presence of U.S. Marines in Darwin, 

enhanced access arrangements for U.S. ships and aircraft, and heightened 

cooperation on maritime and space surveillance. 

Although official public statements are diplomatically worded, it is safe 

to assume that this hewing closer to the alliance is in significant measure 

about China. Canberra’s policy elites do not perceive a direct or simple 

China “threat” but are concerned about China’s growing military power 

and uncertainties about its long-term effect on regional stability. 15 The 

credibility of U.S. alliance commitments thus matters deeply to Australia. 

If one of China’s objectives in the South China Sea is to undermine that 

credibility, then it is in Australia’s interests to help ensure that goal is 

not realized. Australian strategic diplomacy in the Indo-Pacific involves 

seeking to shape the regional security environment to maintain a balance 

of power and discourage coercive changes to the status quo. This helps 

explain Canberra’s efforts in recent years to improve security cooperation 

with Japan, India, South Korea, and various Southeast Asian states. 

Navigating between conflict and coercion. At the same time, Australia 

is not seeking to encourage recklessness by any side, including the United 

States or claimant states such as the Philippines and Vietnam. It has as 

13 Hugh White, The China Choice: Why America Should Share Power (Melbourne: Black Inc., 2012), 151. 

14 External Panel of Experts on the 2015 Defence White Paper, Guarding Against Uncertainty: 

Australian Attitudes to Defence (Canberra: Department of Defence, 2015), 33–34, 111. 

15 See, for instance, Richardson, “The Strategic Outlook for the Indo-Pacific Region.” 

[ 10 ]


profound an interest as any country in the avoidance of armed conflict 

or escalation. Australian policy on the South China Sea consistently 

calls for restraint on all sides. Australia is understandably seeking to 

build a reasonable security relationship with China, alongside its massive 

economic one, and it is not in Australia’s interests to be gratuitous, 

needlessly provocative, or entirely insensitive to how China defines its 

own interests in the South China Sea. Canberra does not take sides on the 

territorial claims and has been an advocate of practical confidence-building 

measures, transparency, and dialogue, including in ASEAN-centric 

forums such as the East Asia Summit. 

At the start of 2016, as China’s island-building moves to completion 

and with no rules-based solution to the South China Sea tensions in 

sight, the limits of a mostly declaratory policy approach by countries such 

as Australia have been made plain. A series of speeches and statements 

by ministers and officials throughout 2015 suggested that Australia was 

firming up its South China Sea policy. Following the publicized activity of 

the destroyer USS Lassen in October 2015, Canberra openly supported the 

U.S. policy of conducting freedom of navigation operations. 16 Intriguingly, 

it then came to light that Australia was quietly continuing to conduct its 

own activities to assert its rights of freedom of navigation in the South 

China Sea, or more specifically of overflight. In December 2015, a BBC 

journalist intercepted and broadcast radio communications from an 

Australian P-3 Orion maritime surveillance aircraft telling Chinese forces 

the plane was exercising rights under international law. Australian media 

reports suggested that the tempo of these flights had increased as a sign 

to Beijing that Australia did not accept claims to maritime territory or 

authority supposedly generated by China’s artificial islands. 17 

What Lies Ahead: Choices and Costs 

The question arises, what else is Australia likely or prepared to 

do to protect its interests in response to China’s behavior in the South 

China Sea? There had been some initial speculation that the moderate 

conservative government of Prime Minister Malcolm Turnbull, who 

replaced the markedly right-wing Tony Abbott in September 2015, would 

16 Shalailah Medhora, “Australia Strongly Supports U.S. Activity in South China Sea, Says Marise 

Payne,” Guardian, October 27, 2015. 

17 David Wroe and Philip Wen, “South China Sea: Australia Steps Up Air Patrols in Defiance of 

Beijing,” Sydney Morning Herald, December 15 2015. 

[ 11 ]

asia policy 

be cautious not to offend China. This was immediately put to rest, with the 

new leader publicly describing China’s behavior in the South China Sea 

as undermining Chinese interests and advocating a strategy combining 

diplomacy with “balancing.” 18 Such rhetoric, combined with revelations 

about Australia’s sustained assertion of rights of overflight, suggests 

that Canberra will continue to support international efforts to manage 

tensions in a critical part of the regional and global commons. In parallel 

with anticipated future U.S. freedom of navigation operations, continued 

Australian air force surveillance will help neutralize the strategic and 

diplomatic value of China’s island-building. 

Australia’s further options are limited but could include exploring 

creative, oblique ways to point out to China that island-building and 

coercion are harmful to its interests. For instance, Australia could step 

up its activism in convening new bilateral security partnerships or even 

minilateral security dialogues with countries concerned about the way 

China is using its power. Such initiatives would signal to China that its 

behavior is bringing about the very outcome it does not want—a firmer 

balancing alignment of other regional powers. Another option is bilateral 

diplomacy, with Australian foreign minister Julie Bishop’s firm opposition 

to China’s destabilizing declaration of an air defense identification zone over 

waters contested with Japan in 2013 providing an important precedent. 19 

In that instance, Australia weathered China’s diplomatic displeasure, 

an experience that has arguably strengthened Australia’s resolve and 

self-respect in handling differences with its largest trading partner. 20 

A looming test of Australia’s priorities will come with how it responds to 

the determination, due in early 2016, of the Permanent Court of Arbitration 

in The Hague on the case that the Philippines has brought against China 

over their competing territorial claims. Despite its repeated endorsement 

of a rules-based approach to the security problems in the South China Sea, 

Canberra has been less than outspoken in praising Manila’s initiative to 

appeal to the umpire. It appears this is not purely or even primarily about 

mollifying China. Rather, the issue is that Australia itself has previously 

18 John Garnaut, “Malcolm Turnbull Changes Direction on Foreign Policy: China Trumps the Islamic 

State Death Cult,” Age, September 24, 2015. 

19 “Angry China Rebukes Julie Bishop over East China Sea Dispute,” Australian, December 7, 2013. 

20 For further discussion of these options, see Rory Medcalf, “The Temperature in Canberra as the South 

China Sea Boils,” Center for Strategic and International Studies, Asia Maritime Transparency Initiative, 

June 4, 2015 u http://amti.csis.org/the-temperature-in-canberra-as-the-south-china-sea-boils. 

[ 12 ]


“opted out of mandatory dispute settlement” under UNCLOS in relation to 

its maritime boundary differences with its small neighbor, East Timor. 21 

In a connected world, no island is an island, including the island 

continent of Australia. For many reasons—a rules-based order, economic 

lifelines, balance of power, and the U.S. alliance—the South China Sea has 

become a major issue in Australian security and foreign policy. This status 

will not diminish soon. However, to go much further in translating its 

concerns into active policy, Canberra will need clear thinking on what costs 

and risks it is willing to incur. 

21 Sam Bateman, “Australia and the South China Sea Arbitration Case,” Australian Strategic 

Policy Institute, Strategist, December 17, 2015 u http://www.aspistrategist.org.au/ 

australia-and-the-south-china-sea-arbitration-case. 

[ 13 ]

asia policy 

India’s Strategic Stakes in the South China Sea 

Abhijit Singh 

In the wake of the U.S. Navy’s recent freedom of navigation patrols in 

the South China Sea in November 2015, maritime stability in Southeast 

Asia has been a hot topic of discussion in Asian strategic circles. The 

passage of USS Lassen within twelve nautical miles of Subi Reef in the 

Spratly Islands group was followed with a fly-by over the same area by U.S. 

B-52 bombers, leading to fears of an escalation in tensions between the 

United States and China. 

Despite some commentary that deemed the naval patrols as a needless 

provocation, 1 many regional analysts saw the patrols as an essential 

undertaking—important to highlight an issue of maritime principle to 

China. 2 Washington, proponents held, was well within its right to warn 

Beijing of the illegality of its reclamation in the South China Sea, as well 

as to underscore the invalidity of its territorial claims in the vicinity of 

artificially constructed islands. Unsurprisingly, many regional states came 

out in support of the U.S. decision to challenge China’s island building. 

Notwithstanding its vastly improved strategic relations with Washington, 

New Delhi, however, surprised regional watchers by maintaining a studious 

silence. This essay examines India’s understanding of the South China Sea 

disputes and assesses the implications of instability in this critical region for 

Indian interests and the Indo-Pacific more broadly. 

India’s Perspective on the South China Sea 

India’s reluctance to endorse a maneuver meant expressly to emphasize 

access to the maritime commons appeared odd since it lately has been 

vocal about the need to ensure freedom of navigation in the South China 

Sea, even raising pointed concerns over the growing state of insecurity in 

abhijit singh is a Research Fellow at the Institute for Defence Studies and Analyses in New Delhi. 

He can be reached at . 

1 Sam Bateman, “What Is the U.S. Protesting in the South China Sea?” East Asia Forum, October 20, 

2015 u http://www.eastasiaforum.org/2015/10/20/what-is-the-us-protesting-in-the-south-china-sea. 

2 Richard Javad Heydarian, “Showdown in the South China Sea: America Takes On China,” National 

Interest, October 27, 2015 u http://nationalinterest.org/feature/showdown-the-south-china-seaamerica-takes-china-14173. 

[ 14 ]


the region. 3 New Delhi, however, remains acutely conscious of its official 

position of neither being party to the disputes nor taking sides. 4 Regardless 

of the magnitude of nautical developments in the region, India’s security 

establishment fears that the perception of abandonment of its neutrality 

might be construed as strategic support for the United States—still the 

principal source of resistance to Chinese unilateralism in the South China 

Sea, but whose deterrence strategy, Indian analysts suspect, could spark an 

intense reaction from Beijing. 

Yet there is no mistaking a sense of exasperation in New Delhi with 

China’s maritime practices in East Asia, which many officials privately 

regard as being arbitrary and unreasonable. The aggressiveness with which 

China has sought to protect its turf in the South China Sea has led Indian 

strategists to believe that, unless sustained pressure is brought to bear upon 

China, a negotiated solution to the dispute is unattainable. 5 Not surprisingly, 

in at least three ASEAN-centric forums since the U.S. naval patrols, Indian 

leaders have emphasized the need for freedom of navigation, the right to 

passage and overflight, and peaceful resolution of disputes in accordance 

with the United Nations Convention on the Law of the Sea (UNCLOS). 

In November 2015, Prime Minister Narenda Modi made a reference 

to the South China Sea conflict in two successive events—at the thirteenth 

ASEAN-India summit and during a public lecture in Singapore—suggesting 

the need for a mechanism that could enhance cooperation in maritime 

security, counterpiracy, and humanitarian and disaster relief. 6 India also 

was widely reported to have snubbed China during the third meeting of the 

India-Philippines Joint Commission on Bilateral Cooperation in New Delhi 

3 Ajai Shukla, “Echoing Modi-Obama Agreement, Parrikar Calls for Freedom of Navigation in South 

China Sea,” Business Standard, November 4, 2015 u http://www.business-standard.com/article/ 

economy-policy/echoing-modi-obama-agreement-parrikar-calls-for-freedom-of-navigation-insouth-china-sea-115110401068_1.html. 

4 Rumel Dahiya and Jagannath Panda, “A Tale of Two Disputes: China’s Irrationality and India’s 

Stakes,” Institute for Defence Studies and Analyses, Policy Brief, June 29, 2015 u http://www.idsa. 

in/policybrief/ATaleofTwoDisputesChinasIrrationalityandIndiasStakes_rdahiya_290615. 

5 C. Raja Mohan, “Raja-Mandala: Why Delhi Must Not Be at Sea,” Indian Express, 

November 3, 2015 u http://indianexpress.com/article/opinion/columns/ 

raja-mandala-china-philippines-maritime-dispute-why-delhi-‌must-not-be-at-sea. 

6 Prashanth Chintala, “At ASEAN, Modi Brings Up South China Sea Issue,” Hindu, November 21, 

2015 u http://www.thehindu.com/news/national/13th-aseanindia-summit-modi-in-malaysiarefers-to-south-china-sea/article7903998.ece; 

and “In Singapore Lecture, PM Modi Alludes to 

South China Sea Dispute,” NDTV, November 23, 2015 u http://www.ndtv.com/india-news/ 

oceans-should-not-become-new-theatres-of-contests-pm-modi-1246663. 

[ 15 ]

asia policy 

in October, when a joint statement referred to the South China Sea as the 

“West Philippines Sea,” a term to which Beijing is averse. 7 

India has also increased its maritime deployments in the South China 

Sea, signaling a desire for an expanded security role in the western Pacific. 

After a contingent of four Indian naval ships completed a two-month tour 

of Southeast Asia in June, the stealth frigate INS Sahyadri was sent to the 

Philippines for an operational deployment in November. Concurrently, the 

Indian Navy has been conducting high-intensity operational exchanges 

with the United States—raising the complexity of Exercise Malabar by also 

inviting Japan to participate for the latest iteration in October. India has 

simultaneously improved its military cooperation with ASEAN countries 

such as Vietnam, Malaysia, Myanmar, and Thailand, even reportedly 

discussing the possible export of BrahMos supersonic cruise missiles to 

Vietnam as a strategic hedge against China. 8 

While the Indian Navy’s Pacific strategy is still in a stage of infancy, 

New Delhi recognizes the strategic implications of growing instability in the 

South China Sea—including the possibility of a skirmish leading to a wider 

conflict in the Asian littoral. Since January 2015, when President Barrack 

Obama visited India, official statements from New Delhi have increasingly 

flagged concerns over the deteriorating state of security relations in the 

Asia-Pacific. In a joint vision document signed during the visit, India and 

the United States urged all Southeast Asian states to avoid the “threat or use 

of force and pursue resolution of territorial and maritime disputes through 

all peaceful means”—a less than subtle reference to aggressive tactics by 

China in the South China Sea. 9 

The need to manage Beijing’s rising ambitions in maritime Asia has, in 

fact, been a key driver of the India-U.S. relationship over the past few years. 

That Prime Minister Modi chose to release a joint vision document during 

the U.S. president’s visit explicitly stating India’s concerns over the South 

China Sea was widely perceived as an indication of New Delhi’s growing 

resolve in underlining its stakes in the region. 

7 Rajeev Sharma, “India Ticks Off China at ASEAN Summit over South China Sea,” Daily O, 

November 11, 2015 u http://www.dailyo.in/politics/modi-in-malaysia-asean-summit-south-chinasea-india-china-ties/story/1/7516.html. 

8 “India Plans to Supply Vietnam BrahMos Missiles,” Deccan Herald, September 12, 2014 u 

http://www.deccanherald.com/content/430576/india-plans-supply-vietnam-brahmos.html. 

9 “U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region,” Ministry 

of External Affairs (India), January 25, 2015 u http://www.mea.gov.in/bilateral-documents. 

htm?dtl/24728/USIndia_Joint_Strategic_Vision_for_the_AsiaPacific_and_Indian_Ocean_Region. 

[ 16 ]


There are three important reasons for India’s growing interests in 

Southeast Asia’s maritime commons. First, Indian trade and economic 

linkages in the Pacific are becoming stronger and deeper. Not only are 

ASEAN and the far-eastern Pacific core areas of Modi’s Act East policy, 

the Southeast Asian commons are a vital facilitator of India’s future 

development. India has energy interests off the coast of Vietnam and is 

increasingly dependent on the Malacca Strait for the flow of goods and 

services. 10 With a tenfold increase in India-ASEAN trade during the past 

decade, economics increasingly factor into India’s maritime policy for 

the Pacific region. Territorial conflicts in the South China Sea, however, 

threaten the future trajectory of India’s economic relations, leading to a 

security-centered approach by New Delhi. 

Second, Indian policymakers are acutely aware of the fact that 

strategic security in the Southeast Asian littorals is a test case for 

international maritime law. With its steady rise in the hierarchy of 

powerful maritime nations, India feels a greater obligation to take a stand 

on the issues of maritime principle enshrined in UNCLOS. Critical among 

nautical norms is the right to access common maritime spaces, which 

New Delhi is keen to be seen defending more robustly. More importantly, 

it has come to better appreciate the importance of strategic balance in 

Asia. 11 From an Indian perspective, uncertainty over China’s geopolitical 

intensions in the South China Sea is destabilizing for maritime Asia, as 

it exacerbates existing power asymmetries. By taking a principled stand 

on the territorial disputes, India hopes to contribute to the restoration of 

strategic equilibrium in the Indo-Pacific. 

Yet the increasingly polarized discourse in the South China Sea 

places New Delhi in the uncomfortable position of having to support the 

ASEAN position without overly challenging China. Needless to say, India’s 

reserved approach is unhelpful in advancing its maritime relationships 

in Southeast Asia, where its South China Sea policy is regarded as passive 

and incremental. 12 India’s qualified position on the territorial disputes also 

undermines claims that its Act East policy involves greater nautical activism. 

Still, many Pacific states, notably the Philippines, recognize India as a model 

10 Amitendu Palit, “India-Southeast Asia Relations: Enhancing Mutual Benefits,” Brookings 

Institution, Brookings India Impact Series, May 2015 u http://www.brookings.in/wp-content/ 

uploads/2015/06/India-Southeast-Asia-Relations-Amitendu.pdf. 

11 C. Raja Mohan, “Modi’s American Engagement,” Seminar, April 2015 u http://www.india-seminar. 

com/2015/668/668_c_raja_mohan.htm. 

12 David Scott, “India’s Incremental Balancing in the South China Sea,” E-International Relations, July 26, 

2015 u http://www.e-ir.info/2015/07/26/indias-incremental-balancing-in-the-south-china-sea. 

[ 17 ]

asia policy 

maritime player, citing its acceptance of a ruling by the Permanent Court of 

Arbitration last year in which a maritime territorial dispute between India 

and Bangladesh was settled largely in favor of the latter. 13 

India and the Indian Ocean Region 

For all the hype surrounding India’s resurging interest in the Pacific, 

New Delhi’s Indian Ocean bias in managing operational security issues is 

clear. While the security establishment acknowledges concerns over China’s 

South China Sea policy, the Indian Navy’s main operational thrust is in the 

Indian Ocean region, where India’s political influence is seen to be losing 

out to China’s growing economic and diplomatic clout. 

Beijing’s announcement of its maritime Silk Road, in particular, has 

posed a challenge for India’s policy in the region. Outwardly, this maritime 

masterplan is focused on creating massive infrastructure and connectivity 

in the Indo-Pacific region, but New Delhi believes there is a broader strategic 

motive. Notwithstanding the project’s inherent economic benefits, Indian 

analysts believe its sales pitch conceals a larger design: securing Chinese 

resource and energy shipments in the Indian Ocean through greater 

operational presence by the People’s Liberation Army (PLA) Navy. 14 With 

African oil and minerals increasingly at the heart of China’s proposals for 

the Indian Ocean, it seems likely that the maritime Silk Road’s eventual aim 

is the establishment of naval facilities in the region to safeguard Chinese 

material interests. 

Beijing’s acknowledgement of its first logistics base in the Indian 

Ocean, in Djibouti, only confirms Indian apprehensions, prompting further 

speculation about an alleged Chinese plan for multiple logistical hubs in the 

Indian Ocean. 15 In particular, there are doubts about the dual-use nature of 

the planned facilities, by which ostensibly commercial sites could be upgraded 

to naval centers in times of geopolitical crises. Despite the rising acceptability 

index of the maritime Silk Road among Indian Ocean states, Indian observers 

continue to be apprehensive of China’s growing naval footprint. 16 

13 “Philippines Wants India at ‘Head Table’ to Tackle China’s Maritime Moves,” Business Standard, 

July 18, 2015 u http://www.business-standard.com/article/news-ians/philippines-wants-india-athead-table-to-tackle-china-s-maritime-moves-115071800732_1.html. 

14 Brahma Chellaney, “China’s Indian Ocean Strategy,” Japan Times, June 23, 2015 u http://www. 

japantimes.co.jp/opinion/2015/06/23/commentary/world-commentary/chinas-indian-ocean-strategy. 

15 K.J.M. Varma, “China to Build Military Logistics Base at Djibouti,” India Today, November 26, 2015 

u http://indiatoday.intoday.in/story/china-to-build-military-logistics-base-at-djibouti/1/532125.html. 

16 Abhijit Singh, “China’s ‘Maritime Bases’ in the IOR: A Chronicle of Dominance Foretold,” Strategic 

Analysis 30, no. 3 (2015). 

[ 18 ]


To be sure, New Delhi and Washington broadly agree that Beijing’s 

Indian Ocean objectives are subservient to its core maritime interests in the 

Pacific. But Indian analysts differ with their U.S. counterparts in viewing 

the Chinese reclamation efforts in the South China Sea as a precursor to 

greater power projection into the Bay of Bengal. From an Indian vantage 

point, the dispute over maritime territory in Southeast Asia provides Beijing 

with a useful excuse for a strategic thrust into the Indian Ocean region, 

invoking the threat of containment by democratic powers around the 

Asia-Pacific rim. 

The difficulty for New Delhi is that it also disagrees with Washington’s 

interpretation of maritime law and the freedoms enjoyed by foreign 

warships in littoral spaces. In particular, India does not fully support U.S. 

attempts at claiming a “right to uninterrupted passage” in coastal waters 

without the prior permission of the subject state—especially in areas that 

are deemed to be within a nation’s territorial waters and exclusive economic 

zone (EEZ). 17 New Delhi’s view on the subject, in fact, broadly corresponds 

with Beijing’s—particularly on the need for prior notification by foreign 

warships before entering a coastal state’s territorial waters or EEZ. 18 

Viewed through an Indian prism, unannounced forays through 

territorial waters and EEZs under the rubric of “innocent passage” or 

“freedom of navigation” are a problematic proposition. Even though 

UNCLOS permits continuous and expeditious passage—necessitated by 

needs of navigation—a maneuver undertaken solely for the purpose of 

scoring political points would be an illegitimate act, even if technically 

legal. Moreover, with the use of autonomous unmanned systems on the 

rise, legal provisions allowing unfettered access to littoral spaces appear to 

warrant a re-examination. 

The legality of littoral patrols in the South China Sea also has 

consequences for the Indian Navy’s strategy in dealing with the presence 

of foreign militaries near the Andaman and Nicobar Islands. New Delhi 

believes the island group deserves legal status as an “archipelago,” without 

17 Lalit K. Jha, “U.S. Regularly Conducts Operational Challenges in Indian EEZ,” India Today, 

October 20, 2015 u http://indiatoday.intoday.in/story/us-regularly-conducts-operationalchallenges-in-indian-eez/1/503344.html. 

See also Raj Narain Mishra, Indian Ocean and India’s 

Security (New Delhi: Mittal Publications, 1986), 102, 138. 

18 In March 2001, India issued a protest to Washington against the presence of the USNS Bowditch, a 

military survey vessel in the EEZ of the Nicobar Islands. For more on this case, see Colin Warbrick, 

Kaiyan Homi Kaikobad, and Micheal Bohlander, eds., International Law and Power: Perspectives on 

Legal Order and Justice (Boston: IDC Publishers, 2009), 565. 

[ 19 ]

asia policy 

which it cannot prevent foreign ships open access to these waters. 19 Reports 

in 2015 of a growing presence of Chinese ships around the Andaman Islands 

caused a flutter in the Indian security establishment. 20 U.S. navigation 

patrols in the South China Sea, Indian analysts fear, could encourage 

greater Chinese maritime activism near the Andaman and Nicobar Islands, 

as the PLA Navy seeks to expand the ambit of its operational presence in the 

Indian Ocean—ironically, employing the same tactics as the U.S. Navy in 

the congested Pacific littorals. 

India’s Strategic Maritime Preferences 

As things stand, New Delhi’s strategic preferences are clear. In the 

short term, India would like China to tone down its aggressiveness and stop 

attempting to unilaterally change the status quo in the South China Sea. 

This involves the cessation of reclamation activities and assertive maritime 

patrolling. But New Delhi also hopes the United States and its East Asian 

allies will resort to milder military strategies in confronting China. For the 

peaceful resolution of territorial disputes in accordance with international 

law, China and other claimants will need to abide by the 2002 Declaration 

on the Conduct of Parties in the South China Sea and tone down their 

military rhetoric. All sides will need to display sincerity in negotiating a 

legally binding pact to govern maritime conduct in the South China Sea. 

Over the medium and long term, it would be in India’s interests to 

see a diffusion of maritime power in the Pacific theater. Strengthening the 

maritime operations capabilities of Southeast Asian states would result in 

a more stable balance of power across the Indo-Pacific strategic system, 

leading to greater stability and predictability in the Indian Ocean. For this 

to occur, India realizes it may need to partner with the United States, Japan, 

and Australia in the wider Asian littoral to secure its own leverage against 

the rapidly growing Chinese naval presence and strategic influence. 

19 Sophia Kopela, Dependent Archipelagos in the Law of the Sea (Boston: Martinus Nijhoff Publishers, 

2013), 137. 

20 Jayanta Gupta, “Chinese Naval Ships Detected Near Andamans,” Times of India, September 4, 

2015 u http://timesofindia.indiatimes.com/india/Chinese-naval-ships-detected-near-Andamans/ 

articleshow/48817805.cms. 

[ 20 ]


Out of Its Comfort Zone: Indonesia and the South China Sea 


During a visit to Tokyo in 2015, Indonesia’s president Joko Widodo 

publicly rejected China’s so-called nine-dash or U-shaped line claim 

in the South China Sea. Yet shortly thereafter in Beijing, he also agreed with 

Chinese president Xi Jinping that Indonesia’s “global maritime fulcrum” 

(poros maritim dunia) concept is complementary to China’s 21st Century 

Maritime Silk Road. 1 Widodo’s statements give the impression that 

Indonesia is conveying a conflicting message to China, expressing concern 

about the U-shaped line while simultaneously trying to cultivate a closer 

economic relationship through maritime cooperation. This approach 

appears to reflect a hedging strategy that Indonesia and other Southeast 

Asian nations take in both accommodating and confronting China’s rise at 

the same time. 2 In the long run, however, Indonesia could face a fork in the 

road where it will be unable to have closer cooperation with China while 

concurrently resisting intimidation and coercion whenever and wherever 

China attempts to impose the U-shaped line. 

This essay examines Indonesia’s perspective as a non-claimant state 

on the South China Sea disputes. The first section discusses Indonesia’s 

interests in the South China Sea. The essay then considers the relevance 

of Indonesia’s status as a non-claimant state for its role in the disputes and 

assesses the implications of the South China Sea disputes for Indonesia’s 

relationships with China and the United States. Finally, the conclusion 

discusses the future that Indonesia envisages for the South China Sea. 

ristian atriandi supriyanto is an Indonesian Presidential PhD Scholar with the 

Strategic and Defence Studies Centre at the Australian National University. He can be reached at 

. 

1 Kanupriya Kapoor and Linda Sieg, “Indonesian President Says China’s Main Claim in South China 

Sea Has No Legal Basis,” Reuters, March 23, 2015 u http://www.reuters.com/article/us-indonesiachina-southchinasea-idUSKBN0MJ04320150323; 

and “Joint Statement on Strengthening 

Comprehensive Strategic Partnership between the People’s Republic of China and the Republic of 

Indonesia,” Ministry of Foreign Affairs of the People’s Republic of China, March 26, 2015 u 

http://www.fmprc.gov.cn/mfa_eng/wjdt_665385/2649_665393/t1249201.shtml. 

2 Cheng-Chwee Kuik, “Malaysia’s Balancing Act,” New York Times, December 6, 2015 u 

http://www.nytimes.com/2015/12/07/opinion/malaysias-balancing-act.html. 

[ 21 ]

asia policy 

What Is at Stake? 

The territorial disputes in the South China Sea place Indonesia’s 

interests at stake, namely the security of the resource-rich Natuna Islands, 

the sanctity of the United Nations Convention on the Law of the Sea 

(UNCLOS), the security of sea lines of communication, and nonalignment 

vis-à-vis the major powers. The security of the Natuna Islands is Indonesia’s 

immediate concern in the South China Sea. China has never claimed the 

islands, yet neither has it clarified to Indonesian policymakers the meaning 

of the U-shaped line. Indonesia rejects the U-shaped line and claims to 

have neither territorial nor boundary disputes with China. 3 However, 

Indonesia is increasingly concerned with the potential spillover effects of 

conflict between China and other claimants as a result of Beijing’s assertive 

enforcement of the U-shaped line. 

The Natuna Islands are scattered across over 100,000 square miles of 

ocean—more than ten times the size of their total land area—and only 

27 out of the 154 islands are inhabited, with a total population of around 

76,000 people. 4 Despite the lack of infrastructure, the Natuna Islands are 

one of Indonesia’s richest regencies in offshore natural resources. Fisheries 

are estimated to yield a potential of 500,000 tons annually, but in reality 

the locals manage to haul in only a third of it through traditional methods. 

Chinese fishermen continually venture south into the fishing grounds 

around the islands, escorted by Chinese government fishery patrol vessels. 

A number of incidents have occurred between these vessels and Indonesian 

maritime authorities while the latter were trying to apprehend illegal 

Chinese fishermen, including one threatening encounter in which a Chinese 

government vessel trained its guns on an Indonesian patrol boat. 5 

Beneath the seabed also lie vast energy resources. Located within 

the purported overlap of the U-shaped line, the East Natuna block 

(block D-Alpha) is estimated to contain one of the world’s largest gas 

reserves at around 46 trillion cubic feet. Indonesia’s oil and gas company, 

Pertamina, in partnerships with U.S.-based ExxonMobil, France’s Total SA, 

3 Randy Faby and Ben Blanchard, “Indonesia Asks China to Clarify South China Sea Claims,” Reuters, 

November 12, 2015 u http://www.reuters.com/article/us-southchinasea-china-indonesia-idUSKC 

N0T10KK20151112#FpxvFikQ4V2vr8eB.97. 

4 Ristian Atriandi Supriyanto, “Indonesia’s Natuna Islands: Next Flashpoint in the South China Sea?” 

S. Rajaratnam School of International Studies (RSIS), RSIS Commentary, no. 033, February 16, 

2015 u https://www.rsis.edu.sg/wp-content/uploads/2015/02/CO15033.pdf. 

5 Scott Bentley, “Shaping the Narrative: New Chinese Documentary Revisits Indonesia and the South 

China Sea,” Australian Strategic Policy Institute, Strategist, February 26, 2014 u http://www.aspistrategist. 

org.au/shaping-the-narrative-new-chinese-documentary-revisits-indonesia-and-the-south-china-sea. 

[ 22 ]


and Thailand’s PTT Public Company Limited, plans to begin production 

in 2024. 6 Additionally, Pertamina holds some shares in the offshore blocks 

near Vietnam in the Nam Con Son Basin with PetroVietnam and Petronas 

that might overlap with the U-shaped line. 

Chinese insistence on the U-shaped line also devalues Indonesia’s belief 

in the sanctity of UNCLOS. Jakarta has been consistently advocating for the 

convention, which recognizes Indonesia as an “archipelagic state,” so that 

it “may draw straight archipelagic baselines joining the outermost islands 

and dying reefs of the archipelago.” 7 Indonesia’s exclusive economic zone 

(EEZ) boundary north of the Natuna Islands was drawn in this manner. 

After China published its U-shaped line map again in 2009, Indonesia 

responded that China’s claim “clearly lacks international legal basis and is 

tantamount to upset[ting] the UNCLOS 1982.” 8 This statement reflects the 

sentiments of Indonesian diplomats, who consider the U-shaped line only 

as “an illustrative map and not a real map” and as “incomplete, inaccurate, 

inconsistent and legally problematic.” 9 

Apart from undermining UNCLOS, the South China Sea disputes could 

impede on the security of sea lines of communication. While merchant 

shipping navigation has not been violated, the growing risk of conflict could 

increase insurance rates and deter merchant ships from passing through the 

South China Sea. China might urge ships to provide notification—through 

electronic or other means—to its monitoring stations located in Chinesecontrolled 

artificial features in the area, thus providing indirect recognition 

of China’s sovereignty over the U-shaped line. Moreover, China could insist 

that commercial flights in and from the region, including Indonesia, comply 

with an air defense identification zone (ADIZ). These outcomes, albeit 

unlikely, are not impossible. Indonesia has clearly stated that it would reject 

a Chinese ADIZ, 10 and it would likewise reject Chinese-imposed reporting 

for foreign ships passing through the U-shaped line. 

6 Amahl Azwar, “Govt Looks to Approve East Natuna Bid,” Jakarta Post, August 14, 2013 u 

http://www.thejakartapost.com/news/2013/08/14/govt-looks-approve-east-natuna-bid.html. 

7 According to Article 7 of UNCLOS, straight baselines can be drawn only under exceptional 

circumstances. 

8 United Nations, “Permanent Mission of the Republic of Indonesia,” no. 480/POL-703/VII/10, 

July 8, 2010 u http://www.un.org/Depts/los/clcs_new/submissions_files/mysvnm33_09/ 

idn_2010re_mys_vnm_e.pdf. The Indonesian version of this note uses stronger words against 

China’s U-shaped line. 

9 Arif Havas Oegroseno, “Indonesia, South China Sea and the 11/10/9-dashed lines,” Jakarta Post, 

April 9, 2014 u http://m.thejakartapost.com/news/2014/04/09/indonesia-south-china-sea-and- 

11109-dashed-lines.html. 

10 Esther Teo, “South China Sea Air Zone? Complicated, Says Beijing,” Straits Times, February 20, 2014 

u http://www.straitstimes.com/asia/south-asia/south-china-sea-air-zone-complicated-says-beijing. 

[ 23 ]

asia policy 

Finally, as tensions in the South China Sea increase, Indonesia’s 

nonalignment vis-à-vis the major powers could be compromised. Indonesia 

maintains an “independent and active” (bebas aktif) foreign policy that 

emphasizes nonalignment. Although this policy eschews formal military 

alliances with foreign countries, Indonesia cannot remain neutral when 

international law is violated, especially when the violation occurs right 

within its front yard. By the same token, while formal military alliances 

are out of the question, anything short of that is possible. Jakarta wishes 

to cultivate close ties with both Beijing and Washington, as well as with 

other major powers, but its order of preference ultimately depends on who 

is aligned more closely with Indonesia’s national interests. Jakarta currently 

considers Beijing and Washington as both responsible for intensifying 

tensions in the South China Sea. However, Indonesia can also see that 

Beijing is a source of anxiety in the views of Southeast Asian claimants and 

thinks that Washington’s policy is largely a reaction to Beijing’s provocative 

behavior. Although it is not in Indonesia’s interest to lean on one major 

power against another, if push comes to shove, external assistance would 

be necessary, including closer military cooperation with the United States. 

A Cautious Non-claimant 

In May 2010, through its UN representative in New York, Indonesia 

declared that it “is not a claimant State to the sovereignty disputes in the 

South China Sea, and as such Indonesia has played an impartial yet active 

role in establishing confidence-building measures among the claimant 

States and creating an atmosphere of peace through a series of workshops 

on the South China Sea since 1990.” 11 However, being a non-claimant state 

connotes a double meaning. On the one hand, Indonesia does not lay claim 

to the disputed features in the South China Sea (such as the Spratly Islands), 

nor does it take sides with any claimant states with regard to the territorial 

disputes therein. On the other hand, Indonesia can attempt to be an honest 

broker by facilitating confidence-building measures among claimant states 

to peacefully manage their disputes. Understood in this context, Indonesia’s 

non-claimant status is not equivalent to that of a disinterested party. On the 

contrary, its non-claimant status creates a comfort zone where Indonesia 

can avoid being “drawn into the fray” alongside the claimant states, elevate 

its diplomatic prestige by offering to be an honest broker to the claimants, 

11 United Nations, “Permanent Mission of the Republic of Indonesia.” 

[ 24 ]


and reap prospective benefits of closer cooperation with China and the 

United States. 12 

By consistently rejecting the U-shaped line, Indonesia can avoid 

creating the perception that it has become a claimant state. If it were to 

acknowledge that overlaps do exist between the U-shaped line and its EEZ, 

Indonesia would indirectly lend credence to Beijing’s claim and undermine 

its credibility as a non-claimant state. This non-claimant status also allows 

Indonesia to elevate its diplomatic prestige by offering to facilitate dialogues 

through a multilateral, consensus-building approach. Indonesia did this in 

the 1990s by facilitating an informal workshop series to reduce tensions and 

build confidence among the claimants and other interested parties. More 

recently, Indonesia has tried to help preserve ASEAN’s unity in the face 

of disagreements over the South China Sea disputes, such as following the 

2012 ASEAN Foreign Ministers’ Meeting in Phnom Penh. 

This preference for a multilateral, consensus-building approach is also 

reflected in Indonesia’s continuing emphasis on the implementation of the 

2002 Declaration on the Conduct of Parties in the South China Sea and 

attempts to formulate a code of conduct, rather than on the Philippines’ 

unilateral decision to seek international arbitration in The Hague, as 

the best way to manage the South China Sea disputes. Through such an 

approach, Indonesia can better showcase its role as an honest broker, while 

at the same time elevating its diplomatic prestige as ASEAN’s primus inter 

pares—now buttressed with President Widodo’s maritime diplomacy 

agenda. In contrast, unilateral approaches, such as the Philippines’ 

arbitration decision, are seen as divisive and leave less maneuvering room 

for Indonesia to play a greater facilitating role. 

Relationships with China and the United States 

Indonesia’s non-claimants status allows it to avoid the political baggage 

of territorial disputes when cultivating closer cooperation with China and 

the United States. Despite its repeated verbal backlash against the U-shaped 

line claim, Indonesia welcomes growing economic and security cooperation 

with China. As of September 2015, China is Indonesia’s largest trading 

partner with a total value of around $27.2 billion. 13 Jakarta is interested in 

12 Douglas Johnson, “Drawn into the Fray: Indonesia’s Natuna Islands Meet China’s Long Gaze 

South,” Asian Affairs 42, no. 3 (1997): 154. 

13 World Trade Organization, “Indonesia,” September 2015 u http://stat.wto.org/CountryProfile/ 

WSDBCountryPFView.aspx?Language=S&Country=ID. 

[ 25 ]

asia policy 

Beijing’s investment pledges, especially through the Asian Infrastructure 

Investment Bank, to finance large-scale infrastructure projects, such as 

seaports, that can help achieve President Widodo’s maritime agenda. 14 

The fanfare surrounding Sino-Indonesian maritime cooperation at 

times gives the impression that Indonesia is strategically tilting toward 

China. However, these closer economic ties with China are just another 

expression of Indonesia’s pragmatic policy to finance its cash-strapped 

infrastructure development. 15 The government reports that in 2005–14 only 

7% of Beijing’s investments in Indonesia were actually implemented. 16 A 

similar trend is also found in bilateral security cooperation. Although both 

countries have announced joint military activities and projects, including 

special forces and naval exercises, missile development, and surveillance 

systems, these activities are mainly symbolic and add little substantial 

value to Indonesia’s cooperation with its traditional Western partners, 

such as the United States and European Union. Instead, Sino-Indonesian 

security cooperation can be seen as a diplomatic way to showcase Jakarta’s 

nonalignment policy, if not also as a diversionary maneuver to gain 

more military assistance from the West amid the intensifying Sino-U.S. 

geopolitical competition. 

On the other hand, Indonesia remains wary of closer alignment with 

the United States and other Western countries, lest it be accused of violating 

its independent and active foreign policy. The United States remains one 

of Indonesia’s top trade and investment partners, and Jakarta has shown 

interest in joining the U.S.-led Trans Pacific Partnership. Indonesia is also 

trying to deepen the country’s military partnership with the United States 

and its allies, including in the maritime domain. Growing concern over 

Chinese maritime assertiveness in the South China Sea has led Jakarta and 

Washington to conduct military surveillance flights over the Natuna Islands 

and the surrounding waters and to plan regular submarine “engagements 

14 Ben Otto, “China-Led Bank to Focus on Big-Ticket Projects, Indonesia Says,” Wall Street Journal, 

April 10, 2015 u http://www.wsj.com/articles/china-led-aiib-to-focus-on-big-ticket-projectsindonesia-says-1428647276. 

15 Rizal Sukma, “Insight: Is Indonesia Tilting toward China?” Jakarta Post, December 11, 2015 u 

http://m.thejakartapost.com/news/2015/12/11/insight-is-indonesia-tilting-toward-china.html. 

16 “BKPM Seeks to Boost Investment from China,” Indonesian Investment Coordinating Board, 

March 23, 2015 u http://www7.bkpm.go.id/contents/news_detail/230101/BKPM+Seeks+to+Boost 

+Investment+from+China#.Vnj4UpN973A. 

[ 26 ]


and operations.” 17 In addition, Indonesia is a target recipient country of the 

U.S.-funded Southeast Asia Maritime Security Initiative that was announced 

in 2015. Such U.S. assistance could help Indonesia develop its nascent coast 

guard agency to better patrol the country’s vast maritime swathes, including 

waters around the Natuna Islands. However, this development should not 

be interpreted as a sign of Indonesia’s alignment with the United States. 

If all things stay the same, Indonesia still wishes to see all major powers, 

especially the United States and China, keep each other in check. Thus, its 

interests continue to lie in preserving ASEAN unity and centrality against 

the domination of a single major power. 

Conclusion: Future Instability 

Without doubt, the most interesting question is what happens if all 

things fail to stay the same. In other words, what if the claimant states—and 

interested parties—engage in behaviors that make the South China Sea 

less stable and more prone to conflict? From the moment China revealed 

its U-shaped line at an Indonesia-facilitated workshop in 1993 until 2010, 

Indonesia could simultaneously both cultivate closer cooperation with 

China and reject the U-shaped line. This is the status quo Indonesia wishes 

to uphold. 

The strategic ambiguity that China carefully and masterfully 

maintained in the last two decades helped sustain this status quo. By 

keeping the U-shaped line from claiming the insular features of the Natuna 

Islands, China removed the most sensitive of Indonesia’s sovereignty 

concerns. It is becoming clearer, however, that China’s ambiguity is more 

declaratory than actual. Despite this vague stance on the potential overlap 

between the U-shaped line and Indonesia’s EEZ boundary, China’s behavior 

suggests that the line can stretch as far south as Beijing wants. Even if China 

were to decide to “compromise” and adjust the southern extremity of the 

U-shaped line to align with Indonesia’s EEZ boundary, Jakarta would still 

not accept such a move because of the intimidating and coercive nature via 

which Beijing enforces its claim vis-à-vis the ASEAN claimants, even apart 

from the illegality of the U-shaped line itself under UNCLOS. 

17 Kanupriya Kapoor and Randy Fabi, “Indonesia Eyes Regular Navy Exercises with U.S. in 

South China Sea,” Reuters, April 13, 2015 u http://in.reuters.com/article/indonesia-ussouthchinasea-idINKBN0N40NT20150413; 

and Brian Reynolds, “Submarine Group 7 

Strengthens Ties with the Indonesian Submarine Force,” Submarine Force Pacific, April 20, 

2015 u http://www.csp.navy.mil/Media/News-Articles/Display-News/Article/633587/ 

submarine-group-7-strengthens-ties-with-the-indonesian-submarine-force. 

[ 27 ]

asia policy 

As China increasingly finds the status quo untenable, Indonesia grows 

more convinced that the South China Sea is becoming unstable. The former 

chief of the Indonesian Armed Forces, General Moeldoko, felt dismayed 

with the U-shaped line and pledged that the Indonesian National Defence 

Forces would strengthen their presence in Natuna. 18 This would include 

a greater deployment of naval and air assets for combat and surveillance 

purposes. Indonesia’s top security minister and former senior adviser to 

President Widodo, Luhut Pandjaitan, has even threatened to take China 

to an international court if it continues to assert its U-shaped line, which 

has the potential to affect the security of the Natuna Islands. 19 Unlike in 

the past, when it had to rely more on diplomatic overtures, China can now 

utilize its naval and law-enforcement capabilities to impose its territorial 

claims. The recent fortification and militarization of features claimed 

by China has created anxiety in Indonesia, not just because of their 

proximity to the Natuna Islands, but also because Chinese activities could 

destabilize the situation further and increase the risk of conflict, with real 

consequences for Indonesia’s interests. It appears that the sooner Indonesia 

begins contemplating a life out of its comfort zone, the better it can brace for 

this future instability. 

18 Moeldoko, “China’s Dismaying New Claims in the South China Sea,” Wall Street Journal, April 24, 

2014 u http://online.wsj.com/articles/SB10001424052702304279904579515692835172248. 

19 Sara Schonhardt and Ben Otto, “Indonesia Invokes International Tribunal in South China 

Sea Dispute,” Wall Street Journal, November 12, 2015 u http://www.wsj.com/articles/ 

indonesia-invokes-international-tribunal-in-south-china-sea-dispute-1447260065. 

[ 28 ]


Japan’s Perceptions of and Interests in the South China Sea 

Yoji Koda 

China’s assertive and high-handed activities in Asian waters—especially 

in the East and South China Seas—are generating serious security 

concerns within the international community. In particular, China’s unique, 

unilateral positions on maritime issues, which it claims are supported 

by its wider, and sometimes self-centered, interpretation of the United 

Nations Convention on the Law of the Sea (UNCLOS) and other established 

international rules, have puzzled regional states and stakeholders such as 

the United States. At the same time, disputes in the South China Sea risk 

escalating into military clashes between the United States and China. 

Thus, for Japan, the South China Sea does not simply involve territorial 

disputes among coastal nations but rather raises a grand issue that could 

cause a direct military collision, undermining existing stability and 

potentially leading the region and the world into an unprecedented chaotic 

situation. This essay examines Japan’s perceptions of and interests in the 

South China Sea. Japan’s primary concerns in the region are twofold: First, 

China’s reclamation activities and military buildup could eventually give it 

strategic control of the sea lines of communication. Second, the potential 

escalation of tensions between China and the United States, Japan’s key 

ally, poses a threat to regional stability. The essay then examines Japanese 

security policy and assesses what actions Japan could take to help stabilize 

the situation. 

An Overview of Japan’s Key Concerns 

China’s reclamation and island-building activities. Stretching 

approximately 1,750 miles from the Bashi Channel/Luzon Strait to 

Singapore and 1,250 miles from Hong Kong to Brunei, the South China 

Sea is roughly 9.5 times as large as Japan and includes around two hundred 

islands, rocks, shoals, and reefs. There are several prominent archipelagos, 

such as the Paracel Islands and the Spratly Islands, and each has its own 

strategic significance. 

yoji koda is a former Vice Admiral of the Japan Maritime Self-Defense Force (JMSDF) and former 

Commander in Chief of the JMSDF fleet. He can be reached at . 

[ 29 ]

asia policy 

Since 2013, China has started reclamation at seven lagoons and engaged 

in the construction of artificial islands. Fiery Cross Reef seems to be a core 

spot that includes full military facilities, most notably a runway and a deep 

port. Subi and Mischief Reefs, which are about 125 miles apart, are the other 

artificial islands with runways and port facilities. Japan fears that four other 

artificial islands with various support facilities could function as outer 

guard posts for the three main islands with airfields and air-surveillance 

sites that could enable a potential Chinese air defense identification zone in 

the South China Sea. These man-made islands, when fully completed, would 

provide China with strong footholds in the Spratly Islands for controlling 

most of the sea lines of communication and for monitoring foreign naval 

and air activities. Moreover, if China in the future ever successfully builds 

an artificial island at the Scarborough Shoal, there would be a strategic 

triangle connecting Woody Island, the Spratlys, and Scarborough Shoal 

that would cover most of the South China Sea. The impact of this strategic 

triangle would be tremendous for the United States’ and Japan’s strategic 

planning and could be a game changer in regional power relations. 

As a major global power, China has a national objective to be a nuclear 

power comparable with the United States. However, China lacks longrange 

bombers and, as a result, naturally depends on its strategic missile 

forces, including its maritime strategic nuclear capabilities, as a major 

element. In this context, the People’s Liberation Army (PLA) Navy must 

maintain a robust nuclear-powered ballistic missile submarine (SSBN) 

force and protect this force against the antisubmarine warfare capabilities 

of potential adversaries—especially the U.S. Navy’s nuclear-powered attack 

submarine (SSN) force. The PLA Navy has completed a new naval base 

at Sanya on Hainan Island, which is ideal for deploying its SSBN force to 

patrol in the Indian and the Pacific Oceans. 

If the size of China’s SSBN force grows to more than eight submarines, 

the PLA Navy may establish two or more submarine patrol areas in the 

Indian Ocean or the western Pacific. The two launching spots together 

would provide nuclear reach to the United States, casting a dark shadow 

over the U.S. nuclear strategy and ballistic missile defense posture. 

However, Hainan poses one serious problem to the PLA Navy: the base 

is openly exposed to the South China Sea, and thus is also exposed to the 

advanced antisubmarine warfare forces of the U.S. Navy. So, for the PLA 

Navy, SSBN protection in the South China Sea will be another key task. 

China’s determination to monopolize the southern South China Sea around 

[ 30 ]


the Spratlys is a clear signal that the PLA Navy is beginning to execute its 

plan to exert greater sea control for SSBN protection in the region. 

The United States and freedom of navigation. Traditionally, the United 

States has not supported any specific country in a territorial dispute, and 

the position of the U.S. government on disputes in the South China Sea 

has also been neutral, even toward China. At the same time, however, the 

United States has repeatedly affirmed freedom of navigation as one of its 

key national interests. 

There are two interpretations of this policy. One adopts the simple 

principle that freedom of navigation guarantees any party’s free activities 

at sea under UNCLOS. The second interpretation is more important than 

the first but is less understood. According to this view, since freedom of 

navigation is a U.S. national interest, if any conflict in the South China Sea 

is considered to cause interference against free and safe use of the sea, the 

United States, which may not even be a party to the dispute, may interpret 

this conflict as an infringement of its national interest. Thus, the United 

States preserves the right to intervene in any maritime conflict in the South 

China Sea if that conflict is interpreted as a violation of the freedom of 

navigation principle. Therefore, both in theory and in practice, to protect 

U.S. national interests, the United States may intervene in a regional conflict 

in the South China Sea. 

Japan’s Security Strategy 

Japan’s security strategy before the end of Cold War had been solely 

focused on the defense of Japan in a narrow sense. This has meant that, in 

compliance with the country’s pacifist constitution, the Japan Self-Defense 

Forces (JSDF) were strictly limited to repelling foreign military aggression 

against Japan, and any preemptive strike or counterattack against an 

enemy’s homeland was considered to be unconstitutional. After the 

Cold War, Japan gradually expanded the role of the JSDF to meet the 

requirements of international organizations by passing new legislation 

while still relying on the same interpretation of the pacifist constitution: 

use of force by the JSDF is strictly prohibited in any overseas missions. In 

this context, the JSDF can only conduct military operations as a real armed 

force in self-defense of Japan’s territory and airspace as well as surrounding 

waters up to one thousand nautical miles from Japan. It is thus difficult 

to find a good rationale for the deployment of the JSDF with full military 

capacity to incidents in the South China Sea. However, JSDF units can be 

[ 31 ]

asia policy 

deployed for other missions than homeland defense—such missions include 

surveillance, logistical support, humanitarian assistance and disaster relief, 

port calls, and combined training and exercises. 

Japan’s new security legislation from last September will give the 

government wider options on Japan-related security incidents for the first 

time under the current constitution. Under the new legislation, in theory, 

an armed attack against allied foreign forces—which is not a direct act of 

aggression against Japan but clearly challenges its national sovereignty 

and jeopardizes its fundamental stability—could be a subject of Japan’s 

execution of the right of collective self-defense. Details of the government’s 

options under the new legislation have not yet been announced, but it is 

clear that the possibility of JSDF military operations in the South China 

Sea under the new policy will become greater than before. One thing 

to be noted is the fact that the government of Japan set another policy to 

strictly limit the conditions to exercise its right of collective self-defense in 

the abovementioned situations. A key objective of the restrictions is to not 

violate the current pacifist constitution. 

At the same time, maintaining the presence of U.S. forces in the region 

is a core component of Japan’s security strategy. U.S. forces stationed in and 

operating around Japan have two major missions. The first is maintaining 

a strategic strike capability in Japan’s defense, and the second is to deter 

aggression through their presence, thereby assisting in the maintenance 

of regional stability. In the latter mission, Japan has played an extremely 

important role for the United States. Without U.S. military bases and 

support facilities, including fuel and ammunition depots in Japan, the 

continuous presence of U.S. forces in the region would be very difficult to 

maintain. In addition, Japan’s social and industrial infrastructure, which 

forms the foundation of its overall support for U.S. forces, is indispensable. 

Most likely, the JSDF will come to bear greater responsibility in supporting 

U.S. operations in future South China Sea incidents than it has previously. 

Japan’s Position on and Potential Measures toward the 

South China Sea 

Despite the fact that almost 80% of Japan’s crude oil imports, critical to 

Japan’s vitality, pass through the South China Sea, the sea has been outside 

the JSDF’s operational planning for decades. In general, many Japanese 

people have found sticking to an armchair interpretation of the pacifist 

constitution more comfortable than facing the possibility of real world 

[ 32 ]


military risks. In addition, for many years the decades-long nonmilitary 

confrontation over the Senkaku Islands in the East China Sea consumed 

more attention from the government, media, and ordinary Japanese people 

than the situation in the South China Sea. 

However, global media reports of China’s unilateral land reclamation 

activities in the Spratlys pushed Japan to make its position clear. The Japanese 

government quickly defined China’s actions as in violation of UNCLOS and 

designated China’s policy on the South China Sea as an attempt to change the 

status quo by force. Japan also supports the United States’ position on China’s 

assertive maneuvers in the South China Sea and U.S. freedom of navigation 

actions. Despite its military limitations, Japan can take several actions to 

support stability in the South China Sea. 

Support regional capacity building. China’s unilateral expansion in 

the South China Sea is causing serious concerns and frictions with coastal 

states, including non-claimant states such as Singapore and Indonesia. 

However, many of these countries’ military forces are extremely limited and 

do not match China’s capabilities. It is thus quite clear that Japan can help 

improve the maritime capacities of these countries, with naval and coast 

guard capacity building being given the highest priority. Japan has initiated, 

and in 2015 started realizing, several capacity-building programs for coastal 

nations in Southeast Asia, in particular the Philippines and Vietnam, which 

have long been under political and military stress from China. Activities 

include transferring nonmilitary patrol vessels and training for maritime 

law-enforcement personnel. The contents of these capacity-building 

programs will expand quickly both in quality and quantity. 

Another challenge is the extremely limited capability of air-maritime 

domain awareness among the coastal Southeast Asian states. One idea 

to help rectify this problem would be to build a joint domain-awareness 

network whereby the coastal participants provide air-maritime 

information and Japan and the United States provide satellite and external 

information. All participating nations would be free to draw information 

from the network. If completed, this could become a key tool to improve 

the domain awareness of participating nations and might encourage them 

to take cooperative and coordinated actions against aggressive behavior 

by any nation. To help develop these capabilities, Japan and the United 

States should jointly support the capacity building of the coastal Southeast 

Asian countries. 

Support U.S. strategy and maintain U.S. presence. It is clear that the 

United States is the only nation able to provide well-functioning deterrence 

[ 33 ]

asia policy 

against China, given its capability to destroy China’s major infrastructure 

and military facilities in a war scenario. As discussed earlier, China’s major 

bases in the South China Sea at Sanya, Woody Island, and Fiery Cross, as 

well as perhaps Scarborough in the future, have huge strategic significance; 

however, they also possess vulnerabilities, especially from incoming 

precision-guided missiles. Because all these key bases are exposed to attacks 

from the sea and the air, they could be targeted by the long-range strike 

capabilities of U.S. forces. 

Washington should send a clear signal to Beijing that the United States 

does not tolerate unilateral and aggressive actions that violate established 

international norms. It is also important to signal that to deter China’s 

adventurism and provocations, not only in the South China Sea but within 

the entire Asian region, the United States is determined to exercise its 

military capability when necessary. From Japan’s perspective, this type 

of action by the United States will make a real contribution to regional 

stability, which the Asian coastal states have long awaited. 

Japan, as a major allied partner of the United States, should provide 

support to U.S. forces operating in the region for this purpose. In order 

for Japan to do so, the JSDF should bear more responsibility for air and 

maritime operations in the western Pacific and the East China Sea. 

Increasing the missions of the JSDF would enable U.S. forces to assume a 

more flexible deployment posture in other areas, depending on U.S. strategic 

requirements, rather than remain tethered to operations in Japanese waters. 

In particular, expanded roles for the Japan Maritime Self-Defense Force 

(JMSDF) in Japanese waters would relieve the U.S. Navy from old missions 

and increase its capacity for more antisubmarine warfare operations in the 

South China Sea. The JSDF’s new operational posture would also improve 

U.S. forces’ flexibility to maintain an uninterrupted presence in the region. 

Support U.S. freedom of navigation operations. Recently, the U.S. Navy 

and Air Force conducted freedom of navigation operations in the vicinity of 

China’s artificial islands by sending the USS Lassen within twelve nautical 

miles of one of the islands and later by overflying B-52 bombers. The Royal 

Australian Air Force reportedly conducted its own freedom of navigation 

operations with a P-3 Orion in mid-December. 

Japan strongly supports such operations. As a seafaring nation and a 

close ally of the United States, Japan should take clear and visible action 

to support freedom of navigation at the earliest opportunity. Sending 

JSDF aircraft and ships to the region for this purpose is considered to be 

constitutional in Japan. The best way for Japan to realize this maneuver 

[ 34 ]


would be to have JMSDF ships that are to be deployed to the Gulf of Aden 

for counterpiracy operations steam through China’s claimed territorial 

waters that are defined as the high seas by international norms. Thus, Japan 

would conduct freedom of navigation operations naturally and calmly and 

make its position on UNCLOS clear. 

Prevent China from island-building at the Scarborough Shoal. In order to 

effectively control the area surrounded by the nine-dash line, China would 

likely need to make use of the artificial islands for strategic purposes and 

may try to reclaim the Scarborough Shoal. If military facilities on the shoal 

are completed, the strategic power balance in the South China Sea will be 

substantially changed to an unrecoverable degree for Japan and the United 

States. The negative impact generated by this new challenge should be 

seriously recognized and re-examined by both Japan and the United States. 

Thus, it is strategically important that they mobilize all possible political 

and diplomatic means for international cooperation to stop future attempts 

by China to build man-made islands at the Scarborough Shoal. 

Further promote bilateral and multilateral exercises with the coastal 

Southeast Asian militaries. After the end of the Cold War, Japan began 

military exchanges with nations of the South China Sea region, and in 

general its relationships with them have been extremely good. These nations 

include Australia, Indonesia, Singapore, Malaysia, Thailand, Brunei, the 

Philippines, and Vietnam. The JMSDF has also been conducting bilateral 

and multinational exercises with navies of the South China Sea states 

for the last two decades. These exercises have quickly and substantially 

improved navy-to-navy relationships and enhanced mutual understanding 

and interoperability, which indicates to Beijing that Japan and the United 

States are ready to respond to any regional adventurism. It is also important 

for Japan and the U.S. Seventh Fleet to conduct joint bilateral warfighting 

exercises in the South China Sea, taking extreme precautions to protect 

their own intelligence elements. 

Last but not least, strategic port calls have a significant role to play in 

the South China Sea. A recent agreement between Japan and Vietnam on 

accepting JMSDF ships at Cam Ranh Bay, which has traditionally been 

a strategic spot to control the entire South China Sea, is a noteworthy 

development. The U.S. Navy will most likely join the JMSDF shortly, and 

this will enhance the U.S. Navy’s presence in the South China Sea. There are 

many other opportunities for strategic port calls by Japan and the U.S. Navy 

and many roles both countries can play in assisting regional stability. 

[ 35 ]

asia policy 

South Korea and the South China Sea: 

A Domestic and International Balancing Act 

Lee Jaehyon 

South Korea has long been unclear on its stance regarding the territorial 

disputes in the South China Sea. For many years, the closest thing 

the government had to an official position was the consistent but vague 

statements of successive spokespeople from the Ministry of Foreign 

Affairs. These statements essentially noted that the Republic of Korea 

(ROK) supported freedom of navigation in the South China Sea and hoped 

the parties involved would resolve the disputes in a peaceful manner 

through dialogue. 

In 2015, however, there was a slight but crucial change in that position. 

There had long been rumors that South Korea was under pressure from 

the United States to clarify its position on the South China Sea. Then, in 

November, Defense Minister Han Min-goo delivered remarks at the ASEAN 

Defense Ministers’ Meeting-Plus (ADMM-Plus) stating that freedom of 

navigation and overflight must be guaranteed and that the disputes should be 

resolved in a peaceful manner. 1 Later that month, President Park Geun-hye 

went a step further at the East Asia Summit in Malaysia when she stated that 

concerned parties should observe the Declaration on the Conduct of Parties 

in the South China Sea and that disputes should be resolved according 

to international law. She went on to assert that concerned countries must 

respect the promise of demilitarizing the South China Sea, which was 

widely interpreted as supporting the U.S. position on the disputes. At the 

2015 East Asia Summit, Park argued that “Korea has consistently stressed 

that the dispute must be peacefully resolved according to international 

agreements and code of conduct” and “China must guarantee the right of 

free navigation and flight.” 2 

lee jaehyon is a Senior Research Fellow in the ASEAN and Oceania Studies Program in the Center 

for Regional Studies and the Director of External Relations at the Asan Institute for Policy Studies. He 

can be reached at . 

1 “Freedom of Navigation Should Be Guaranteed in Disputed South China Sea: S. Korean Defense 

Minister,” Yonhap News Agency, November 4, 2015 u http://english.yonhapnews.co.kr/news/2015/ 

11/04/0200000000AEN20151104008751315.html. 

2 “Park Appeals to Beijing on South China Sea,” Korea Joongang Daily, November 24, 2015 u 

http://koreajoongangdaily.joins.com/news/article/Article.aspx?aid=3011908. 

[ 36 ]


Despite these recent clarifications by the president and defense 

minister, South Korea’s position on the disputes in the South China Sea has 

been quite vague and ambivalent. While South Korea does not claim any 

territories in the South China Sea and has no direct military or strategic 

interests there, to fully understand the country’s position, it is important to 

understand what stakes the ROK does have in the resolution of the current 

disputes. This essay examines these issues and draws implications for South 

Korea’s relations with both the United States and China. 

South Korea’s Economic and Diplomatic Interests in the South China Sea 

Though lacking direct strategic and military interests in the region, 

South Korea nevertheless has huge economic interests in the South China 

Sea. As the world’s sixth-largest trading nation by volume, it is highly 

dependent on the free flow of goods. In 2014, more than 1.1 billion tons of 

its trade passed through the South China Sea. South Korea is also highly 

dependent on energy resources from overseas. Approximately 86% of its 

oil consumption is supplied by imports from the Middle East, almost all of 

which must transit the South China Sea. 3 In sum, any undesirable events in 

the South China Sea or a consequential blockade of its sea lanes would be 

devastating to the South Korean economy. 

The ROK’s diplomatic interests in the region are just as important as 

trade. First, in recent years, South Korea has developed a close partnership 

with the Association of Southeast Asia Nations (ASEAN) countries, 

and two of the most vocal South China Sea claimants—the Philippines 

and Vietnam—are ASEAN members. South Korea fears that when it 

discusses security cooperation with the ASEAN countries, its position 

on the disputes may be on the agenda, which is likely to put it in an 

awkward position. Additionally, South Korea frequently calls on ASEAN 

countries for support on Korean Peninsula issues such as North Korean 

denuclearization. If some ASEAN countries were to ask it to support 

ASEAN’s position on the South China Sea disputes in return for their 

supporting South Korea on the Korean Peninsula, then Seoul would face 

a dilemma. 

3 “Namjung-gughae ginjang gojo…Suchul-ib hanglo maghilkka choggag” [Rising Tension in South 

China Sea…Maritime Trade Route in Danger], Yonhap News Agency, October 28, 2015 u 

http://www.yonhapnews.co.kr/bulletin/2015/10/28/0200000000AKR20151028212600003.HTML; 

and Ministry of Foreign Affairs (ROK) website u http://www.mofa.go.kr/ENG/policy/energy/ 

overview/energy/index.jsp?menu=m_20_130_10&tabmenu=t_3. 

[ 37 ]

asia policy 

South Korea Is Caught between the United States and China 

Compared with the potential impact of the South China Sea disputes 

on South Korea’s relations with the United States and China, the dilemma 

with the ASEAN countries is secondary. It is not an exaggeration to say that 

the United States and China have contradicting stances on the disputes. As 

is the case with South Korea’s broader strategic dilemma of being caught in 

the middle of Sino-U.S. strategic competition, the ROK is not entirely free 

to support either power in the South China Sea without expecting a serious 

backlash from the other superpower. 

In general, South Korea supports freedom of navigation and the ruling 

of the United Nations Convention on the Law of the Sea (UNCLOS) in 

the disputes. It sees these mechanisms as ways to safeguard South Korea’s 

huge economic interests in the South China Sea. If Seoul wants to take this 

position a step further, it could say that demilitarization in the disputed 

area also serves its interests. This would closely align the country with the 

stance of the United States, which is one of the most important safety nets 

for South Korea, especially against the potential threat from North Korea. 

However, clarifying this position would almost certainly draw a harsh 

response from China. Given that South Korea is so heavily dependent on 

China for its economic prosperity, this would not be an easy policy option. 

China accounts for over 30% of the ROK’s trade—more than its trade with the 

United States and Japan combined. South Korea remembers what happened 

during the so-called garlic standoff with China in 2000 when the government 

imposed heavy tariffs on cheap garlic imports from China to protect South 

Korean farmers. China responded by banning imports from the ROK of 

mobile phones and chemical products. Whereas garlic imports from China 

amounted to only $9 million at the time, South Korea’s mobile phone and 

chemical product exports to China exceeded $471 million. 4 Additionally, 

any country that is economically dependent on China will remember what 

happened when China banned exports of rare earth elements to Japan in 2010. 

However, South Korea’s economic dependence on China is not the only 

important factor; security interests are also at stake. As the United States is one 

of the most important players in the Korean Peninsula issue, so is China in a 

different way. The United States is crucial in deterring any potential military 

threat posed by North Korea. In contrast, South Korean policymakers have 

long believed that China has the ability to influence and control North Korea’s 

4 Don Kirk, “Just a Little Garlic Overpowers Asian Trade Ties,” New York Times, July 8, 2000 u 

http://www.nytimes.com/2000/07/08/news/08iht-garlic.2.t.html. 

[ 38 ]


behavior. If China is determined to do so, this could be a huge asset for 

South Korea in resolving the North Korean nuclear threat and facilitating 

reunification of the Korean Peninsula. When such huge security interests are 

at stake, it is not easy for Seoul to risk upsetting Beijing by siding with the 

ASEAN countries or the United States in the South China Sea disputes. 

Implications for Other Maritime Disputes in East Asia 

In East Asia, several countries are involved in maritime disputes in 

the East China Sea and the East Sea—namely, Japan and China over the 

Senkaku/Diaoyu Islands and South Korea and Japan over Dokdo/Takeshima. 

Although geographically distant, the South China Sea issue is interlinked 

with these maritime disputes in East Asia in a very interesting way. In short, 

what China represents in the South China Sea is what Japan represents in 

the Dokdo case in the East China Sea. Likewise, what Japan represents in 

the Senkaku dispute is similar to South Korea’s position regarding Dokdo. 

These tangled linkages will make any legal approach to resolving the 

disputes hard to implement. 

In general, China is against the so-called internationalization of 

the South China Sea issue: it opposes the involvement of non-claimant 

countries and has tried to keep the disputes quiet, while attempting 

to expand its effective control in the South China Sea. In the Senkaku 

case, China claims that the islands are a disputed territory, while Japan 

insists that there is no dispute and that the islands are under Japan’s 

effective control. As a result, Tokyo opposes any legal action through the 

International Court of Justice (ICJ) that China may want. By contrast, 

in the Dokdo case, Japan is of the opinion that the territory is disputed 

and has proposed to take the case to the ICJ, which South Korea opposes. 

Seoul argues that the islands are under South Korea’s effective control and 

that there is no territorial dispute in the East Sea. 

If China pushes forward its position in the Senkaku dispute, then it will 

face problems in the South China Sea when ASEAN countries try to take 

the case to the ICJ. Likewise, if Japan tries to take the Dokdo case to the ICJ, 

it will face a dilemma in the Senkaku dispute if China tries the same tactic. 

In short, a state’s legal action in one dispute will put the same country in a 

legal dilemma in another. The pursuit of a legal solution in one case could 

cause a chain reaction in all three cases. This is one of the reasons that a 

legal solution is not an easy option in maritime disputes in East Asia. 

[ 39 ]

asia policy 

South Korea and the Future of the South China Sea Disputes 

No country is quite sure what the solution is to the South China Sea 

disputes. What will happen in the South China Sea, however, is easier to 

predict. It is likely that in the coming five to ten years the same situation that 

we are observing today will continue. China will continue claiming nearly 

the whole South China Sea as its territory and territorial waters and will 

keep working on reclaiming land and constructing objects on islands and 

reefs in the sea. ASEAN countries will continue to protest China’s behavior 

but will not be able to take actions to deter it. The United States will push 

forward its own interpretation of freedom of navigation, criticizing China’s 

breaching of international laws. This, however, does not mean that the 

United States is likely to use military power to deter China whenever China 

behaves provocatively in the South China Sea. The United States has every 

reason to take cautious steps when it comes to military actions. 

Why is this so? First, China cannot back down because the Chinese 

government has made it clear that the South China Sea issue is a matter 

of sovereignty and a core interest. Second, the ASEAN countries, despite 

their grievances, are not likely to have the capacity to confront China 

militarily. Third, the United States will not be confident that it can defeat 

China in the South China Sea. Defeating China militarily may not be in 

question for the United States, given its naval power, but what matters is 

the collateral damage that the United States will suffer if there is a serious 

military confrontation in the South China Sea. Although China may not be 

able to defeat the United States, it could deliver significant blows. Finally, no 

country has a clear military and strategic edge over its opponents. Neither 

the United States nor China wants to enter a serious military dispute that 

will cause heavy damage to itself. 

For countries like South Korea, such protracted low-intensity tension 

is not a bad option. Of course, as the tension is prolonged, they will need 

to continuously shift back and forth depending on the strategic situation, 

thereby creating some strategic uncertainty. However, such a situation 

could actually be better for the ROK than an all-out military confrontation 

in the South China Sea, which would damage the South Korean economy 

irreparably. If either the United States or China were to prevail, then 

South Korea may have some substantial costs to pay—either economic or 

security—depending on who the winner is. 

[ 40 ]


Singapore and the South China Sea: 

Being an Effective Coordinator and Honest Broker 

Jane Chan 

The South China Sea has long been a source of regional tension, and 

disputes have heated up significantly in recent years. Disagreements 

over competing territorial sovereignty and maritime claims between Brunei, 

China, Malaysia, the Philippines, Taiwan, and Vietnam are the main source 

of this tension. Singapore, as a non-claimant country to the South China 

Sea disputes, does not take sides nor judge the merits of the rival claims. 

It has consistently urged “all parties to manage their differences calmly 

and peacefully in accordance with international law, including UNCLOS 

[United Nations Convention on the Law of the Sea].” 1 

Not being a claimant does not mean that Singapore has no interest in the 

South China Sea. Much to the contrary, as a small state, it has an interest in 

ensuring that all claimant states always act in accordance with international 

law, including UNCLOS. 2 Moreover, as an island state, Singapore has an 

interest in ensuring that international law preserves freedom of navigation 

and overflights and that such law is interpreted and applied consistently. 

Finally, as a Southeast Asian state, Singapore has an interest in ensuring 

that the Association of Southeast Asian Nations (ASEAN) remains cohesive 

and united and that its processes effectively advance common interests 

by engendering a high degree of cooperation and integration among all 

member states. However, little progress has been made in negotiating a 

binding code of conduct (CoC) in the South China Sea since the adoption 

of the 2002 Declaration on the Conduct of Parties in the South China Sea 

(DoC). Singapore, as the current country coordinator for ASEAN-China 

dialogue relations, hopes to make progress on that front. 

This essay examines Singapore’s interests and role in the South China 

Sea in four areas: the commitment to upholding the rule of law in the 

relations between states, the defense of the right to freedom of navigation 

jane chan is a Research Fellow and the Coordinator of the Maritime Security Programme at the 

Institute of Defence and Strategic Studies in the S. Rajaratnam School of International Studies at 

Nanyang Technological University. She can be reached at . 

1 Ministry of Foreign Affairs (Singapore), “MFA Press Statement: Introductory Calls on Minister for 

Foreign Affairs Minister Dr. Vivian Balakrishnan,” Press Release, October 28, 2015. 

2 S. Jayakumar (keynote address at the Centre for International Law’s Conference on Joint 

Development and the South China Sea, Singapore, June 16, 2011). 

[ 41 ]

asia policy 

and overflight, the attention Singapore gives to ASEAN and the role of 

multilateralism in the region, and its current role as country coordinator of 

ASEAN-China dialogue relations. 

Rule of Law 

Singapore consistently has advocated for all parties to manage their 

differences calmly and peacefully in accordance with international 

law, including the 1982 UNCLOS. As a small country, Singapore has a 

fundamental interest in the peaceful settlement of international disputes 

in accordance with international law and its sanctioned processes 

rather than on the basis that might is right. 3 Sovereignty disputes are 

governed by customary international law on the acquisition and loss of 

territory, not by the 1982 UNCLOS—a rather common misperception. 

Having presided over negotiations of the 1982 UNCLOS, Tommy Koh 

has iterated on various occasions that “UNCLOS contains no provisions 

on how to resolve sovereignty disputes over islands or other geographic 

features.” 4 The convention does set the various maritime zones that such 

features could potentially generate, defines the rights and obligations 

in those maritime zones, and in the event that there are overlapping 

maritime claims, determines how the maritime boundaries can be 

delimited in accordance with international law. Alas, claimant states 

in the South China Sea have taken unilateral actions in disputed areas, 

such as reclaiming and building artificial islands, conducting oil and gas 

exploration and exploitation, and increasing military and enforcement 

presence, all worrying trends. 

At this stage, where disputes are unlikely to be resolved by negotiation, 

Singapore advocates reliance on rules-based regimes and mechanisms to 

ensure peaceful settlement of the matter. Under no circumstances should 

force or the threat of force be used to settle disputes among states. Practical 

recommendations for managing the current level of tensions include a 

sweeping halt to all unilateral actions contrary to international law and 

3 S. Jayakumar, Diplomacy: A Singapore Experience (Singapore: Straits Times Press, 2011), 198; and 

Lee Hsien Loong, “China and the World—Prospering and Progressing Together” (speech presented 

at the Central Party School, Beijing, September 6, 2012) u http://www.mfa.gov.sg/content/mfa/ 

overseasmission/beijing/press_statements_speeches/2012/201209/Press_20120906.html. Also see 

S. Jayakumar and Tommy Koh, Pedra Branca: The Road to the World Court (Singapore: National 

University of Singapore Press, 2008), xiii. 

4 Tommy Koh is ambassador-at-large at the Singapore Ministry of Foreign Affairs, chairman of the 

Centre for International Law, and a professor at the National University of Singapore. Professor 

Koh was the president of the Third United Nations Conference on the Law of the Sea. 

[ 42 ]


for claimants to clarify the extent of the various claims. For example, the 

claims by China, as illustrated in its nine-dash line map, do not seem to 

have any basis under UNCLOS. 

Freedom of Navigation 

Singapore’s economic survivability and prosperity depend on the 

openness of major sea (and air) lanes. As an international transshipment 

and aviation hub, the island state has a vital interest in the noninterference 

of freedom of navigation and overflight, which are preserved through a legal 

regime that ought to be applied consistently in the South China Sea. Its waters 

are responsible for carrying more than half of world trade and two-thirds of 

the world’s energy demand. Freedom of navigation is particularly important 

to sustain Southeast Asia’s highly integrated export-led economic growth 

model, to which Singapore serves as a vital link. 

The rights and obligations of the coastal and user states as laid 

out in the 1982 UNCLOS were a result of long and arduous rounds of 

negotiations and compromises among the parties. The final agreement 

reflected an equitable balance between the interests and jurisdiction of 

the littorals and the navigational rights and obligation of the user states. 

These carefully negotiated provisions, including the right of freedom 

of navigation, must not be arbitrarily curtailed or undermined in 

contravention to international law. 

ASEAN and Regional Stability 

The South China Sea disputes have affected both relations between 

ASEAN member states and these states’ relations with extraregional powers. 

The disputes have also shaped the dynamics of great-power relations in the 

region. The periodic escalation of tensions between claimants as well as 

between China and the United States is not conducive for regional stability. 

The fact is that Sino-U.S. relations in the South China Sea need not be a 

zero-sum game. While there are elements of competition, the two states also 

share mutual interests in Southeast Asia. Singapore continues to support 

[ 43 ]

asia policy 

a U.S. presence in the region, with the belief that it is necessary to ensure 

peace, stability, and prosperity. 5 

However, this task does not only lie with the United States. Singapore 

continues to regard a cohesive ASEAN and the maintenance of its centrality 

within the ASEAN-led multilateral framework as vital for peace and 

security in Southeast Asia. The various regional cooperative groupings, in 

particular the ASEAN Regional Forum and the East Asia Summit, provide 

inclusive platforms for ASEAN to engage its partners and extraregional 

powers in the wider Asia-Pacific. Singapore works hard with other member 

states to forge a cohesive, effective, and credible ASEAN to do just that. By 

promoting mutual respect and win-win cooperative opportunities, ASEAN 

endeavors to promote open dialogue and diplomacy in order to engender 

deep mutual understanding among member countries and thereby foster 

predictable behavior. 

At the moment, there is a clear lack of trust between ASEAN member 

states and China. Unilateral activities have led to various skirmishes and 

incidents between naval and enforcement assets at sea. ASEAN and China 

are in agreement on the need to reinvigorate discussions on a CoC with the 

hope that tensions at sea can be better managed. It will be useful to consider 

implementing mechanisms to avoid further incidents. For example, a 

broadened Code for Unplanned Encounters at Sea to apply to both naval 

and civilian assets operating in the South China Sea would be a positive 

step toward rebuilding trust and confidence. 6 In the meantime, Singapore 

continues to support efforts to implement the 2002 DoC in accordance with 

the implementation guidelines adopted in 2011. 

ASEAN-China Dialogue Relations 

As the coordinator for ASEAN-China dialogue relations through 2018, 

Singapore aims “to be an honest broker, dealing fairly and openly with all 

5 Singapore provides logistical support to U.S. military aircraft and vessels in the region under the 

1990 memorandum of understanding and the 2005 Strategic Framework Agreement. Singapore 

also hosts the logistical command of the U.S. Seventh Fleet, rotational deployments of the littoral 

combat ships operating in Southeast Asia, and most recently a deployment of surveillance aircraft. 

See Tan See Seng, “America the Indispensable: Singapore’s View of the United States’ Engagement 

in the Asia-Pacific,” Asian Affairs 38, no. 3 (2011): 156–71; and “Joint Statement by U.S. Secretary of 

Defense Ashton Carter and Singapore Minister for Defence Dr. Ng Eng Hen,” Ministry of Defence 

(Singapore), Press Release, December 8, 2015 u http://www.mindef.gov.sg/imindef/press_room/ 

official_releases/sp/2015/08dec15_speech.html#.VnltklLD9zE. 

6 The Code for Unplanned Encounters at Sea adopted by the Western Pacific Naval Symposium in 

2014 standardized safety and communication procedures applicable to naval assets operating at sea. 

[ 44 ]


the parties.” 7 It believes that tension in the South China Sea is a subset of 

the broader regional agenda and that the disputes should not dominate 

ASEAN-China ties. 

At the same time, Singapore harbors no illusion that the competing 

territorial claims can be resolved anytime soon and has maintained that 

issues of territoriality can only be dealt with by the disputing parties. What it 

hopes to achieve in its short stewardship will be to try to cool down tensions 

and avoid any escalations that would adversely affect ASEAN-China ties. 

To this end, Singapore will work to make progress in negotiations for 

a binding CoC in the disputed waters as a basis for self-restraint by all 

parties. Given the impasse in attempts to resolve competing sovereignty and 

maritime claims by negotiation and the reluctance to resort to third-party 

adjudication, proposals for joint development should be considered with 

the shared understanding that these initiatives will be without prejudice to 

their respective claims on unresolved sovereignty and territorial disputes. 

Proposals calling for parties to set aside sovereignty disputes to pursue joint 

development or other cooperative mechanisms have long been mooted. 

Very few of these initiatives were being taken seriously because some of the 

maritime claims remain ambiguous, making it difficult to determine the 

actual areas of overlap and likewise potential areas for cooperative efforts. 

Tasks Ahead 

Singapore will continue to encourage claimant states in the South 

China Sea disputes to clarify their claims and bring them in line with 

international law, including the 1982 UNCLOS. Different historical 

narratives and vexing issues of domestic and nationalistic concern leave 

some parties in intractable positions. This interplay of national interests 

and international law means that a resolution by negotiation among the 

claimants will be very difficult. 

While Singapore hopes to shepherd the negotiation of a CoC further 

along, the level of trust and confidence between China and ASEAN may 

create enough speed bumps to render some of these efforts futile. As the 

coordinator of ASEAN-China dialogue relations, Singapore will need to 

maintain impartiality and neutrality to be able to steer the whole agenda 

ahead with a view toward regional peace, stability, and prosperity and 

to create more opportunities for cooperative projects between ASEAN 

7 Lee Hsien Loong (8th S. Rajaratnam Lecture, Singapore, November 27, 2015) u http://www.pmo. 

gov.sg/mediacentre/pm-lee-hsien-loong-8th-s-rajaratnam-lecture-27-november-2015. 

[ 45 ]

asia policy 

and China. Creating habits of cooperation toward common interests would 

help rebuild confidence and trust over time. 

Managing the South China Sea disputes while ensuring stable relations 

both between ASEAN and China and among the major powers in the region 

will be a delicate balancing act. 8 Singapore will need to keep all stakeholders 

focused on collective maritime interests and concerns. More importantly, it 

must encourage them to address various security challenges ahead without 

becoming embroiled in existing territorial, political, and strategic rivalries 

that could undermine regional stability and security. 

8 While being a firm strategic partner of the United States, Singapore is mindful of the robust and 

pragmatic relationship with China that it has painstakingly nurtured over a long period of time. 

For further analysis of the challenges that Singapore faces in balancing Sino-U.S. relations, see 

Evelyn Goh, “Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security 

Strategies,” International Security 32, no. 3 (2007/8): 113–57; Kuik Cheng-Chwee, “The Essence of 

Hedging: Malaysia and Singapore’s Response to a Rising China,” Contemporary Southeast Asia 30, 

no. 2 (2008): 159–85; Tan See Seng, “Faced with the Dragon: Perils and Prospects in Singapore’s 

Ambivalent Relationship with China,” Chinese Journal of International Politics 5, no. 3 (2012) 

245–65; and Barry Desker, “The Eagle and the Panda: An Owl’s View from Southeast Asia,” Asia 

Policy, no. 15 (2013): 26–30. 

[ 46 ]


ASEAN’s Stakes: 

The South China Sea’s Challenge to Autonomy and Agency 

Alice D. Ba 

The South China Sea has come to involve important stakes for all 

involved. The Association of Southeast Asian Nations (ASEAN) is no 

different—though its situation is also notably distinct. The South China 

Sea occupies what Michael Leifer once characterized as the geographic 

“heart of Southeast Asia.” 1 Geography alone means that whatever happens 

in the South China Sea affects ASEAN states the most directly. Moreover, 

as smaller powers, these states confront much greater vulnerabilities 

when it comes to great-power demands, even as they may be particular 

beneficiaries of great-power association. China’s activities in the South 

China Sea have no doubt underscored these dilemmas as the ASEAN 

states all try to navigate between the strategic vulnerabilities and the 

economic opportunities associated with a rising, more confident China. 

Nor are ASEAN states’ great-power dilemmas limited to China: the 

latter’s activities in the South China Sea have also precipitated heightened 

attention from the United States. ASEAN’s challenge is thus compounded 

by the fact that the South China Sea has become an important focal point 

of rivalry and tension between the ASEAN region’s two most important 

great-power relationships. Maintaining a space between China and 

the United States—one in which Southeast Asian states can enjoy some 

range of maneuver and choice—may prove to be the greatest challenge 

confronting the ASEAN region. 

This essay considers what is at stake in the South China Sea disputes 

for ASEAN’s coalition of smaller powers, with special attention paid to 

institutional interests and constraints. It considers not only the more 

immediate challenges created by territorial disputes but also the more 

general great-power dilemmas that heightened tensions have recently 

thrown into sharp relief. 

alice d. ba is an Associate Professor in the Department of Political Science and International 

Relations at the University of Delaware. She can be reached at . 

1 Michael Leifer, The ASEAN Regional Forum (Oxford: Oxford University Press, 1996), 9. 

[ 47 ]

asia policy 

ASEAN’s Immediate Challenges 

Most immediately, China’s physical and jurisdictional assertions 

create the challenge for ASEAN of agreeing on a collective response. This 

challenge, however, is made more complicated by the fact that it is an 

intergovernmental organization. Thus, while other governments may have 

to manage a constellation of domestic interests and agencies, ASEAN as an 

institution is the expression of ten distinct sovereign actors. States differ not 

just in the importance they attach to the disputes but also in their relations 

with China and the kinds of regional responses they prioritize. ASEAN’s 

unprecedented and very public failure to produce a joint communiqué at 

its 2012 annual foreign ministers’ meeting chaired by Cambodia in Phnom 

Penh dramatically illustrated this challenge. Additionally complicating 

ASEAN’s response is the fact that critical differences exist even among the 

grouping’s four claimant states. The Philippines and Vietnam have been 

the most vocal and active in responding to China’s activities, while Brunei 

and Malaysia—even with recently growing Malaysian concerns—have 

generally favored softer approaches. Such differences challenge ASEAN’s 

efforts to adopt a collective position as well as implement possible ad hoc 

workarounds that might facilitate a way forward. 

In its response to the South China Sea disputes, ASEAN as a collective 

has prioritized the pursuit of a regional code of conduct (CoC) because it 

keeps attention on the principles of international law, as well as existing 

codes of conduct like ASEAN’s Treaty of Amity and Cooperation. 

Following the embarrassment of ASEAN’s 2012 meeting, Indonesia quickly 

moved to facilitate ASEAN’s Six-Point Principles on the South China Sea. 

This statement identifies the “early conclusion” of a CoC and the “full 

implementation” of both ASEAN’s 2002 Declaration on the Conduct of 

Parties in the South China Sea and the 2011 guidelines as important priorities 

alongside self-restraint and the nonuse of force by all parties, “full respect” 

for the United Nations Convention on the Law of the Sea (UNCLOS), and 

the peaceful resolution of disputes. These six principles continue to provide 

ASEAN states with an important basis for consensus and action. Indonesia’s 

moves to quickly correct the failures of the 2012 ASEAN ministers’ meeting 

under Cambodia’s chairmanship are indicative of the understood risks that 

the South China Sea disputes pose to the organization. 

Notably, however, the CoC is “not meant to be an instrument to settle 

disputes.” Instead, its objective is to serve as both “a rules-based framework 

containing a set of norms, rules and procedures that guide the conduct of 

the parties in the South China Sea” and a confidence-building mechanism 

[ 48 ]


in support of “a conducive environment for peaceful settlement of disputes, 

in accordance with international law.” 2 For ASEAN states, the CoC process 

represents a complex commitment to creating a rules-based, as opposed 

to power-based, regional order. It also allows flexibility as states search 

for a mutually acceptable solution. The process, as elaborated below, is not 

without its challenges, but CoC negotiations still compel states to pay some 

attention to matters of legal principle and the principles of conduct. 

As ASEAN chair in 2015, Malaysia made the adoption of a CoC a 

particular priority. Malaysia directed Thailand, as the country coordinator 

for ASEAN-China relations, to “increase the frequency” of consultations 

with China so as to facilitate progress on a CoC. Singapore, which 

assumed its three-year term as country coordinator in August, expressed 

the same commitment. 3 As noted above, of the ASEAN claimants, 

Malaysia has historically been quieter about the South China Sea disputes 

than Vietnam and the Philippines. Its prioritization of the issue is thus 

notable and likely indicative of both the general concern that ASEAN 

states have come to share about China’s extensive maritime construction 

activities—so publicized over the course of 2015—and the specific concerns 

raised by China’s presence and activities in the James and Luconia Shoals 

off the Malaysian coast near Sarawak. 4 Many observers, however, express 

skepticism that the same level of attention will be sustained under Laos’s 

chairmanship in 2016. Such uncertainty is illustrative of one institutional 

constraint: ASEAN chairs have some discretion in terms of how agendas 

are pursued. For Laos, like Cambodia and other mainland Southeast Asian 

states, the South China Sea has generally been of less interest. Laos may 

also view the dispute as complicating what it considers more important 

economic and developmental goals that benefit from Chinese support. 

On the other hand, there is now a much more broadly shared sense of 

urgency among other ASEAN states than what existed during Cambodia’s 

chairmanship in 2012 or Myanmar’s chairmanship in 2014, which may keep 

attention focused on the CoC process. 

2 A draft general framework for the code of conduct can be found in Sok Khemara, “ASEAN 

Ministers to Push for S. China Sea Agreements,” Voice of America, August 3, 2015. 

3 See the statements made by Malaysian foreign minister Anifah Aman and Singaporean foreign 

minister K. Shanmugam quoted in Prashanth Parameswan, “ASEAN to Intensify South China Sea 

Response Amid China Concerns,” Diplomat, January 28, 2015. 

4 “Malaysia to Protest over Chinese Coast Guard ‘Intruders,’ ” Wall Street Journal, June 9, 2015; and 

Olivia Harris, “Malaysian Deputy PM: We Must Defend Sovereignty in South China Sea Dispute,” 

Reuters, November 14, 2015. 

[ 49 ]

asia policy 

Nevertheless, movement toward an early conclusion of a CoC has been 

slow—due largely to outstanding differences between ASEAN states and 

China. While there has been progress in clarifying some areas of agreement 

and cooperation, the pace of negotiations provides incentives for interested 

parties to pursue or develop other options. Thus, ASEAN claimants, similar 

to China, have resisted proposals to stop various complicating activities. 

The Philippines’ decision to seek international arbitration via the 

International Tribunal for the Law of the Sea is sometimes characterized as 

a case of a state pursuing an extra-ASEAN option at the expense of ASEAN. 

But this interpretation is both true and false. It is true to the extent that 

this decision appears to have been reached without much consultation 

with other ASEAN states and certainly not with ASEAN as a collective 

group. Further, it is worth noting that most ASEAN states initially viewed 

this action as provocative and did not rally behind the Philippines, thus 

reinforcing the existing perception of the organization as less than unified. 

In general, ASEAN states have preferred to work out disagreements through 

dialogue and negotiation rather than arbitration and litigation, as the latter 

are considered more confrontational and zero-sum processes. Notably, 

ASEAN’s collective declarations and statements have avoided mentioning 

the ongoing arbitration process, despite strong pressure from the Philippines 

to do so. 

On the other hand, the peaceful resolution of disputes remains the 

organization’s top interest and priority. Whether that outcome is pursued 

via ASEAN or non-ASEAN means is less important. This is true of the 

South China Sea disputes and has also been true of other interstate disputes 

that previously challenged regional relations. Historically, for example, 

extra-ASEAN processes have been considered acceptable and appropriate, 

especially if a dispute is potentially too sensitive or divisive in terms of 

intra-ASEAN relations. None of these historical cases are understood as 

contrary to ASEAN principles—just the opposite, in fact. Equally important, 

they are also not viewed as instances of ASEAN inaction. Rather, most see 

ASEAN’s contributions to the resolution of these disputes as indirect—that 

is, the organization created conditions that facilitated states’ support for 

more peaceful options. Thus, ASEAN offers a space for states to interact, 

exchange views, expand exchanges, and deepen regional integration, all 

of which are understood to facilitate both common understanding and 

common interests that, in turn, push states to exercise greater self-restraint. 

As highlighted above, the goals of the CoC have notably been characterized 

in some very similar terms. 

[ 50 ]


Although the Philippines’ action may initially have been a source of 

division and consternation within ASEAN, it has also served to heighten 

interest in, or at least attention to, processes based on the rule of law. Since 

Manila’s submission in 2013, other states such as Vietnam have expressed 

greater interest in arbitration as a course of action. 5 Representatives in 

Indonesia, which is not a claimant, have also expressed interest in legal 

proceedings to clarify the area of the Natuna Islands if dialogue fails. 6 

ASEAN’s Longer-Term Challenges 

In addition to growing intra-ASEAN insecurities about Chinese power, 

there has also been much external scrutiny of ASEAN, higher expectations, 

and pressure on the organization to take a more active role. By the same 

token, ASEAN’s perceived failures or shortcomings in performing such a role 

have tended to undercut its credibility in the eyes of some critical partners. 

One can debate the appropriateness of expectations for what ASEAN 

should do (as opposed to what it in fact does do), but the reality is that 

heightened tensions have increased questions about the organization. 

Moreover, unlike twenty years ago, ASEAN today is interested in occupying 

a central place in the Asia-Pacific’s mix of intersecting institutional 

arrangements involving external partners. Since the mid-1990s, when 

the South China Sea last posed a major challenge, ASEAN—seizing the 

institutional initiative from other actors like Australia and Japan—has 

carved out a space in which it performs a distinct role in the Asia-Pacific 

as a hub or focal point of various trade, diplomatic, and political security 

frameworks and initiatives as well as facilitator of regional exchanges. 

In that role, ASEAN states have exercised important agency in setting 

institutional agendas and convening a broad and diverse membership. Most 

important, through new frameworks, ASEAN put alternative conceptions 

of regional order that did not hinge on great-power deterrence or a priori 

great-power hierarchy into the mix of contending ideas. The challenge faced 

by ASEAN, however, is that its role now depends on external recognition. 

The assertive behavior by China in the South China Sea, along with ASEAN 

states’ own divisions and heightened great-power tensions, raises questions 

about whether the organization can hold the center. 

5 See Alex Calvo, “China, the Philippines, Vietnam, and International Arbitration in the South China 

Sea,” Asia-Pacific Journal, October 26, 2015. 

6 “Indonesia Says Could Also Take China to Court over South China Sea,” Reuters, November 11, 2015. 

[ 51 ]

asia policy 

More seriously, the intensification of great-power tensions between 

the United States and China makes the South China Sea a challenge that 

is much bigger than ASEAN. The dynamics of U.S.-China exchanges are 

well-beyond ASEAN’s capacity to control, and yet few states—with the 

exception of China itself—have as much resting on the outcome of the South 

China Sea disputes as do ASEAN and its members. 

Conclusion 

Territorial disputes, because they are typically understood in zero-sum 

terms, generally involve difficult negotiations. But the South China Sea 

disputes are now layered by great-power dynamics that have added another 

dimension to what was already a highly complex dispute. The politicization 

of these disputes intensifies the urgency of finding a solution while at the 

same time making a solution harder to achieve. China increasingly views 

actions by ASEAN states, including the Philippines’ pursuit of arbitration, 

through the lens of U.S.-China relations, which complicates ASEAN’s 

ability to work with Beijing toward mutually acceptable outcomes. 

The larger challenge for ASEAN is that the current dynamics of the 

South China Sea may have more to do with U.S.-China relations than with 

ASEAN-China relations or the actual territorial disputes. ASEAN and its 

member states, however, will bear some of the most direct costs, especially 

if the situation worsens. Dissatisfactions with current ASEAN-China 

processes could result in further internationalization of disputes and the 

pursuit of non-ASEAN mechanisms (as is already being proposed by some 

countries). Such alternatives not only challenge ASEAN’s stated institutional 

interests but also may introduce sharper and more competitive exchanges. 

ASEAN will thus continue to attach importance to negotiating a CoC 

despite its challenges. This does not mean forgoing other supplementary 

actions, but the CoC process nevertheless offers an important means by 

which member states can engage China directly and collectively in pursuit 

of a principled approach and outcome to the South China Sea disputes. As 

noted, great-power dynamics cannot be completely isolated, but, more so than 

other mechanisms, the CoC process allows for ASEAN and China to work 

through the problem via the terms of their specific relationship. To be sure, 

many see the one-on-one nature of the process as also its weakness—that is, 

the CoC allows China too much leeway as the larger negotiating power. Still, 

an important value of the process remains its openness to the possibility of 

more cooperative and mutually agreed upon outcomes. 

[ 52 ]


Here, it bears correcting or at least elaborating on a conclusion that is 

sometimes arrived at too easily. Specifically, some observers suggest that 

China’s wide-ranging maritime activities plus the expansion or consolidation 

of U.S. strategic ties in Southeast Asia are evidence that ASEAN’s great-power 

choice is clear. Such conclusions, however, oversimplify Southeast Asian 

interests and predicaments. While developments in the South China Sea 

have indeed produced greater consensus in ASEAN on the need to support 

U.S. strategic engagement as a source of regional stability, few states, if any, 

in Southeast Asia would agree that such engagement is sufficient. This is 

not just because of their significant economic interests with China, as is so 

often emphasized, but also because ASEAN autonomy demands a mix of 

relationships. 7 In this sense, ASEAN’s longer-term challenge regarding the 

South China Sea is to ensure its own autonomy in the face of very strong 

great-power influences. 

For all the challenges discussed in this essay, ASEAN and its processes 

will remain an important emphasis in states’ responses to the South China 

Sea disputes. The stakes for ASEAN are high and involve more than 

questions of territory. Ultimately, the question is what the South China 

Sea portends for regional order. A regional order created by Chinese power 

or by U.S. deterrence alone is one in which the interests and agency of 

ASEAN’s lesser states have diminished standing. Thus, ASEAN states are 

likely to continue supporting regional and ASEAN-centered alternatives, 

however challenging their implementation may be. In the face of such a 

politically charged situation in which all countries, not just members of 

ASEAN, are adapting and adjusting, the challenge for ASEAN states will 

be to balance flexibility with firmness. They will need to be flexible in the 

options pursued. This includes providing possible face-saving alternatives 

(for example, when the international tribunal rules on the Philippines’ 

questions) and countering the zero-sum logic that both China and the 

United States at times apply to their relationships in Southeast Asia. Perhaps 

most of all, the efficacy of ASEAN’s efforts will also require a stronger and 

more dependable ASEAN consensus on the way forward. 

7 For this reason, some argue that great-power competition is not necessarily bad for Southeast 

Asian states’ interests and security. See, for example, Bilahari Kausikan, “Asia’s Strategic Challenge: 

Manoeuvring between the U.S. and China,” Australian National University, Strategic and Defence 

Studies Centre, Centre of Gravity Series, July 2015. 

[ 53 ]

asia policy 

Europe and Maritime Security in the South China Sea: 

Beyond Principled Statements? 


The European Union, France, Germany, Italy, and the United 

Kingdom all signed the G-7 Foreign Ministers’ Declaration on 

Maritime Security in Lübeck in April 2015. The declaration reiterates 

their commitment to “freedoms of navigation and overflight” and to an 

“international maritime order based upon the principles of international 

law, in particular as reflected in UNCLOS [the United Nations Convention 

on the Law of the Sea].” The declaration also makes clear that Europe 

shares the concerns of the United States and Japan regarding “unilateral 

actions” in the East and South China Seas. 1 However, despite this 

diplomatic support, Europe has been by far a marginal player in the South 

China Sea and appears disconnected from the Asian security debate that 

takes place in Washington—for example, only a very tiny minority of 

individuals in European capitals has discussed the possibility of freedom 

of navigation operations in the South China Sea. 

This essay examines European interests in the South China Sea and 

argues that Europe faces a gap between intentions and capabilities regarding 

Asian security. This gap is widening as a result of the deteriorating security 

environment in Europe’s immediate neighborhood—the wars in eastern 

Ukraine and Syria, the refugee crisis, and the necessity of protecting 

European populations from terrorist actions. For the United States, Europe 

should be taken for what it is—a partner in values that can only make 

limited contributions to improving the security environment in the South 

China Sea. As long as tensions in the South China Sea remain below the 

threshold of armed confrontation, the policy debate in Europe will remain 

focused on how to best formulate statements. 

mathieu duchâtel is a Senior Policy Fellow and Deputy Director of the Asia and China Programme 

at the European Council on Foreign Relations. He can be reached at . 

1 “G7 Foreign Ministers’ Declaration on Maritime Security in Lübeck, 15 April 2015,” Federal 

Foreign Office (Germany), April 15, 2015 u http://www.auswaertiges-amt.de/EN/Infoservice/ 

Presse/Meldungen/2015/150415_G7_Maritime_Security.html?nn=479796. 

[ 54 ]


Europe’s Declaratory Diplomacy 

Europe has been generally restrained in commenting on recent 

developments in the South China Sea. At the EU level, the response to 

deteriorating security trends has come in the form of reactive statements 

reaffirming the principles of peaceful settlement, international law, and the 

importance of confidence building. This approach is summarized in the 

2012 “Guidelines on the EU’s Foreign and Security Policy in East Asia.” The 

document defines the European interests in the South China Sea in terms of 

the promotion of a “rules-based international system [and] the principle of 

freedom of navigation” and mentions “the risk of tensions impacting on the 

consistent increase in trade and investment, with negative consequences for 

all.” 2 The document also encourages the claimants to resolve their “disputes 

through peaceful and cooperative solutions and in accordance with 

international law (in particular UNCLOS), while encouraging all parties to 

clarify the basis for their claims.” 3 

The EU reiterates these general principles whenever a major development 

occurs in the South China Sea. In May 2014, it issued a statement when 

China deployed an oil rig in waters disputed with Vietnam, leading to a tense 

standoff that lasted two months. The statement mentions the international 

law of the sea and the importance of a “peaceful and cooperative solution.” 

The main adjustment in the May 2014 statement concerns the greater 

insistence on freedom of navigation and the need to refrain from unilateral 

actions. Further statements became slightly more specific, including one 

released on the occasion of Vietnamese prime minister Nguyen Tan Dung’s 

visit to Brussels in December 2015 that emphasized Europe’s “serious 

concerns” regarding “massive land reclamation.” 4 A final notable feature of 

the European approach is the constant reaffirmation of the importance of 

all processes led by the Association of Southeast Asian Nations (ASEAN) to 

guarantee peace and stability in the South China Sea. 

Repeated in all meetings where the EU has a voice—such as the 

ASEAN Regional Forum and the Asia-Europe Meeting—this diplomatic 

language suggests that the essence of the European approach is to remain 

2 Council of the European Union, “Guidelines on the EU’s Foreign and Security Policy in East Asia,” 

June 15, 2012 u http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressdata/en/ 

misc/97842.pdf. 

3 Council of the European Union, “Guidelines on the EU’s Foreign and Security Policy in East Asia.” 

4 “Press Statement by the President of the European Commission Jean-Claude Juncker, the President 

of the European Council Donald Tusk and the Prime Minister of Viet Nam Nguyen Tan Dung,” 

European Commission, Press Release, December 2, 2015. 

[ 55 ]

asia policy 

at the general level of principles and avoid taking clear sides. 5 Similar to 

other external stakeholders, the EU does not have a stance on territorial 

sovereignty in the South China Sea. At the same time, the European 

choice has been to emphasize international law without stating clearly 

which elements of UNCLOS or other texts best apply to the situation. This 

explains, for example, why the EU has refrained from openly supporting 

the Philippines in its decision to bring a case to the Permanent Court of 

Arbitration; when the court declared it had jurisdiction and competence 

over most of the elements raised by the Philippines, the EU did not make a 

statement. This issue has the potential, however, to force the EU to become a 

more active player in the South China Sea equation. 

An Approach Centered on the International Law of the Sea 

Indeed, the future of Europe’s approach to security in the South China 

Sea is increasingly tied to the outcome of the ongoing case at the Permanent 

Court of Arbitration. Europe’s self-image as a normative power defending 

an international order based on the rule of law could be seriously eroded if 

the ruling of the Permanent Court of Arbitration were ignored by China in 

a context of European silence or inaction. As a result, since 2014, the policy 

debate in Europe regarding freedom of navigation in the South China Sea 

has focused on the language of the statement Europe would release if the 

court were to issue a decision favorable to the Philippines. This is happening 

in the context of the drafting of the “Global Strategy for Foreign and Security 

Policy,” the EU’s next foreign policy guideline, which will be released in June 

2016 after an ongoing review initiated by the new high representative for 

common foreign and security policy, Federica Mogherini. One of the goals 

of the review is to ensure a constructive role for Europe in Asian security 

affairs and engage with Asian partners beyond trade and investment. 

The procedure at the Permanent Court of Arbitration clearly has the 

potential of forcing Europe to clarify and specify its approach centered on 

international law. Depending on the final ruling, Europe may face difficult 

diplomatic choices. What if the court invalidates in unequivocal language 

the notion that China’s nine-dash line has a foundation in international 

law? How can Europe help enforce a rules-based international order if 

the court states clearly that some of the Chinese artificial islands are 

5 Matthew Tempest, “Mogherini Warns Against Intimidation in the South China Sea,” EurActiv with 

the Agence France-Presse, November 6, 2015 u http://www.euractiv.com/sections/global-europe/ 

mogherini-warns-against-intimidation-south-china-sea-spat-319267. 

[ 56 ]


low-tide elevations or rocks and thus not entitled to an exclusive economic 

zone (EEZ) of two hundred nautical miles? The ruling will raise a number of 

specific questions that could challenge Europe’s current strategy to remain 

at the level of generalities. 

Beyond Statements? 

Beyond statements, Europe has two policy instruments to influence 

developments in the South China Sea: arms sales and freedom of navigation 

operations. First, do European arms sales have an impact on the regional 

security environment? In recent years, European arms companies have 

concluded new deals with some of the claimants in the South China Sea. 

In 2013, Southeast Asia was the recipient of a total of 2,682 billion euros 

of European arms according to the official journal of the EU (which will 

not publish 2014 statistics until March 2016). 6 Vietnam placed an order 

for Dutch Sigma frigates and French Exocet anti-ship missiles, while the 

Philippines is importing French and Italian armed light helicopters. 7 This 

is happening in the context of strict restrictions on arms transfers to China 

imposed by various European export-control regulations, sometimes 

quickly summarized as the “European arms embargo on China.” 8 When the 

emerging cooperation in the field of military technology between France, 

the United Kingdom, and Japan is considered, it appears that Europe 

exerts a limited influence on the military balance of power in Asia. Still, 

its influence must be kept in perspective, given that the annual increase of 

China’s military expenditure exceeds the combined total of Vietnam’s and 

the Philippines’ defense budgets. 

Second, could European navies conduct freedom of navigation 

operations? On this matter, there seems to be a French exception. The 

French Navy operates a small force in the Pacific, which is primarily 

used for patrolling the EEZs surrounding French territories but also for 

conducting a number of other operations, including naval diplomacy. 

According to a French Ministry of Defense official speaking on the record 

6 “Sixteenth Annual Report according to Article 8(2) of Council Common Position 2008/944/CFSP 

Defining Common Rules Governing Control of Exports of Military Technology and Equipment,” 

Official Journal of the European Union, March 2015 u http://eur-lex.europa.eu/legal-content/EN/ 

TXT/PDF/?uri=OJ:C:2015:103:FULL&from=EN. 

7 Stockholm International Peace Research Institute (SIPRI), SIPRI Arms Transfer Database, 2015 u 

http://armstrade.sipri.org/armstrade/page/trade_register.php. 

8 Mark Bromley, Oliver Braüner, and Mathieu Duchâtel, “Western Arms Exports to China,” SIPRI, 

SIPRI Policy Paper, no. 43, January 2015. 

[ 57 ]

asia policy 

at the 2015 Shangri-La Dialogue, the French naval task force sailed through 

the Paracel and Spratly Islands after a port call in Shanghai in 2015, “fully 

exercising its freedom of navigation as international law allows it to do 

so and will continue to do so.” 9 The French Navy has not communicated 

which specific features the task force sailed through and the reactions it 

encountered, nor whether this will become a regular mission. Overall, 

Europeans would be extremely reluctant to engage in freedom of navigation 

operations in the South China Sea. However, if the Permanent Court 

of Arbitration’s ruling renders illegal some Chinese activities from the 

perspective of freedom of navigation under UNCLOS, the perception of 

such operations might slightly evolve, including in the United Kingdom. 

Today, Europe seems unlikely to intensify arms sales or engage 

in an ambitious program of freedom of navigation operations—the 

alternatives to the current approach centered on principled statements. 

Overall, though, Europe’s diplomatic support for solutions based on 

international law should not be dismissed as irrelevant. Even though the 

U.S. Navy abides by the rules of UNCLOS, the lack of U.S. ratification of 

the convention is a diplomatic weakness when it comes to the South China 

Sea. Although Europe is not in a position to provide strong leadership to 

enforce an international maritime order based on UNCLOS, it remains a 

key piece of the puzzle. The decision of the Permanent Court of Arbitration 

will clarify whether some activities in the South China Sea constitute a 

legal challenge to the regime governing the oceans. It will also be a key 

test of consistency and coherence for the European ambition to support an 

international order based on norms and rules. 

9 Sun Jianguo, Gerry Brownlee, and Ursula von der Leyen, “Strengthening Regional Order in 

the Asia-Pacific: Q&A” (question and answer session at the Shangri-La Dialogue, Singapore, 

May 31, 2015) u http://www.iiss.org/en/events/shangri%20la%20dialogue/archive/ 

shangri-la-dialogue-2015-862b/plenary4-b8e3/copy-of-qa-37d7. 

[ 58 ]


Walking the Talk in the South China Sea 


For most of the first decade of the 21st century, the South China Sea 

was a region of relative calm. Civilian commerce and military transits 

and training were conducted with only routine concern for the security 

environment. After the Hainan Island EP-3 collision incident in 2001, 

peaceful development of the region’s resources moved forward until China 

re-promulgated a vague historical claim to much of the South China Sea 

in 2009—the so-called nine-dash line—which stoked tensions with its 

neighbors over competing sovereignty claims. Also worrying have been 

Beijing’s confrontational tactics: harassment at sea, the construction and 

garrisoning of artificial islands, and the absolute rejection of mediation or 

legal adjudication. These activities have tested, and frequently overstepped, 

the boundaries of international law. 

This essay examines the core U.S. interests in the South China Sea and 

argues that the United States should ensure that freedom of navigation 

operations are one component of a consistent and comprehensive strategy 

of regional engagement. This strategy needs to make full use of well-honed 

diplomatic, military, and economic tools to impart a shared vision of a 

peaceful maritime arena. 

Core U.S. Interests and Freedom of Navigation 

The escalation of tensions in the South China Sea has tested the littoral 

states’ preferred strategic orientation: good relations with China, the 

United States, and their neighbors. More than ever, they fear that China’s 

pretensions are a preview of the day when Beijing will make all the rules and 

call all the shots in littoral Asia. In a number of respects, it is unfortunate 

that the U.S. pivot or rebalance to Asia was framed as such, implying that 

the United States had abandoned the region during the war on terrorism. 

As one of our good friends in the region once said to me, the rebalance 

is really a “reaffirmation” of U.S. policy and presence over the past three 

administrations. The facts are the United States has remained committed 

thomas b. fargo is the John M. Shalikashvili Chair for National Security Studies at The National 

Bureau of Asian Research. He served for 35 years in the U.S. Navy, which culminated in his position as 

Commander of U.S. Pacific Command from 2002 to 2005. He can be reached at . 

[ 59 ]

asia policy 

to Southeast Asia and engaged there because the challenge to peace in the 

South China Sea is also a challenge to three key U.S. interests. 

The first and foremost reason the United States will remain invested 

in the peace and stability of Pacific Asia is economic. In 2014, U.S. exports 

to Asia had a total value of $650.5 billion, while imports from Asia were 

worth $1.06 trillion, accounting for a respective 27.7% and 37.2% of total 

U.S. exports and imports. 1 Further, investment by American entrepreneurs 

in Asian economies gives the United States a stake in the regular and 

uninterrupted conduct of intrastate and intraregional trade and in 

predictable and inclusive growth. A second national interest is the security 

of allies and friends. The pursuit of peace beyond U.S. shores is, in turn, 

the most effective guarantee that the continental homeland will never itself 

become a battlefield. 

Third, both of these core interests—prosperity and security—are 

underpinned by the traditional rights of states to sail unimpeded on the 

high seas and, without impairing the peace or security of coastal states, 

travel through territorial waters without prior permission. From its earliest 

days, the law of the sea has protected trading nations’ access to foreign 

ports. In the modern global economy, all nations are traders and enjoy 

in common the benefits of open access. Further, maritime power, which 

is reliant on mobility at sea, plays a unique and irreplaceable role in U.S. 

power-projection strategies, being both flexible and visible. U.S. fleets 

make neighbors of our distant allies, assuring them of the United States’ 

commitment to their security. 2 

The U.S. Freedom of Navigation Program was established in response 

to the gradual erosion of traditional rights at sea. Rather than an attempt 

by the United States to claim special privileges, it was created in reaction 

to new claims to territorial zones that threatened to enclose the littoral 

space within a jumble of overlapping jurisdictions. 3 Announced in 1979 

by President Jimmy Carter and endorsed by President Ronald Reagan 

in the 1983 U.S. Oceans Policy, the Freedom of Navigation Program has 

provided the auspices for U.S. Navy vessels to sail and operate in waters 

1 “International Data: Table 2.3. U.S. International Trade in Goods by Area and Country, Not 

Seasonally Adjusted Detail,” Bureau of Economic Analysis, U.S. Department of Commerce, 

September 17, 2015; and “International Data: Table 2.3. U.S. Trade in Services, by Country or 

Affiliation and by Type of Service,” Bureau of Economic Analysis, U.S. Department of Commerce, 

October 15, 2015. Both sets of data are available at http://www.bea.gov/itable. 

2 Hedley Bull, “Sea Power and Political Influence,” Adelphi Papers 16, no. 122 (1976): 6. 

3 Elliot L. Richardson, “Power, Mobility and the Law of the Sea,” Foreign Affairs 58, no. 4 (1980): 904. 

[ 60 ]


subject to coastal states’ opportunistic and overreaching claims. 4 The state 

practice established by these missions buttresses U.S. objections to coastal 

states’ excessive maritime claims that are inconsistent with international 

law. By challenging these excessive claims, the U.S. military demonstrates 

the nation’s resolve not to acquiesce to acts by other states to restrict 

freedom of navigation or other lawful uses of the sea and to preserve U.S. 

operational flexibility. 5 

The energetic assertion of maritime rights should not, however, be 

interpreted as inconsistent with U.S. promotion of the peaceful settlement 

of international disputes. The Obama administration and its successors 

will need to maintain a resolute line with regard to freedom of navigation, 

while persuading all parties to de-escalate the tactics they have adopted for 

advancing their sovereignty claims. 

How Should the United States Advance Its Interests? 

The voyage in late October of the USS Lassen through the disputed 

waters of the Spratly Islands should have been a timely reminder of the 

indispensable role that the United States plays in safeguarding access to 

the maritime commons. 6 Passing within twelve nautical miles of Subi 

Reef, a low-tide elevation expanded into an artificial island by the Chinese 

dredging vessels, the ship had every right to follow normal underway 

operations, including use of its fire control radars and other exercises, since 

no territorial sea is internationally recognized in that area. Unfortunately, 

the ship appears to have conducted itself consistent with an unannounced 

innocent passage through territorial waters. As Joseph Bosco said in a 

4 “U.S. Department of Defense: Freedom of Navigation Program: Fact Sheet,” Office of the Under 

Secretary of Defense for Policy, U.S. Department of Defense, Fact Sheet, March 2015 u 

http://policy.defense.gov/Portals/11/Documents/gsa/cwmd/DoD%20FON%20Program%20--%20 

Fact%20Sheet%20(March%202015).pdf. 

5 Stephen A. Rose, “Naval Activity in the Exclusive Economic Zone—Troubled Waters Ahead?” 

Ocean Development and International Law 21, no. 2 (1990): 123–45; and George Galdorisi, “The 

United States Freedom of Navigation Program: A Bridge for International Compliance with the 

1982 United Nations Convention on the Law of the Sea?” Ocean Development and International 

Law 27, no. 4 (1996): 401–2. 

6 For a summary of the legal issues raised by the operation, see Bonnie S. Glaser and Peter A. 

Dutton, “The U.S. Navy’s Freedom of Navigation Operation around Subi Reef: Deciphering U.S. 

Signaling,” National Interest, November 6, 2015 u http://nationalinterest.org/feature/the-usnavy%E2%80%99s-freedom-navigation-operation-around-subi-reef-14272; 

Raul Pedrozo and 

James Kraska, “Can’t Anybody Play This Game? U.S. FON Operations and Law of the Sea,” Lawfare, 

November 17, 2015 u https://www.lawfareblog.com/cant-anybody-play-game-us-fon-operationsand-law-sea; 

and Adam Klein and Mira Rapp-Hooper, “Freedom of Navigation Operations in the 

South China Sea: What to Watch For,” Lawfare, October 23, 2015 u https://www.lawfareblog.com/ 

freedom-navigation-operations-south-china-sea-what-watch. 

[ 61 ]

asia policy 

recent essay, it is a virtual certainty that the Chinese “know the facts and 

have drawn the appropriate conclusion.” He also points out—correctly, in 

my view—that while we call on China to mean what it says, “we all must 

mean what we say.” 7 The U.S. strategy for future engagement in the South 

China Sea stands to learn much from the USS Lassen episode. Getting U.S. 

policy right in the South China Sea requires a continuation of long-standing 

practices while deepening engagement with our allies and partners. 

Conduct business as usual. First are the elements that are already in 

place, which must be maintained. Washington should maintain a neutral 

stance toward territorial claims in the South China Sea and continue to 

endorse negotiation or adjudication as the only means of settling disputes, 

including support for the arbitral case brought by the Philippines under 

the United Nations Convention on the Law of the Sea (UNCLOS). Last, 

the United States should continue treating the UNCLOS regime as part of 

customary international law and make ratification of the treaty a priority. 8 

On the waters, freedom of navigation operations should be accepted 

as routine practice. Now that defense officials have pledged to conduct 

operations at least twice a quarter, the United States can better communicate 

its intentions by treating these operations as strictly business as usual. 9 

And by making clear the legal interpretation underlying each operation, 

Washington could demonstrate that the challenge is principled and not 

discriminatory. For instance, similar operations in recent years have 

targeted treaty allies Japan, the Philippines, and South Korea. Without a 

return to the quiet strength of past freedom of navigation operations, the 

United States will find it difficult to convince other states that it is willing 

to assume operational risks for the sake of preserving international law and 

global mobility 

7 Joseph Bosco, “South China Sea Aftermath,” Pacific Forum CSIS, PacNet, no. 80, November 24, 2015 

u http://csis.org/files/publication/Pac1580.pdf. 

8 Admiral Michael Mullen, former chairman of the Joint Chiefs of Staff, in arguing for U.S. 

ratification of UNCLOS, noted that some member states believe that rights to passage through 

territorial seas and exclusive economic zones can be withheld from non-parties. See John E. 

Noyes, “U.S. Policy and the United Nations Convention on the Law of the Sea,” George Washington 

International Law Review 39, no. 3 (2007): 629–30. Additional arguments in favor of ratification 

are offered in Hillary Clinton, “Accession to the 1982 Law of the Sea Convention and Ratification 

of the 1994 Agreement Amending Part XI of the Law of the Sea Convention,” testimony before 

the Senate Foreign Relations Committee, Washington, D.C., May 23, 2012 u http://www.foreign. 

senate.gov/imo/media/doc/REVISED_Secretary_Clinton_Testimony.pdf; John D. Negroponte and 

Gordon England, “Reap the Bounty,” Washington Times, June 13, 2007 u http://2001-2009.state. 

gov/s/d/2007/86345.htm; and Vern Clark and Thomas R. Pickering, “A Treaty That Lifts All Boats,” 

New York Times, July 14, 2007 u http://www.nytimes.com/2007/07/14/opinion/14pickering.html. 

9 Yeganeh Torbati, “Pentagon Chief Visits U.S. Carrier in Disputed South China Sea, Blames 

Beijing for Tension,” Reuters, November 5, 2015 u http://www.reuters.com/article/2015/11/05/ 

us-southchinasea-usa-carter-idUSKCN0ST35J20151105#Ke1yAQz5sUqpUI8l.97. 

[ 62 ]


Emphasize the nonsecurity aspects of U.S. involvement. Washington 

must stay the course on the Asian rebalance, especially the economic pillar 

with the Trans-Pacific Partnership (TPP). The expansion of U.S. resources 

and focus in the Asia-Pacific equips the United States with the range of tools 

needed to secure its interests in the maritime domain and beyond. Through 

lowering barriers and setting common regulatory standards, a ratified TPP 

agreement will further trade liberalization and promote economic growth 

on terms that are consistent with U.S. values. Beyond ratification, U.S. 

diplomatic efforts must be refocused on the hard work of expanding TPP 

membership to include those states that are eager to accede and willing to 

open their markets in good faith. Outside the economic sphere, there are 

many other global governance problems that require better cooperation 

with Asia, all of which represent opportunities for win-win engagement: 

preventing and mitigating the effects of climate change, building capacity 

for humanitarian activities and disaster relief, promoting financial stability, 

and creating the conditions for sustained economic development. 

Ensure that all claimant and non-claimant states support a common 

message. A key diplomatic challenge will be convincing all regional nations, 

including non-claimant members of the Association of Southeast Asian 

Nations (ASEAN), that they have an interest in promoting the peaceful 

settlement of the South China Sea disputes. The goal of U.S. diplomacy 

should be to convince the less-engaged parties, such as Malaysia and 

Indonesia, that if Chinese assertiveness is not deterred in these disputes, 

these states may find themselves standing apart from their ASEAN friends 

when their own critical interests are challenged in the future. To promote 

this message, U.S. diplomatic efforts should support regional defense and 

economic cooperation through arenas such as the ASEAN Regional Forum 

and the Shangri-La Dialogue, as well as other Track 1.5 and Track 2 events. 

Additional regional cooperative security measures, such as the successful 

Malacca Strait Patrol initiated by Indonesia, Malaysia, and Singapore, 

should receive the full support of the U.S. military. 

U.S. strategists should also look beyond Southeast Asia to explore 

how the United States’ other naval partners could supplement this 

message. Japan, for example, clearly sees a stake in preserving freedom of 

navigation in the South China Sea. It has clear economic interests and can 

potentially support the region by cooperating with Southeast Asian states in 

humanitarian assistance and disaster relief. Australia likewise understands 

its reliance on maritime rights and has shown a seriousness in renewing 

its ability to challenge restrictions on naval operations. Two unknowns are 

[ 63 ]

asia policy 

whether India and South Korea can contribute to the common position: the 

former might have an interest, while the latter may believe that relations 

with China must be preserved for the sake of peninsular politics and trade. 

Deter militarization of the South China Sea. As the primary provider 

of maritime public goods, it is incumbent on the United States to advocate 

against militarization of features in the South China Sea. Already, several 

of the artificial islands built by China in the Spratly Islands feature radar 

installations, armaments, and runways that can support sophisticated 

military aircraft. In the future, these assets could lead to an expanded 

People’s Liberation Army (PLA) Navy and Air Force presence in the 

region that enables the calculated use of force in support of coercive 

diplomacy—i.e., the intimidation of ASEAN interests. 

Washington must clarify what kind of militarization activities it 

considers escalatory. Beyond a significant and permanent deployment of 

PLA personnel in the islands, the United States might also warn against 

basing interceptor aircraft on new airfields or deploying sophisticated 

air-defense systems. Furthermore, Washington should clarify how it would 

respond to these developments, including actions that would undermine 

broader Chinese strategic interests. In particular, a visible U.S. presence in 

the region could serve as a deterrent to escalatory activities. The rotation 

of U.S. forces in the Philippines is one such example of shoring up U.S. 

interests by deepening an important alliance. 

Engage from top to bottom. Finally, U.S. engagement should occur 

at all levels of government and in all aspects of our interests: economic, 

diplomatic, and security. Throughout the long wars in Afghanistan and 

Iraq, the U.S. military continued its deep engagement with allies in the 

Asia-Pacific, training officers and enlisted personnel in accordance with 

long-standing cooperation agreements. Military training and education is 

a tool of U.S. statecraft that is well appreciated and practiced and should 

continue to be a primary plank of engagement with the Asia-Pacific region. 

The Obama administration gets high marks on this score with 

frequent presidential and cabinet-level engagement. Major speeches and 

well-publicized visits can be a powerful symbol of U.S. dedication to 

regional partners, as demonstrated by Secretary of State Hillary Clinton’s 

July 2010 speech after meetings with ASEAN leaders in Hanoi and Secretary 

of Defense Ashton Carter’s announcement of the new Southeast Asia 

Maritime Security Initiative at the 2015 Shangri-La Dialogue in Singapore. 

While we face a world ever more demanding of high-level officials’ time, 

[ 64 ]


the importance of maintaining peace in the South China Sea justifies a 

concerted effort to keep up meaningful visits to the region. 

Between U.S. troops routinely exercising with their ASEAN 

counterparts and cabinet visits stand the middle managers of U.S. grand 

strategy: senior military officials and their peers in the Foreign Service. They 

too play an important role in communicating the nuances in Washington’s 

approach to the region. In particular, dialogue among senior military 

officials from the United States, Southeast Asian states, and China could go 

a long way toward mitigating the operational risks of maritime encounters. 

Maintaining cordial relations and personal familiarity between experienced 

sailors and airmen could make the difference between unintentional 

escalation and pragmatic steps toward de-conflicting tensions. 

Conclusion 

Many of the ingredients of an optimal strategy for advancing U.S. 

interests in the South China Sea, such as freedom of navigation missions, 

military engagement, thoughtful diplomacy, and trade liberalization 

efforts, already exist. The key challenge for Washington is advancing these 

activities as business as usual so that Asian partners understand that the 

U.S. presence in the region will be principled, permanent, and peaceful. 

Support for freedom of navigation will continue to be an important focus 

of activity in the South China Sea but must be accompanied by a reinforced 

message that there is much more to U.S. interests. The United States must 

reiterate its support for the peaceful resolution of the disputes underlying 

present tensions and guide its partners toward achieving the economic 

prosperity that ultimately incentivizes cooperation and stability. To do so, 

it should take advantage of its full range of diplomatic tools, ranging from 

military-to-military engagement to head-of-state summits. Drawing on the 

support of its allies and partners, the United States should define how it 

will defend a shared vision of a peaceful maritime arena and what costs it is 

willing to incur along the way. We need to say what we mean and mean what 

we say. This strategy must be the common responsibility of all our friends in 

the region and all levels of government from Washington to the Pacific. 

[ 65 ]



Taiwan and Regional Trade Organizations: 

An Urgent Need for Fresh Ideas 


kevin g. nealer is a Principal of the Scowcroft Group, specializing in 

financial services and trade policy issues for emerging markets, with emphasis 

on China and Southeast Asia. He is a member of the Council on Foreign 

Relations and the author or co-author of numerous articles on political 

economy, including the report Beginning the Journey: China, the United 

States, and the WTO (2001). 

margaux fimbres is a Research Specialist at the U.S. Department of 

Energy, focusing on energy security issues in Asia. She received an MA in 

International Economics and Energy, Resources, and the Environment from 

the Johns Hopkins University Paul H. Nitze School of Advanced International 

Studies (SAIS). She can be reached at . 

note u The views expressed in this essay are those of the authors and 

do not necessarily reflect the official policy or position of any agency of the 

U.S. government. The authors are grateful for the guidance provided by 

Richard Bush of the Brookings Institution. 

keywords: taiwan; economics; regional trade agreements 


asia policy 


This essay assesses Taiwan’s prospects for joining the Trans-Pacific 

Partnership (TPP) and recommends options for how Taiwan can overcome 

the challenges related to gaining membership. 

main argument 

Taiwan is an important exporter and investor in the Asia-Pacific, but its 

economic role in the region is diluted by its exclusion from regional trade 

deals, which have increased in both number and significance. As more free 

trade and regional trade agreements are signed, Taiwan needs to find ways 

to knit itself into the region’s economic and commercial fabric. The most 

significant—and timely—region-wide trade liberalization deal is the TPP. For 

Taiwan, the benefits of TPP membership would be twofold: (1) TPP standards 

would necessitate broad reforms, making the island more competitive, 

and (2) membership would create trade diversification, thereby reducing 

economic dependence on the mainland. Taiwan now has an opportunity 

to take the necessary steps toward membership. If it does, the island will 

improve its competitive position in the region. But if it remains a bystander, 

its competitiveness will erode. TPP membership would enable Taiwan to 

retain and improve its status as a strong economic player in the Asia-Pacific. 


• Taiwan should work on the TPP areas where it can achieve success, such as 

the services sector. This approach will allow it to build public support for 

more difficult reforms in agriculture and investor-state dispute settlement. 

• Taiwan should not view the TPP as a competition with China. Taiwan’s 

membership should be considered on its own merits. 

• Taiwan should engage in bilateral discussions with TPP nations—especially 

Japan, which has publicly supported Taiwan joining the negotiations—to 

explore how to reform its economy so as to be prepared for engaging in a 

follow-on round of negotiations for potential new members. 

• Taiwan should continue to pursue closer economic cooperation with the 

U.S. through the trade and investment agreement framework and work to 

resolve outstanding issues, especially in the agriculture sector.

nealer and fimbres • taiwan and regional trade organizations 

This essay provides an overall assessment of Taiwan’s prospects for 

joining the Trans-Pacific Partnership (TPP) and recommends a series 

of potential options for how Taiwan can overcome the challenges related 

to gaining membership. The first section offers a brief overview of regional 

trade architecture in the Asia-Pacific region and Taiwan’s place within that 

architecture. The second section details the challenges Taiwan faces in joining 

the TPP, both domestically and externally. The third and fourth sections 

describe the implications of Taiwan joining or being excluded from the TPP 

for cross-strait relations and U.S.-Taiwan relations, respectively. The essay 

concludes by identifying a path forward for Taiwan and offering policy 

recommendations that the island’s leaders can use in their arguments that 

joining the TPP is in Taiwan’s best interests. 

understanding the asia-pacific’s trade 

architecture and taiwan’s trade relations 

The Asia-Pacific’s Trade Architecture 

Asian regional trade agreements—twelve and counting—range in scope 

from the world’s most far-reaching trade agreement (the Australia–New Zealand 

Closer Economic Relations Trade Agreement) to narrower preferential deals 

(such as the Asia-Pacific Trade Agreement). The Asia-Pacific is also one of the 

most prolific regions when it comes to free trade agreements (FTA). Yet some 

have characterized these agreements as a “noodle bowl” of commitments and 

called into question their tangible benefits due to the effects of overlapping 

regulations and trade diversion. 1 

There is debate about whether the proliferation of regional agreements 

has contributed to the inability to make progress on multilateral trade 

liberalization, especially as the Doha Round agenda recedes to a vanishing 

point. 2 Concerns about the expansion of FTAs focus on the potential to 

undermine existing multilateral trade agreements. But the truth is that 

the companies most interested in open trade and investment regimes are 

indifferent about the package in which such benefits are delivered. The trend 

1 “Asian Free Trade Agreements: Untangling the Noodle Bowl,” Asian Development Bank, August 8, 

2013 u http://www.adb.org/features/free-trade-untangling-asia-s-noodle-bowl; and Masahiro 

Kawai and Ganeshan Wignaraja, ed., Asia’s Free Trade Agreements: How Is Business Responding? 

(Cheltenham: Edward Elgar Publishing, 2011). 

2 World Economic Forum, “Mega-Regional Trade Agreements: Game-Changers or Costly 

Distractions for the World Trading System?” July 2014 u http://www3.weforum.org/docs/ 

GAC/2014/WEF_GAC_TradeFDI_MegaRegionalTradeAgreements_Report_2014.pdf. 

[ 69 ]

asia policy 

in the Asia-Pacific is clear: regional trade agreements are here to stay. The 

sooner nations and businesses accept this fact and adjust accordingly, the 

better off they will be at maintaining competitiveness. 

The Association for Southeast Asian Nations (ASEAN) has signed 

FTAs with several Asian nations and has begun negotiations with China, 

Japan, South Korea, India, Australia, and New Zealand to form the 

Regional Comprehensive Economic Partnership (RCEP). 3 While some in 

Taiwan—including President Ma Ying-jeou—have called for the island’s 

participation in the RCEP, 4 the reality is that it favors states that already have 

FTAs with ASEAN, putting Taiwan at a disadvantage. However, the TPP is 

more encompassing than the RCEP, and if Taiwan were to join the TPP, the 

impact of its exclusion from the RCEP would be lessened. 

A number of FTAs have emerged elsewhere in the Asia-Pacific, with the 

Korea-U.S. (KORUS) FTA being the most consequential for Taiwan. South 

Korea and Taiwan are major competitors in certain technology products, such as 

smartphones, but Taiwan’s advantage has relied mostly on building factories in 

mainland China where it could find cheap labor. In recent years, that advantage 

has diminished because of South Korea’s ability to create global brands and sign 

FTAs. The KORUS FTA, which was signed in June 2007 and implemented in 

2012, has cut tariffs, expanded market access for services, improved regulatory 

transparency, streamlined the movement of goods, and strengthened 

intellectual property protection. 5 South Korea has also signed FTAs with the 

European Union and China. In 2014, Taiwan’s Ministry of Economic Affairs 

warned that once the FTA between South Korea and mainland China goes into 

effect, approximately one-fourth of Taiwan’s export orders from the mainland 

may be diverted to South Korea. 6 In addition, China, Japan, and South Korea 

have been working toward a trilateral FTA since 2012. 7 

3 Joshua Meltzer, “Taiwan’s Economic Opportunities and Challenges and the Importance of the 

Trans-Pacific Partnership,” Brookings Institution, Center for East Asia Policy Studies, East 

Asia Policy Paper, no. 2, January 2014 u http://www.brookings.edu/~/media/research/files/ 

papers/2013/09/30-taiwan-trans-pacific-partnership-meltzer/taiwan-trans-pacific-partnershipmeltzer-012014.pdf. 

4 ITS Global, “Taiwan and the Regional Comprehensive Economic Partnership (RCEP): An 

Australian Perspective,” December 2014 u http://www.itsglobal.net/sites/default/files/itsglobal/ 

TaiwanRCEPFinalReport_08Dec14__just.pdf. 

5 Bruce Hirsh, “KORUS FTA: Year Three in Deepening Market Integration” (remarks at a conference 

on the KORUS FTA, Fullerton, March 12, 2015) u https://ustr.gov/about-us/policy-offices/ 

press-office/speechestranscripts/2015/march/remarks-assistant-us-trade. 

6 Steve Chuang, “Sino-Korea FTA May Divert One-Fourth of Orders from Taiwan to China,” China 

Economic News Service, August 7, 2014 u http://cens.com/cens/html/en/news/news_inner_46802.html. 

7 “Update 1—Japan PM Eyes Start of Free Trade Talks with China, S. Korea,” Reuters, May 11, 2012 u 

http://www.reuters.com/article/2012/05/11/japan-trade-china-south-korea-idUSL4E8GB7UL20120511. 

[ 70 ]


Taiwan’s Trade Relations 

Although Taiwan is a prominent regional investor and export link 

in the Asian supply chain, its commercial importance is not reflected in 

its inclusion in regional trade deals. This is in part because of Taiwan’s 

ambiguous international status and uncertainty over its sovereignty, which 

is considered a prerequisite for membership in many multilateral agreements 

and bodies. Other contributing factors include China’s political opposition 

and Taiwan’s own domestic resistance to entering into FTAs. If Taiwan cannot 

find a way to integrate itself more deeply into the economic and commercial 

architecture of the Asia-Pacific, its competitive position will be significantly 

eroded. Speaking to the Economist in March 2014, President Ma expressed his 

concerns regarding trade marginalization: 

External trade accounts for 70% of Taiwan’s economic growth. 

Taiwan has long performed well in external trade, but in the past 

10 years or so, countries around the world have signed free-trade 

agreements (FTA). Many countries want to do business with 

Taiwan, but when it comes to signing a FTA with us, they become 

hesitant, because of our diplomatic predicament. 8 

In 2014, Taiwan’s GDP stood at $505.5 billion and total exports were 

around $310 billion. 9 With exports accounting for such a large component 

of Taiwan’s economy, any drag on trade will be a major hit to the economy. 

If Taiwan continues to be excluded from trade deals, its export-oriented 

economy will be significantly harmed as Taiwan’s exports will fail to compete 

with exports from FTA or preferential markets. Joshua Meltzer of the 

Brookings Institution points out, 

The recent successful completion by Korea—a competitor with 

Taiwan across a range of products—of FTAs with the EU and the 

United States provided a useful example of some of the costs to 

Taiwan of not participating in these Asian FTAs…. Korean goods 

now have preferential access to the two largest developed country 

markets where all tariffs will go to zero. This means that Korean 

exports of apparel, LCD televisions and bicycles to the EU—all 

goods in which Taiwan competes—will face zero tariffs while 

Taiwan exports of these goods face tariffs of twelve, fourteen and 

fifteen percent, respectively. 10 

8 “Straight from Mr. Ma’s Mouth,” Economist, March 28, 2014 u http://www.economist.com/blogs/ 

banyan/2014/03/interview-taiwans-president. 

9 American Chamber of Commerce in Taipei, “2015 Taiwan White Paper,” Taiwan Business Topics, 

June 2015 u http://www.amcham.com.tw/white-papers-2. 

10 Meltzer, “Taiwan’s Economic Opportunities and Challenges.” 

[ 71 ]

asia policy 

In addition, Taiwan could see major losses in the textiles sector as Vietnam, a 

major competitor, benefits from the TPP’s provisions for rules of origin. 

Taiwan became the 144th member of the World Trade Organization 

(WTO) in 2002 as Chinese Taipei—a separate customs area—in parallel with 

China’s WTO accession. 11 Joint membership in the foundational international 

trade agreement changed the character of the political economy between Taipei 

and Beijing and was welcomed by both, even if Beijing was more circumspect 

in its enthusiasm for Taiwan’s status as an independent contracting party. 

Membership in the WTO laid the predicate for President Ma’s response to 

China’s exclusion of Taiwan from other international agreements with a bold 

move to engage bilaterally on cross-strait economic issues. In June 2010, 

China and Taiwan agreed on the Economic Cooperation and Framework 

Agreement (ECFA) in an effort to reduce tariffs and commercial barriers, 

and in September 2010 the agreement went into effect. The ECFA is a partial 

trade agreement similar to China’s trade agreement with Hong Kong and 

Macao. Taiwan’s Democratic Progressive Party (DPP) and other opponents 

of the agreement have criticized the ECFA by arguing that deeper economic 

integration with China could put Taiwan on a slippery slope to political 

absorption. The ECFA framework offered Taiwan proportionally greater tariff 

concessions and the promise of access to eleven mainland service sectors. It 

also paved the way for the “early harvest” tariff reductions that went into effect 

in 2011, which saw mainland China cut tariffs on over five hundred products 

imported from Taiwan and Taiwan similarly lower import tariffs on over two 

hundred items from mainland China. 12 Since then, China and Taiwan have 

engaged in several rounds of talks to pursue follow-up agreements to the 

ECFA covering goods and services. 

It was President Ma’s hope that a byproduct of the ECFA would be greater 

Chinese acceptance of Taiwan’s participation in other trade agreements. In 

2013, China did not oppose Taiwan’s groundbreaking FTAs with New Zealand 

and Singapore—both important trade and investment partners for Taiwan. (It 

is worth mentioning that China has FTAs with both countries, as many in 

Taiwan believe that a standing FTA between China and a given country is a 

prerequisite for Taiwan to sign an FTA with that same country.) Taiwan also 

has FTAs with Guatemala, Nicaragua, Panama, Paraguay, El Salvador, and 

11 Taiwan’s full official name under the WTO is “Separate Customs Territory of Taiwan, Kinmen and 

Matsu.” Steve Charnovitz, “Taiwan’s WTO Membership and Its International Implications,” Asian 

Journal of WTO & International Health Law and Policy 1, no. 2 (2006): 401 u http://scholarship. 

law.gwu.edu/cgi/viewcontent.cgi?article=1436&context=faculty_publications. 

12 “ECFA ‘Early Harvest’ List Tariff Cuts Come into Effect,” Bloomberg, January 2, 2011, available at 

http://www.taipeitimes.com/News/front/archives/2011/01/02/2003492456. 

[ 72 ]


Honduras and is in negotiations with Paraguay and the Dominican Republic. 

All are countries with which Taiwan maintains full diplomatic relations. 

The Obama administration has attempted to deepen economic ties 

with Taiwan through a trade and investment framework agreement (TIFA). 

Although the agreement was signed in 1994, it has faced political resistance in 

Taiwan. Talks were suspended from 2007 until 2013 because of disagreements 

over U.S. beef and pork imports in which Taiwan rejected imports it deemed 

had high levels of ractopamine, as well as certain parts of the meat. President 

Ma eventually smoothed the issue over, and U.S. beef imports were allowed 

once again, but Taiwan still does not allow U.S. pork imports. In the eighth 

round of TIFA talks in April 2014, the United States and Taiwan agreed 

to discuss investment and technical barriers to trade through working 

groups. But U.S. participants and regional observers question whether 

Taiwan—despite its reliance on trade—has the political will and credibility 

to negotiate away barriers that protect powerful domestic constituencies. 

According to the 2015 white paper by the American Chamber of Commerce 

in Taipei, “unique-to-Taiwan rules and regulations impose heavy burdens, 

both for multinational corporations and domestic exporters.” 13 Technical 

barriers to trade, in particular, can be used to discourage foreign imports by 

enforcing technical regulations and standards, such as packaging, labeling, and 

certification requirements that diverge from normal international practice. 14 

The latest round of TIFA talks was held in October 2015 and addressed a 

number of important trade issues, including bilateral investment, intellectual 

property, pharmaceuticals, and agricultural products. 15 While the two sides 

made headway on several trade issues, including an agreement to bolster 

exchanges in enforcing intellectual property rights protection, no agreement 

was reached on U.S. pork imports. 

The Trans-Pacific Partnership 

The TPP is the most significant—and timely—of the myriad trade 

liberation agreements that crisscross the Asia-Pacific. In the view of most of 

the twelve members who negotiated the trade pact, the TPP has the potential to 

be the cornerstone of trade liberalization in the 21st century, providing a new 

13 American Chamber of Commerce in Taipei, “2015 Taiwan White Paper.” 

14 Don Shapiro, “Zeroing in on Trade Obstacles,” American Chamber of Commerce in Taipei u 

http://www.amcham.com.tw/topics-archive/topics-archive-2013-0/vol-43-no-09/3964-issues. 

15 John Liu, “Latest TIFA Talks ‘Productive’: U.S.,” China Post, October 2, 2015 u 

http://www.chinapost.com.tw/taiwan/national/national-news/2015/10/02/447339/Latest-TIFA.htm. 

[ 73 ]

asia policy 

standard of market opening through transparent rulemaking. Its completion 

and implementation will drive competitiveness in the region and undoubtedly 

attract participation from a number of countries not currently engaged. 

China has expressed interest in joining, and Taiwan is looking critically at 

the agreement. According to a report from the Brookings Institution, “the 

significance of the TPP is also as a potential vehicle to achieving the aspirations 

in the 1994 APEC [Asia-Pacific Economic Cooperation] Bogor Declaration 

of free trade amongst APEC members by 2020 by becoming an FTA of the 

Asia-Pacific region.” 16 

The main benefits of the TPP are derived from its regional scope and 

high standards for entry. The TPP can help members develop regional supply 

chains and link existing supply chains more seamlessly. Equally important for 

Taiwan, members enjoy comprehensive market access through the elimination 

of tariffs and other barriers, thereby boosting global competitiveness. The 

crosscutting issues that build on APEC initiatives and will also attract Taiwan’s 

attention include the following: 

• Regulatory coherence. The TPP will make trade between member 

countries more seamless and efficient. 

• Competitiveness and business facilitation. The agreement will facilitate 

business and improve competitiveness through regional production 

and supply chains. 

• Small and medium-sized enterprises. Special attention will be paid 

to these businesses’ difficulty in understanding and using trade 

agreements. 

• Development. The TPP will promote comprehensive and robust market 

liberalization and improve trade- and investment-enhancing disciplines. 

The benefits of joining the TPP would go beyond creating more space 

for Taiwan in the international arena. Taiwan’s economic future—like that 

of other advanced economies—depends on maintaining its competitive 

advantage. The main benefits of TPP membership would be twofold: First, 

TPP standards would necessitate a comprehensive reform effort in Taiwan, 

which would in turn make the island more competitive in the long run. 

Second, TPP membership would provide an avenue for trade diversification, 

thereby lessening Taiwan’s economic dependence on the mainland. 

16 Richard C. Bush and Joshua Meltzer, “Taiwan and the Trans-Pacific Partnership: Preparing the 

Way,” Brookings Institution, Center for East Asia Policy Studies, East Asia Policy Paper, no. 3, 

January 2014. 

[ 74 ]


As the American Chamber of Commerce in Taipei’s 2015 white paper 

points out, Taiwan is still regarded as an excellent place to do business. 17 With 

that in mind, its accession to the TPP would lead to several positive changes 

for foreign businesses, including harmonization of regulatory procedures, 

elimination of “made in Taiwan” rules and regulations, and enhanced 

protection for intellectual property rights. In addition, Taiwan’s membership 

could create opportunities for other TPP members to better utilize the island’s 

leadership in the regional supply chain. 

obstacles to taiwan joining the tpp 

Given the potential benefits of the TPP that were discussed in the previous 

section, the government under President Ma has emphasized the importance 

of joining the TPP in the second round, and the DPP has also backed 

membership. Taiwan has already established task forces for negotiating FTAs 

and reviewing commitments and regulatory changes in FTAs to which it is 

not a party, and it has begun to adjust its trade policies to move closer to TPP 

standards. 18 However, Taiwan still faces two main challenges as it seeks to join 

the TPP: domestic resistance and opposition from China. 

Domestic Resistance 

Taiwan’s leaders have been receptive to the idea of joining the TPP as well 

as the ASEAN-led RCEP. But several domestic factors cast doubt on the future 

of trade liberalization, especially with the mainland, including local protests 

about the hollowing-out of Taiwan’s economic base, the decline in high-paying 

jobs, and concerns about the competitiveness of local businesses. Yet not all 

domestic resistance to trade liberalization should be seen as an indictment of 

free trade itself; rather, cross-strait trade liberalization is often seen in Taiwan 

as the proxy for integration—economically and then politically—with the 

mainland. The most recent expression of this opposition was the backlash to 

the trade in services agreement between the mainland and Taiwan, resulting 

in the so-called Sunflower Movement in March and April 2014. 19 


18 Richard C. Bush, “Taiwan and the Trans-Pacific Partnership: The Political Dimension,” Brookings 

Institution, Center for East Asia Policy Studies, East Asia Policy Paper, no. 1, January 2014 u 

http://www.brookings.edu/~/media/research/files/papers/2013/10/03-taiwan-trans-pacificpartnership-bush/taiwan-tpp-bush-012014.pdf. 

19 Michael Gold, “Taiwan Youth to China: Treat Us Like a Country,” Reuters, June 30, 2015 u 

http://www.reuters.com/article/2015/06/30/us-taiwan-china-youth-idUSKCN0PA2W320150630. 

[ 75 ]

asia policy 

The TPP will require Taiwan to undertake comprehensive reforms 

that may prove politically difficult, raising the core question of whether 

the government can persuade a wary population to support a regional 

trade agreement that many see as leading to more job losses and a decline 

in economic opportunity. The high standards of the TPP would leave little 

room for protectionism and inefficient trade policies. In addition, concessions 

on tariff and non-tariff barriers would be daunting for Taiwan, given that 

joining the TPP would have implications for intellectual property, labor 

rights, investment, and the environment. 20 Why, then, would any Taiwan 

government accept those risks? The answer may be because the alternative is 

simply unacceptable to Taiwan’s regional position and global competitiveness. 

DPP chair Tsai Ing-wen has said there is an “urgent need” for Taiwan to be 

included in the TPP or at least in the next round of talks. 21 That statement 

suggests a willingness even on the part of the DPP to take a fresh look at 

policies that are uncompetitive and hence politically unsustainable. 

The TPP already has shaped expectations about regional investment 

and trade. Just as the North American Free Trade Agreement encouraged 

significant realignment of investment and production by global corporations 

prior to formalization of the deal, companies are already making choices 

about in which countries they will invest and locate production sites. There 

will be no prizes for those betting on Asian economies where the local polity 

or economic fundamentals disfavor TPP participation. Markets will be judged 

on whether they are connected to the best terms of trade and investment 

in the region. If Taiwan chooses not to participate, it may need to work for 

decades to regain the confidence of investors. 

Opposition from the Mainland 

A major challenge for Taiwan’s regional trade integration is opposition 

from the mainland. It is not clear whether China intends to join the TPP, 

which dims Taiwan’s prospects as well. As mentioned above, China’s de facto 

stance has been to approve of Taiwan signing FTAs with other parties only if 

China has FTAs with those same nations, as was the case with New Zealand 

and Singapore. The question also remains of whether a DPP administration 

would ever accept this dynamic; the previous DPP administration under 

Chen Shui-bian certainly would not have. Another condition is the name 

20 Bush, “Taiwan and the Trans-Pacific Partnership: The Political Dimension.” 

21 Shannon Tiezzi, “Cross-Strait Relations: The DPP’s Tightrope Walk,” Diplomat, June 5, 2015 u 

http://thediplomat.com/2015/06/cross-strait-relations-the-dpps-tightrope-walk. 

[ 76 ]


that Taiwan would use in the agreement. In the case of WTO negotiations, 

China did not oppose the use of language recognizing “the Separate Customs 

Territory of Taiwan, Penghu, Kinmen, and Matsu.” 

One possible solution, then, is for Taipei and Beijing to join the TPP 

nearly simultaneously, as was done with WTO accession. Yet while this may be 

Taiwan’s only option (depending on China’s stance), it should not be Taiwan’s 

first choice. Both sides would need to implement significant reforms to be 

“TPP ready,” including in areas such as government procurement, which would 

likely take several years in the case of China. Because investment decisions 

are being made now based on expectations set by the TPP, investment will 

move before the deal is finalized and implemented. For Taiwan, the longer it 

is excluded from the TPP, the more significant the implications. 

Further complicating matters, other Asian nations may be reluctant to 

pursue economic ties with Taiwan at the risk of offending Beijing. Although 

the issue of political sovereignty (i.e., Taiwan’s status as a nonstate participant) 

has largely been addressed outside Taiwan, with most nations (including the 

United States) following a “one China” policy, gray areas still exist with regard to 

Taiwan’s economic space in the international arena. For example, the mainland 

did not block Taiwan from joining the WTO, the Asian Development Bank, 

or APEC. In particular, membership in APEC, which focused on economic 

and trade issues, is not based on sovereign political identity but on economic 

identity. 22 On the other hand, the Beijing-led Asian Infrastructure Investment 

Bank rejected Taiwan as a founding member in April 2015, despite Taiwan’s 

hope that APEC would serve as a model for its bid. Chinese officials stated 

that Taiwan may be able to join in the future under an “appropriate name.” 23 

The issue of political sovereignty creates gray areas when it comes to Taiwan 

joining international agreements, and third parties often look to Beijing to set 

the tone. Should Taiwan decide to seek TPP membership, unanimous consent 

from all founding members is required, which leaves room for China to sway 

states against Taiwan’s participation if it so chooses. 

22 Chen-shen J. Yen, “China and Taiwan’s Window of Opportunity at APEC,” Diplomat, September 30, 

2014 u http://thediplomat.com/2014/09/china-and-taiwans-window-of-opportunity-at-apec. 

23 William Kazer, “Taiwan’s Ma Ying-jeou Believes AIIB Rejection Due to ‘Political 

Considerations,’ ” Wall Street Journal, May 10, 2015 u http://www.wsj.com/articles/ 

taiwans-ma-ying-jeou-believes-aiib-rejection-due-to-political-considerations-1431293643. 

[ 77 ]

asia policy 

implications 

The implications of Taiwan joining the TPP would be substantial and 

affect its relations with both the mainland and the United States. As Tsai 

Ing-wen has argued, Taiwan must “articulate an open and forward-looking 

strategy for the future” that is “premised on robust economic, defense and 

people-to-people relationships with the U.S., in parallel with a comprehensive 

and principled engagement with China.” 24 The following discussion considers 

the potential implications of Taiwan’s TPP membership for both cross-strait 

and U.S.-Taiwan relations. 

Implications for Cross-Strait Relations 

China already has its own preferential trade framework with Taiwan. 

President Ma signed the ECFA with China in 2010 in the hope that it would 

entice other nations to follow China’s example. Taiwan’s economic cooperation 

agreements with New Zealand and Singapore give credence to this view. 

But if China did not already have FTAs with New Zealand and Singapore, 

it is unlikely that Taiwan would have been able to sign these agreements 

without opposition from Beijing. China’s stance on multilateral agreements is 

somewhat murkier. It has not clearly stated its intentions to join the TPP, nor 

has it taken a stance on the possibility of Taiwan joining. Such uncertainty is 

itself a diplomatic tool—one that Beijing is likely to continue to use. 

Assuming, however, that Taiwan does eventually seek to join the TPP, 

framing this decision as an issue of economic necessity—as opposed to an 

effort to distance itself from China—will be important. TPP membership 

would allow Taiwan to diversify its trading partners, which would benefit 

Taiwan both economically and strategically. Although TPP membership 

would reduce its economic dependence on the mainland, a more economically 

secure Taiwan, whether led by the DPP or the Kuomintang, would be in a 

better position to maintain cordial relations with the mainland. By engaging 

diplomatically with the mainland out of choice rather than necessity, Taiwan 

could negotiate from a position of strength, which may provide greater 

flexibility in compromise and cooperation. In addition, an economically 

prosperous and competitive Taiwan benefits the mainland, which is the 

island’s biggest trading partner. So too, Taiwan’s companies are a significant 

source of mainland FDI and an important class of mainland tax payers. 

24 Tsai Ing-wen, “Taiwan Can Build on U.S. Ties,” Wall Street Journal, June 1, 2015 u http://www.wsj. 

com/articles/taiwan-can-build-on-u-s-ties-1433176635. 

[ 78 ]


Third-country investors look at how Taiwan firms are performing as a more 

transparent surrogate for Chinese industries. Diminished upside for Taiwan 

businesses and heightened risk communicate uncertainty about the mainland 

to global markets. 

By contrast, a Taiwan that is economically marginalized, and thus 

weakened, may be less willing to forge closer ties with the mainland. Taiwan 

leaders certainly would be operating with less flexibility. For Beijing, this puts 

unification (without coercion or force) even further away. 

Implications for U.S.-Taiwan Relations 

Taiwan was the United States’ tenth-largest trading partner in 2014, 

with more than $63 billion worth of goods in bilateral trade. 25 Yet although 

U.S.-Taiwan trade and investment flows are strong and mutually beneficial, 

they continue to underperform expectations. 26 Despite conclusion of the 

TIFA, Taiwan’s equivocal approach to follow-through on implementation and 

the persistence of some import barriers have undermined the confidence of 

some U.S. firms and politicians. 

Conclusion of a bilateral investment agreement (BIA) could meaningfully 

restore some luster to Taiwan’s market. It would demonstrate Taiwan’s 

political will to improve the business climate for all foreign participants across 

multiple sectors by contributing to predictability and exerting downward 

pressure on investment protectionism. Even though a BIA is a clear priority 

of U.S. businesses in Taiwan, 27 there has been no meaningful forward motion 

since the creation of a 2013 working group on the matter. As U.S.-China 

negotiations on a bilateral investment treaty continue, it will be important 

for the United States and Taiwan to revive BIA negotiations to avoid the sense 

that Taiwan is a next-best choice. 

The TPP is an important part of the Obama administration’s strategy of 

rebalancing to the Asia-Pacific because it reaffirms U.S. commitments in the 

region. As previously stated, the inclusion of Taiwan in the TPP agreement 

would allow the island to diversify its trading partners, making it more 

economically secure. Trade diversification, however, would not only lessen 

25 Tsai Ing-wen, “Taiwan Can Build on U.S. Ties.” 

26 William T. Wilson, “Market Solutions Should Be Central to U.S.’s Taiwan Policy,” Heritage 

Foundation, Backgrounder, no. 2930, August 1, 2014 u http://www.heritage.org/research/ 

reports/2014/08/market-solutions-should-be-central-to-uss-taiwan-policy. 

27 American Chamber of Commerce in Taipei, “Background Information: U.S.-Taiwan 

Bilateral Investment Agreement (BIA),” January 27, 2015 u http://www.amcham.com.tw/ 

government-public-affairs/background-information. 

[ 79 ]

asia policy 

dependence on the mainland but would also limit Taiwan’s dependence on 

the United States, integrating the island more successfully into natural trade 

flows of the region. One possible diplomatic option for the United States is 

to work privately toward Taiwan’s inclusion in the TPP—provided it meets 

the same requirements as current members—to blunt the effect of a veto by 

Beijing. This option could be pursued alongside a strategy of accelerating 

China’s TPP entry and is not inconsistent with that clear U.S. policy goal. 

the road forward and policy recommendations 

Taiwan has an opportunity now to take the necessary steps toward TPP 

membership. If it does, the island’s economy will evolve and its competitive 

position in the region will be enhanced. Being a bystander at a time of 

accelerating regional integration and bilateral special deals will inevitably 

reduce Taiwan’s competitiveness and marginalize its role. The most significant 

challenge may be the KORUS FTA. That agreement, which entered into force 

on March 12, 2012, has changed regional trade and supply-chain structures 

in just three years. Some of that change was well chronicled before the fact, 

while other features have underperformed. 28 Nonetheless, the KORUS FTA 

is the United States’ second-largest bilateral deal, and it gives South Korea 

advantages in key sectors where it competes directly with Taiwan. As they 

work to overcome the obstacles to TPP membership, Taiwan’s leaders should 

consider the following five points: 

First, Taiwan should focus its efforts on the areas of the TPP where it 

can achieve successful outcomes, such as the services sector, rather than 

attempting to tackle all aspects of the TPP at once, which would require 

considerable political and economic capital. Taking incremental steps toward 

meeting TPP standards will enable Taiwan’s leaders to build public support 

for more difficult reforms in agriculture and investor-state dispute resolution. 

Second, transparency and stakeholder engagement will be extremely 

important in convincing the public that joining the TPP is in Taiwan’s best 

interests. The American Chamber of Commerce in Taipei’s 2015 white paper 

claims that “sometimes important policy changes are not communicated 

to the public, leaving stakeholders in the dark.” 29 Moving forward, the 

28 Brock R. Williams, Mark E. Manyin, Remy Jurenas, and Michaela D. Platzer, “The U.S.–South 

Korea Free Trade Agreement (KORUS FTA): Provisions and Implementation,” Congressional 

Research Service, CRS Report for Congress, RL34330, September 16, 2014 u https://fas.org/sgp/ 

crs/row/RL34330.pdf. 


[ 80 ]


government should actively engage the public and businesses on TPP issues 

and promote increased transparency over trade deals. The leadership in 

Taiwan should consider the U.S. Trade Representative’s advisory committee 

system as a model for creating an engagement and advisory mechanism 

that is structured, open, and formal. The U.S. system was created to ensure 

that policy and trade-negotiating objectives adequately reflect U.S. public 

and private sector interests, with the U.S. Trade Representative’s Office of 

Intergovernmental Affairs and Engagement spearheading the effort to engage 

with outside groups in order to build support for a robust trade agenda. 30 

Third, Taiwan should engage in bilateral discussions with current TPP 

nations to review key trade and investment issues and consider how it might 

reform its economy so as to be prepared to engage in a follow-on round for 

potential new members. In particular, Taiwan should engage with Japan, 

which has publicly supported Taiwan joining negotiations and is facing 

similar difficulties in passing the domestic reforms required by the TPP. 

Taiwan should also resolve any outstanding trade issues with the twelve TPP 

members, given that unanimous approval from all founding members is 

required for new nations to join in the second round. 

Fourth, Taiwan should not view the TPP as a competition with China. 

Whether China ultimately seeks to join the agreement is not a matter over 

which Taiwan has any influence. Taiwan’s membership should rise or fall on 

its own merits. With this in mind, Taiwan should move forward with domestic 

reforms to be prepared to comply with TPP requirements. 

Finally, Taiwan should continue to pursue closer economic cooperation 

with the United States through the TIFA framework, resolving outstanding 

issues, especially in the agriculture sector. The TIFA with the United States 

and FTAs with New Zealand and Singapore can showcase the value of Taiwan’s 

future participation in the TPP. 

conclusion 

Trade flows and investment indicate that Taiwan is an important 

exporter and investor in the Asia-Pacific, but this economic reality has 

outrun policy. Taiwan’s economic role in the region is diluted by its 

exclusion from regional trade deals, which are increasing in number and 

significance. This is in large part due both to China’s political opposition 

30 “About Us: Advisory Committees,” Office of the United States Trade Representative u https://ustr. 

gov/about-us/advisory-committees. 

[ 81 ]

asia policy 

and to Taiwan’s own domestic resistance. It is difficult to imagine a quick 

resolution of either of these challenges in the short term. But as more and 

more free trade and regional trade agreements are signed among its major 

economic partners, Taiwan faces some tough choices about its competitive 

posture and economic adaptability. 

Given all the strategic and security implications of further integration into 

the Asia-Pacific region, joining the TPP would be immensely advantageous for 

Taiwan. However, apart from the core issue of its interest in and commitment 

to such an ambitious agenda, Taiwan’s trade partners have questioned the 

island’s political capacity to implement difficult market openings. 

Now that the terms of the TPP have been completed, Taiwan faces 

an important societal decision on the costs and benefits of joining. If the 

debate in the United States is any indication, that decision is far from 

easy, especially when many of the terms of the final agreement remain 

subject to negotiation. Yet it is imperative for Taiwan to knit itself into the 

economic and commercial fabric of the Asia-Pacific. Being a bystander at 

a time of accelerating regional integration will inevitably reduce Taiwan’s 

competitiveness and marginalize its role. 

[ 82 ]



Challenges Ahead in China’s Reform 

of State-Owned Enterprises 

Wendy Leutert 

wendy leutert is a PhD Candidate in government at Cornell University 

and a Visiting Researcher at the Brookings Institution’s John L. Thornton China 

Center (2014–15). She worked for the International Crisis Group in Beijing and 

holds an MA in government from Cornell and an MA in international relations 

from Tsinghua University. She can be reached at . 

note u The author thanks the Brookings Institution’s John L. Thornton 

China Center and the Brookings-Tsinghua Center for Public Policy and is also 

grateful for support from the U.S.-China Policy Exchange Fellowship funded by 

the Ford Foundation. All views expressed are those of the author. 

keywords: china; state-owned enterprises; yangqi; economy; reform 


asia policy 


This essay analyzes three challenges ahead in reforming China’s centrally 

owned companies, known as yangqi: determining how and when to give 

market forces a greater role, aligning mismatched executive incentives, and 

overcoming complicating factors within firms. 

main argument 

The Xi Jinping administration has identified the reform of state-owned 

enterprises (SOE) as an essential step in the structural transformation of 

China’s economy. In September 2015, Beijing released long-delayed guiding 

opinions for reforming state firms, to be followed by a series of policy 

documents. Three key challenges, however, block the path ahead: deciding 

when and how to grant market forces a greater role, especially after stock 

market turmoil; aligning managerial incentives with firm performance and 

corporate governance priorities; and overcoming company-level obstacles. 

Continuing to restrict competition in protected sectors while merging 

centrally owned firms will increase their market share at the risk of long-term 

competitiveness and efficiency gains. Yet such performance concerns are a 

lesser priority for SOEs in strategic industries, where political rather than 

market logic remains paramount. Second, while the Chinese Communist 

Party under Xi is actively exercising its authority to appoint and remove the 

top leaders of yangqi, shuffling executives cannot eliminate their multiple and 

often conflicting incentives. Finally, the size, complexity, and organizational 

culture of centrally owned firms will complicate reform implementation. 


• To establish realistic expectations for the next phase of China’s reform 

of SOEs, policymakers and business leaders must understand the major 

challenges ahead in carrying out new reforms. 

• The Chinese government has long maintained protected industries and 

reformed yangqi by merging underperforming and smaller state firms into 

other centrally owned companies. Yet boosting competition and enabling 

market exit for the worst performers, particularly in nonstrategic sectors, 

may be the best approach to improve efficiency and service quality in the 

long term. 

• New reforms will not succeed without targeted policies at the firm level 

to align executive incentives, strengthen internal oversight, and overhaul 

enduring cadre culture.

leutert • china’s reform of state-owned enterprises 

The reform of state-owned enterprises (SOE) is an urgent priority for 

the Xi Jinping administration. Economically, Beijing aims to decrease 

the drag on domestic growth and increase the overseas competitiveness of its 

largest firms known as yangqi, long plagued by declining performance, rising 

debt, and serious corruption. 1 Politically, the Chinese Communist Party 

wants to reinforce state ownership as a pillar of domestic stability at home 

and increased influence abroad. To achieve these ends, Beijing released the 

long-delayed “Guiding Opinions of the Communist Party of China Central 

Committee and the State Council on Deepening the Reform of State-Owned 

Enterprises” in September 2015, to be followed by a series of detailed policy 

documents. 2 This roadmap calls for regrouping state firms by function; 

further consolidating their assets, while simultaneously developing “mixed 

ownership”; and loosening state authority over executive management, 

especially for those in nonstrategic sectors. 3 

Categorizing SOEs into a public class (gongyilei) and a commercial class 

(shangyelei) is a transformative move at the heart of the new reforms. Firms 

will be divided by function into those dedicated to public welfare and those 

seeking profit. Future reforms will be carried out separately for these two groups 

in a dual-track approach: distinct strategic objectives will be set for each, and 

their performance will be evaluated by different metrics. While Beijing seeks to 

improve all SOEs’ operational efficiency, service quality, and ability to innovate, 

profitability will always be a secondary priority for those charged with public 

welfare or national security functions. Specifically, the new guidelines stipulate 

that firms designated as public will be assessed by their ability to control 

costs, the quality of their goods and services, and the stability and efficiency 

of their operations. 4 Political rather than market logic will therefore remain 

the paramount driver of changes to state firms in the public class. In contrast, 

boosting market competitiveness and delivering gains in financial performance 

will be a top priority for SOEs classified as commercial, to be assessed by 

1 This essay focuses on China’s central state-owned enterprises (zhongyang guoyou qiye), 

specifically the 106 nonfinancial firms administered by the State-Owned Assets Supervision and 

Administration Commission (SASAC). 

2 Zhonggong zhongyang, guowuyuan guanyu shenhua guoyou qiye gaige de zhidao yijian [Guiding 

Opinions of the Communist Party of China Central Committee and the State Council on Deepening 

the Reform of State-Owned Enterprises], Communist Party of China Central Committee and State 

Council of the People’s Republic of China (PRC) (Beijing, September 13, 2015). 

3 In 2006, the State Council identified seven “strategic industries” where the state will keep “absolute 

control” (defense, electricity, petroleum, telecommunications, coal, aviation, and shipping) as 

well as “pillar industries” where the state will maintain “strong influence” (machinery, electronics, 

information technology, automobiles, steel, nonferrous metals, chemicals, and construction). 

4 Zhonggong zhongyang, guowuyuan guanyu shenhua guoyou qiye gaige de zhidao yijian, part 1, 

section 6. 

[ 85 ]

asia policy 

indicators such as economic value added. 5 However, these firms will still serve 

political goals, including fostering indigenous innovation, supporting social 

stability and crisis response in China, and advancing economic initiatives 

abroad such as “One Belt, One Road.” 

This essay analyzes three challenges confronting this reform agenda: 

determining how and when to grant market forces a greater role, especially 

for state firms designated as commercial; aligning mismatched managerial 

interests and incentives; and overcoming complicating factors within 

companies. First, continuing government-directed mergers while restricting 

competition in protected sectors will boost state firms’ market share at the 

risk of deepening their financial and operational weaknesses in the long term. 

Second, while the Xi administration is actively exercising personnel control, 

defined as the authority to appoint and remove top company leaders, shuffling 

executives cannot eliminate their mismatched incentives. 6 Finally, the size, 

complexity, and cadre culture of SOEs will complicate reform implementation. 

Whether these difficulties can be surmounted will ultimately determine the 

success of Xi’s reform agenda and China’s economic transformation. 

central state-owned enterprises 

China’s state-owned economy remains significant today. State firms’ 

exact contribution to industrial output is debated but has been estimated 

at between 25% and 30%. 7 State firms continue to enjoy advantages in 

obtaining bank loans and regulatory approvals, even if their privileged 

capital access has gradually declined. The central government currently 

owns 106 companies, out of which 47 firms ranked in the 2014 Fortune 

Global 500. 8 These centrally owned firms, or yangqi, controlled more than 

$5.6 trillion in assets at the end of 2013, including more than $690 billion 

abroad. 9 Concentrated in strategic industries like defense, petroleum, 

5 Zhonggong zhongyang, guowuyuan guanyu shenhua guoyou qiye gaige de zhidao yijian, part 1, section 5. 

6 Top executives refers to individuals holding one or more of the following positions: general 

manager (zongjingli), party secretary (dangwei shuji), or chair of the board of directors 

(dongshizhang), if one exists. 

7 Nicholas R. Lardy, Markets Over Mao: The Rise of Private Business in China (Washington, D.C.: 

Peterson Institute for International Economics, 2014). 

8 “47 jia zhongyang qiye ruwei 2014 nian shijie 500 qiang” [47 Central State-Owned Enterprises 

Enter 2014 Fortune Global 500], SASAC, July 8, 2014 u http://www.sasac.gov.cn/n1180/n1226/ 

n2410/n314259/n315134/15951889.html. 

9 “Guoziwei ‘modi’ zhongyang jingwai zichan” [SASAC “Feels Bottom” on Central State-Owned 

Enterprises’ Overseas Assets], Xinhua, March 18, 2015. 

[ 86 ]


and electricity, yangqi also operate in competitive sectors ranging from 

automobiles to shipping. Centrally owned firms have long been integral to 

China’s industrial policy at home. Today, they also play a leading role in 

its economic statecraft abroad, such as the Xi administration’s “One Belt, 

One Road” initiative to promote infrastructure development and economic 

integration in Eurasia. SOEs have historically been controlled by government 

ministries and other state organizations, but in 2003 Chinese leaders 

centralized their administration under the newly created State-Owned 

Assets Supervision and Administration Commission (SASAC). 

Yangqi are officially divided into two groups based on their strategic 

importance and size. The first is a core group of 53 firms known as “important 

backbone state-owned enterprises” (zhongyao gugan guoyou qiye). This group 

includes many of China’s largest and best-known companies, such as Sinopec, 

China Mobile, and State Grid. The second group comprises the remaining 

firms—a varied mix of global industry players such as Sinosteel, lesser-known 

companies like the China National Salt Industry Corporation, and state-run 

research institutes like the General Research Institute for Nonferrous Metals. 

Due to their varying strategic importance and size, these two groups 

of yangqi possess different administrative ranks. The core 53 state firms are 

ranked at the vice-ministerial level (fubuji). This gives their top executives 

official standing equivalent to political elites of the same administrative 

rank (for example, vice provincial party secretaries or governors). 10 The 

remaining centrally owned firms have department-level (zhengtingji) rank. 

Administrative rank confers important political privileges that can enhance 

executives’ ability to advocate for benefits to their companies, such as licenses, 

or oppose economic policies disadvantageous to their industries. Specifically, 

these political privileges include access to documents of varying grades of 

classification, invitations to meetings for officials of a certain rank, and 

the opportunity to participate in study groups and further training at the 

Central Party School of the Chinese Communist Party. While SASAC states 

that administrative rank does not matter for how yangqi are managed and 

assessed, in practice it is critical to the political influence of both these firms 

and their leaders. 

10 A small number of executives come to their companies with a higher administrative rank by virtue 

of their previous positions. For example, Wang Yupu, appointed as party secretary and board 

chairman of Sinopec in April 2015, gained full ministerial rank (zhengbuji) by serving previously as 

the vice party secretary of the Chinese Academy of Engineering starting in 2013. 

[ 87 ]

asia policy 

giving market forces a greater role 

The Enduring Appeal of Consolidation 

Consolidating central SOEs has long been China’s preferred method 

of reform. SASAC administered 189 nonfinancial SOEs at its establishment 

in 2003. Of the 83 firms that disappeared over the past thirteen years, the 

vast majority were merged into existing central SOEs, while a handful were 

combined to create new conglomerates or returned to ministerial control. For 

instance, the Yangtze Estuary Waterway Construction Company was returned 

to the Ministry of Transportation in 2006 to become the Yangtze Estuary 

Waterway Administration Bureau. China Communications Construction 

Company Group and China Energy Engineering Group are examples of such 

newly created conglomerates. During these processes of consolidation and 

restructuring, however, the core 53 firms have remained largely unchanged. 11 

Beijing’s consolidation of yangqi is motivated by both economic 

and political factors. In theory, merging these companies combines 

complementary capacities and increases resources—employees, capital, 

and client networks. It aims to promote Chinese state firms’ international 

competitiveness in a given sector by eliminating price wars among them 

overseas. In addition, consolidation is politically appealing for two reasons. 

First, it avoids the sensitive issues of selling state firms, which prompts 

corruption concerns, or closing them and dismissing their employees, which 

raises the specter of social instability. Second, it fits Beijing’s win-win vision 

for reforming SOEs, especially those classified as commercial—market 

competitiveness with party control. This aspiration is embodied most clearly 

in China’s “national champions” strategy: a long-term government initiative 

to build large, globally competitive state firms. The privatization of SOEs is 

not the end goal for new reforms and never has been. 

The new guiding opinions call for ongoing government-directed 

consolidation of state-owned firms, which has been Beijing’s stated goal for 

years. In a 2007 speech, for example, inaugural SASAC director Li Rongrong 

identified the development of 30–50 globally competitive companies as the 

“clear goal” for central SOE reform. Impending reforms, however, may step 

up the pace. Multiple mergers have been officially confirmed, while others 

11 Exceptions are the 2008 merger of China Aviation Industry Corporation I and China Aviation 

Industry Corporation II to form China Aviation Industry Corporation, the 2008 merger of China 

Netcom into China Unicom, and the 2013 reorganization and merger of China National Erzhong 

Group into China National Machinery Industry Corporation (Sinomach). 

[ 88 ]


remain rumored. 12 Two changes already stand out in the latest round of 

consolidation. First, China’s core 53 state firms—not only smaller or poorly 

performing centrally owned firms—are now among those under consideration 

for mergers. Second, because of this fact, and since the size of yangqi overall 

has increased dramatically over the past decade, newly created conglomerates 

may dwarf both their domestic and international competitors. 

New Risks of an Old Approach 

Creating even larger SOEs is likely to exacerbate their already daunting 

financial and organizational ills. The average return on assets for nonfinancial 

state firms nationwide was 3.1% in 2012, falling well below the cost of capital. 13 

A number of yangqi that year posted a return on assets below this average, 

including several companies operating in nonstrategic sectors. 14 Efforts to 

boost performance by merging huge state firms without downsizing them 

risk running aground on SOEs’ well-known organizational ills—inefficient 

operations, communication gaps, and weak oversight. Mergers can also create 

a host of other problems, such as redundant staff and departments or dueling 

executive teams. 

While many of these challenges are typical for mergers involving 

multinational firms, they are amplified for Chinese SOEs. Many yangqi 

operate in administrative monopolies created by government actions to 

limit competition in certain industries or grant monopoly status to specific 

enterprises. These administrative monopolies create little external pressure 

12 Confirmed mergers include China Merchant Group and SINOTRANS & CSC Holdings 

Corporation; Minmetals and China Metallurgical Group Corporation; China Ocean Shipping 

Group (COSCO) and China Shipping Group; China CNR Corporation Limited and CSR 

Corporation Limited; Nam Kwong Group Corporation Limited and Zhuhai Zhenrong Company; 

and China Power Investment Corporation and State Nuclear Power Technology Corporation. 

Rumored mergers include Air China and China Southern Airlines; China State Shipbuilding 

Corporation and China Shipbuilding Industry Corporation Limited; China Railway Construction 

Corporation and China Railway Engineering Corporation; Sinopec and PetroChina; Baosteel and 

Wuhan Iron and Steel Company (WISCO); and Dongfeng Motors and First Auto Works. 

13 Average interest rates on loans of one to three years have exceeded 7% since 2011, according to 

statistics from the People’s Bank of China, as cited in Andrew Batson, “Fixing China’s State Sector,” 

Paulson Institute, Paulson Policy Memorandum, January 2014, 8–9. 

14 Among the top 53 companies, firms reporting a return on assets in 2012 below this average 

include China Telecom, China Unicom, China First Heavy Industries, China National Erzhong 

Group (now Sinomach), Chinalco, Baogang, WISCO, China Shipping Group, and the Commercial 

Aircraft Corporation of China. Yearbook data for the 2012 return on assets was not reported 

for the following: China National Nuclear Corporation, China Aerospace Science and Industry 

Corporation, China State Shipbuilding Corporation, Sinopec, China National Offshore Oil 

Corporation (CNOOC), Huadian, Dongfeng Motors, Anshan Iron and Steel Corporation, COSCO, 

China Minmetals Corporation, and China National Travel Service Corporation. Zhongguo guoyou 

zichan jiandu guanli nianjian [State-Owned Assets Supervision and Management Yearbook], 

SASAC (Beijing, 2013). 

[ 89 ]

asia policy 

for yangqi to improve the quality of goods and services or boost operational 

efficiency, such as by streamlining internal departments and reducing staff. 

As mergers simultaneously produce larger SOEs and shrink the number of 

players operating in still-protected sectors, these problems will become more 

acute. Those looking to China’s anti-monopoly law to address the concerns 

about competitiveness raised by mergers among SOEs will be disappointed. 

Enforcement authority is fragmented among three government agencies—the 

National Development and Reform Commission, the Ministry of Commerce, 

and the State Administration for Industry and Commerce—with limited 

resources and little authority to rule against mergers mandated by higher 

levels of government. 

Tough Choices about Marketization Remain 

Beijing’s latest reform push is running headlong into concerns about 

economic and political stability, leaving the timing and process of future 

marketization unclear. The guiding opinions for SOE reform never mention 

the “decisive role” for the market pledged at the Third Plenum in November 

2013. In 2015, Chinese stock market turmoil solidified conservative 

political elites’ conviction that party-controlled yangqi are an essential 

part of the government’s toolkit for averting financial crisis. Beijing is 

also extremely concerned about the security implications of foreign 

investment and technology, as demonstrated by the National Security Law 

and banking technology regulations. Tough choices lie ahead about which 

market-oriented reforms the government should adopt, which agencies will 

be responsible for carrying them out, and when, where, and in what order 

reforms will be implemented. 

The first approach under consideration is gradual expansion of mixed 

ownership between centrally owned firms and other state-owned and private 

investors through instruments including share subscriptions, equity stake 

purchases, and convertible bonds. But many private investors have remained 

skittish despite rosy coverage by official media and efforts by the State Council 

to clarify the permissible forms and scope of investment. 15 An alternative 

approach involves authorizing the holding companies of state-owned 

business groups, presumably those classified as commercial, to augment their 

role in state capital management. In effect, this would shift SASAC’s function 

15 “Guowuyuan guanyu guoyou qiye fazhan hunhe suoyouzhi jingji de yijian” [Opinions of the State 

Council on State-Owned Enterprises Developing Mixed Ownership Economy], State Council 

(PRC), Document No. 54, September 24, 2015. 

[ 90 ]


away from asset management toward a regulatory role. Although SASAC set 

up pilots in 2014 to explore these two options, the guiding opinions call for 

additional experimentation, making it unclear which of these tactics, if any, 

will be implemented on a wider scale. 16 

Others advocate rolling back administrative monopolies and boosting 

competition—both between state and private firms and within the 

state-owned sector—as the best approach to improve efficiency and service 

quality in the long run. 17 Most if not all of the nonstrategic sectors still 

protected by the Chinese government as “pillar industries”—electronics, 

machinery, information technology, automobiles, steel, nonferrous metals, 

chemicals, and construction—are inherently competitive, if capital intensive. 

Lowering levels of state ownership while making administrative interventions 

more limited and predictable will boost the efficiency of resource allocation 

and encourage the participation of smaller private firms. 18 The State Council’s 

pledge in October 2015 to phase out price controls in nonstrategic sectors 

by 2017, limiting government-set prices to sectors like electricity and water 

supply, is an important step toward creating more competitive markets. 

However, this move is unlikely to seriously affect yangqi domination of these 

industries in the near term. 

aligning mismatched managerial incentives 

Personnel Control versus Personal Power 

A second obstacle to carrying out new reforms arises from SOE leaders and 

the party’s system of personnel control. The Central Organization Department, 

the powerful party organ charged with management of elite cadres, appoints top 

executives for the core 53 SOEs. Leaders of the remaining central state-owned 

firms are appointed by SASAC in coordination with the Central Organization 

Department. In theory, the party exercises influence over SOEs through its 

authority to appoint, transfer, and remove their top leaders. This control is 

thought to align officials’ career incentives with party priorities. According to 

16 “Guoziwei qidong si xiang gaige shidian” [SASAC Starts Four Reform Pilots], Xinhua, July 14, 2014. 

17 World Bank and the Development Research Center of the State Council (PRC), China 2030: 

Building a Modern, Harmonious, and Creative Society (Washington, D.C.: World Bank, 2013). 

18 Ibid., 110. 

[ 91 ]

asia policy 

this view, cadres loyal to the party compete to become top performers, motivated 

by possible promotion to a higher-ranked political position. 19 

A disconnect in career incentives, however, means the mechanism of 

personnel control may not always function as intended. One way of assessing 

this is to examine executives’ career backgrounds and next positions. During 

the Hu Jintao era, most heads of the top 53 state firms were veterans of 

state-owned industry, often of the very companies they later led. The majority 

entered retirement directly from their company leadership positions. With 

no prospect of political promotion due to China’s mandatory retirement 

age—60 for officials at the vice-ministerial and department levels—such 

individuals may have more incentive to coast to a comfortable retirement 

than to engage in the hard work of reform. 20 

Yet state firm executives are far from passive pawns in a centralized 

personnel management system. They derive personal power vis-à-vis the 

center from multiple sources. A small number of executives hold ministerial 

rank from their previous positions, equaling that of the government agencies 

charged with monitoring them. Internal checks on top leaders’ authority are 

weak, as the board of directors often overlaps substantially with the party 

committee and independent directors remain scarce. Executives who built 

their careers within a single sector or company operate from a position of 

deep personal networks within their industries and firms. A fortunate few 

even possess professional or family ties to top leaders. Finally, individual 

executives’ influence has also been boosted by the growing size and profits of 

central SOEs during the past decade. 

Greater attention should be given to departmentalism (benwei zhuyi) in 

SOE management as a potential impediment to reform. Studies of China’s 

bureaucratic politics have documented the impact of this phenomenon, in 

which long-serving individuals in specialized bureaucracies come to evaluate 

national policy priorities from the perspective and interests of their own 

bureaucratic unit. 21 Departmentalism is thought to be more likely to occur if 

tenure in a given functional bureaucratic system is lengthy—in this case, if an 

executive has spent his or her entire career working in a state-owned industry 

or a single state firm. 

19 For further discussion of the system of local official competition and political incentives in China, 

see Hongbin Li and Li-An Zhou “Political Turnover and Economic Performance: The Incentive 

Role of Personnel Control in China,” Journal of Public Economics 89, no. 9–10 (2005): 1743–62. 

20 Barry Naughton, “Leadership Transition and the ‘Top-Level Design’ of Economic Reform,” Hoover 

Institution, China Leadership Monitor, no. 37, Spring 2012. 

21 See, for example, Kenneth Lieberthal and Michel Oksenberg, Policy Making in China: Leaders, 

Structures, and Processes (Princeton: Princeton University Press, 1988), 404. 

[ 92 ]


The majority of yangqi executives built their careers in the state-owned 

economy, and numerous individuals worked for decades in the same firms 

they later led. Many served longer than 5 years in top leadership positions, 

and some served over 10 years or even all the way to retirement. One example 

of a long-serving executive who entered retirement directly is Liu Fuchun, 

who worked for 32 years at China National Cereals, Oils and Foodstuffs 

Corporation (COFCO) before serving as its general manager (2000–2007). 

In part, long company service and leadership tenures in SOEs may result 

naturally from China’s former system of lifetime state employment as well as 

from the time required to gain industry-specific technical expertise. However, 

recent moves by the Xi administration suggest that the government has 

recognized departmentalism in yangqi as one hindrance to reform. 

Beijing Shuffles Executives, but Mismatched Incentives Remain 

To consolidate control over central SOEs, the Xi administration has 

stepped up the rotation of executives. During the Hu Jintao era (2002–12), 

fourteen top-level executive transfers were made among the 53 core state 

firms. In the past three years, the Xi administration has already made 

approximately half this number of transfers within the same group of 

companies. 22 Reassignment of executives from one yangqi to another serves 

two purposes. First, it shakes up established groups of leaders and creates 

potential organizational learning by bringing in individuals with successful 

experiences running other state firms. Second, it may function as a prelude to 

further consolidation of SOEs in a given sector. 

But rotating company leaders does not solve the mismatched incentives 

inherent in the personnel control system, a problem that will persist as 

long as these individuals are both bureaucrats and executives. The average 

age of SOE executives has decreased over the past decade, but because of 

mandatory retirement ages, many know already that their current leadership 

position is likely to be their last. For such individuals, it cannot be assumed 

that the prospect of political promotion will motivate performance or deter 

corruption. Even for younger officials, the current system creates serious risks. 

As SASAC itself acknowledges, evaluation on economic performance for 

22 These statistics understate actual management rotation because they refer only to transfers of top 

executives in the core 53 state firms directly to another such position in this group of companies; 

they do not include transfers of lower-level executives. They also do not count those individuals 

who served in two or more top leadership positions in the core 53 state firms, but who held 

positions outside state-owned industry in the interim. 

[ 93 ]

asia policy 

political promotion can lead executives to make risky short-term investments 

as they seek fast returns to get promoted. 23 

Nor are financial incentives being deployed to help align executives’ 

and the government’s interests in improved company performance. Amid 

the ongoing anticorruption campaign, Chinese leaders have worried about 

how to address the issue of one set of bureaucrats getting rich while others 

of the same administrative rank do not. In response, they unveiled plans in 

2015 to reduce SOE executives’ pay by up to 50%. 24 SASAC officials argue that 

widespread attrition is unlikely because yangqi executives enjoy nonmaterial 

benefits that substitute for salary, such as career stability and the opportunity 

for professional development at leading industry firms. 25 Such rewards, 

however, do not incentivize individual performance gains; moreover, slashing 

salaries may serve as an impetus for corrupt behavior. 

One path forward is to combine increased external recruitment of executives 

with expanded market-based compensation schemes (including bonuses and 

stock options), especially for the leaders of state firms designated as commercial. 

A prominent Chinese expert has forecast that SOE leaders at the level of general 

manager and below will all be recruited from the market by 2020, instead of being 

appointed by party or government organs. 26 In October 2015, Xinxing Cathay 

International Group became the first yangqi to have its general manager selected 

by the board of directors. However, the problem of wage disparity persists, 

because managers recruited from the market are likely to outearn state-appointed 

executives. Indeed, new reform guidelines indicate that SOEs should develop 

separate compensation schemes for external market hires and executives 

appointed by the Central Organization Department and the State Council. 27 

23 Tansuo yu yanjiu: guoyou zichan jiandu guanli he guoyou qiye gaige yanjiu baogao [Exploration and 

Research: State-Owned Assets Supervision and Management and State-Owned Enterprise Reform 

Research Report] (Beijing: Jingji chubanshe, 2012), 351. 

24 See Zhongyang guanli qiye fuzeren xinchou zhidu gaige fangan [State-Owned Enterprise Executive 

Compensation Reform Plan], January 1, 2015. The plan was dubbed the “pay ceiling order.” 

25 Bai Tianliang, “Yangqi gaoguan, xinchou zenme guan” [Central State-Owned Enterprise 

Executives: How to Manage Compensation], Renmin ribao, September 29, 2014. 

26 See Chai Hua, “Yangqi shouci xingshi zongjingli xuanpinquan” [Yangqi Exercise Right to Select 

General Manager for the First Time], Zhongguangwang, October 18, 2015. In addition, Chinese 

Academy of Social Sciences expert Zhang Zhuoyuan commented on this issue in “Guoqi gaige 

liang da fangan jiang chulu, guoziwei zhineng jiang shengbian” [Two Major State-Owned Company 

Reforms to Be Released, SASAC’s Role Will Change], Jingji guancha bao, May 10, 2015. 

27 Zhonggong zhongyang, guowuyuan guanyu shenhua guoyou qiye gaige de zhidao yijian, part 1, section 10. 

[ 94 ]


Untangling Managerial and Party Roles 

Joint appointments for top managerial and party positions in yangqi 

remain widespread but entail conflicting economic and political priorities. 28 

Joint appointments refer to when a single person serves simultaneously 

in one, two, or even three of the following roles: party secretary, general 

manager, and board chairman. They occur in a variety of configurations, 

with the combination of board chairman and party secretary being by far 

the most common among the core 53 state firms. When boards of directors 

were established at the holding company level of these SOEs, the new board 

chairman was nearly always the existing party secretary or concurrently 

appointed to serve as party secretary. Overall, the incidence of joint 

appointments has been highest in the strategic industries where party control 

is paramount: defense, power, and petroleum. 

Separating managerial and party roles is important for strengthening 

corporate governance, which is a stated priority for yangqi designated as 

commercial and now seeking greater external investment. In particular, 

the widespread joint appointment of board chairman and party secretary 

undermines outside investors’ confidence in boards of directors. Specifically, 

it implies that the board’s independent decision-making authority may 

be subject to influence by the party committee, suggests the possibility of 

political priorities trumping profit maximization, and underscores the state’s 

predominant authority to shareholders already wary about protection of their 

interests. Although dividing managerial and party roles cannot resolve deeper 

tension between firm autonomy and party control, it would be a critical step 

for yangqi pursuing mixed ownership reforms. 

overcoming complicating factors within state firms 

Sprawling, Hybrid Organizations 

New reforms also confront complicating factors at the company level: 

SOEs’ byzantine structures, partial marketization, and growing global scope. 

Nearly all yangqi are huge, multi-tiered, partially marketized business groups. 

At the top is a state holding corporation wholly owned by SASAC. Below this 

28 In addition to enhancing party influence, joint appointments for executives are intended as an 

internal bridging mechanism between the vertically oriented “new three committees” (xin san 

hui)—shareholders meeting, board of directors, and supervisory board—and the horizontally 

oriented “old three committees” (lao san hui)—party committee, workers representative assembly, 

and workers union. 

[ 95 ]

asia policy 

administrative entity is an opaque constellation often comprising one hundred 

to over two hundred member companies, including joint venture firms, 

research institutes, and other bodies. These member companies range widely 

in size, financial performance, operational scope, and geographic location. To 

complicate matters further, each member company may itself have subsidiary 

firms or hold ownership stakes in multiple other enterprises. 29 Such complex 

corporate organizations are a typical feature of many large and multinational 

firms. What makes yangqi stand out is their partial marketization and extremely 

rapid increase in size and complexity, due to both domestic restructuring and 

overseas expansion. 

Yangqi are partially marketized entities. Some of their member companies 

and subsidiaries may be publicly listed on Chinese or overseas stock 

exchanges, but typically the majority are not. 30 The proportion of publicly 

listed assets varies widely across centrally owned firms, with full public listing 

still a distant goal for most. In some cases, this hybrid nature creates conflict 

between the commercially oriented viewpoint of publicly listed entities and 

the often more conservative outlook and emphasis on political priorities of 

holding companies. 

Ongoing mergers of central SOEs, together with their rapid international 

expansion, have greatly increased these firms’ size and geographic spread. 

The average number of subsidiaries of centrally owned enterprises more than 

doubled from 82 in 2003 to 191 in 2010. 31 For more than a decade, Beijing’s 

explicit policy goal has been to consolidate yangqi and make them bigger. 

At the same time, government support, together with growing domestic 

competition and surplus capacity, impelled a surge of overseas investments 

and joint ventures. According to state media, centrally owned firms hold 

more than $690 billion of assets abroad, and this figure is expected to grow. 32 

29 See, for example, the visual depiction of China Datang Group’s 143 member companies and their 

holdings in Li-Wen Lin and Curtis J. Milhaupt, “We Are the (National) Champions: Understanding 

the Mechanisms of State Capitalism in China,” Stanford Law Review 65, no. 4 (2013): 733. 

30 Comprehensive and reliable data on the proportion of Chinese centrally owned firms’ assets that 

are publicly listed is scarce. According to official media, centrally owned companies controlled a 

total of 277 entities listed on the Shanghai and Shenzhen stock exchanges as of April 2015. Yang 

Ye, “Chongzu chaoyong, yangqi hui suozhi 40 jia” [Wave of Restructuring, Central State-Owned 

Enterprises to Shrink to 40], Jingji cankao bao, April 27, 2015. 

31 Chang-Tai Hsieh and Michael Song Zheng, “Grasp the Large, Let Go of the Small: The 

Transformation of the State Sector in China,” Brookings Institution, Brookings Papers on Economic 

Activity, February 2015. 

32 “Guoziwei ‘modi’ zhongyang jingwai zichan.” 

[ 96 ]


Intra-firm Obstacles to Reform 

The size, global spread, and complex, hybrid structure of yangqi create 

additional stumbling blocks for reform. First, these factors create serious 

communication problems, a common challenge for multinational companies 

regardless of nationality. Yet inside China’s SOEs, communication problems 

are often compounded by a lack of information-sharing mechanisms across 

departments, and even within them. SASAC has sought to increase reporting 

requirements, particularly about state firms’ overseas investments, but 

yangqi themselves often struggle to collect accurate information from their 

subsidiaries. 33 Underreporting of losses is endemic and damaging for the state 

as well as other shareholders. 

These communication problems exacerbate a second issue: weak 

oversight. Auditing capacity at all levels is limited and often inadequate for 

effective reporting among the holding company, member firms, and their 

subsidiaries, as well as external auditors. Internal monitoring is also bogged 

down by bureaucratic paperwork. Forms requiring approval by multiple 

superiors are ubiquitous for both large and small issues. Intended as an 

operational cross-check, the result is instead an enormous paperwork backlog 

that negatively affects both oversight and efficiency. As anticorruption 

investigations have revealed, corruption thrived in this environment of weak 

internal and external scrutiny. 

A third obstacle for implementing reforms is the frequently overlooked 

politics within yangqi themselves. Much analysis has focused on state firms’ 

efforts to influence central government policies or on power struggles between 

party leaders and specific individuals linked with state firms. Insufficient 

consideration has been given to the competitive and even conflictual 

relationships among a company’s top executives, between the holding 

company and member companies, among member companies, and between 

member companies and their subsidiaries in China or overseas. Mergers 

often cause the most acute internal clashes, because they transform existing 

networks and hierarchies and create clear winners and losers, especially at 

33 For details on SASAC’s efforts to take stock of centrally owned companies’ overseas assets 

and establish a reporting system for their assets abroad, see “Guanyu jiaqiang zhongyang qiye 

jingwai guoyou zichan guanli youguan gongzuo de tongzhi” [Announcement on Strengthening 

Central State-Owned Enterprises’ Overseas State Asset Management Related Work], SASAC, 

October 14, 2011 u http://www.sasac.gov.cn/n1180/n1566/n258222/n259188/13863071.html; 

and “Zhongyang qiye jingwai guoyou chanquan guanli zanxing banfa” [Interim Measures for the 

Administration of Overseas State-Owned Property Rights of Central Enterprises], SASAC, June 

27, 2011 u http://www.sasac.gov.cn/n1180/n1566/n11183/n11244/13624758.html. In addition, 

starting in 2015, SASAC has taken the further step of sending its own inspectors to yangqi for 

multi-month investigations into the status of overseas assets. 

[ 97 ]

asia policy 

higher levels of management. They can also result in redundant departments 

and staff, leading to turf battles and further inefficiency. 

The final obstacle that new reforms must confront is SOEs’ enduring 

cadre culture. The organizational culture of state firms still reflects their 

origins in a system of socialist and traditional values—where authority 

and benefits are disproportionally allocated to those who are older, longer 

serving, loyal, and male. 34 De facto lifetime employment remains common, 

and it is extremely difficult to lay off workers. Personal connections and 

family background are still influential factors in hiring and promotion, 

despite concerted efforts to standardize human resource management. 

Career progression is still based on a bureaucratic system of grades linked 

with years of service, and individual sacrifice for the company’s long-term 

good is encouraged over personal ambition. 

New reforms to yangqi will not succeed without targeted policies to 

address these obstacles. Centralized reporting and document-management 

systems should be strengthened to boost the timeliness and accuracy of 

information reporting throughout SOEs, especially from member companies 

and subsidiaries operating overseas. Oversight can be improved by streamlining 

internal approvals, increasing the numbers and professionalization of 

company staff responsible for audits, and establishing mechanisms to improve 

their communication with one another and external auditors. When merging 

state-owned firms, greater consideration must be given to the challenges of 

integrating executive teams and downsizing redundant departments and 

personnel. Overhauling existing cadre culture will require concerted effort 

toward achieving ambitious aims: implementing standardized hiring and 

dismissal procedures, promoting employees based on their qualifications 

and competence rather than seniority or gender, and building organizational 

cultures oriented toward improving efficiency and individual integrity. 

conclusion 

Beijing’s planned overhaul of SOEs confronts major obstacles: 

determining how and when to give market forces a greater role, aligning 

mismatched executive incentives, and overcoming complicating factors 

within firms. Beyond these three challenges discussed in this essay, other 

factors are also likely to bedevil reform of SOEs. 

34 John Child, Management in China during the Age of Reform (Cambridge: Cambridge University 

Press, 1996), 190. 

[ 98 ]


Bureaucratic contestation among the various actors engaged in 

implementing reforms will be a major stumbling block. New leading small 

groups at the central level, within the State Council, and inside SASAC were 

a critical mechanism for the Xi administration to overcome bureaucratic 

gridlock and formulate the long-delayed 2015 guiding opinions. But 

implementing the policy documents within this framework must again 

contend with the divergent interests of multiple government, party, and 

company actors—many of whom view new reforms as threatening a status 

quo from which they have long profited. 

Ultimately, the success of SOE reforms will be linked inextricably with 

progress in broader financial and legal reforms. Boards of directors in yangqi 

still lack independent directors, autonomy from party committee influence, 

and greater oversight and authority over managerial decision-making. 

Increased marketization of state firms under a mixed ownership system must 

first overcome private sector skepticism. Both of these goals—empowering 

boards of directors and expanding yangqi marketization—will require 

improved legal regulations to protect minority shareholders and greater 

transparency in accounting procedures. A further obstacle is that despite 

considerable progress in financial reforms, Beijing is still struggling to 

get commercial state-owned banks to extend more credit to private firms 

instead of SOEs. 

Articulating different objectives for SOEs operating in strategic and 

competitive sectors is a pivotal step and will be the foundation for future 

reforms. For yangqi classified as public, political priorities will continue to 

predominate. For those designated as commercial, it remains to be seen 

whether government-directed reforms can improve firm performance if mixed 

ownership and market influence on company restructuring, operations, and 

management stay minimal. Ending administrative monopolies in industries 

where the state lacks an overriding strategic interest will face fierce resistance. 

Yet competition—not consolidation—may be the best way to increase yangqi 

efficiency and service quality while promoting long-term economic growth. 

Whether new SOE reforms can overcome the challenges ahead will be a critical 

test for both Xi’s reform agenda and the transformation of China’s economy. 

[ 99 ]



Between a Rock and a Hard Place: 

South Korea’s Strategic Dilemmas with 

China and the United States 


ellen kim is a PhD student in Political Science and International Relations 

at the University of Southern California and an Adjunct Fellow at the Center 

for Strategic and International Studies. She can be reached at . 

victor cha is Senior Adviser and inaugural holder of the Korea Chair 

at the Center for Strategic and International Studies as well as a Professor 

of Government at Georgetown University. He is also the Director of Asian 

Studies and holds the D.S. Song-KF Chair in the Department of Government 

and School of Foreign Service at Georgetown University. He can be reached at 

. 

keywords: south korea; china; united states; strategy; entrapment 


asia policy 


This essay examines four strategic dilemmas that the Republic of Korea 

(ROK) faces vis-à-vis China and discusses their implications for regional and 

U.S.-ROK relations. 

main argument 

The current bilateral relationship between China and South Korea is the best 

in the two nations’ modern histories. It is not clear, however, whether the 

current positive trajectory can be sustained into the future, given the recurring 

fluctuations in South Korea’s policy toward China. This dynamic results from 

four strategic dilemmas that South Korea faces in dealing with China: dilemmas 

over power, economics, North Korea, and entrapment in the U.S. alliance. 

Recent developments in Sino-ROK relations have led to new opportunities for 

greater bilateral cooperation but also have important implications for regional 

relations. In the triangular context of the U.S.-ROK-China relationship, South 

Korea’s closeness with China has not come at the expense of a diminished 

relationship with the U.S. This demonstrates that its bilateral relationships 

with China and the U.S. may not be mutually exclusive but could achieve 

positive-sum gains. Nevertheless, South Korea still faces significant challenges 

in managing relations with both countries. 


• Understanding South Korea’s strategic dilemmas vis-à-vis China is critical 

for the U.S. in order to successfully manage its alliance with the ROK. The 

two allies must address a misalignment of their policy priorities regarding 

China and determine how to sustain a coordinated, if not common, strategy. 

• The U.S. must recognize that South Korea’s outreach toward China is not 

construed as alliance dissonance. Seoul’s active engagement with Beijing 

can be a strategic opportunity to influence China to adhere to global norms 

and behave as a responsible stakeholder. 

• South Korea’s relationships with the U.S. and China need not be a zero-sum 

game or mutually exclusive. A deep alliance with the U.S. actually strengthens 

South Korea’s position as it deals with China, but only if Seoul resists Beijing’s 

efforts to demarcate the scope of its alliance with Washington.

kim and cha • between a rock and a hard place 

On September 2, 2015, South Korean president Park Geun-hye visited 

Beijing upon invitation by Chinese president Xi Jinping to attend the 

country’s celebration of the 70th anniversary of the end of World War II. Joined 

by Russian president Vladimir Putin and other foreign guests, Presidents Park 

and Xi watched a massive military parade at Tiananmen Gate. Absent from 

the celebration was the current North Korean leader Kim Jong-un. Ironically, 

61 years ago it was Mao Zedong and Kim Il-sung, founding fathers of the 

People’s Republic of China (PRC) and North Korea, respectively, who were 

standing together in the same place to see a military review. Perhaps nothing 

can better illustrate the current state of affairs in China’s relations with the two 

Koreas than a juxtaposition of these two contrasting images. 

The bilateral relationship between the Republic of Korea (ROK) 

and China under the current Park and Xi governments is undeniably at 

its strongest point in modern history, with a series of efforts underway to 

consolidate and institutionalize their strategic partnership. The first summit 

between the two leaders in June 2013 led to the establishment of four strategic 

communication channels to regularize high-level strategic dialogues. Both 

countries also pledged to move forward on their previous agreement to set 

up a military hotline between their defense ministers. With respect to the 

economic relationship, the two countries signed the China-Korea Free Trade 

Agreement and agreed to establish a direct trading market for the Chinese 

yuan and Korean won to further boost bilateral trade. All these measures 

are indicative of a new level of bilateral cooperation unprecedented in the 

modern history of Sino-ROK relations. 

Nonetheless, South Korea’s relations with China remain complex, and it 

appears unclear whether the current positive dynamic in the relationship will 

or can be sustained into the future, given a pattern of recurring fluctuations 

in South Korea’s policy toward China. Some analysts may argue that this 

pattern has emerged because South Korea’s China policy is determined by the 

administration in Seoul or the strength of the U.S.-ROK alliance. However, 

this vacillation actually results from far more fundamental conditions 

underlying South Korea’s political, economic, and security considerations 

and geostrategic calculations, which create four strategic dilemmas for South 

Korea in dealing with China: dilemmas over power, economics, North Korea, 

and entrapment in the U.S. alliance. Understanding these four dilemmas 

is important because South Korea’s policy toward China holds important 

geopolitical and regional implications. South Korea is a key U.S. ally in 

Asia, yet Seoul’s growing closeness to Beijing amid emerging tensions and 

competition between the United States and China complicates U.S. strategy as 

[ 103 ]

asia policy 

it rebalances to the region. This situation also raises concerns about the future 

direction of the U.S.-ROK alliance. More broadly, South Korea’s geostrategic 

trajectory could directly affect the balance of power in Asia. Whether South 

Korea inclines toward a rising China or stays anchored in the traditional 

alliance relationship with the United States, it could become a marker of Asia’s 

future direction. 

This essay first will examine each of the four dilemmas identified above 

and South Korea’s position in them to promote a better understanding of 

the current trends in PRC-ROK relations and the principles driving South 

Korea’s China strategy. It will then consider alternative arguments before 

concluding with a discussion of implications for regional relations and the 

U.S.-ROK alliance. 

south korea’s four strategic dilemmas 

There is a basic puzzle with regard to the South Korean view of China. On 

the one hand, South Korea views China as the second most favorable country 

among regional powers after the United States. 1 On the other hand, South 

Korea also views China as a major threat. These diverging views mark a clear 

departure from South Korea’s negative perception of China in the 1950–60s, 

when China was largely considered a Communist adversary during the 

Korean War and later North Korea’s staunch ally. Yet South Korea’s perception 

of China remains complex and ambiguous at best. This complexity is not 

just limited to public attitudes and perceptions but is also mirrored in the 

government’s foreign policy toward China. Although South Korea pursues 

close economic cooperation and a strategic partnership with China, it does 

so while hedging, if not balancing, against a rising China. How do we then 

unpack this exceedingly complex relationship? 

South Korea’s China policy has a tendency to vacillate because the 

country’s strategy toward China has been largely a combination of engagement 

and hedging. A primary driving force behind Seoul’s engagement with Beijing 

has been the need for Chinese cooperation on North Korea, combined with 

burgeoning economic ties. By contrast, other political and military issues and 

concerns make South Korea hedge against China. Of these considerations, the 

most pertinent is the fact that South Korea is a treaty ally of the United States, 

which places what one scholar calls “structural and perceptual limits” on its 

1 Jiyoon Kim, Karl Friedhoff, Chungku Kang, and Euicheol Lee, “South Korean Attitudes on China,” 

Asan Institute for Policy Studies, July 2014. 

[ 104 ]


engagement with China. 2 In between these two opposing forces, South Korea 

also faces a power dilemma with regard to China: smaller countries like South 

Korea may feel threatened by the presence of a giant neighbor and thus opt 

to “accommodate” that country. 3 In addition to these general trends, South 

Korea finds itself caught striking the right balance between contrary impulses 

within each of these four areas. For instance, although strong economic and 

trade relations draw it closer to China through greater economic cooperation, 

South Korea is also concerned about its growing economic dependence on 

China. Overall, the interplay of conflicting and competing forces within, and 

between, each of the four dilemmas shapes Seoul’s dual hedging and engaging 

strategy and results in vacillating policies. 

The Power Dilemma 

South Korea’s power dilemma vis-à-vis China primarily stems from the 

sheer presence of China as a great power and neighbor in Northeast Asia. 

Although South Korea has always existed next to China, the latter has and 

continues to exert significant influence on the Korean Peninsula, stemming 

from thousands of years of historical relations that Koreans cannot ignore. 

China is the world’s most populous country (estimated population of nearly 

1.4 billion) and one of the largest countries by size, with a land mass of 

roughly 9.3 million square kilometers (km), or roughly 3.6 million square 

miles. 4 South Korea, in comparison, is approximately 28 times smaller in 

population (estimated at 49 million people) and 96 times smaller in area 

(estimated a 96,920 square km, or 37,421 square miles). 5 The vast disparity 

in physical size matters more prominently in South Korea’s security 

perceptions because of geographic proximity. Although South Korea does 

not directly adjoin China, the Korean Peninsula is connected to continental 

Asia via a 1,416 km (880 mile) border with China. This geographic reality 

will never change and will always directly affect South Korea’s security 

perceptions—increasingly so as a rising China becomes more assertive in its 

foreign policy. 

2 Jae Ho Chung, Between Ally and Partner: Korea-China Relations and the United States (New York: 

Columbia University Press, 2007), 114. 

3 Aaron L. Friedberg, A Contest For Supremacy: China, America, and the Struggle for Mastery in Asia 

(New York: W.W. Norton & Company, 2011), 201. 

4 “East and Southeast Asia: China,” in World Factbook (Washington, D.C.: Central Intelligence 

Agency, 2015) u https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html. 

5 “East and Southeast Asia: Korea, South,” in ibid. u https://www.cia.gov/library/publications/ 

the-world-factbook/geos/ks.html. 

[ 105 ]

asia policy 

In addition to population and territory, what also underlies and amplifies 

South Korea’s power dilemma is China’s economic and military power, 

which has grown apace over the past decades. For instance, in 2013 China’s 

economy ($9.240 trillion) was approximately seven times the size of South 

Korea’s ($1.304 trillion) in terms of GDP. 6 Although South Korea spends more 

on its military as a percentage of GDP, it still trails China in total military 

spending. China’s defense budget was $112.2 billion in 2013, whereas South 

Korea’s defense budget was only $31.8 billion. 7 Furthermore, China’s military 

accommodates a greater number of troops than any other country in the world 

at close to 2.3 million strong in 2012. 8 Such gaps in sheer power undoubtedly 

make South Korea vulnerable to China’s economic influence and potential 

military aggression. South Korea’s insecurity may also derive from its political 

and ideological differences with China. Dissonant value systems can breed 

insecurity and suspicion between democracies and illiberal regimes that 

share a common border. Political scientist Michael Doyle attributes this to the 

“perception by liberal states that non-liberal states are in a permanent state 

of aggression against their own people.” 9 South Korea—seen as a successful 

democracy—cannot but feel uncertain about the implications of the rise of a 

mammoth Communist state in its neighborhood. 

Above all, China’s global rise deepens South Korea’s power dilemma. To 

South Koreans, China’s rise augurs a resurgence of Sinocentric hierarchical 

order. In light of their country’s own historical experiences as a tributary 

state to old Chinese dynasties, and also given Beijing’s increasingly assertive 

behavior and willingness to project its newfound power, South Koreans are 

naturally wary and anxious about China’s rise. 10 Such apprehension surfaced 

in 2004 when China claimed ancient Korea’s Koguryo kingdom as part of 

Chinese provincial history, which immediately invited strong rebukes 

from South Koreans. Some argued that the action showed “hegemonic 

6 “GDP (Current US$),” World Bank, World Development Indicators u http://data.worldbank.org/ 

indicator/NY.GDP.MKTP.CD. 

7 “The Military Balance 2014 Press Statement,” International Institute for Strategic Studies, 

February 5, 2014 u http://www.iiss.org/en/about%20us/press%20room/press%20releases/press%20 

releases/archive/2014-dd03/february-0abc/military-balance-2014-press-statement-52d7. 

8 Ministry of National Defense (ROK), 2012 Defense White Paper (Seoul, 2012), 350–53 u http:// 

www.mnd.go.kr/user/mnd_eng/upload/pblictn/PBLICTNEBOOK_201308140915094310.pdf. 

9 Michael Doyle, “Kant, Liberal Legacies, and Foreign Affairs, Part 2,” Philosophy and Public Affairs 

12, no. 3 (1983): 325–26. 

10 Chung, Between Ally and Partner, 101. 

[ 106 ]


ambitions,” 11 while others saw it as an indication of Chinese strategic 

intent in the event of contingencies on the Korean Peninsula. 12 In the end, 

China’s revisionist claim was a wake-up call for South Koreans and had a 

dramatically chilling effect on their increasingly positive view of China. 13 

This power dilemma is a constant, not a variable, in South Korea’s policy 

calculations toward China. The sheer differences in various measures of 

power between the two countries are a source of vulnerability and skepticism 

while at the same time providing incentive to South Korea not to antagonize 

its big neighbor. 

The Economic Dilemma 

If trade was one of the main conduits of limited cooperation and 

bilateral exchanges in the pre-normalization period of the 1970s and 

1980s, it has become an end in itself that provides a major impetus to 

greater bilateral cooperation between China and South Korea given their 

current robust trade and commercial ties. This economic logic gained 

traction in Seoul when China surpassed the United States as South Korea’s 

largest trading partner in 2004. Ten years later, in 2014, China imported 

approximately $145 billion worth of products from South Korea, which 

constituted 25.4% of South Korea’s total exports that year. 14 In comparison, 

the United States, the ROK’s second-largest trade partner, imported only 

$70 billion worth of South Korean products in 2014—a little less than 

half of what China imported. 15 China has also remained the country with 

which South Korea has the largest trade surplus, ranging from $62 billion 

in 2013 to $55 billion in 2014. 16 Furthermore, its total trade volume with 

China dramatically increased to more than $270 billion in 2013, surpassing 

South Korea’s combined bilateral trade volume with the United States and 

11 Dick K. Nanto and Emma Chanlett-Avery, “The Rise of China and Its Effect on Taiwan, Japan, 

and South Korea: U.S. Policy Choices,” Congressional Research Service, CRS Report for Congress, 

RL32882, January 13, 2006, 26. See also Jin-sung Chun, “Our Dispute with China Isn’t about 

Ancient History,” Chosun Ilbo, February 27, 2007 u http://english.chosun.com/site/data/html_ 

dir/2007/02/27/2007022761035.html. 

12 See “‘Dulyeoun yeogsa naljo’ Jung-gug-ui Dongbuggongjeong wangyeol” [The “Dreadful History 

Hoax” of China’s Northeast Project Concludes], dongA.com, January 26, 2007 u http://news.donga. 

com/3/all/20070126/8400671/1. 

13 For South Korean views of China and the United States, see Jae Ho Chung, “Leadership Changes 

and South Korea’s China Policy,” Korea Economic Institute, Joint U.S.-Korea Academic Series, 

vol. 23, 2012. 

14 “Segyetong-gye: Hangug-ui 10dae muyeongguk” [World Statistics: South Korea’s Ten Major 

Trading Countries], K-stat u http://stat.kita.net/stat/world/major/KoreaStats06.screen. 

15 Ibid. 

16 Ibid. 

[ 107 ]

asia policy 

Japan. 17 Naturally, South Koreans understand that their economic future 

is tied to China, as was shown in a June 2014 survey of regional experts 

across Asia-Pacific countries, where 86% of South Korean experts selected 

China as their country’s most important economic partner in ten years. 18 

Inevitably, these burgeoning economic ties began to influence politics in 

South Korea: enhancing greater economic cooperation with China—even 

in times of difficult political relations with Beijing—became a major policy 

imperative for many South Korean leaders. This led to the emergence of a 

dual strategy of pursuing a strong economic partnership with China while 

relying on a military alliance with the United States. 

The current Park government is no less insensitive about South Korea’s 

economic reality. For her first state visit to China in 2013, President Park 

brought a record 71 business leaders in her delegation, signifying the 

importance her government places on its economic ties with China. (She 

brought 159 business leaders for her latest visit to China in September 2015.) 

In his reciprocal state visit to Seoul in July 2014, President Xi’s delegation 

included 200 Chinese business leaders, setting a record as the largest 

foreign business delegation to ever visit South Korea. To further strengthen 

already robust economic ties, both governments agreed to establish a 

direct trading market for their currencies and negotiated bilateral and 

multilateral trade agreements such as the Regional Comprehensive Economic 

Partnership (RCEP) and a trilateral free trade agreement (FTA) between 

China, Japan, and South Korea. These ongoing trade cooperation efforts led 

to the conclusion of the bilateral China-Korea FTA in November 2014 on the 

sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. 

While technical negotiations and legislative ratification of the agreement 

still must be completed, this bilateral FTA with China is expected to eliminate 

immediately $8.7 billion in tariffs on Korea’s exports to China when it takes 

effect, with another $45.8 billion to be eliminated over ten years. 19 The FTA 

will cover 91% and 92% of Chinese and South Korean goods, respectively, 

within twenty years. 20 The conclusion of the agreement also distinguishes 

17 Jin Kai, “China’s Charm Offensive Toward South Korea,” Diplomat, July 8, 2014 u http://thediplomat. 

com/2014/07/chinas-charm-offensive-toward-south-korea. 

18 Michael J. Green and Nicholas Szechenyi, Power and Order in Asia: A Survey of Regional 

Expectations (New York: Rowman and Littlefield, 2014). 

19 “Korea, China Strike Free Trade Pact,” Korea.net, November 20, 2014 u http://www.korea.net/ 

NewsFocus/Policies/view?articleId=122781. 

20 “Hanjung FTA sangseseolmyeongjalyo” [Detailed Material for the Explanation of Korea-China 

FTA], Ministry of Trade, Industry, and Energy (ROK), March 2015 u http://www.fta.go.kr/ 

webmodule/_PSD_FTA/cn/doc/1_description.pdf. 

[ 108 ]


South Korea as the third country after Chile and Peru, and the largest 

economy thus far, to have concluded FTAs with the world’s three largest 

economies: the United States, the European Union, and China. However, 

the agreement is not as high quality in scope as the Korea-U.S. Free Trade 

Agreement, and the potential economic benefits are limited. For example, 

the agreement covers only 70% of agricultural products and also excludes 

key products such as rice, steel, and auto parts from tariff elimination, which 

are points of sensitivity for both countries. The conclusion of negotiations 

acts more as a political boost for ties between Beijing and Seoul because the 

FTA adheres to the earlier summit agreement of the two countries’ leaders 

to strike a deal by the end of 2014. 

As South Korea becomes increasingly economically dependent on China, 

however, South Koreans also have begun to perceive China as an economic 

threat. The number of South Koreans who view China as an economic threat 

has increased sharply from 52.7% in 2012 to 71.9% in 2014, even though their 

favorable view of China was consistently high during this period. 21 Equally 

notable is the fact that more South Koreans perceived China as an economic 

threat than a military threat (66.4%). 22 Thus far, this trend has not translated 

into any sort of action or had any policy implication in South Korea. Yet there 

are underlying tensions and serious concerns emerging in the country about 

China as both a major economic competitor and a rising economic influence. 23 

The North Korea Dilemma 

North Korea lies at the heart of South Korea’s strategic engagement 

with China. Given decades of confrontation and deadlocked negotiations 

between South Korea and North Korea as well as the latter’s isolation and 

faltering economy, China’s political ties with North Korea as that country’s 

only ally and largest trade partner have given Beijing enormous leverage over 

the North Korean regime. As a result, China’s cooperation has long been 

regarded as key to resolving the current nuclear standoff with North Korea 

and achieving Korean reunification. In a public opinion survey in December 

2013, almost 50% of South Koreans responded that China is the country 

21 Kim et al., “South Korean Attitudes on China,” 22. 

22 Ibid. 

23 Ibid. 

[ 109 ]

asia policy 

whose cooperation is the most critical for reunification. 24 Another survey 

found that the South Korean public believed that North Korea’s nuclear 

program (37.2%) and inter-Korean cooperation for reunification (20.6%) are 

the two most important issues for PRC-ROK relations. 25 

Despite decades of diplomacy, however, South Korea’s engagement 

strategy has not been successful in gaining Chinese cooperation on North 

Korea. The crux of the problem is that although Beijing publicly supports the 

denuclearization of the Korean Peninsula and peaceful Korean unification, its 

core geostrategic interest lies in maintaining the current status quo with North 

Korea as a crucial buffer state. China’s greatest fear is a reunification of the 

North and South, presumably under the governance of South Korea, whereby 

China loses that buffer zone and faces the U.S. Forces Korea immediately at 

its border, as well the likely massive inflow of North Korean refugees. Only 

by supporting the regime in Pyongyang can China avert such a daunting 

outcome. As a result, these diverging interests have led China to apply 

pressure on North Korea to rein in its nuclear weapons program and appease 

other countries, on the one hand, but also provide oil and other political and 

economic aid to North Korea so as to prevent the regime’s collapse, on the 

other hand. 26 This two-track approach has been successful only in serving 

China’s interests. 

Nonetheless, cracks in what was once called a “lips and teeth” relationship 

between China and North Korea have slowly begun to emerge, especially after 

Kim Jong-un took power. The quintessential example is the fact that there has 

not yet been a summit between Xi and Kim, whereas Xi and Park have held 

six summits, including two state visits. North Korea’s missile tests in July 2014, 

a day before Xi’s state visit to Seoul, were a clear sign of vehement protest over 

China’s increasing closeness with South Korea. To reduce its overwhelming 

dependence on China, Pyongyang made diplomatic overtures to Japan, 

Russia, South Korea, and even the United States, but to no avail. Meanwhile, 

a growing distance between Beijing and Pyongyang has allowed the Park and 

Xi governments to draw closer than had previously been possible. In Seoul, 

this is regarded as a window of new opportunity to pull China farther away 

from North Korea and closer to South Korea. Successful summits, diplomatic 

24 “Half of S. Koreans Pick China as Key Help in Korean Unification: Poll,” Yonhap News Agency, 

February 5, 2014 u http://english.yonhapnews.co.kr/national/2014/02/05/36/0301000000AEN201 

40205007200315F.html. 

25 “South Koreans and Their Neighbors,” Asan Institute for Policy Studies, April 19, 2014 u 

http://en.asaninst.org/contents/south-koreans-and-their-neighbors-2014. 

26 Friedberg, A Contest For Supremacy, 191. 

[ 110 ]


gestures, and expanding bilateral cooperation between South Korea and 

China have functioned as a means of strengthening their relationship and at 

the same time causing further erosion in Beijing-Pyongyang ties. 

However, South Korea’s strategy has also received close scrutiny from 

neighboring countries. Although Seoul maintained close communication 

and cooperation with Washington, concerns and skepticism inevitably 

emerged among the United States and Japan about South Korea’s intention 

and its future direction. President Park’s attendance at the Chinese military 

parade celebrating the end of World War II, in particular, spurred different 

interpretations abroad. Some people saw her presence as evidence of South 

Korea’s “ ‘tilting’ toward China at the expense of the U.S.,” while others 

suggested a “lure” or effort on the part of South Korea to acquire the 

higher-level strategic cooperation that it desires from China in dealing with 

North Korea. 27 

China and North Korea are locked in a “mutual hostage relationship” 

in which one cannot easily abandon the other. Despite noticeable strains in 

relations and China’s warm gesture toward the South, Beijing has not changed 

its North Korea policy and seems highly unlikely to do so until its strategic 

interests are at stake. One scholar argues that China sees Korean reunification 

as inevitable and its strategy is only to delay unification as long as possible 

given its concerns about instability. 28 If that claim accurately reflects China’s 

thinking, building deep strategic ties with Beijing will be essential for Seoul, 

no matter how limited the influence that such engagement can actually have 

on Chinese strategic thinking about North Korea. Having a coordination 

and cooperation mechanism and strategic communication channels between 

Seoul and Beijing is crucial and is also in U.S. and Japanese interests. Yet one 

important caveat in South Korea’s North Korea dilemma deserves careful 

consideration. Just as Seoul tries to peel China away from North Korea and 

seeks greater cooperation from Beijing, there is also a danger that Beijing could 

adroitly use this dilemma to its own advantage and cause erosion in Seoul’s 

alliance with Washington. Ultimately, South Korea’s strategic engagement 

with China is a double-edged sword that poses a multidimensional challenge. 

Seoul must exercise diplomatic finesse in furthering its strategic ties with 

27 Shannon Tiezzi, “South Korea’s President and China’s Military Parade,” Diplomat, September 3, 

2015 u http://thediplomat.com/2015/09/south-koreas-president-and-chinas-military-parade; 

and Scott A. Snyder, “Park’s Decision to Join Xi Jinping’s World War II Commemoration,” Council 

on Foreign Relations, Asia Unbound, September 2, 2015 u http://blogs.cfr.org/asia/2015/09/02/ 

parks-decision-to-join-xi-jinpings-world-war-ii-commemoration. 

28 Victor Cha, ed., Korean Unification in a New Era: A Conference Report of the CSIS Korea Chair 

(New York: Rowman and Littlefield, 2014), 39. 

[ 111 ]

asia policy 

Beijing while at the same time managing its allies’ and partners’ perceptions 

to avoid potential pitfalls down the road. 

The Entrapment Dilemma 

South Korea’s strategies toward China also need to address the entrapment 

dilemma, which largely stems from the notion that South Korea cannot afford 

to isolate China even as it remains allied with the United States. South Korea 

never wants to be in a situation where it will be caught between U.S. and 

Chinese interests. Nowhere is this fear of entrapment more evident than in 

debates about strategic flexibility. South Korea is extremely reluctant to allow 

U.S. forces on the Korean Peninsula to be used for contingencies in the region, 

especially regarding China. This issue came to a head in the early 2000s when 

the United States pushed for an explicit commitment, which South Korea was 

unwilling to give. Even as it remains a U.S. treaty ally, Seoul’s worst nightmare 

is to be forced to choose between Beijing and Washington. To avoid this 

entrapment dilemma, South Korea’s China strategies retain the U.S.-ROK 

alliance as a core component, though with varying degrees of enthusiasm. 

South Korean presidents historically have dealt with the entrapment 

dilemma in one of two ways. One way is by playing a balancing role between 

the two powers. This strategy operates on the premise that South Korea cannot 

afford to choose between the United States and China and therefore will seek 

to position itself between the two, at times siding with the United States and 

at other times with China. This view retains the U.S. alliance but puts some 

distance between Seoul and Washington in order for South Korea to be a 

credible partner to China. This view was formally pronounced and upheld 

by the late South Korean president Roh Moo-hyun, who in 2005 asserted that 

South Korea could be a “balancer in Northeast Asia.” As simple as the concept 

may have sounded, it was not easy to implement, and the policy generated 

negative perceptions in Washington among pro-alliance constituents that 

South Korea was tilting away from the United States. 

The second strategy is what might be termed “alliance-plus” and is 

based on the view that South Korea’s relationship with China and the United 

States need not be a zero-sum game. This strategy rests on an underlying 

assumption that despite political sensitivities, differences, and the competing 

natures of these relationships, there are converging areas of interest where 

both the U.S.-ROK alliance and the PRC-ROK strategic partnership can 

operate to achieve mutual benefits and greater public goods. This strategy also 

encompasses the view that there are alternative ways to look at relations with 

[ 112 ]


China beyond the friend-threat dichotomy. Supporters of this view claim that 

South Korea’s alliance with the United States and partnership with China are 

not mutually exclusive; to the contrary, a deep alliance with the United States 

actually strengthens South Korea’s position as it deals with China. 29 Indeed, 

one high-level South Korean official privately noted this by saying, “If we have 

a poor relationship with the U.S., China treats us like a province, but if we 

have a good relationship, then they treat us with respect.” 30 

The Park administration’s China strategy reflects a delicate balance of 

the two strategies described above. This was previously demonstrated in 

January 2013 when President Park, then the president-elect, made an active 

overture to China by sending her first diplomatic envoy to Beijing instead of 

the traditional choice of Washington. 31 Unlike her predecessors, who often 

went to Japan for their second trip abroad after the United States, President 

Park chose to return to China to show her resolve to improve relations. This 

series of unusual diplomatic moves by the Park administration was welcomed 

in Beijing and led to a reciprocal state visit by President Xi in July 2014. But 

President Park’s overtures to Beijing were carefully managed with regard to 

Washington. In May 2013, she made her first overseas trip to Washington, D.C., 

to hold a summit with President Barack Obama, demonstrating that South 

Korea’s center of gravity in its foreign relations remains the alliance with 

the United States. In addition to celebrating the 60th anniversary of the 

U.S.-ROK alliance, President Obama publicly supported President Park’s 

Korean Peninsula trust-building initiative, and President Park was given 

the honor of addressing a joint session of Congress, all of which shows the 

strength of bilateral ties. In spring 2015, however, the Park government faced 

a risk of entrapment between the United States and China over the Asian 

Infrastructure Investment Bank (AIIB) and issues surrounding Terminal 

High Altitude Area Defense (THAAD). Amid heightened tensions, a flurry 

of visits to Seoul by high-ranking government officials in March–April 2015, 

beginning with Chinese assistant minister of foreign affairs Liu Jianchao, U.S. 

assistant secretary of state Daniel Russel, and U.S. secretary of defense Ashton 

Carter, was seen in Seoul as a “tug of war” between the United States and 

29 “Dongbug-asin jilseoleul malhada: ‘Hanmi meol-eojimyeon…Jung, ohilyeo Hangug-eul 

gyeongsihal geos’ ” [Speaking of a Northeast Asian Order: “If the U.S.-ROK Alliance Weakens, 

China Will Not Take South Korea Seriously”], Chosun Ilbo, July 18, 2014 u http://news.chosun. 

com/site/data/html_dir/2014/07/18/2014071800344.html. 

30 Author’s private meeting with senior Korean official, Seoul, South Korea. 

31 Lee Ji-seon, “Park Sends First Envoy to China,” Kyunghyang Shinmun, January 17, 2013 u 

http://english.khan.co.kr/khan_art_view.html?artid=201301171445397&code=710100. 

[ 113 ]

asia policy 

China, with pressure mounting on the Park government to make a zero-sum 

choice between the two great powers. 32 

President Park is not the first leader to seek an improvement in relations 

with China. Despite some hiccups and lingering issues, however, there has 

been no time in the post–Cold War period when South Korea has maintained 

a good bilateral relationship with both China and the United States. Clearly, 

this is a unique moment. But it also brings greater risks and confronts South 

Korea with much more perplexing challenges as the country will need to 

carefully manage relationships with both the United States and China going 

forward without being caught between their interests. 

New PRC-ROK Relations: 

Implications for Regional and U.S.-ROK Ties 

Recent developments in PRC-ROK relations have led to new 

opportunities for greater bilateral cooperation but also have had important 

regional implications by creating new dynamics and uncertainties in Asia. 

The most direct impact was felt in China–North Korea relations. A growing 

distance in the relationship deepened North Korea’s isolation and appears to 

have prompted a change in its external relations strategy. More significantly, 

closer ties between Beijing and Seoul allegedly undermined China’s influence 

on North Korea. During a recent U.S. Senate Armed Services Committee 

hearing, U.S. government officials claimed that China’s influence on North 

Korea is waning and indicated this was a deep concern for the United States. 33 

In light of Pyongyang’s provocative behavior, Beijing’s inability to rein in 

North Korea would entail greater uncertainty and potentially higher risks 

of conflict on the peninsula. As South Korea continues to cultivate a deeper 

strategic partnership with China, policymakers in Seoul must be cognizant of 

Pyongyang’s perception of the changing security environment and how this 

will affect its future behavior and nuclear strategy. 

South Korea’s warming relations with China also created new, complex 

dynamics in the context of the China-Japan-Korea triangle against the 

backdrop of resurgent historical and territorial disputes that damaged Japan’s 

relationship with both countries. In light of the fact that China’s rise and 

growing assertiveness is largely perceived in Japan as a grave challenge to 

32 “Decision to Join China-Led Bank Tests South Korea’s Ties to U.S.,” Wall Street Journal, March 24, 

2015 u http://www.wsj.com/articles/decision-to-join-aiib-tests-south-koreas-ties-to-u-s-1427185565. 

33 Harry B. Harris Jr., statement to the U.S. Senate Committee on Armed Services Hearing to Receive 

Testimony on Maritime Security Strategy in the Asia-Pacific Region, September 17, 2015 u 

http://www.armed-services.senate.gov/imo/media/doc/15-72%20-%209-17-15a.pdf. 

[ 114 ]


Japan’s security and prosperity with the potential to undermine its position 

in Asia, 34 Seoul’s closeness to Beijing appeared to be a shift in the changing 

balance of power. Although South Korea is a U.S. ally and a democracy that 

shares common values and many overlapping global interests with Japan, 

Seoul’s growing tilt toward Beijing amid its constrained relationship with 

Tokyo has increased Japan’s susceptibility to the changing power transition 

in the region and spurred serious concern and skepticism about South 

Korea’s intention and policy direction. Moreover, the fact that this expanding 

cooperation with China coincided with South Korea’s intense historical and 

territorial disputes with Japan appears to have sent an unintended signal 

to Tokyo, creating a perception that China and South Korea were forming 

a united front against Japan on historical issues. This perception was partly 

fed by Beijing’s entreaties toward Seoul to rally against Japan based on their 

shared historical experiences under Japanese aggression. 35 However, the 

Park government’s China policy is not driven by an anti-Japan agenda. Seoul 

has deflected all invitations by Beijing to join forces in attacking Japan on 

historical issues, arguing that its grievances with Japan are a bilateral issue. 

Despite this, bilateral relations between Japan and South Korea have reached 

the lowest point since the normalization of their ties. Public opinion also 

significantly dropped in both South Korea and Japan. According to a May 

2015 poll conducted by the Genron NPO and East Asia Institute, 72.5% of 

South Koreans and 52.4% of Japanese have a negative view about each other. 36 

In the short run, the current adverse dynamic may likely continue among 

the three countries. Although China, Japan, and South Korea made small 

progress by holding their first trilateral summit in early November, the trilateral 

talks left much of their disputes unaddressed over historical grievances and 

other thorny issues that battered their regional relationships. On the sidelines 

of the trilateral summit, South Korean president Park Geun-hye and Japanese 

prime minister Shinzo Abe held their first bilateral talks. While the summit 

offered an opportunity to reset their strained bilateral relationship between 

Seoul and Tokyo and the two leaders agreed to resolve comfort women 

issues, the road ahead remains unclear as the two countries could not narrow 

34 Sheila A. Smith, “Disdain in Beijing and Edginess in Tokyo,” Council on Foreign Relations, Asia 

Unbound, June 30, 2015 u http://blogs.cfr.org/asia/2015/06/30/disdain-in-beijing-and-edginess-in-tokyo. 

35 Choe Sang-Hun, “Chinese Leader, Underlining Ties to South Korea, Cites Japan as Onetime 

Mutual Enemy,” New York Times, July 4, 2014 u http://www.nytimes.com/2014/07/05/world/asia/ 

in-south-korea-chinese-leader-cites-japan-as-onetime-mutual-enemy.html. 

36 Yasushi Kudo, “Perilous Perception Gaps Surge between Tokyo and Seoul 50 Years after 

Normalizing Diplomatic Relations,” Genron NPO, May 30, 2015 u http://www.genron-npo.net/en/ 

pp/archives/5184.html. 

[ 115 ]

asia policy 

down their outstanding differences in their views on wartime issues. Recent 

developments in Japan also do not bode well. In late September, the Japanese 

Diet passed security legislation that will allow the country to dispatch its 

Self-Defense Forces for overseas combat missions. Largely viewing Japan’s 

policy shift in the framework of the country’s remilitarization, both China 

and South Korea immediately criticized these moves and will be watching 

Japan’s new trajectory with great concern. 

The strained relationship between Seoul and Tokyo has had adverse 

impacts on the U.S. rebalancing strategy toward Asia by weakening 

U.S.-ROK-Japan trilateral cooperation. Revamping the trilateral relationship 

thus has become essential for Washington to effectively deal with challenges 

in the region such as North Korea’s nuclear weapons program and China’s 

growing assertiveness in the South China Sea. As part of such efforts, President 

Obama brokered a trilateral summit in 2014 with President Park and Prime 

Minister Shinzo Abe with the goal of paving the way for a breakthrough in the 

relationship between the two U.S. allies. In this regard, South Korea and Japan 

made a small positive step forward at the end of December 2014 by reaching 

a new information-sharing agreement on North Korea, with the United States 

serving as an intermediary. Washington’s active role and deep involvement to 

ensure the stability of relations between Seoul and Tokyo are vital for regional 

security in Asia. 37 

Meanwhile, South Korea’s inclination to prioritize Korean Peninsula 

issues over off-peninsula or other regional security issues with China does 

not bode well for U.S.-ROK-Japan trilateral cooperation. This was evident 

in November 2013 when South Korea attempted to negotiate with China 

directly, rather than taking a united position with Japan and the United States 

on China’s newly declared air defense identification zone (ADIZ), which 

overlapped with South Korea’s ADIZ. In retrospect, had Beijing accepted 

Seoul’s request to rewrite the ADIZ to remove the overlap, this could have led 

to a critical breakdown in U.S.-ROK-Japan trilateral coordination. 38 

In the context of the U.S.-ROK-China relationship, South Korea’s 

closeness with China has not come at the expense of a diminished relationship 

with the United States. Nevertheless, challenges remain ahead as to how South 

Korea will manage its bilateral relationships with both the United States and 

China. One of the immediate concerns is the disagreement over deploying the 

37 Victor Cha, “Lessons from Reischauer,” Joongang Ilbo, June 28, 2015. 

38 Victor Cha, “Korea’s Mistake on China’s ADIZ Controversy,” Center for Strategic and International 

Studies, Korea Chair Platform, December 2, 2013. 

[ 116 ]


U.S. anti-missile system THAAD to South Korea. Beijing repeatedly called on 

Seoul to reject the deployment of THAAD, arguing that such a move is aimed 

at China and would seriously damage PRC-ROK ties. In the face of China’s 

vehement objections, the Park administration has been extremely careful, 

and even strategically ambiguous, in order to avert a likely backlash from 

Beijing. The question of Seoul’s political or strategic choice between the two 

great powers still remains a focal point in the national debate over THAAD, 

but South Korea must prioritize national security interests over any efforts by 

China to delimit or demarcate the geographic scope of Seoul’s alliance with 

Washington. For the United States and China, a policy that forces South Korea, 

or any other country, to choose one over the other is not going to be in the 

interest of either great power; this situation will only undermine the regional 

stability and peace in Asia. In the end, THAAD is a top national security issue 

that the South Korean government cannot afford to compromise on in the 

face of external pressure. Just as Seoul prioritized its economic interests in 

joining the AIIB (over U.S. entreaties to the contrary), its decision on security 

issues should be determined by the extent of the missile threat emanating 

from North Korea rather than a misplaced desire to please China. 

alternative arguments 

Other analysts may argue that South Korea’s policy fluctuations toward 

China are induced by factors other than the aforementioned strategic 

dilemmas, such as domestic politics and changes of government in South 

Korea. That is, South Korea under a progressive government would tilt more 

toward China due to the popular anti-American sentiments more prevalently 

shared among progressives. Conversely, the same argument posits that 

South Korea under a conservative government would tilt more toward its 

traditional alliance relationship with the United States. On the surface, this 

argument appears to make a compelling case because historically it is more 

or less consistent with political trends in South Korea. For over six decades, 

the U.S.-ROK alliance has been the backbone of South Korea’s foreign policy 

under conservative governments in office. But the relationship began to 

drift during the progressive Kim Dae-jung (1998–2003) and Roh Moo-hyun 

(2003–8) administrations, and even became precarious during the latter. 

The PRC-ROK relationship was upgraded from a “cooperative partnership” 

[ 117 ]

asia policy 

in 1998 to the level of a “full-scale cooperative partnership” in 2000 and a 

“comprehensive cooperative partnership” in 2003. 39 

Nevertheless, the domestic politics argument does not adequately 

explain South Korea’s policy fluctuation because it does not hold in the case 

of the current conservative Park government. What this indicates is that a 

much more complex interaction of various forces drives South Korea’s China 

policy. How, then, can we better understand South Korea’s tilt toward China 

under the progressive governments? One plausible explanation can be 

provided by South Korea’s North Korea dilemma. Under the Kim Dae-jung 

administration, South Korea actively engaged China because earning greater 

Chinese cooperation for Korean reunification was an integral part of Kim’s 

Sunshine Policy toward North Korea. 40 Unlike the Roh administration, the 

Kim administration did not exhibit an ideological drive in its engagement 

toward China to balance South Korea’s relations with the United States. 41 

Another counterexample is the fact that other conservative governments 

also sought to improve bilateral ties with China. For instance, it was under 

the conservative Roh Tae-woo administration that South Korea promoted 

Nordpolitik to engage China and the Soviet Union after the end of the Korean 

War, which led to a PRC-ROK détente in 1982. Even the conservative Lee 

Myung-bak administration, which bolstered the U.S.-ROK alliance as a top 

priority, wanted to deepen strategic ties with China. President Lee publicly 

noted that “it is not desirable for Korea to lean toward a South Korea–U.S. 

alliance, particularly from the perspective of a power balance in Northeast 

Asia. South Korea–U.S. relations and South Korea–China relations should be 

complementary to each other.” 42 In May 2008, he and Chinese president Hu 

Jintao agreed to further strengthen the PRC-ROK relationship by upgrading 

it to a “strategic partnership.” 

Another alternative explanation suggests that South Korea’s policy 

fluctuation is correlated with the strength of the U.S.-ROK alliance. 43 That 

is, the status of the alliance may influence South Korea’s foreign policy 

stance, drawing the country closer to China when the alliance is weak while 

distancing it from China when the alliance is strong. A quintessential example 

would be the Roh and Lee administrations, which both shared an off-balance 

39 Scott Snyder, “China-Korea Relations: Establishing a ‘Strategic Cooperative Partnership,’ ” Pacific 

Forum, Center for Strategic and International Studies, Comparative Connections, July 2008. 

40 Chung, “Leadership Changes.” 

41 Ibid. 

42 Snyder, “China-Korea Relations.” 

43 Chung, Between Ally and Partner, 102–3. 

[ 118 ]


relationship with China and the United States. In particular, in navigating the 

geopolitics in Northeast Asia, President Roh’s proclamation of South Korea 

as a regional balancer was widely interpreted as Seoul distancing itself from 

the United States and moving toward China. Nevertheless, this argument fails 

to acknowledge the notable bilateral cooperation that the United States and 

South Korea achieved under the Roh administration. Indeed, the Roh and 

George W. Bush administrations pushed to open new areas of bilateral alliance 

cooperation—including the deployment of troops to Iraq, visa waivers, 

physical readiness training deployments in Afghanistan, and negotiations 

for the Korea-U.S. FTA. The last of these became a strong foundation of 

the U.S.-ROK comprehensive alliance after its successful conclusion and 

ratification in 2012. 44 

Thus, there does not always appear to be an inverse correlation between the 

state of the U.S.-ROK alliance and the state of Sino-ROK relations. Although 

during the Lee administration strong ties with Washington correlated with 

bad ties toward China, the intervening factor was China’s failure in 2010 

to respond to North Korea’s sinking of the ROK corvette Cheonan and the 

shelling of Yeonpyeong Island. The Park government also seems to disprove 

the correlation as President Park appears to have good relations currently 

with both the United States and China. 

concluding thoughts 

There is no country in Asia that has a more complex and nuanced 

relationship with China than South Korea. This complexity derives from the 

convergence of South Korea’s power, economic, and North Korea dilemmas 

as well as its deep fear of entrapment in escalating U.S.-China competition. 

As a result, the interplay of these factors causes South Korea’s China policy 

to vacillate, more so than do domestic politics alone or the state of the 

U.S.-ROK alliance. Given the fluctuating nature of South Korea’s China 

policy, understanding these strategic dilemmas vis-à-vis China is critical for 

U.S.-ROK alliance management. The two allies must address a misalignment 

of their policy priorities regarding China and determine how to sustain a 

coordinated, if not common, strategy. For the United States, understanding 

Seoul’s outreach toward Beijing is important; Washington should view this 

not as an alliance disruption but rather as a strategic opportunity for a U.S. 

44 Katrin Katz and Victor Cha, “Holding Ground as the Region’s Linchpin,” Asian Survey 52, no. 1 

(2012): 52–64. 

[ 119 ]

asia policy 

ally to influence China to adhere to global norms and behave as a responsible 

stakeholder. The AIIB will be a good test case for this approach. South Korea 

and other like-minded countries could come together and play a critical role 

in ensuring that the China-led bank operates according to global standards of 

governance and transparency. Instead of impeding Seoul’s cooperation with 

Beijing, Washington should instead support such engagement, especially if it 

helps South Korea gain insight into Chinese intentions and strategic views on 

North Korea, and also promotes quiet U.S.-ROK-China dialogue on North 

Korean contingencies. All these steps would help mitigate Seoul’s North 

Korea and entrapment dilemmas. 

The management of U.S. alliances in Northeast Asia should also be in 

tandem with bilateral or multilateral efforts to enhance the U.S.-ROK alliance 

and U.S.-ROK-Japan trilateral relations, as well as to promote regional 

stability and cooperation. As a balancing act against South Korea’s growing 

economic dependence on China, particularly following the conclusion of 

the China-Korea FTA and ongoing negotiations of the RCEP, Washington 

would do well to bring South Korea in as one of the first post-agreement 

countries of the recently concluded Trans-Pacific Partnership negotiations. 

The United States should also play a more active role in managing ROK-Japan 

relations. In particular, it should work to prevent historical disputes from 

undermining bilateral relations between its two allies while facilitating a 

positive environment for constructive dialogue and also promoting and 

enhancing cooperation on functional issue areas of common interest, such as 

cybersecurity and disaster relief. Any misperceptions or misunderstandings 

by South Korea and Japan of each other’s actions should be managed through 

confidence-building measures among these three countries to prevent further 

deterioration of bilateral relations. As part of these efforts, holding regular 

U.S.-ROK-Japan summits or reinvigorating trilateral ministerial meetings 

and other consultative mechanisms would be helpful. In addition, the United 

States, Japan, and South Korea should make concerted efforts to slowly build 

consensus for a collective security statement regarding North Korean threats. 

Upgrading current information-sharing into a general security of military 

information agreement and an acquisition and cross-servicing agreement 

would be a logical next step. 

Seoul certainly hopes that it can continue to operate strategically in a 

space in which it can reap security benefits from the United States and 

economic benefits from China, while maintaining good relations with both. 

As argued above, this is the optimal path for South Korea to circumvent the 

four dilemmas of power, economics, unification, and entrapment. However, 

[ 120 ]


the degree to which this strategic space remains open for Seoul is not fully 

within its control. Indeed, the size of this space will depend greatly on the 

actions of South Korea’s great-power ally and its giant neighbor. Given Chinese 

complaints about THAAD, Seoul may be finding that Beijing is willing to 

afford South Korea little space to finesse the issue and that it instead may have 

to make a choice. And with U.S. complaints about Chinese land reclamation 

activities in the South China Sea, the space for South Korea to say nothing 

about freedom of navigation may be shrinking. It would behoove strategic 

thinkers in both Seoul and Washington to begin a serious discussion of how 

the alliance should prepare for such contingencies. 

[ 121 ]



Is South Korea in China’s Orbit? 

Assessing Seoul’s Perceptions and Policies 


jae ho chung is a Professor in the Department of Political Science and 

International Relations and Director of the Program on U.S.-China Relations 

in the Asia Center of Seoul National University. He can be reached at 

. 

jiyoon kim is a Research Fellow at the Asan Institute for Policy Studies. 

She can be reached at . 

note u This article draws in part on Jae Ho Chung, “Wind Behind the Sails? 

South Korea–China Relations after the Park-Xi Summit: A South Korean 

Perspective,” Asan Forum, National Commentary, September 24, 2014 u 

http://www.theasanforum.org/a-south-korean-perspective. 

keywords: south korea; china; rok-u.s. alliance; korean peninsula 


asia policy 


This article examines South Korea’s perceptions of and policies toward China, 

particularly since President Park Geun-hye’s inauguration in 2013, and 

assesses the thesis that Seoul is in the Chinese orbit. 

main argument 

Although the view that South Korea is tilting increasingly toward China at the 

expense of its relations with the U.S. has been gaining an audience in some 

corners of the U.S. and Japan in recent years, this thesis is largely ungrounded. 

It is challenged both by an assessment of Xi Jinping’s state visit to South Korea 

in July 2014 and by an analysis of South Korean perceptions toward China in 

seven issue domains: China’s rise, historical disputes, the sharing of norms 

and values, territorial disputes, North Korea, reunification, and the ROK-U.S. 

alliance. Nonetheless, nascent concerns about North Korea’s renegade 

behavior and China’s rise are in the backdrop of Seoul’s recent approach to 

China. Down the road, the number of issues over which Seoul must agonize 

will only increase, thereby leading the U.S. to worry about China’s influence 

over South Korea more often than ever before. 


• South Korea’s policies and perceptions toward China, though varying by issue, 

overall are embedded in recognition of the high uncertainty surrounding 

China’s rise and how it will relate to the fate of North Korea. 

• In order to mitigate or eradicate faulty assumptions and perceptions, both 

Track 1 and Track 1.5 dialogues need to be held more frequently between South 

Korea, Japan, and China, as well as between South Korea, the U.S., and China. 

• The accelerating pace of China’s ascent is likely to make important issues 

of contention arise more frequently, pushing Seoul to choose between 

Washington and Beijing.

chung and kim • is south korea in china’s orbit? 

The vital interests—and core goals—of the Republic of Korea (ROK) are 

anchored in economic growth and development, peace and security, and 

reunification. So far as economic interactions are concerned, China currently 

figures prominently vis-à-vis the United States. In terms of national security 

and military defense, by contrast, China pales in importance next to the 

ROK-U.S. alliance. Which country’s role and contribution will be deemed 

more pivotal to the daunting task of reunification still hangs in the air. Key 

questions about South Korea’s perceptions of and policies toward China are 

posed in this fluid and evolving context. 

Since mid-2013, there has been a growing perception in Washington and 

Tokyo that Seoul has fallen into China’s orbit. The thesis posits that South 

Korea is at present tilting increasingly toward China at the expense of its 

relations with the United States and will eventually align itself with China. 1 

Such concerns originated with President Park Geun-hye’s successful state visit 

to China in June 2013, during which Seoul-Beijing ties were further cemented 

by a pledge to consolidate the “strategic cooperative partnership” established 

in 2008. 2 Granted that it was fairly common to hear that ROK-China relations 

have never been better (particularly compared with the five years under Lee 

Myung-bak), such concerns on the part of the United States and Japan are 

understandable, though largely blown out of proportion. 

A year after Park’s visit, President Xi Jinping reciprocated with his first 

state visit to South Korea in early July 2014. It was the first time that the Chinese 

president visited South Korea before he did the North. More importantly, 

President Xi’s itinerary included only one country—South Korea—as if he 

had specific goals and motives in mind for the visit. Naturally, the overall 

atmosphere was cordial, protocols were maximally accorded, schedules were 

planned to the minute, and hopes and expectations soared high. However, 

some reporting on the visit was exaggerated and assessments were inflated by 

1 For such assessments, see Alain Guidetti, “South Korea and China: A Strategic Partnership in the 

Making,” Global Asia 9, no. 3 (2014): 110–15; and Tom Wright, “South Korea Looks to Prosper 

in China While Staying Close to U.S.,” Wall Street Journal, November 25, 2014. For Japanese 

sources, see, for instance, Kimura Kan, “Chuugokuheno kyuusekkinha Kankokuno” [South 

Korea’s Futures Trading—Closer Relations with China], Weekly Toyo Keizai, July 13, 2013, 79–101; 

Nishimura Kinyichi, “Shinmitsuna Chuukankankeiga Kakkokuhe oyabosu eikyou to sono tenbou” 

[The Impact of Closer Korea-China Relations on Other Nations], Japan Forum for Strategic 

Studies, Quarterly Report, no. 62, October 2014, 28–34; and Suzuoki Takabumi, “Kankokuha 

‘kaerazaru hasi’ wo wataru” [Korea Has Passed the “Point of No Return”], Nikkei Business Online, 

September 7, 2015 u http://business.nikkeibp.co.jp/atcl/report/15/226331/090400012. 

2 It should be noted that despite Beijing’s suggestion in early 2013 to upgrade the bilateral 

relationship to a “comprehensive strategic cooperative partnership” (quanmian zhanlue hezuo 

huoban), Seoul held on to the original designation. 

[ 125 ]

asia policy 

the news media’s eagerness to mete out positive results even before the two 

sides had announced their formal agreements. 

This article is an empirical rebuttal to the mostly anecdotal and largely 

impressionistic views in some corners of the United States and Japan that 

South Korea is already in the Chinese orbit. The article is organized as follows: 

u 

u 

u 

pp. 126–29 offer an assessment of the Xi visit in July 2014 as a key 

indicator of South Korea’s policies toward China. 

pp. 130–43 examine South Koreans’ perceptions of China in seven issue 

domains, arguing that these are not quite congruent with the thesis that 

Seoul is in China’s orbit. 

pp. 143–45 look into the more recent case of President Park’s attendance 

of China’s Victory Day celebration in September 2015 and provide some 

informed predictions about South Korea’s future relations with China. 

an assessment of the xi visit in 2014 

Twenty-three years after the normalization of diplomatic ties, ROK-China 

relations have entered into a period of maturation. With a history of ebbs and 

flows, 3 bilateral ties were particularly bumpy during 2008–12 due not only 

to the Lee Myung-bak administration’s largely pro-U.S. approach but also to 

Beijing’s defense of North Korea’s sinking of the ROKS Cheonan and shelling 

of Yeonpyeong Island in 2010. When the Xi and Park administrations were 

inaugurated in 2012 and 2013, respectively, an improvement in the bilateral 

relationship was highly anticipated. 

Four factors have played a role in facilitating better relations between 

Seoul and Beijing since 2013. First, as if to accommodate such high 

expectations, the Xi administration has put much effort into wooing Seoul, 

often at the expense of Pyongyang. 4 Second, the Park government found that 

it was rather difficult to distinguish itself from the previous administration in 

the relationship with the United States and regarded improving relations with 

China as a diplomatic blue ocean. Third, as a result of the bizarre behavior 

of the Kim Jong-un regime, Beijing came to realize that Pyongyang could 

become a serious political liability for China’s reputation as a “responsible 

great power.” Fourth, President Park’s visit to China in 2013—officially 

3 Jae Ho Chung, Between Ally and Partner: Korea-China Relations and the United States (New York: 

Columbia University Press, 2007). 

4 Several South Korean officials interviewed by the authors referred to Beijing’s recent approach as a 

“charm offensive.” 

[ 126 ]


promoted as a “trip for heart-to-heart building of trust” (xinxin zhi lü)—was 

such a big hit in China that it had the effect of further cementing bilateral ties. 

Many analysts thus expected President Xi’s state visit to South Korea in 

July 2014 to lead to another heyday for ROK-China relations. As the saying 

goes, summits rarely fail. Although the outcomes of the Park-Xi summit did 

not exactly meet these inflated expectations, a couple of developments merit 

special attention. The decision to start official negotiations in 2015 regarding 

the demarcation of maritime boundaries, including exclusive economic zones 

(EEZ), was a huge step forward. For one, successful win-win negotiations on 

this sensitive issue would eliminate for good a principal obstacle to stable 

ROK-China relations. In addition, given that maritime territorial disputes 

have long constituted a principal source of contention in East Asia, agreement 

by Seoul and Beijing on a mutually satisfying solution could set a useful model 

for crisis prevention and confidence building with far-reaching ramifications 

for the region. 

As for the areas of bilateral cooperation, three were specified—reduction 

of air pollution, collective rescue operations in cases of accidents and natural 

calamities, and increased cooperation in public health—with specific modes 

of operation and cooperation to be delineated. 5 In the realm of economic 

cooperation, the two sides set the target of reaching an agreement on a 

bilateral free trade agreement (FTA) before the end of 2014. Thanks to the 

leaders’ close attention to this issue, the Korea-China FTA was subsequently 

signed on November 10, 2014, and is now waiting to be formally ratified. 

Other noteworthy outcomes of the summit included establishing an offshore 

yuan center in Seoul (the first one in Asia outside the greater China region) 

and granting South Korea an 80 billion renminbi quota for domestic investors 

to buy Chinese securities under the Renminbi Qualified Foreign Institutional 

Investor program. 6 Nevertheless, a big picture for economic cooperation over 

the next five to ten years was apparently missing. 

With regard to areas for regional and global cooperation, which are now 

deemed a key domain of the strategic cooperative partnership between the 

two countries, three issues were highlighted—climate change, cybersecurity, 

5 The following discussion is based on the joint statements announced after the 2014 Park-Xi 

summit. For the joint statement, see “Pakdaetonglyeong-Sijuseog chaetaeg Hanjung 

gongdongseongmyeong jeonmun” [President Park-Premier Xi Sino-Korean Joint Statement Text], 

Yonhap News Agency, July 30, 2014 u http://www.yonhapnews.co.kr/politics/2014/07/03/0501000 

000AKR20140703143800001.HTML. 

6 See Jung-Hoon Kim, “Xi Jinping banghan” [Specials on Xi Jinping’s Visit], Chosun Daily, 

July 4, 2014; and Special Report, “Hanguk gyungje yong eui deung’e olatada” [South Korea’s 

Economy Riding with the Dragon], JoongAng Daily, November 11, 2014. 

[ 127 ]

asia policy 

and intraregional nuclear plant safety. While these issues are undoubtedly 

important, specific modes of bilateral cooperation have yet to be formulated. 

Positive assessments of the Xi visit nearly stop there. Other than the 

issues discussed above, the “same bed, different dreams” phenomenon was 

discernible. China’s position—at least the public side of it—on North Korea 

and its nuclear weapons program was little different than 2013. Although 

President Xi apparently expressed quite a bit of his displeasure with 

Pyongyang in private conversations with President Park, he stopped short of 

publicly criticizing Pyongyang and calling for the denuclearization of North 

Korea. 7 As expected, he called for yet another round of six-party talks, which 

many pundits have long considered to be on life support, if not already dead. 

President Xi also demanded action on the agreement reached on September 19, 

2005. 8 It is questionable, however, whether that could really be the basis of a 

meaningful new beginning, given the developments since 2005 (particularly 

the advancement of Pyongyang’s nuclear and missile capabilities). 

If China was lukewarm on the North Korean conundrum, South Korea was 

equally so on the Japan question. Against Beijing’s expectations, South Korea did 

not quite go along with China’s plan of turning Japan into an open culprit. Japan 

was never mentioned in the joint statement (not even in the appendix). 9 Although 

China and South Korea agreed to conduct joint research on “forced sex slaves,” a 

united front against Japan did not materialize. President Xi’s “strong remarks” on 

Japan during his down-to-earth speech at Seoul National University on July 4, 2014, 

was perhaps another way of expressing his frustrations with the summit so far as 

the Japan issue was concerned. 10 

Overall, President Xi’s visit was not as impressive or substantive as 

President Park’s visit to China a year earlier. For one, the 2013 Park-Xi 

7 Scattered pieces of evidence—such as exchanges of negative remarks between Beijing and 

Pyongyang, the reduction of China’s crude oil shipments to North Korea, and the absence of 

high-level official exchanges—appear to suggest that China’s tactical mode of dealing with 

North Korea might have changed, although whether Beijing’s strategic interests vis-à-vis 

Pyongyang have also changed remains to be substantiated. For an argument along this line, see 

Jae Ho Chung and Myung-hae Choi, “Uncertain Allies or Uncomfortable Neighbors? Making 

Sense of China-North Korean Relations, 1949–2010,” Pacific Review 26, no. 3 (2013): 243–64. 

8 The September 19 joint statement grew out of the fourth round of the six-party talks and laid out 

several principles, such as the U.S. reaffirmation of having no intention to attack or invade North 

Korea with nuclear or conventional weapons and North Korea’s commitment to abandon all 

nuclear weapons and existing nuclear programs. 

9 China allegedly demanded that the word “Japan” be stipulated in the appendix. Authors’ interview 

with a senior ROK official, October 2014. 

10 Jae Ho Chung, “Wind Behind the Sails? South Korea–China Relations after the Park-Xi Summit: 

A South Korean Perspective,” Asan Forum, National Commentary, September 24, 2014 u 

http://www.theasanforum.org/a-south-korean-perspective. Also see Won-Yop Chung, “Hanguk 

Xi Jinping hangil bigonggae haja” [As South Korea Chose Not to Reveal Xi’s Anti-Japan Remarks], 

JoongAng Daily, July 4, 2014. 

[ 128 ]


summit—as the first between the two presidents—already dealt with most of 

the principal issues in the bilateral relationship. Second, the media’s outsized 

expectations made the 2014 summit appear less successful than it really was. 

A South Korean official offered the following comments on the 2014 summit: 

“The media in Seoul went way ahead on setting the atmosphere and agendas 

for the summit…. Granted that media people always look for something 

new instead of important continuities, they were generally excessive and 

often dead wrong.” 11 The official specifically pointed out that some media 

organizations performed as a mouthpiece for China by demanding that the 

bilateral relationship be “upgraded” to a “comprehensive strategic cooperative 

partnership.” 12 Their demands were effectively rejected by President Park’s 

decision to keep the official designation intact. 

After the 2014 summit, the People’s Daily described Seoul as Beijing’s 

close partner in regional peace and global prosperity. The Global Times 

went further to characterize the bilateral relationship as “politically hot and 

economically hot as well” (zhengre jingre), as if to contrast it with relations 

under the Lee administration (which were economically hot but politically 

cold). 13 Soon thereafter, however, sober—if not conservative—voices became 

loud in Seoul. Mainstream newspapers published editorials warning the 

Park administration against moving too fast to consolidate security ties with 

China. In some cases, this argument was only implicit, while other pundits 

were more explicit in highlighting the need to guard against China’s “hidden 

agenda” in actively wooing South Korea. 14 

11 Authors’ interview with a South Korean official, November 2014. 

12 The possibility of upgrading the bilateral relationship to a comprehensive strategic cooperative 

partnership was allegedly explored informally by the Chinese side in early 2014. See Jihye Yoo and 

Won-Yop Chung, “Hanjung gwangye jungreo sujuneuro gyuksang chujin” [South Korea and China 

in the Middle of Upgrading the Relationship on a Par with Sino-Russian Relations], JoongAng 

Daily, June 26, 2014. 

13 See Yao Dawei, “Xi Jinping tong hanguo zongtong Park Geun-hye huitan” [Xi Jinping’s 

Summit with President Park Geun-hye], Renmin ribao, July 4, 2014; and Huanqiu shibao, 

July 4, 2014. 

14 See Michael Green, “An Optimistic Relationship,” JoongAng Daily, July 11, 2014; Park Jung-Hoon, 

“6·25reul wideaehan ‘Hangmi wonjo jonjaeng’ yila haetdeon Xi Jinping” [Xi Jinping Who 

Dubbed the Korean War as a Great ‘Resist the U.S. and Support North Korea’ War], Chosun Daily, 

July 11, 2014; Kim Younghee, “Xi Jinping pyo Junggukeui ggumeul gyonggyehanda” [Need to 

Guard Us against Xi Jinping’s China Dream], JoongAng Daily, July 11, 2014; Sunwoo Jung, “Yiyi 

jeyi” [Using the Barbarians to Check the Barbarians], Chosun Daily, July 12, 2014; Kim Dae-Jung, 

“Byongja horaneul yingneundae Xi Jinping yi watda” [Xi Jinping’s Visit in the Midst of Reading 

a Book on China’s Invasion of Chosun], Chosun Daily, July 15, 2014; Kim Ki-Chun, “Hanjung 

FTA—sodureul pilyo eopda” [No Need for Rush—The Korea-China FTA], Chosun Daily, July 16, 

2014; Victor Cha, “Is South Korea Already Tilting Toward China,” JoongAng Daily, August 15, 

2014; Lee Jeong-Jae, “Jungguk gwa hanggye salgi” [Co-Living with the Chinese], JoongAng Daily, 

September 11, 2014; and Kim Dae-Jung, “Jungguk e jongsokjokin Park Geun-hye woegyo” [Park’s 

Diplomacy Too Dependent on China], Chosun Daily, February 3, 2015. 

[ 129 ]

asia policy 

south korea’s perceptions of china: 

an issue-area approach 

Being a democratic system, South Korea’s diplomacy is conditioned 

and constrained, often considerably, by public opinion. 15 Studies are readily 

available on psychological sources of South Korea’s inherent concern with an 

assertive China, many of which were historically learned and accumulated 

over long years. 16 As for the contemporary sources of friction between South 

Korea and China, seven domains may be identified here: economic relations, 

historical disputes, clashes of norms and values, territorial issues, the North 

Korean conundrum, differences over the question of reunification, and the 

ROK-U.S. alliance. Based on the premise that leaders may mitigate certain 

frictions but nonetheless find it difficult to uproot the sources of contention, 

this study seeks to trace South Korean public opinion regarding the seven 

issue areas listed above. 

Given that systematic elite interviews on all these issues are 

difficult—if not impossible—to conduct, public opinion surveys are utilized 

here to gather pertinent empirical data. Three principal sources are opinion 

polls conducted by the Institute for Peace and Unification Studies (IPUS) of 

Seoul National University, the Asan Institute for Policy Studies, and the East 

Asia Institute. The first refers to the Unification Attitude Surveys from 2007 to 

2014. The second includes the Asan Annual Survey (2010–14) and the Asan 

Daily Poll (May 1–3, 2014; May 4–6, 2014; May 7–9, 2014; July 4–6, 2014; and 

August 26–28, 2014). 17 And the third denotes a number of polls conducted 

by the East Asia Institute in collaboration with JoongAng Daily, the Chicago 

Council on Global Affairs, and the Asiatic Research Institute of Korea 

University. 18 In addition, overseas surveys by polling agencies such as the Pew 

Research Center are also utilized. 

15 Key examples include the South Korean government’s accommodation of and submission to 

public opinion regarding the history controversy with China in 2004, the Korea-U.S. Free Trade 

Agreement’s clause on beef imports in 2008, and intermittent conflicts over a wide array of history 

issues with Japan. 

16 See Chung, Between Ally and Partner, chap. 2. 

17 Data for all Asan surveys and polls is available upon request. Since August 2012, when the Asan 

Daily Poll began, China-focused surveys have been conducted just three times. 

18 For all the South Korean polls used in this study, respondents were over nineteen years old and 

were randomly selected in order to best represent the South Korean public. Although the size of 

samples differed across the series of surveys, the survey with the smallest sample size still had one 

thousand respondents, sufficing to restrict the margin of error within ±3.1% at a 95% confidence 

level. All survey results were subjected to customary post-stratification processes to best match the 

census data of South Korea. 

[ 130 ]


General Perceptions of Sino–South Korean Relations 

Perceptions in South Korea of relations with China have fluctuated in 

tandem with the evolving international environment and in response to 

unforeseen events. For example, the Goguryeo history controversy generated 

a hugely negative impact on the bilateral relationship in 2004 and beyond. 19 

Public opinion has been particularly fluid in recent years. As Table 1 

demonstrates, positive perceptions of Sino–South Korean relations dropped 

to 36.4% in 2008 from 65.5% in 2007. 20 In the very next year, 58.9% of South 

Koreans thought that relations between the two countries were relatively 

good, while only 39.7% saw the relationship in a negative light. The former 

figure again declined to 50.8% in 2010, perhaps due to China’s lukewarm 

response to North Korea’s provocations against the South in the West Sea 

and on Yeonpyeong Island. While it is somewhat difficult to explain these 

ups and downs, South Korean perceptions of China have improved since the 

inauguration of President Park. The Asan Daily Poll found in 2014 that 62.0% 

of respondents assessed the relationship to be good. More importantly, the 

percentage of those who viewed the relationship in a negative light plummeted 

from 45.8% in 2010 to only 13.6% in 2014. 21 

TABLE 1 

South Koreans’ Perceptions of Sino–South Korean Relations (%) 

2007 2008 2009 2010 2014 

Relatively good 65.5 36.4 58.9 50.8 62.0 

Relatively bad 34.5 59.8 39.7 45.8 13.6 

Source: Northeast Asian History Foundation, Public Opinion Poll on Korea-China Relations, 2007–10; and 

Asan Institute for Policy Studies, Asan Daily Poll, July 4–6, 2014. 

Note: The balance consists of “no difference from before” and “don’t know.” 

19 Scott Snyder, “A Turning Point for China-Korea Relations?” Comparative Connections 6, no. 3 

(2004): 109–14; and Peter Hays Gries, “The Koguryo Controversy, National Identity, and 

Sino-Korean Relations Today,” East Asia 22, no. 4 (2004): 3–17. 

20 Some incidents during the Olympic torch relays in Seoul stirred South Korean public sentiments 

against China in 2008. 

21 It should be noted that because the survey in 2014 was conducted by the Asan Institute for Policy 

Studies rather than the Northeast Asian History Foundation, it is hard to claim that these numbers 

are on the same continuum. Nonetheless, the numbers for 2014 still seem to indicate a fairly 

positive state of affairs between China and South Korea. 

[ 131 ]

asia policy 

South Korean views of China have likewise fluctuated considerably 

over time. 22 As Table 2 demonstrates, in 2007 only 19.3% of the respondents 

regarded China as a cooperative partner, while 46.5% and 31.0% saw China as 

a competitor or a country to be guarded against, respectively. The percentage 

of respondents who considered China as a cooperative partner gradually 

declined to a record low of 16.9% in 2012 (which was the last year of President 

Lee’s tenure). 23 On the other hand, the percentage of those who regarded 

China as an enemy rose significantly from 2007 to 2012. The overall mood 

changed drastically in 2013 when the percentage of those viewing China as 

a cooperative partner increased by 11.6 percentage points. The figure again 

rose to 34.0% in 2014. 24 The percentage of South Koreans perceiving China 

as a competitor also increased from 35.3% in 2012 to 43.9% in 2013. The 

competitor figure subsequently decreased to 34.6% in 2014, suggesting that 

South Korean sentiments toward China have indeed improved since 2013. 

TABLE 2 

South Koreans’ Perceptions of China (%) 

2007 2008 2009 2010 2011 2012 2013 2014 

Cooperative partner 19.3 23.7 21.1 19.7 20.5 16.9 28.5 34.0 

Competitor 46.5 38.2 42.0 45.1 40.2 35.3 43.9 34.6 

Country to be 

cautious about 

31.0 32.9 33.3 31.8 34.9 35.8 24.5 29.1 

Enemy 3.3 5.1 3.6 3.4 4.4 5.4 3.1 2.3 

Source: Institute for Peace and Unification Studies (IPUS), Tongil euisik josa [Unification Attitude Survey] 

(Seoul: IPUS, 2014), 187. 

22 See, for instance, Jae Ho Chung, “Korean Views of Korea-China Relations: Evolving Perceptions 

and Upcoming Challenges,” Asian Perspective 36, no. 2 (2012): 219–36. 

23 The decline may well have been due to China’s position on the Cheonan sinking and the 

Yeonpyeong shelling, which was not in line with South Korea’s expectations and preferences. See 

Kim Jiyoon and Woo Jung-yup, “Yeonpyeong pogyok satae gwanlyon gengeup yoron josa bogoseo” 

[Report on the Survey Regarding the Yeonpyeong Shelling Incident], Asan Institute for Policy 

Studies, November 2010, 18. 

24 The authors are grateful to the staff of the Institute for Peace and Unification Studies (IPUS) at 

Seoul National University for sharing these figures before their official publication. IPUS, Tongil 

euisik josa [Unification Attitude Survey] (Seoul: IPUS, 2014). 

[ 132 ]


These findings are also supported in part by the changes in the favorability 

score for China (see Figure 1). 25 In 2010, China’s favorability score was 4.50, 

but it dropped to 3.93 and 3.94 in 2011 and 2012, respectively. Due perhaps to 

the positive impact of the exchange of visits by Presidents Park and Xi, China’s 

favorability score increased to 4.24 in 2013 and 4.87 in 2014, reducing the gap 

with the scores for the United States. Around the time of President Xi’s visit in 

July 2014, China’s favorability score peaked at 5.13. 26 

Thanks to the new leaders’ proactive diplomacy, South Korean public 

perceptions of China have been quite positive since 2013. Compared with the 

prevailing sentiments in South Korean society in 2012, the change is rather 

10 

9 

8 

7 

FIGURE 1 

Country Favorability Scores 

Favorability score 

6 

5 

4 

3 

2 

1 

0 

Favorability of China 

Favorability of the United States 

2010 2011 2012 2013 May 2014 July 2014 

Year 

Source: Asan Institute for Policy Studies, Asan Annual Survey, 2010–13; and Asan Institute for Policy Studies, 

Asan Daily Poll, May 1–3, 2014, July 4–6, 2014. 

25 The favorability scores of China and the United States are measured on a scale of 0 to 10. When a 

person dislikes a country very much, he or she gives a score of 0. If a person likes a country very 

much, his or her favorability score for the country is 10. The scores are average figures of the sample. 

Calculations are based on the Asan Institute’s annual surveys as well as its daily polls in May and 

July 2014. While the primary focus here is South Koreans’ favorability scores for China, we have 

juxtaposed them with the favorability scores for the United States for the purpose of comparison. 

26 According to a recent survey conducted by the Chosun Daily in 2015, those who had favorable 

feelings toward China accounted for 23.1%, while the percentage of respondents with favorable 

feelings toward the United States was 54.2%. See “Gwangbok 70nyon gungmin euisik josa” [The 

National Opinion Survey in Commemoration of the 70th Year of Liberation], Chosun Daily, 

August 10, 2015. 

[ 133 ]

asia policy 

impressive. Although this trend is certainly welcome for Sino–South Korean 

relations, the fundamental question remains of how sustainable or durable it 

is. As these surveys show, public sentiments and perceptions are by definition 

fickle and, therefore, assessing them more concretely in a couple of principal 

issue-areas is deemed necessary. 

China as an Economic Partner or Competitor 

Once regarded as a factory for the world with its cheap labor, China 

has been fast transforming and upgrading its industrial structure, thereby 

enhancing its economic competitiveness. Accordingly, in the eyes of the South 

Korean public, China is increasingly seen as a source of tough competition 

and even a growing economic threat. A poll conducted in 2006 found that 

58.5% of respondents considered China as a market with ample business 

opportunities, whereas 40.8% viewed the country as an economic threat 

(see Table 3). 27 By 2012, the mainstream South Korean view had changed, as 

52.7% now saw China’s economic growth as a threat to the Korean economy. 

This trend persisted in 2014, with 71.9% of South Koreans viewing China’s 

economic rise as threatening. 28 

Two reasons largely account for the growing view of China’s rise as 

an economic threat. For one, the fear of China’s economic rise stems from 

South Korea’s high level of trade dependence on China. While the level of 

TABLE 3 

South Koreans’ Perceptions of China’s Economic Rise (%) 

2006 2012 2014 

Threat 40.8 52.7 71.9 

Not a threat 58.5 43.5 18.7 

Source: East Asia Institute, JoongAng Daily, and Chicago Council on Global Affairs, Public Opinion Survey on 

Foreign Relations, 2006; Asan Institute for Policy Studies, Asan Annual Survey, 2012; and Asan Institute for 

Policy Studies, Asan Daily Poll, May 7–9, 2014. 

27 East Asia Institute, JoongAng Daily, and the Chicago Council on Global Affairs, Public Opinion 

Survey on Foreign Relations, 2006 u http://www.eai.or.kr/type/p2.asp?catcode=1410101100. Data 

is available upon request. 

28 Asan Institute for Policy Studies, Asan Annual Survey, 2012; and Asan Institute for Policy Studies, 

Asan Daily Poll, May 7–9, 2014. See also Jiyoon Kim, Karl Friedhoff, Chungku Kang, and Euicheol 

Lee, Asan Report: South Korean Attitudes on China (Seoul: Asan Institute for Policy Studies, July 

2014) u http://en.asaninst.org/contents/south-korean-attitudes-on-china. 

[ 134 ]


trade dependence of the two countries on each other was fairly similar up to 

the mid-1990s, China’s volume of trade grew explosively thereafter, steeply 

increasing South Korea’s trade dependence on China (see Table 4). As of 

2013, South Korea’s dependence on China was 3.8 times that of China’s on 

South Korea. South Koreans are in part concerned that Beijing could utilize 

this trade dependence as diplomatic leverage. 

South Koreans also feel threatened by the rapidly narrowing technological 

gap between South Korea and China. In an Asan Daily Poll conducted in May 

2014, 43.6% of respondents referred to this factor as an important reason for 

their wariness of China’s rise. 29 The relative technological indices for Seoul 

and Beijing were 83.9 and 71.4, respectively, in 2013, compared with 76.3 and 

58.5 in 2010 (the United States has a standard value of 100). South Korea 

has also been less competitive than China on the world market. In 2012, for 

instance, China produced 1,495 products ranked number one, while South 

Korea only produced 64. 30 

Despite these concerns, South Koreans were fairly sanguine about reaching 

an FTA with China. Whereas in 2012 46.5% of respondents supported an FTA, 

while 39.0% opposed it, by 2014 the percentage of those supporting an FTA had 

TABLE 4 

Mutual Trade Dependence of South Korea and China (%) 

Year 

South Korea’s dependence 

on China 

China’s dependence 

on South Korea 

1990 2.8 3.3 

1995 6.4 5.9 

2000 9.4 6.6 

2007 19.9 8.9 

2013 21.0 5.5 

Source: Korea International Traders Association u http://www.kita.net, calculated with data from Zhongguo 

tongji nianjian [China Statistical Yearbook] (Beijing: National Bureau of Statistics of China, pertinent years). 

29 Asan Institute for Policy Studies, Asan Daily Poll, May 7–9, 2014. 

30 See JoongAng Daily, July 9, 2014. For further analysis of South Koreans’ concerns with the massive 

inflow of Chinese capital, see “Haewundae ggaji Jung jabon milmul” [A Tidal Wave of Chinese 

Capital into Korea], Chosun Daily, October 3, 2014. 

[ 135 ]

asia policy 

increased to 65.5%, while opposition decreased to 24.2%. Similarly, whereas 31% 

of respondents regarded the Korea-China FTA as mutually beneficial in 2012, 

a near majority of 49% saw it as mutually beneficial in 2014. 31 Such perceptual 

undercurrents were the key driver that facilitated the bilateral agreement on the 

FTA on November 10, 2014. The actual contents of the FTA, however, proved 

to be less comprehensive than South Korea’s FTAs with the United States (2006) 

and the European Union (2007). 32 

In sum, the South Korean public is watching the economic rise of China 

with wary eyes. Given that the level of economic complementarity between 

the two countries is fast decreasing—i.e., mutual competition is becoming 

more severe—the future on this front may not necessarily be so bright. 33 

Historical Controversies 

Since the end of the Cold War, East Asia as a whole has been inundated 

with “identity politics.” 34 While Japan has long been the locus of these sensitive 

controversies, ROK-China relations are by no means exempt from historical 

debates, particularly concerning the interpretation of the Goguryeo dynasty. 35 

Although the controversy has been largely contained by both governments, 

the issue is more or less dormant rather than resolved for good. Given that 

both Koreans and Chinese are highly nationalistic, even a small catalyst could 

reignite the debate and possibly even cause a diplomatic row between Seoul 

and Beijing. 

When a 2014 Asan Daily Poll asked South Koreans about how seriously 

they viewed the Chinese claim to the Goguryeo dynasty, 78.9% replied 

that it was indeed a serious problem. 36 According to the same poll, 51.1% 

of respondents thought that this issue would have a negative impact on the 

relationship between South Korea and China, while 23.5% did not expect any 

31 Asan Institute for Policy Studies, Annual Survey of the Asan Institute, 2012; and Asan Institute for 

Policy Studies, Asan Daily Poll, July 4–6, 2014. 

32 “Tagyol doen Hanjung FTA” [The Korea-China FTA Finally Agreed], JoongAng Daily, 

November 11, 2014. 

33 Zhang Yunling of the Chinese Academy of Social Sciences, for instance, characterizes economic 

relations today between South Korea and China as a “competition for advantages” (youshi 

jingzheng). See Zhang Yunling (remarks at the 20th Korea-China Future Forum, Seoul, 

September 17, 2015). 

34 See Gilbert Rozman, ed., East Asian National Identities: Common Roots and Chinese Exceptionalism 

(Stanford: Stanford University Press, 2012). 

35 China had long regarded the Goguryeo dynasty as part of Korean history, but since the early 1980s 

some Chinese scholars have put forward revisionist views with an intention to incorporate the 

dynasty into Chinese history. For detailed discussions of this debate, see Jae Ho Chung, “China’s ‘Soft’ 

Clash with South Korea: The History War and Beyond,” Asian Survey 49, no. 3 (2009): 468–83. 

36 Asan Institute for Policy Studies, Asan Daily Poll, August 26–28, 2014. 

[ 136 ]


impact on the relationship and 19.4% were unsure about the consequence. 37 

Given that both countries are currently engaged in historical disputes with 

Japan, neither perhaps intends to pick a fight with the other over history for 

the time being. 

A fundamental question remains, however: will the issue continue to 

be dormant or will it resurface at some point, especially as China’s power 

continues to grow? The same Asan Daily Poll cited above asked South 

Koreans why China is seeking to incorporate the Goguryeo dynasty into its 

own history: 28.8% of respondents replied that Beijing is planning to wield 

influence over a reunified Korea on the basis of the rewritten history of 

Goguryeo, 24.5% stated that China is preparing for a territorial dispute with 

South Korea through its Northeast Project (dongbei gongcheng), and 15.2% 

thought that China wishes to sustain its influence over North Korea. 38 Thanks 

to the efforts by both governments, the issue is currently not perceived as an 

imminent problem. Yet if the past is a useful guide, this controversy is likely 

to come back to haunt both South Korea and China. 

The Clash of Norms and Values 

When asked what comes to their mind when hearing the word China, 

South Koreans’ number one answer was “rapid economic growth” (35.1%), 

followed by “huge territory” (32.9%). Although China is well known for its 

long history and rich culture, only 7.6% of the respondents mentioned them. 39 

Overall, South Koreans appear to be more attuned to aspects of contemporary 

China than those of traditional China. Despite frequent references to the 

“shared culture” between the two countries, only 32.5% of respondents think 

that they share similar values. 40 While this is higher than the percentage of 

South Koreans who think that South Korea and the United States share values 

(24.2%), given that Chinese culture—especially Confucianism—immensely 

influenced Korean traditions and culture, the figure appears a bit low. 

Normative divergence between Seoul and Beijing on the issue of 

North Korean refugees (which China refers to as “escapees”) is already 

37 Not surprisingly, only 5.4% of respondents answered that the dispute would have a positive impact 

on Sino–South Korean relations. 

38 The percentage of respondents who replied “don’t know” was 18.8%. Asan Institute for Policy 

Studies, Asan Daily Poll, August 26–28, 2014. 

39 Asan Institute for Policy Studies, Asan Daily Poll, May 7–9, 2014. See also Kim et al., Asan Report, 30. 

40 Kim et al., Asan Report, 31. 

[ 137 ]

asia policy 

widely documented. 41 Environmental protection and food safety are newly 

emerging issues that cause divergence in norms and values. In a poll 

conducted in June 2014, 95.2% of South Koreans regarded environmental 

pollutants from China as a serious threat, while 80.8% of respondents stated 

that they would prefer not to buy food from China. 42 

Given that China has been emphasizing the cultivation of soft power 

and cultural diplomacy in recent years, how do South Koreans evaluate 

China’s cultural influence abroad? In an Asan poll conducted in 2014, 37% 

of South Koreans felt uncomfortable with the diffusion of Chinese culture 

and values. In contrast, only 25% were uncomfortable with the spread of 

American culture and values. 43 Additionally, in a 2008 poll nearly 70% of 

South Koreans did not favor China becoming Asia’s leader. Although this 

figure had decreased to 55% in 2014, a majority of respondents still viewed 

this scenario in a negative light. 44 

Table 5 cross-tabulates South Korean views of China’s regional leadership 

and of culture-sharing with China. Of the respondents who agreed that South 

Korea and China shared values, 57.9% supported China’s leadership over Asia, 

while 42.1% disapproved of it. In contrast, of the respondents who disagreed 

TABLE 5 

South Koreans’ Views on Shared Values 

Approve of China’s 

leadership in Asia 

Disapprove of 

China’s leadership 

in Asia 

Share 

similar values 

Do not share 

similar values 

Total 

194 people 199 people 393 people 

57.9 % 32.7% 41.6% 

141 people 410 people 551 people 

42.1% 67.3% 58.4% 

Source: Asan Institute for Policy Studies, Asan Daily Poll, May 7–9, 2014. 

41 Young Nam Cho, “Gyubom gwa gachigwan eso eui chungdol” [Clashes in the Areas of Norms and 

Values], in Jungguk eul gominhada [Agonizing over China], ed. Jae Ho Chung (Seoul: Samsung 

Economic Research Institute, 2011), chap. 5. 

42 Jihye Yoo and Won-Yop Chung, “Hangukin euisik josa” [Korean Opinion Surveys], JoongAng Daily, 

June 27, 2014. 

43 Asan Institute for Policy Studies, Asan Daily Poll, May 7–9, 2014. See Kim et al., Asan Report, 29. 

44 East Asia Institute and Chicago Council on Global Affairs, “Global Views 2008: Soft Power in 

East Asia,” Joint Survey, 2008 u http://www.eai.or.kr/type/p2.asp?catcode=1410100000&subcatco 

de=1410101000. 

[ 138 ]


that the two countries shared many values, 67.3% were uncomfortable with 

China assuming regional leadership. Despite the repeated rhetoric about 

shared culture, the majority of South Koreans do not believe that the countries 

share many values and norms for the time being. 

Territorial Issues 

South Korea and China are not officially engaged in any territorial disputes 

at the present time. When it comes to the issue of territorial skirmishes in East 

Asia, most South Koreans tend to think of the dispute with Japan over Dokdo. 

According to a survey conducted in 2014, 76% of respondents viewed Dokdo 

(also known as the Liancourt Rocks) as the most salient territorial dispute 

in the region, followed by the Senkaku/Diaoyu Islands (6.5%). Competing 

claims by South Korea and China over the jurisdiction of Ieodo/Suyanjiao 

(i.e., the Socotra Rock) were recognized by only 4.4% as a serious source of 

dispute in the region. 45 

In the case of Ieodo, the question of maritime boundary demarcation 

(specifically the recognition of EEZs) remains to be resolved. It would be 

overly optimistic or naive to state that South Korea will not get involved in any 

jurisdictional dispute with China. Because both South Koreans and Chinese 

are highly nationalistic, any sort of jurisdictional dispute is likely to seriously 

undermine the bilateral relationship unless properly managed. When asked 

about a hypothetical territorial dispute with China, 77% of South Korean 

respondents answered that such a dispute could easily develop into a much 

more serious conflict. 46 Before the issue resurfaces, therefore, it is important 

for both countries to follow through on their agreement at the 2014 Park-Xi 

summit to work out a mutually beneficial settlement. 

The North Korean Problem and the Issue of Reunification 

From South Korea’s viewpoint, North Korea has been the thickest thorn 

stuck in its relations with China. During crises in inter-Korean relations, due 

mostly to the North’s provocative actions, South Korea’s relationship with 

China has tended to be adversely affected. The most recent such examples 

are the Cheonan sinking in March 2010 and the Yeonpyeong shelling in 

45 Asan Institute for Policy Studies, Asan Daily Poll, August 26–28, 2014. 

46 Pew Research Center, “America’s Global Image Remains More Positive Than China’s but Many See 

China Becoming World’s Leading Power,” July 2013, 24 u http://www.pewglobal.org/2013/07/18/ 

chapter-3-attitudes-toward-china. 

[ 139 ]

asia policy 

November of that same year. In the eyes of many South Koreans, China 

one-sidedly defended North Korea in both instances. Particularly in the latter 

case, when North Korea attacked South Korea’s land territory for the first time 

since the armistice in 1953, China’s position was deemed unacceptable. 47 

Annual polls conducted by IPUS illustrate South Koreans’ deep-seated 

distrust of China regarding the issue of North Korea (see Table 6). 

Concerning a hypothetical war between the two Koreas, the polls in 2007 

and 2008 found that 26.8% and 30.4% of South Koreans, respectively, viewed 

China as prone to support North Korea. This percentage, however, rose to 

56%–63% in polls taken during 2010–12. A reversal of this trend occurred in 

2013 when, due perhaps to the improvement of the bilateral relationship, the 

percentage of South Koreans who regarded China as likely to support North 

Korea in a war with the South declined to 49.7%. The figure decreased further 

in 2014 to 42.0%. Still, nearly a majority (41.4% in 2013 and 46.6% in 2014) 

of respondents held that China would act according to its national interest, 

which could cut either way. 48 In all the polls discussed, very few South Koreans 

regarded China as likely to support South Korea. 

With regard to North Korea’s nuclear weapons program, the gap between 

what South Koreans expect from China and what they think China is actually 

delivering is particularly wide. Prior to President Xi’s visit to South Korea in 

2014, 53.6% of South Koreans regarded North Korea’s nuclear program as a 

key agenda for the summit, and 34.3% chose China as a country that should 

perform a proactive role in resolving the conundrum. 49 

On the issue of reunification, the South Korean public strongly believes 

that attaining China’s cooperation is necessary for this daunting process. 

The IPUS polls show that, except for 2012, more than 80% of South Koreans 

replied that China’s cooperation was indispensable (see Table 7). In stark 

contrast, only a small fraction of the South Korean public (an average of 

14.5% for 2007–14) thought that China would actually support Korean 

reunification. While this figure slightly increased during 2013–14, more than 

81% of South Koreans were still of the view that reunification would not be 

wholeheartedly supported by China. 

47 See Jae Ho Chung, “China’s Evolving Views of the Korean-American Alliance, 1953–2012,” Journal 

of Contemporary China 23, no. 87 (2014): 425–42. 

48 IPUS, Tongil euisik josa, 153. 

49 The comparable figures for South Korea and the United States were 33.7% and 22.5%, respectively. 

See Asan Institute for Policy Studies, Asan Daily Poll, May 4–6, 2014. 

[ 140 ]


TABLE 6 

South Koreans’ Views on China’s Position 

in an Inter-Korean Conflict (%) 

2007 2008 2009 2010 2011 2012 2013 2014 

Side with South Korea 5.3 4.5 3.1 3.3 2.4 1.3 3.3 5.4 

Side with North Korea 26.8 30.4 38.5 55.5 62.8 58.3 49.7 42.0 

Stay out of the conflict 11.4 13.0 7.7 3.8 3.8 2.8 5.6 6.0 

Protect its own 

national interest 

56.4 52.2 50.8 37.4 31.0 37.5 41.4 46.6 

Source: IPUS, Tongil euisik josa, 187. 

TABLE 7 

South Koreans’ Views on China and Korean Reunification (%) 

China’s 

cooperation 

necessary 

China’s 

cooperation not 

necessary 

China wants 

reunification 

China does 

not want 

reunification 

2007 N/A N/A 16.0 83.8 

2008 80.7 19.3 12.3 87.6 

2009 83.2 16.7 13.9 86.2 

2010 89.1 10.9 14.9 85.1 

2011 84.7 15.3 10.1 89.7 

2012 68.0 32.0 11.9 88.1 

2013 84.5 15.5 18.3 81.7 

2014 88.6 11.4 18.9 81.1 

Source: IPUS, Tongil euisik josa. 

Note: The four response options were (1) very necessary, (2) somewhat necessary, (3) not very necessary, and 

(4) not necessary at all. Replies of “very necessary” and “somewhat necessary” were combined as “necessary,” 

and replies of “not very necessary” and “not necessary at all” were combined as “not necessary.” The four 

response options on reunification were similarly reformulated into two categories. 

The ROK-U.S. Alliance 

From the Chinese perspective, the ROK-U.S. alliance is undoubtedly 

the biggest impediment to constructive relations with South Korea. In the 

past—up to the mid-2000s—Beijing officially opposed the stationing of 

American troops in South Korea but implicitly recognized the utility of U.S. 

[ 141 ]

asia policy 

forces in restraining North Korea. 50 As China’s power grows and the range of 

its power projection expands over time, its objection to the ROK-U.S. alliance 

has become increasingly loud. Particularly after Washington’s adoption of the 

“rebalance” strategy, Beijing has become more sensitive and vocal about the 

possibility of the alliance being deployed to “contain” China. 51 

While China generally views the alliance as a remnant of the Cold War, the 

South Korean perspective differs quite considerably. As far as the conventional 

military forces are concerned, South Korea is believed to have a sufficient edge 

over the North. In recognition of this disparity, Pyongyang has developed 

asymmetric capabilities—namely, nuclear and biochemical weapons. This 

leaves Seoul with two options: violating pertinent international law and 

norms by following the North’s path and developing nuclear and biochemical 

capabilities; or relying on its alliance with the United States to offset the 

North’s advantage in asymmetrical capabilities. Seoul’s choice has clearly 

been the latter, which the international community has largely supported. 

South Korean public opinion, too, appears to be generally supportive of this 

choice. Table 8 tabulates three different survey series during 2002–13 and 

shows public support for the alliance with the United States increasing over 

the given period. 

Last but not least, when asked about South Korea’s preferred partner for 

security cooperation in 2014, 59.6% of South Koreans chose the United States 

over China (24.9%). 52 Given that the survey was conducted right after President 

Xi’s visit in July 2014, the finding seems to have key implications. It also matches 

the findings of the 2013 survey by the Pew Research Center’s Global Attitudes 

Project in which 56% of the South Korean public chose the United States as the 

ROK’s preferred security partner, compared with only 28% who chose China. 53 

If Seoul is so determined to sustain the alliance with the United States, which 

China views as detrimental to its security interests, the ROK-U.S. alliance is 

likely to remain a thorny issue for Sino–South Korean relations. 

50 See Wang Jianwei and Wu Xinbo, “Against Us or With Us? The Chinese Perspective of America’s 

Alliances with Japan and Korea,” Shorenstein Asia-Pacific Research Center, Working Paper, 

May 1998; and Jae Ho Chung, “Decoding Beijing’s Perception of the U.S.-South Korea Alliance,” 

S. Rajaratnam School of International Studies, Policy Report, July 2014, 4–6. 

51 See Keyu Gong, “The Korea-U.S. Alliance from a Chinese Perspective,” Asian Perspective 36, no. 2 

(2012): 309–30. 

52 Asan Institute for Policy Studies, Asan Daily Poll, July 4–6, 2014. 

53 Pew Research Center, “America’s Global Image,” 42. 

[ 142 ]


TABLE 8 

South Koreans’ Views on the U.S.-ROK Alliance (%) 

Independent 

diplomacy 

Balance between 

independent 

diplomacy and 

the alliance 

Maintain 

status quo 

Strengthen 

the alliance 

2002 a 2003 a 2004 a 2006 b 2008 b 2009 c 2010 c 2013 c 

26.3 16.8 19.8 29.0 26.8 18.9 30.8 14.9 

50.5 48.6 45.6 22.2 21.4 – – – 

– – – – – 40.9 33.6 19.5 

21.9 32.8 32.7 48.6 50.9 39.7 34.7 65.6 

Source: Data noted a is from East Asia Institute and JoongAng Daily, Public Opinion Survey, 2002–4; data 

noted b is from East Asia Institute, JoongAng Daily, and Chicago Council on Global Affairs, Public Opinion 

Survey on Foreign Relations, 2006; and data noted c is from East Asia Institute and Hankook Research 

Company, Public Opinion Survey on Politics and National Security, 2009–10, 2013. 

Note: No such surveys were conducted in 2005, 2007, 2011, or 2012. 

back to the question 

Has South Korea already entered the Chinese orbit? The foregoing 

analyses of South Korea’s policies toward and perceptions of China suggests 

probably not. Seoul’s agony over keeping a delicate balance between 

Washington and Beijing on key issues might have given the United States 

the impression that South Korea is tilting toward China, but we stand by our 

assessment in this article for two reasons. For one, because of geographic 

proximity and historical memories, South Korea has nascent fears of a strong 

and imposing China on its border. Second, personal relationships between 

leaders rarely outweigh vital national interests. While some still assert that 

Seoul does not have to choose between Washington and Beijing, important 

issues of contention are arising more frequently than ever before. 

One such issue is missile defense—that is, the deployment of Terminal 

High Altitude Area Defense (THAAD) and X-band radar on U.S. bases in 

South Korea. While China wishes to avoid such a scenario at all costs for fear 

of its military assets being exposed, on what grounds Seoul can effectively 

dissuade Washington remains unclear, particularly given the changing 

[ 143 ]

asia policy 

assessments of the threat from North Korea. 54 Heated debates on joining the 

U.S.-led Trans-Pacific Partnership (TPP) and the China-centered Regional 

Comprehensive Economic Partnership (RCEP) or Free Trade Area of the 

Asia-Pacific raise other issues of contention. Seoul has already expressed its 

desire to join the TPP, while RCEP has been taking its own path of evolution. 

More recently, China’s new initiative of “Asian security by the Asian 

people” announced at the Conference on Interaction and Confidence Building 

Measures in Asia in 2014 put additional pressure on South Korea. Seoul’s 

position was very clear, however: the United States’ presence in the region 

is both necessary and crucial. Beijing’s invitation for South Korea to join the 

Asian Infrastructure Investment Bank (AIIB) as a founding member presented 

yet another dilemma. Seoul’s calculated responses to these issues—e.g., a 

last-minute decision to participate—have not been fully satisfying to China. 55 

The most controversial case perhaps concerned President Park’s 

attendance of China’s Victory Day celebration on September 3, 2015. 56 She 

was the only head of state from a close U.S. ally and her standing shoulder to 

shoulder with Xi and Putin certainly looked odd. Then, again, when President 

Xi offered to have a private lunch—a privilege granted to President Park alone 

among 30 heads of state—and given the “personal friendship” emphasized in 

2013 and again in 2014 by both governments, what else could she have done? 

Given the top priority the Park administration has placed on reunification, 

turning down China’s cordial invitation would not have been as easy as it 

seemed to Washington or Tokyo. While Chinese media dubbed the visit as 

54 For further discussion of the differing positions between South Korea, the United States, and 

China on the issue of THAAD, see Teng Jianqun, “Why Is China Unhappy with the Deployment 

of THAAD in the ROK?” China Institute of International Studies, April 1, 2015 u http://www. 

ciis.org.cn/english/2015-04/01/content_7793314.htm; Woo Jung-Yeop, “A South Korean View on 

the Deployment of THAAD to the ROK,” Asan Forum, National Commentaries, March 31, 2015 

u http://www.theasanforum.org/a-south-korean-perspective-3; and Van Jackson, “From Political 

Taboo to Strategic Hedge: A U.S. Perspective on Ballistic Missile Defense,” Asan Forum, National 

Commentaries, March 31, 2015 u http://www.theasanforum.org/a-us-perspective-4. 

55 While South Korea joined the AIIB in the last batch, Seoul did not quite buy into the principle of 

the Conference on Interaction and Confidence Building Measures in Asia. For further discussion 

of Seoul’s deliberation over the AIIB, see Sung-Hoon Lee, “Hanguk do chamyohana gomin” [South 

Korea Agonizing over Whether to Join the Asia Infrastructure Investment Bank], Chosun Daily, 

March 14, 2015; Jung-Hoon Kim, “Hanguk eun chamyo Ileun bulcham” [South Korea Joining 

While Japan Not Joining], Chosun Daily, March 27, 2015; Byung-gun Chae, “THAAD wa AIIB: 

Obama eui jaegyunhyung Hanguk so hodoen sihom” [THAAD and AIIB: Obama’s Rebalance 

Being Harshly Tested in South Korea], JoongAng Daily, March 19, 2015; Tae-Kyung Lee et al., “Je2 

gonsol boom gidae” [High Expectations for the Second Boom of Overseas Construction], JoongAng 

Daily, March 28, 2015; and Kyung-jin Shin, “57gaeguk’i AIIB changlip member” [57 Countries to 

Be Founding Members of the AIIB], JoongAng Daily, April 16, 2015. 

56 For a report on different views among American pundits, see In-Sun Kang, “Do keun woegyo 

chaeklyak yoguhaneun Hanjung milwol” [The Korea-China Honeymoon Is in Need of a Broader 

Diplomatic Strategy], Chosun Daily, September 5, 2015. 

[ 144 ]


President Park’s “strategic choice based on her diplomatic wisdom,” this claim 

remains to be substantiated. 57 

Nonetheless, there may be some room for reasonable doubt on the 

part of the United States concerning South Korea’s foreign policy direction 

in recent years. China is now an indispensable economic, diplomatic, and 

cultural partner for South Korea. Yet Seoul continues to be structurally tied 

to Washington through the alliance treaty, which it may find helpful and 

reassuring if Beijing proves to be too demanding and assertive in the future. 

The United States often overlooks the weight that the economic dimension 

carries for ROK-China bilateralism: South Korea’s combined trade with the 

United States and Japan has for several years been smaller than its trade with 

China. 58 In contrast, China tends to underestimate the ultimate insurance 

value that South Korea attaches to its military alliance with the United States 

in an era of growing strategic uncertainties in East Asia. 

Being a middle power in a sea of global powers, South Korea must 

be prudent and prepare to adjust its sails in the winds of 21st-century 

international politics, which will be both turbulent and highly unpredictable. 

Unfortunately, the United States and China will likely ask South Korea for an 

exclusive commitment—“Are you with us or against us?”—with increasing 

frequency down the road. Because China’s future remains highly uncertain, a 

singular emphasis on the alliance option may well prove as unwise for South 

Korea as rushing into the Chinese orbit now. Principles are important, but 

they are never as important as key national interests. As an old saying goes, 

“the pessimist complains about the wind, the optimist expects it to change, 

and the realists adjusts the sails.” 

57 For an exemplary report by Chinese media, see Fazhi ribao, September 3, 2015. Dozens of columns 

in the mainstream South Korean media warned Seoul against letting its guard down too fast 

against China. See, for instance, Yoon Pyung-joong, “Jungguk jjaksarang DNA” [Korean DNA in 

One-Sided Love with China], Chosun Daily, September 25, 2015. 

58 The United States should seek to enhance its multidimensional relevance to South Korea as well 

as other regional states. See, for instance, “China or the U.S., Which Is More Confident?” Global 

Times, September 19, 2015. 

[ 145 ]



book review roundtable 


The China-Pakistan Axis: Asia’s New Geopolitics 

New York: Oxford University Press, 2015 

ISBN: 978-0-19021075-5 (cloth) 


Daniel Markey 




Andrew Small 


asia policy 

Keeping Pakistan as a Balancer While Courting Indian Friendship 


Andrew Small’s analysis of recent developments in Sino-Pakistan 

relations in his book The China-Pakistan Axis: Asia’s New Geopolitics 

is insightful and persuasive. Small’s central thesis, as I understand it, is that 

around 2013 China significantly shifted its policy for managing its vital 

relationship with Pakistan. Motivated both by the metastasis of Islamic 

extremism across the region and by deepening understanding of the impact 

that a possible India-Pakistan nuclear war would have on that spreading 

extremist cancer, China set aside its earlier policy of noninterference in 

Pakistan’s “internal affairs.” It began urging Pakistan’s leaders to rein in 

extremist groups, not only those mucking around in China’s Xinjiang 

region (which Beijing had long warned Islamabad against), but even within 

Pakistan and Afghanistan. Beijing recognized the diminishing utility 

of secret side deals worked out with extremist groups in years past. Such 

deals simply did not work as well with the new generation of extremist 

leaders—a conclusion attested to by the more frequent attacks in Xinjiang 

and on Chinese interests in Pakistan. Beijing also signaled to Islamabad 

that its support for Pakistan in a future confrontation with India would be 

conditioned by Pakistan’s role in provoking that confrontation. This “shorter 

leash” was an attempt to dissuade elements in the fragmenting Pakistani 

state from again condoning terrorist attacks on India that threatened to 

trigger Indian retaliation and thence an India-Pakistan war that could 

further destabilize the entire region. 

This new approach expanded diplomatic common ground with the 

United States in countering the spread of Islamic extremism and the 

disintegration of the Pakistani state. Derivatively, Beijing attempted to 

mediate a search for political accommodation in Afghanistan and adopted 

a more relaxed view toward the U.S. military presence there. “Lord, make 

them [the Americans] leave, but not yet,” became the new Chinese mantra, 

Small suggests. 

Scholars will need to test Small’s thesis of a major shift in China’s 

Pakistan policy through further primary research. But at a minimum, 

the book’s clear, thoughtful, and empirically substantiated argument 

john w. garver is a Professor Emeritus at the Georgia Institute of Technology. He can be reached 

at . 

[ 148 ]

ook review roundtable • the china-pakistan axis 

has advanced our knowledge of an important issue. Small posits two 

primary factors driving the shift in China’s Pakistan policy: (1) greater 

fragmentation of the Pakistani state and use of Pakistani territory as a base 

for Islamist operations, and (2) a rethinking of the implications of a possible 

India-Pakistan nuclear war. 

Regarding the first factor, the growing frequency of violent Uighur 

protests in both Xinjiang and major Chinese cities outside Xinjiang, 

combined with extremist attacks on Chinese citizens in Pakistan 

(e.g., construction crews refurbishing the Karakorum Highway, academics 

conducting research, or women operating massage parlors) indicated 

to Beijing that China’s traditional reliance on Pakistan’s military and 

political elites to minimize such incidents was simply no longer effective. 

The new generation of extreme Islamist leaders is more ideological and less 

pragmatic than the older generation, with whom a deal might stick. The 

collapse of states such as Syria, Iraq, and Libya, together with the looming 

U.S. withdrawal from Afghanistan and the prospect of renewed civil war 

there, caused China to give much greater emphasis to internal security 

concerns arising out of its deeply rooted “Uighur problem.” In short, these 

concerns increasingly influenced China’s management of its “all-weather” 

relationship with Pakistan. The spread of terrorist movements in the 

post-Soviet countries of Central Asia also threatened to undermine the 

ambitious transport-building programs of the “new Silk Road” designed to 

draw those lands into China’s economic sphere and foster stability through 

faster economic growth. 

Regarding the nuclear factor, Small persuasively argues that, starting 

with the Kargil confrontation of 1999, Beijing recalculated the region-wide 

destabilizing effects of a nuclear exchange between India and Pakistan. 

Refugees could flood Central Asian countries abutting Xinjiang and into 

that region itself. Such a flood of refugees might total hundreds of millions, 

possibly including much of Pakistan’s population. Anger and hatred would 

accompany displacement, further fostering extremism. The consequences of 

Chinese association with such a nuclear war could be immensely adverse for 

China—especially if the war arose out of another Pakistan-based terrorist 

attack against India that could be linked to the Inter-Services Intelligence. 

All these factors have resulted, Small persuasively demonstrates, in a 

considerable narrowing of China’s toleration of destabilizing actions by 

Pakistan—even while Beijing continues to support Pakistan’s comprehensive 

national power as a balance against India. In particular, Small’s close 

examination of Chinese policy during the Kargil crisis is pathbreaking. 

[ 149 ]

asia policy 

My quibbles with Small’s book involve a call for broader perspective both 

at a lower domestic politics level of analysis and at a higher great-power system 

level of analysis. At the domestic level, if one looks beyond Sino-Pakistani 

relations, it becomes apparent that the early 2013 shifts in China’s Pakistan 

policy that are discussed by Small were part of a broader package of more 

assertive policies, rooted in a Chinese recalculation circa 2008 that the 

global balance of power had shifted in China’s favor as the West sank into 

deep economic crisis. When Xi Jinping came to power in late 2012, he 

mandated more proactive foreign policies befitting a more glorious and great 

China—an initiative sloganized as the “China dream.” In the East China Sea, 

Chinese vessels increasingly challenged Japan’s control over the disputed 

Senkaku/Diaoyu Islands. People’s Liberation Army (PLA) Navy warships 

maneuvered nearby while Japanese and Chinese nonmilitary state vessels 

confronted each other within the islands’ twelve and twenty nautical mile 

zones. In the South China Sea, China began large-scale efforts to construct 

artificial islands hosting military facilities. Along another quadrant, in 

the negotiations over Iran’s nuclear program Beijing set aside its earlier 

low-profile and low-risk approach and instead undertook an active, public, 

and high-profile effort to mediate between Iran and the United States in 

an effort to reach a comprehensive solution to the stalemate. According to 

Beijing’s explanation of this new policy, it wanted to avoid an Iran-U.S. war 

that would destabilize the Persian Gulf region. 1 

All these more proactive policies seem to have been rooted in an effort 

by Xi to foster a stronger spirit of Chinese nationalism—one befitting his 

own more authoritarian rule and thus legitimizing the regime. The shifts 

in China’s Pakistan policy outlined by Small may well have been part of a 

package of more assertive foreign policies driven by Xi’s “dream” of a more 

powerful and glorious China. 

At a higher international level of analysis, the Sino-Pakistani axis needs 

to be situated in the rivalry between China and Japan, India, and the United 

States. Small sketches quite well Pakistan’s traditional role as China’s hedge or 

balancer against India. He discusses quite ably China’s changing calculus in that 

triangular Pakistan-China-India equation. Japan, however, does not figure into 

Small’s calculations. (Only three pages are listed in the index under “Japan.”) 

In fact, Beijing is deeply concerned that India will move into alignment with 

Japan as Tokyo throws off its post-1945 military limitations under Article 9 of 

1 For further discussion, see my chapter “China and the Iran Nuclear Negotiations: China’s Effort at 

Mediation of the Iran–United States Conflict” in the forthcoming book China and the Middle East 

(working title), edited by James Reardon-Anderson. 

[ 150 ]


the Japanese constitution. A steadily intensifying maritime rivalry is already 

underway between China, on the one hand, and Japan, India, and the United 

States, on the other hand, over control of sea lines of communication (SLOC) 

between the Bal el-Mandeb and the Hormuz Strait in the west and the Malacca 

Strait in the east. 2 A chronic Chinese fear is that India will join the United 

States, Japan, and Australia to “pin” the PLA Navy into the western Pacific and 

out of the Indian Ocean, rendering vulnerable China’s SLOCs across that ocean. 

Chinese apprehensions became acute when Shinzo Abe began his second 

period as Japan’s prime minister in December 2012. In this context, “friendship” 

diplomacy toward New Delhi is a key Chinese trope to counter India’s drift 

toward participation in the Japan-U.S. “anti-China coalition” being peddled 

(or so Chinese analysts believe) by Washington and Tokyo. I suspect that if one 

looked, one would find strong linkages between this friendship policy, on the 

one hand, and Beijing’s new management of Pakistan, on the other. 

What is needed is a book that situates the China-Pakistan-India 

triangle in the contemporary rivalry of global powers—that is, a sequel to 

Bhabani Sen Gupta’s masterpiece The Fulcrum of Asia, which analyzed this 

triangle in the context of the Cold War. 3 Perhaps such an update might be 

Small’s next undertaking. 

2 Mohan Malik, ed., Maritime Security in the Indo-Pacific: Perspectives from China, India, and the 

United States (Lanham: Rowman and Littlefield, 2014). 

3 Bhabani Sen Gupta, The Fulcrum of Asia: Relations Among China, India, Pakistan, and the USSR 

(New York: Pegasus, 1970). 

The Strange Tale of Sino-Pakistani Friendship 

Daniel Markey 

Andrew Small’s The China-Pakistan Axis: Asia’s New Geopolitics 

delivers a comprehensive assessment of one of the world’s most 

consequential, peculiar, and poorly understood bilateral relationships. 

daniel markeyis a Senior Research Professor and Academic Director of the Global Policy Program 

at the Johns Hopkins School of Advanced International Studies. He is also an Adjunct Senior Fellow 

for South Asia at the Council on Foreign Relations and the author of No Exit from Pakistan: America’s 

Tortured Relationship with Islamabad (2013). He can be reached at . 

[ 151 ]

asia policy 

Small weaves together his own interviews and travel observations with 

extensive use of other histories and narratives that touch on various aspects 

of China-Pakistan relations but, as he rightly observes, have thus far failed 

to deliver a full and up-to-date version of the story. 

Small’s book took a half-dozen years to write, but its timing is nearly 

ideal. He concludes his history by observing that “the China-Pakistan 

axis is almost ready to step out of the shadows” (p. 181). It is now quite 

safe to remove the caveated “almost” from his phrase. China’s new One 

Belt, One Road initiative—the grand scheme to extend and improve 

interconnectivity throughout China’s western periphery through massive 

state-led investments—is finding its most important test case in the 

China-Pakistan Economic Corridor, where, according to Pakistan’s 

probably inflated accounts, China has pledged $46 billion in new 

investments over the coming years. 

The China-Pakistan Axis is truly one of a handful of books that must 

be read by professionals seeking to understand Pakistan’s past or hoping 

to catch a glimpse into its future. And as China’s own fate becomes more 

intertwined with South, Central, and West Asia, the book will be an 

increasingly vital resource for serious China hands as well. As Small 

correctly notes, the study of relations between China and Pakistan is 

“something of an intellectual orphan, falling between a variety of regions 

and disciplines” and is complicated by the reality that it “encompasses 

some of the most sensitive areas of the two sides’ national security policies” 

(p. 5). To put it bluntly, most China scholars have not bothered to give 

much thought to Pakistan, while most South Asianists are ill-equipped 

to contemplate Beijing’s strategies, motives, or capabilities. Those who are 

interested must crack into the realm of tight-lipped security services, an 

especially tough task on the Chinese side. 

Small ably bounces between strategic perspectives, having spent 

sufficient time in Beijing, Islamabad, and Washington to build networks 

of reliable expert sources. He avoids ideology and dogmatism, rendering 

different perspectives in a dispassionate effort to understand them rather 

than to mount moralizing critiques. He does, however, pause to debunk 

myths, such as the claim that 11,000 Chinese troops were deployed to 

Pakistan’s north (p. 6), and punctures grand illusions like the notion that 

either Gwadar port or the Karakoram Highway has ever demonstrated any 

serious prospect of commercial success (p. 101, 106). Small also offers a 

steady flow of insider tidbits that demonstrate his grasp of the wider political 

processes at work, such as how Sino-Pakistani defense ties “ensure buy-in 

[ 152 ]


from some of China’s highest ranking party and military families” (p. 108), 

and wades into controversial and sensitive topics, including China’s troubled 

policies in Xinjiang (p. 72). 

The book’s historical account of Sino-Pakistani ties is useful as a 

stage-setter for present circumstance, mainly because Small reminds the 

reader of the many twists and reversals in the region’s geopolitics. The very 

closeness between Beijing and Islamabad has its roots in the 1959 Lhasa 

uprising that hastened the death of good relations between India and China 

(p. 21). With the spirit of “Hindi-Chini bhai bhai” (Indians and Chinese 

are brothers) buried, China and Pakistan teamed up to support a range of 

insurgencies within India, such as the Nagas and Mizo (p. 77). Later, Small 

recounts how Pakistan was the handmaiden for some of the most sensitive 

military and intelligence cooperation between China and the United 

States during the Cold War (p. 36) as well as the more widely recognized 

cooperation to fund the Afghan mujahideen (p. 123). 

Small also delves into China’s many—often dimly perceived—links 

with the Afghan Taliban before and after September 11. He describes, 

for instance, how China’s ambassador to Pakistan was the first senior 

representative of a non-Muslim state to meet Mullah Omar in late 2000 

(p. 129), how Donald Rumsfeld blindly rebuffed Chinese offers of intelligence 

assistance immediately after September 11 (p. 130–31), and how China then 

went on to supply arms to the Taliban for their insurgency against NATO 

and Afghan forces (p. 134). 

Throughout this sometimes wild and counterintuitive tale, it is often 

difficult to escape the utter strangeness of the Sino-Pakistani relationship. 

China, the enormous, nominally Communist, and broadly secular 

state—with its modern origins in revolutionary guerilla warfare and its 

more recent experience of spectacular economic success—simply has 

almost nothing in common with the Islamic Republic of Pakistan. The latter 

is a historically ineptly managed state dominated by a Western-oriented 

class of feudal and military leaders who sit astride a vast, poor, and poorly 

educated nation that for many reasons has become increasingly alienated 

and violent. But Small cuts past the evident cultural and religious chasm 

to focus on the inner core of the Sino-Pakistani linkage: security. For 

whatever their differences, the fact remains that China delivered essential 

nuclear weapons and missile capabilities to Pakistan. Pakistan, at least 

for the first several decades of their relationship, usefully distracted 

neighboring India and helped insulate China from the western Islamist 

threat. Small usefully elaborates the details of all these dealings. 

[ 153 ]

asia policy 

So China, the ultimate realist state, and Pakistan, the ultimate security 

rentier state, have found mutual benefit from their decades of loosely coupled 

cooperation. And that looseness seems an essential part of the story to date, 

for there is no formal alliance between Islamabad and Beijing. This has 

permitted less than perfect harmony in Sino-Pakistani policies at numerous 

important milestones in the relationship, such as in 1971, when China stood 

by as Pakistan lost half its country in war. Small questions whether China 

would be with Pakistan in its hour of need and finds a consistent answer 

from 1971 to the present: “only up to a point” (p. 16). Yet the looseness of the 

Sino-Pakistani coupling is a mutual one. Pakistan does not treat China as a 

true ally either. For example, in September 2001, when Pakistani president 

Pervez Musharraf received the “with us or against us” ultimatum from 

Washington, he did not even pause to call Beijing (p. 131). In short, Pakistan 

and China have delivered in important ways for each other, but not in every 

way, and their priorities and preferences have never been perfectly aligned. 

That said, Small leaves no doubt in his book’s tantalizing epilogue 

that China’s growing power and ambitions are leading the country to play 

an increasingly active, rather than passive, role in its western periphery, 

especially in Pakistan and Afghanistan. This shift has been partly driven 

by—and has further exposed—the limits of depending on Pakistan’s 

military and intelligence services as a guarantor of China’s security against 

Islamist militants (p. 91). 

China’s far greater activism in and around Pakistan is already stirring a 

bit of discomfort among Pakistanis, who Small describes as missing the “free 

hand”—the loosely coupled relationship—they have long enjoyed (p. 162). 

In Afghanistan, for instance, Small sees that China does not share all of 

Pakistan’s priorities or perceptions. China cares more about stability and less 

about India. It is also less optimistic about prospects for engineering a deal 

with the Taliban (p. 162). These, I would suggest, are not minor differences. 

In my own interviews with Pakistani military officers, I have more than 

once heard a clear reluctance to allow Pakistan to fall too far under China’s 

sway. Their preference, as I take it, is less to be the junior partner in a tighter 

Sino-Pakistani alliance than to enjoy the generous affections of both Beijing 

and Washington for as long as possible. As a totemic example, the new JF-17 

Thunder combat aircraft jointly produced with China is considered a 

serviceable option, but not one that can hold a candle to the U.S. F-16. And 

that is unlikely to change anytime soon. 

With this backdrop of potential Pakistani strategic disquiet and 

hedging comes Small’s observation of Islamabad’s striking leverage 

[ 154 ]


over China’s ability to realize its grand trans-Asian schemes like the 

One Belt, One Road initiative. He writes that “the politics rely on Pakistan” 

(p. 179), pointing to the need for a political settlement in Afghanistan, 

Indo-Pakistani stability, and security within Pakistan itself. But if this is 

the case, if Beijing is truly so vulnerable to Pakistan’s vicissitudes, then 

we must ask whether China is in the process of trading a frustratingly 

inadequate but relatively cheap policy of passivity in its western periphery 

for a fabulously costly and spectacularly risky policy of overactivity, 

committing itself to an early down payment in Pakistan. 

Can Pakistan, despite its faults, offer a friendship to China that will bear 

the stresses likely to be imposed by a far more demanding and ambitious 

partner in the years to come? Small writes, “Beijing would prefer to have 

a longer list of candidates, but when it evaluates whom it can consistently 

expect to find in its camp, there is a single name that recurs” (p. 181). He 

notes that while China has some misgivings with Pakistan, “friendship, the 

one commodity that Pakistan can offer China more convincingly than any 

other country, matters far more to Beijing than it used to” (p. 181). I suspect 

even this assessment of what Pakistan can offer China will seem too rosy in 

hindsight. No matter, The China-Pakistan Axis offers readers ample material 

to reach their own conclusions on this and many other important issues. 

Sino-Pakistani Relations: Axis or Entente Cordiale? 


Andrew Small’s book The China-Pakistan Axis: Asia’s New Geopolitics 

traces the perplexing relationship between Beijing and Islamabad. 

Small’s geopolitical assessment is familiar, but his dubbing of relations 

between two important Asian states as an “axis” is somewhat mystifying. 

The notion of axis in international politics harkens back to World War II 

feroz hassan khan is a Lecturer at the Naval Postgraduate School in Monterey, California. He 

was formerly a Brigadier General in the Pakistan Army, where he served for 32 years. He can be reached 

at . 

[ 155 ]

asia policy 

between the Allies and Axis powers. More recently, President George W. 

Bush famously described three countries—Iran, Iraq, and North Korea—as 

an “axis of evil.” Given the negative historical connotation of the term, the 

book’s title suggests a sinister intent behind Sino-Pakistani relations; in 

fact, the partnership is no more than a classic manifestation of neorealism 

in international relations. Small’s crisp and descriptive work follows 

the research of John Garver, whose seminal book Protracted Conflict: 

Sino-Indian Rivalry in the Twentieth Century accurately describes the 

Sino-Pakistani relationship as an “entente cordiale.” 1 

China’s friendship with Pakistan was not preordained at the time 

of India’s and Pakistan’s independence. India-China relations initially 

blossomed before the India-Pakistan regional rivalry and Cold War 

dynamics resulted in the current South Asian geopolitical alignment. Small 

describes the “all-weather friendship” between Beijing and Islamabad as 

if it were simply “forged by war” (with India) and later cemented through 

“nuclear fusion” (see chapters 1 and 2). However, the dependability of 

the partnership during times of isolation and need, more so than shared 

animosity toward India, is what deepened the relationship. As it became 

disillusioned by Western policies, Islamabad saw the fracturing of 

“brotherly relations” between China and India as an opportunity to mend 

its relationship with Beijing. The Sino-Indian crisis came after China had 

suffered humiliation at the hands of the United States in the Taiwan Strait 

in the mid-1950s and had been abandoned by the Soviet Union. By the 

mid-1960s, China could only depend on Pakistan during its worst moments 

of isolation. Pakistan’s China policy, spearheaded by the ambitious young 

leader Zulfiqar Ali Bhutto, capitalized on the strategic opportunity 

presented by India’s faltering forward policy and the Sino-Indian border 

war in 1962. As a result, Beijing received vital access in Xinjiang through 

the Karakoram Highway, and Islamabad found a trustworthy ally. 

China’s geopolitical fortunes changed with the great strategic 

somersault of the Cold War. Islamabad was the conduit to the Sino-U.S. 

détente in a time of acute tension between China and the Soviet Union 

and China’s internal crisis (the Lin Biao incident). 2 China could not 

support Pakistan in the 1971 war with India because it was concerned 

that the South Asian crisis could escalate into a broader conflict given the 

1 John W. Garver, Protracted Contest: Sino-Indian Rivalry in the Twentieth Century (Seattle: 

University of Washington Press, 2001). 

2 Qiu Jin, “Distorting History: Lessons from the Lin Biao Incident,” Quest 3, no. 2 (2002). 

[ 156 ]


Soviet Union’s support of India (especially after Washington fed Beijing 

details of Brezhnev’s intentions to strike China with nuclear weapons at 

the height of the Sino-Soviet border crisis in 1969). 3 More poignantly, Small 

observes that despite President Richard Nixon’s directive to “tilt” toward 

Pakistan, Washington still neglected to prevent the dismemberment of its 

formal ally (p. 11). Beijing took notice and used this opportunity to set the 

tone of its relations with Islamabad. 

India’s 1974 nuclear test again dramatically changed South Asia’s 

geopolitical landscape. Pakistan, reeling from conventional defeat and 

India’s primacy, feared nuclear coercion. Facing a Western arms embargo 

and emerging barriers in the nascent nonproliferation regime, the 

once-proud Muslim nation-state was struggling to survive in a system 

seemingly stacked against it. Beijing empathized with Islamabad’s strategic 

anxieties, recalling its own “never again” moment two decades earlier, when 

the sudden cutoff of scientific cooperation with the Soviet Union forced 

China onto the path of self-reliance. 4 Small adroitly explains the “nuclear 

fusion,” though the term is somewhat exaggerated. He draws substantially 

from my book Eating Grass but also provides insights from sources that 

were beyond my reach during my research. 5 However, as I maintain, and 

as Small notes, China only supplemented Pakistan’s scientific prowess in 

nuclear weapons development. Pakistani scientists were determined to 

develop a nuclear capability, and Chinese assistance helped Pakistan reach 

its force goals much earlier than if it were working alone (p. 39). Small is 

also spot on in observing that China’s greatest contribution was in helping 

Islamabad with delivery methods (p. 39–40). He rightly notes that Pakistan’s 

nuclear capability “remains considerably less vital to Chinese interests than 

it is to Pakistan’s, whose autonomy and even survival as a state have been 

preserved” (p. 44). Absent, however, are details—both in my own book and 

in The China-Pakistan Axis—on China’s agreement with Pakistan on civil 

nuclear energy cooperation in 1986. This agreement grandfathers China’s 

ongoing civil nuclear cooperation, which has wider implications after the 

U.S.-India civil nuclear deal. 

Like most Western authors, Small dismisses Pakistan’s anxieties 

over India’s Cold Start doctrine. For over fifteen years, India’s military 

has flaunted its doctrine of “limited war.” Authorizing punitive strikes in 

3 Jian Chen, Mao’s China and the Cold War (Chapel Hill: University of North Carolina Press, 2001), 240. 

4 John Wilson Lewis and Litai Xue, China Builds the Bomb (Stanford: Stanford University Press, 1991). 

5 Feroz Hassan Khan, Eating Grass: The Making of the Pakistani Bomb (Stanford: Stanford University 

Press, 2012). 

[ 157 ]

asia policy 

response to purported Pakistani-sponsored terrorist attacks in India, the 

concept entails rapid mobilization and shallow, cross-border maneuvers 

to inflict maximum possible damage to Pakistan’s forces, infrastructure, 

and economy in a short war that is limited in scope, geography, and time. 

This concept dangerously flirts with crossing Pakistan’s declared nuclear 

red lines. 6 In response, Pakistan has introduced short-range, low-yield 

nuclear weapons (tactical nuclear weapons), dubbing this strategy as 

“full-spectrum deterrence.” 7 Small recounts a famous assertion from the 

former longtime director of Pakistan’s Strategic Plans Division that the 

introduction of tactical weapons has “pour[ed] cold water on Cold Start” 

(p. 46). My own conclusion—having spearheaded several studies and 

tabletop simulation exercises involving regional experts—is that India’s 

limited war would not remain limited nor would Pakistan’s tactical nuclear 

weapons deter India from attacking. Small quite aptly concludes that 

“China is uncomfortable” with the game of chicken that India and Pakistan 

are playing (p. 46). The implications for strategic stability in South Asia are 

disturbing. More disconcerting, neither China nor the United States appears 

to have fully grasped its role in a subcontinental nuclear crisis. 

Small goes beyond the familiar stories and explains the shifting nature 

of the relationship from the 20th into the 21st century. Beneath the veneer of 

common assertions of Pakistan being “China’s Israel” and Pakistani rhetoric 

of the country’s relations with China being “higher than the Himalayas” 

are some mythologized stories that Small succinctly exposes thanks to the 

access and interviews he obtained over the years. Beijing dismisses India’s 

fear of a China threat and is equally unresponsive to fears of Sino-Pakistani 

collaboration to prevent the rise of a democratic and supposedly secular 

India as a great power. India’s worst-case hypothesis is a two-front war in 

which China intervenes militarily in an Indian war with Pakistan. This may 

well be Pakistan’s pipe dream, but, as many historians point out, China’s 

sophisticated realpolitik would preclude involvement in the amateurish 

statecraft that at times hijacks South Asian diplomacy. China has no interest 

in embroiling itself in South Asian crises, much less in opening a second 

front against India. 

According to Small’s analysis, China’s investment in Pakistan is 

motivated by both mutual security interests and shared economic interests 

6 Michael Krepon and Julia Thompson, eds., Deterrence Stability and Escalation Control in South Asia 

(Washington, D.C.: Henry L. Stimson Center, 2013). 

7 Vipin Narang, Nuclear Strategy in the Modern Era: Regional Powers and International Conflict 

(Princeton: Princeton University Press, 2014). 

[ 158 ]


that include, but also go beyond, common animosity toward India. The 

Karakorum Highway constructed in the 1960s has turned out to be visionary. 

China’s landlocked Xinjiang region is now provided with seaward access 

to its far-flung areas and is critical to China’s “look west” policy. As Beijing 

invests up to $46 billion to link China to Pakistan’s coastline, it benefits 

from heightened energy security and access to a strategic South Asian 

corridor. In return, Pakistan gains infrastructure development at a time 

when it faces tremendous internal security threats, including the separatist 

insurgency that persists in the province of Baluchistan. 8 With China’s 

investment assured, Pakistan is preparing ten thousand troops to secure 

the China-Pakistan Economic Corridor. Currently, the Baluch insurgency is 

subsiding, partly due to this promised investment. 

From China’s perspective, investment in Pakistan and Xinjiang promises 

stability; from Pakistan’s perspective, this initiative makes best use of its 

geostrategic significance. Pakistan has a long history of being utilized by 

outside powers to wage wars—for example, during the Cold War in the 1980s 

and the war against terrorism from 2001 onward. Islamabad has suffered 

the blowback of these policies. China’s One Belt, One Road initiative could 

dramatically change Pakistan’s economic significance, but this outcome is 

contingent on the country’s stability and security. For regional stakeholders, 

this policy is a manifestation of the three core objectives of the Shanghai 

Cooperation Organisation—combatting terrorism, extremism, and 

separatism—to which both India and Pakistan are in the process of acceding. 9 

Given these and other developments, the canard of a China-Pakistan 

axis as a nefarious plot against India is dated. Beijing hopes that Pakistan’s 

possession of a robust nuclear deterrent will make India cautious while 

ensuring Pakistan’s security enough to prioritize investment in economic 

interests. 10 In fairness to Small, some of the developments described in this 

essay occurred after the publication of The China-Pakistan Axis. Despite 

these concerns, however, Small’s very well-researched book is a distinct 

contribution on this important subject. 

8 Ziad Haider, “Sino-Pakistan Relations and Xinjiang’s Uighurs: Politics, Trade, and Islam along the 

Karakorum Highway,” Asian Survey 45, no. 4 (2005): 522–45. 

9 Charles Clover and Lucy Hornby, “China’s Great Game: Road to a New Empire,” Financial Times, 

October 12, 2015 u http://www.ft.com/cms/s/2/6e098274-587a-11e5-a28b-50226830d644.html. 

10 See Andrew Cooley, Great Games, Local Rules: The New Great Power Contest in Central Asia (New 

York: Oxford University Press, 2012). 

[ 159 ]

asia policy 

Where Is the China-Pakistan Relationship Heading— 

Strategic Partnership or Conditional Engagement? 


Andrew Small’s book The China-Pakistan Axis: Asia’s New Geopolitics 

provides a fascinating account of the Sino-Pakistani “all-weather 

friendship,” covering various facets of this relationship. This is a substantial 

contribution to the existing debate on the subject. Small very eloquently 

explains both countries’ perceptions and understandings of each other and 

reveals the complexities and conditionality of the bilateral relationship. An 

additional strength of the book lies in the author’s use of primary sources 

to substantiate his various arguments. Yet while the book covers various 

aspects of China-Pakistan relations, in my view this relationship can at best 

be characterized as strategic and instrumental in nature. 

The China-Pakistan partnership is one of the long-standing 

relationships in the region, one that continues to grow stronger in an era 

that is witnessing significant changes at the regional and international 

levels. However, Beijing’s approach and strategy to engagement with 

Islamabad has changed over the years as China’s economic and military 

influence continues to grow. Recently, ties have been further deepened by 

China’s huge financial commitment to infrastructure development projects 

in Pakistan as part of the new China-Pakistan Economic Corridor, which is 

connected to Beijing’s ambitious One Belt, One Road initiative. China views 

Pakistan as an important neighbor with a geostrategic location, having landroute 

access to the Persian Gulf and occupying an important position in the 

Islamic world. Pakistan’s key role in facilitating normalization of relations 

has also been acknowledged by the Chinese leadership. Former Chinese 

president Hu Jintao’s statement that “China can give up gold but not its 

friendship with Pakistan” 1 and President Xi Jinping’s statement that “China 

and Pakistan are good neighbors, good friends, partners and brothers” 

and that “the friendship between the two countries is deeply rooted and 

meena singh roy is a Research Fellow and Coordinator of the West Asia Centre with the Institute 

for Defence Studies and Analyses in New Delhi, India. She can be reached at . 

1 Syed Hasan Javed, Chinese Soft Power Code (Karachi: Paramount Books, 2014), 33. 

[ 160 ]


unbreakable” 2 are indicative of China’s long-term commitment to Pakistan. 

This aspect of the relationship is well captured in The China-Pakistan Axis. 

The first chapter of the book looks at India as a key factor in the 

formation of the China-Pakistan friendship during the early years. Here, 

Small provides a comprehensive account of how the relationship developed 

between the two countries over three crucial wars (the 1962 Sino-Indian 

War, the 1965 Indo-Pakistani War, and the 1971 Indo-Pakistani War). The 

book rightly argues that 

China and Pakistan have never been treaty allies and their 

armies come from such radically different traditions that 

the two sides have often talked past each other on matters of 

strategy. But after Pakistan’s devastating defeat (in 1971), China 

helped the country to develop a set of military capabilities to 

ensure that it would never face the same fate again. (p. 3) 

To enhance Pakistan’s military capabilities, China fully backed and 

supported Pakistan’s nuclear ambitions through close cooperation, making 

Pakistan the only nuclear weapons country in the Islamic world. The central 

motive was to neutralize India’s nuclear weapons. 

The second chapter presents a fascinating narrative account of this 

nuclear cooperation. Small depicts China’s role in helping Pakistan obtain 

nuclear weapons and nuclear-capable missiles by supplying not only 

technology but also the necessary expertise and materials, including highly 

enriched uranium. Small correctly notes that “if the military relationship 

lies at the heart of China-Pakistan ties, nuclear weapons lie at the heart 

of the military relationship” (p. 29). But the most interesting dimension 

explained in the book is what this relationship actually has meant both for 

the Pakistani military and for its Chinese counterpart. When Pakistani 

foreign minister Zulfiqar Ali Bhutto traveled to China in 1965 to tell leaders 

there that India had built a plutonium plant and ask them to help Pakistan 

build a similar one, China suggested that Pakistan get assistance from 

Canada. The Karachi Nuclear Power Plant subsequently became operational 

in 1973, one year before India’s nuclear test. When Pakistan’s clandestine 

program was discovered by the International Atomic Energy Agency, 

Bhutto instead turned to A.Q. Khan for help with enrichment, using the 

latest European design from Urenco. And then China saw the advantage of 

cooperation with Pakistan to improve its own enrichment capabilities. 

The third chapter of the book provides an in-depth analysis of China’s 

dilemma on how to deal with Pakistan’s military adventurism against India, 

2 Javed, Chinese Soft Power Code, 33. 

[ 161 ]

asia policy 

very aptly capturing the real essence of Sino-Pakistani relations. As Small 

notes, “even as the Sino-Indian relationship has improved, India’s rise as a 

potential competitor to Beijing has further reinforced the original rationale 

for its partnership with Pakistan” (p. 4). In the past, China often did not 

provide the kind of support that Pakistan wanted during conflicts with India 

and instead tried to defuse crises in cooperation with the United States. A 

case in point is China’s refusal to provide military or diplomatic support 

during the Kargil conflict. Small explains China’s conditional support 

for its supposedly all-weather friend by noting that “the most significant 

backing that China provides does not come in the midst of the latest crisis, 

but from the steady, long-term commitment to ensure that Pakistan has the 

capabilities it needs to play the role China wants it to” (p. 61). India thus 

will remain the central pillar of the Sino-Pakistani relationship despite the 

changing geopolitics of Sino-Indian, U.S.-Indian, and Sino-U.S. relations. 

Even with Beijing’s improving ties with New Delhi, India continues to bind 

China and Pakistan. Small very aptly describes this aspect of the relationship 

when he writes that for China “whatever the ebbs and flows in its bilateral 

ties with New Delhi, Pakistan’s utility as a balanced, potential spoiler, and 

standing counterpoint to India’s ambitions has never gone away” (p. 65). He 

goes on to note that China would like to see the India-Pakistan relationship 

exist in a state of managed mistrust” (p. 54). 

There are many anecdotes in The China-Pakistan Axis that help explain 

the complex yet strong bond between the two countries. One of the book’s 

most interesting passages is its discussion of how the Islamicization of 

the Pakistan Army reveals an often overlooked ambivalence in China’s 

approach toward Pakistan. It is here, in chapter four, that the limitations 

of Sino-Pakistani ties are most visible. China has always relied on Pakistan 

to manage the threat of jihadi forces affecting its own territory. Pakistan’s 

relevance for China in this regard is twofold: first, Pakistan is China’s 

conduit to the Islamic world; and second, Islamabad is useful for countering 

the East Turkestan Islamic Movement in Xinjiang, a Muslim-majority 

region where Beijing is struggling to fight the Uighurs and their linkages 

to the extremist forces present in Pakistan, Afghanistan, Central Asia, and 

(now with the Islamic State of Iraq and Syria, or ISIS) in West Asia. The 

importance of Xinjiang for China’s internal security is immense: it is one 

of the world’s top unexplored oil basins and also has coal reserves crucial 

for China’s energy security. Moreover, China has a large arsenal of nuclear 

ballistic missiles located in the region, along with twelve army divisions 

and six air force bases. In addition, Xinjiang functions as a buffer between 

[ 162 ]


China and Central Asia. These factors will continue to enhance Pakistan’s 

relevance for China and make “a strong, capable Pakistan…an asset to 

China in its own right” (p. 3). China’s adventures and misadventures in 

dealing with Islamist forces are well documented by Small. 

Readers, however, are left with some unanswered questions. First, are 

economic relations between China and Pakistan win-win? The fifth chapter 

argues that the strategic dimension of their cooperation in grand economic 

projects continues to provide momentum, but it does not explain the 

commercial rationale of the relationship. Though Small refers to economic 

relations between the two sides as being traditionally weak—that is, a problem 

to fix rather than a source of strength—this issue needs more attention. In 

fact, China’s argument that its huge economic package for infrastructure 

development could bring about change in Pakistan’s social and economic 

makeup does not sound very convincing, given the past failures of large-scale 

U.S. and Western financial and military aid to the country. 

A second question that merits attention is whether Sino-Pakistani 

relations will have any positive impact on relations between India and 

Pakistan. Third, and more important, the role of Russia, Saudi Arabia, and 

North Korea in building Sino-Pakistani relations is worthy of attention. 

Analysis of Chinese concerns about Pakistan’s relations with both Saudi 

Arabia and North Korea would be of great value because these ties could 

significantly influence future trends in Asian geopolitics. In addition, China 

has now decoupled India from Russia and is facilitating Russian arms sales 

to Pakistan. Growing ties between Russia, Pakistan, and China are likely 

to establish a new front of cooperation in Asian geopolitics. Finally, the 

concept of a potential trilateral U.S.-India-China relationship could have 

been examined further. 

Overall, however, The China-Pakistan Axis is a very useful contribution 

for helping unravel the complexity of Sino-Pakistani relations. This 

strategic partnership, despite its conditional engagement, is likely to grow 

in the future. 

[ 163 ]

asia policy 

Friends in Need… 


China’s rise to prominence in Asia has been both dramatic and 

seemingly inexorable. The country has significantly expanded its 

economic and diplomatic involvement and considerably extended its 

military reach. However, despite growing hard power and greater global 

presence, Beijing feels vulnerable and has very few reliable partners. Within 

this context China’s close and enduring friendship with Pakistan stands out. 

Indeed, as Andrew Small astutely observes in the opening sentence of The 

China-Pakistan Axis: Asia’s New Geopolitics, Beijing’s ties with Islamabad 

have “run closer than most formal alliances” (p. 1). In this impressive book, 

Small outlines in considerable detail the main contours of this fascinating 

and secretive relationship. 

While all states are dysfunctional to some degree, China and 

Pakistan appear to be defined by the extreme nature of their respective 

dysfunctionalities. In addition, judging from Small’s analysis, their 

relationship is itself highly dysfunctional. In psychology, codependency 

is defined as a pathological relationship where two parties are dependent 

on each other to an unhealthy degree. Each party has feelings of extreme 

insecurity and fears being alone. This condition appears to have defined the 

China-Pakistan relationship since the 1960s. Both Beijing and Islamabad 

suffer from high anxiety and believe they have a dearth of trustworthy 

friends in other capitals. Accordingly, each side views this partnership 

as essential to maintaining its own national security. Implicit in The 

China-Pakistan Axis is the idea that codependency is an apt diagnosis of the 

partnership’s dysfunctionality, or at least that significant elements of this 

condition apply. Whether the author concurs with this characterization, 

it does seem consistent with his reference to Chinese and Pakistani 

“pathologies” in their foreign relationships (p. 7). 

China has enjoyed a warm relationship with Pakistan since the 

1960s, with the leaders of both countries often referring to the bilateral 

relationship as an “all-weather friendship.” It considers Pakistan a pivotal 

state that will decisively influence the course of events in surrounding 

countries, notably Afghanistan. Moreover, Beijing also thinks of Islamabad 

as a longtime but deeply troubled ally on a geostrategic fault line between 

andrew scobell is a Senior Political Scientist at the RAND Corporation. He can be reached at 

. 

[ 164 ]


South and Central Asia—a region where China has had few friends. Yet 

Beijing’s support has become more restrained than in the past as Pakistan 

has gradually declined in overall geopolitical significance. Although 

Pakistan is still an important partner and a major arms market for Chinese 

defense firms, its value as a conduit to the Islamic world or facilitator on the 

global stage has been greatly reduced. In the 21st century, China has robust 

relationships with every country in the Middle East and globally has full 

diplomatic ties with all but 22 microstates. In particular, India looms ever 

larger as a major economic partner for China. As a result, China’s interests 

in Pakistan are increasingly regional and aimed at restraining Islamabad. 

And yet despite these developments, Islamabad continues to be Beijing’s key 

capital in South Asia precisely because it is a counterweight to New Delhi. 

Labeling the China-Pakistan relationship an “axis” is controversial. Yet 

Small’s meticulous research suggests the term is appropriate to characterize 

this rather unique partnership. At least in terms of cooperative relationships, 

China has maintained few enduring friendships. After all, the country has 

tended to not play well with others. Formal alliances, such as with the 

Soviet Union, ended badly, and China’s relationship with its sole remaining 

official treaty ally—North Korea—has been extremely tumultuous across 

the decades. Beijing’s ties to another erstwhile Communist comrade in 

arms—Vietnam—have also been characterized by considerable turmoil, 

leading to extended border unpleasantries and outright war in 1979. By 

contrast, Beijing’s ties with Islamabad have been remarkably steady, with 

high levels of security cooperation in the conventional and nuclear spheres. 

Pakistan would not likely have become a nuclear state without China’s 

assistance, and today its armed forces rely very heavily on conventional 

armaments supplied by China. The People’s Liberation Army (which 

includes all of China’s military services) has almost certainly conducted 

more field exercises in the post–Mao Zedong era with Pakistan’s armed 

forces than with those of any other country. 

Early in the book, Small poses a key question: “What does Pakistan 

actually do for China?” The answer he provides—that China has “rarely 

needed Pakistan to do anything vastly different from what it intends to do 

anyway”—seems underwhelming (p. 3). So why has China elected to stand 

by Pakistan? The reason is essentially that it has few friends of long standing, 

especially ones that Chinese leaders feel able to trust. Beijing has invested a lot 

of time and effort into its relationship with Islamabad, and the two sides have 

built up an “unusual level of mutual trust” (p. 44). And trust is an extremely 

scarce resource both within China and in its relationships with other states. 

[ 165 ]

asia policy 

Over the past two decades, Pakistan has become a key partner in 

China’s struggle with terrorism at home and in the unstable areas to the 

west. China appears to have a chronic problem within its own borders. The 

Uighurs, a restive Turkic ethnic minority concentrated in the autonomous 

region of Xinjiang, have been radicalized as a result of harsh repression and 

discrimination by Beijing combined with moral and material support from 

sympathetic Turkic and Muslim brethren in Central Asia, South Asia, and 

the Middle East. Pakistan has become a training ground for radicalized 

Uighurs, and Beijing has sought to enlist better cooperation with Islamabad 

on counterterrorism. China has also pressed Pakistan to do a better job of 

protecting Chinese citizens from Islamic radicals inside Pakistan. Beijing, 

like Washington, is well aware that Islamabad is beset with intricate and 

chronic “doubling-dealing with militant groups” (p. 156) but sees little 

alternative but to remain engaged. Although the results of counterterrorism 

efforts have been far from ideal, Beijing may have benefited more from its 

relationship with Islamabad than Washington has. The swift and dramatic 

cooperation China received from Pakistan following the Red Mosque 

incident in 2007 (which Small outlines in the preface), contrasts sharply 

with the limited and tortuous cooperation the United States received in 

the aftermath of the September 11 attacks. It took almost a decade for the 

United States to “bring justice” to Osama bin Laden, and this was achieved 

despite the collusion and ineptitude of Pakistan’s military and intelligence 

services (pp. 155–56). 

China’s burgeoning economic ties with India have far surpassed those 

with Pakistan, but Beijing has not distanced itself from Islamabad. Pakistan 

figures prominently in the ambitious One Belt, One Road initiative officially 

launched by President Xi Jinping in late 2013. Indeed, China has doubled 

down on its South Asian ally: during an April 2015 visit to Islamabad, Xi 

declared that Beijing was prepared to invest $46 billion in Pakistan toward 

upgrading and expanding infrastructure. Pakistan is a risky place to do 

business. The security environment in sizeable areas of the country is poor, 

and Chinese citizens have repeatedly found themselves in danger. However, 

China is no stranger to operating in unstable countries in the developing 

world, so perhaps its Pakistan gambit should come as no surprise. 

What does come as a surprise is the unanswered question posed by 

the book’s subtitle. It may be that Small is referring to a new Asia where 

China is the economic, diplomatic, and military center of gravity and has 

emerged as the dominant power in the region. In this scenario, China may 

begin to step out of its traditional comfort zone to form de facto alliances 

[ 166 ]


and establish spheres of influence. Perhaps it is in this broader geopolitical 

context that Small perceives a “China-Pakistan Axis…almost ready to slip 

out of the shadows” (p. 181). 

Author’s Response: 

Beyond India-Centricity—China and Pakistan Look West 

Andrew Small 

The year since my book The China-Pakistan Axis: Asia’s New 

Geopolitics was published has been an unusually dramatic one in the 

Sino-Pakistani relationship. The launch of the China-Pakistan Economic 

Corridor (CPEC), Xi Jinping’s landmark visit to Pakistan, and China’s 

increasingly public role in the Afghan peace process all imply—as Daniel 

Markey notes in his essay—a partnership that has finally stepped out of the 

shadows. Yet despite its heightened profile, there is still much that remains 

opaque, from the details of the vast array of new infrastructure deals to the 

contours of Chinese policymakers’ thinking about strategy in the country’s 

western periphery. This comes through in the reviewers’ strikingly divergent 

assessments of the state of the relationship, its geopolitical context, and its 

likely trajectory. The disagreements are partly a reflection of the fact that we 

are each putting our limited pieces of the puzzle together in ways that imply 

quite different overall pictures. 

Nonetheless, I would posit that a few clear trends are emerging, all of 

which have accelerated over the last year. First, there has been a consolidation 

of the shift traced over the course of the book from a relationship that was 

essentially India-centric to one in which Pakistan now plays a weightier role 

in China’s pursuit of a series of westward-facing policy goals. Second, after 

a decade in which Pakistan was in danger of being left behind, the country 

is finally proving to be a beneficiary of the new, China-driven geopolitical 

and geoeconomic context in which it finds itself. Third, this dynamic 

now encompasses opportunities and pressures that are likely to see the 

andrew small is a Transatlantic Fellow with the German Marshall Fund’s Asia Program. He can be 

reached at . 

[ 167 ]

asia policy 

relationship both deepen and normalize, moving from a mythically elevated 

status—“higher than the highest mountain”—to somewhere closer to earth. 

This puts me in a somewhat more optimistic position than the reviewers, 

who place greater emphasis on the emerging tensions in the relationship 

and the risks inherent in this new phase of Chinese engagement with the 

wider region. Those lines of analysis are also laid out in the book itself, 

which provides ample grounds for skepticism about the two sides’ economic 

projects and discusses many of the private disputes and frustrations that 

the Chinese side, in particular, has expressed. But I would contend that 

events in the last eighteen months have tended to reinforce the case set 

out in the epilogue: a convergence of different factors that include Xi’s 

assumption of power, the election of the Pakistan Muslim League (Nawaz) 

(PML-N) government, shifts in the structure of the Chinese economy, 

and the drawdown of the U.S. military presence in Afghanistan has put 

the relationship on a very different course from the one we saw during the 

era of Hu Jintao, Ashfaq Parvez Kayani, and Asif Ali Zardari. Although 

components of CPEC and other associated new initiatives may well fail, 

there are good grounds for thinking that they will at least fail better. 

The central question to address is related to the book’s subtitle: what 

is the geopolitical context in which the relationship is now playing out? 

This is the issue on which the reviewers are perhaps most at odds. If the 

partnership is considered over a period of several decades, Andrew Scobell 

is clearly right to state that for China Pakistan has “declined in overall 

geopolitical significance” in contrast with the days when it was a “conduit 

to the Islamic world” and a “facilitator on the global stage.” As China 

has developed diplomatic ties with all but a small subset of states around 

the world, Islamabad’s brokering role has evidently faded. Equally, the 

normalization of China’s relationship with India and the subsequent 

expansion in economic relations between the two Asian giants have 

long threatened to place Pakistan in an even more modest role—a legacy 

friendship rather than one with real utility. John Garver goes much further, 

suggesting that as a result of fears that India will align with Japan, the United 

States, and Australia, Beijing has since 2013 adopted a “new management” 

of Pakistan, placing it on a “shorter leash” and urging the Pakistani army 

to rein in extremist groups. While Garver sees China as motivated partly 

by factors such as the rising terrorist threat in Xinjiang and concerns that 

militants might precipitate an India-Pakistan war, he also identifies a strong 

linkage between China’s handling of Pakistan and what he describes as a 

[ 168 ]


“friendship policy” toward India, as well as the more generally assertive 

turn that Chinese foreign policy has taken under Xi. 

I would disagree modestly with Scobell and more substantially with 

Garver. While a contrast between the current relationship and that of the 

1960s or 1970s sees Pakistan’s role in Chinese foreign policy diminishing, if 

the comparison is instead made with the relationship in the 1990s, or even 

that of a few years ago, there is a strong argument to be made that it is on the 

rise again. The temptation for China to trade off aspects of the relationship 

with Pakistan for the sake of better ties with India was at its zenith during 

the late Jiang Zemin era, when trade-centric economic diplomacy was closer 

to the heart of Chinese policy and a lasting friendship with India was a more 

plausible diplomatic prize. Some of these proclivities on China’s part—at 

least a level of caution about how India would react to certain initiatives with 

Pakistan—endured until the late stages of the Hu era, when the U.S.-India 

partnership was being consolidated. Hu’s second term in office was also the 

period in which tensions over Pakistan’s handling of extremist groups were 

at their peak. Killings and kidnappings of Chinese workers spiked, Uighur 

militants found safe haven in Pakistan’s tribal areas, and concerns about 

Islamist sympathies in Pakistan’s security services and the broader stability 

of the country started to rise. Even then, there was never a broad-based 

push by China to encourage Pakistan to pull back its relations with militant 

groups across the board, as Garver suggests. Hu’s administration was still 

monomaniacally focused on the Uighurs. The shift under Xi has not been a 

greater level of assertiveness over Pakistan’s domestic affairs; instead, it has 

been the provision of a substantial package of positive economic incentives 

in the shape of CPEC, which is entirely a Xi-era initiative. 

There are some bilateral factors that have played into this development. 

The last eighteen months have seen Pakistan deliver enough to at least 

moderate Chinese concerns that the country was on a relentless downward 

slide. General security levels have improved, the Zarb-e-Azb operation has 

largely pushed Uighur militants out of their bases in North Waziristan, 

and the economy has seen a modest but tangible uptick. The Chinese 

government is also demonstrably more comfortable dealing with the 

PML-N government than with its predecessor, despite strenuous efforts 

made by the Pakistan People’s Party to push many of the same projects 

forward. But the really consequential shift during Xi’s tenure has been the 

greater seriousness with which China is taking its westward strategy. A 

number of the objectives of the multifaceted One Belt, One Road scheme 

converge in Pakistan, including the outsourcing of industrial capacity, the 

[ 169 ]

asia policy 

search for growth drivers in the Chinese interior, the push to build up new 

markets for Chinese exports, efforts to stabilize China’s western periphery 

and comprehensively address the threat of rising militancy, and plans for 

alternative transportation routes that diversify the usual maritime conduits. 

Markey rightly notes Islamabad’s “striking leverage over China’s ability to 

realize its grand trans-Asian schemes.” Pakistan is one of the few countries 

with shovel-ready projects on the scale envisaged, the political comfort 

level with China to attempt to absorb and push forward such an ambitious 

plan, ports that Beijing can expect to rely on, and an army that is both the 

historical source of much of the region’s militancy and an essential part of 

any solution to this problem. As a result, CPEC has become the flagship 

project of Xi’s flagship initiative. 

China is actively seeking to decouple this westward-facing agenda 

from the competitive strategic environment elsewhere in East Asia and 

South Asia. Its aim has been to ensure that intensifying competition 

in one region does not spill over into areas where there are common 

interests. So far, Beijing’s heightened diplomatic activism and new 

infrastructure investment schemes have largely been embraced by the 

United States, which has long urged China to take on a greater level of 

responsibility in Afghanistan, Pakistan, and the broader region. India is a 

trickier case, but here, too, Beijing’s view is that New Delhi should at least 

acquiesce to many of these new initiatives, and potentially even see some 

advantages accruing from them. Although it was impossible to portray 

Chinese support to Pakistan’s military capabilities as anything other 

than a threat to India, if Beijing is able to encourage Pakistan to pursue a 

more dedicated focus on economic objectives and regional trade linkages 

rather than a security-centric agenda, India is potentially the greatest 

beneficiary other than Pakistan itself. In this context, Chinese officials 

saw the postponement of Xi’s trip to Islamabad in 2014 as advantageous: 

when the visit finally went ahead in April 2015, it was the first in decades 

by a senior Chinese leader to occur without a stopover in India. Evidently 

Pakistan’s utility to China as a balancer in the region persists, but Beijing 

can credibly claim that the relationship now occupies a qualitatively 

different position in the grand scheme of Chinese foreign policy. 

As Markey highlights, this new framework does pose some challenges 

for the “all-weather friendship.” Stated or unstated, India was the common 

focus for decades and provided the precondition for other forms of 

cooperation. Feroz Hassan Khan suggests that it was the “dependability of 

the partnership during times of isolation and need” that mattered more, 

[ 170 ]


but the partnership would neither have existed nor have been as trusted 

without India providing that shared strategic framework. With this 

backdrop, the fact that China and Pakistan did not always see eye to eye 

on tactics and strategy did not wholly matter. Scobell argues that my 

suggestion that China has rarely needed Pakistan to do anything vastly 

different from what it intends to do anyway is underwhelming, but this is 

the main reason that the friendship has endured so long. Pakistan’s most 

important function was to act as a counterweight, and it was only during 

episodes of excessive risk-taking, such as the Kargil War, that China felt 

obliged to push back hard. As China’s activism in its western periphery 

grows, and the relationship focuses on a new set of issues that include 

Afghanistan, infrastructure linkages in the region, and even domestic 

militancy in Pakistan itself, this shared strategic framework is absent. 

Some of the differences in outlook between the two sides, as Markey notes, 

are not minor, and there is no doubt that Beijing is already proving to be 

a “far more demanding and ambitious partner.” This has been evident 

on issues ranging from Chinese encouragement for Pakistan to conduct 

operations against Uighur militants in North Waziristan to Beijing’s push 

for Pakistan to get the Taliban to the table for peace talks with the Afghan 

government. Will these stresses place a level of strain on the friendship 

that it can no longer bear? And is Chinese policy now “fabulously costly 

and spectacularly risky,” as Markey suggests? 

I think we at least have preliminary answers, some of which also touch 

on the critique raised by Meena Singh Roy that “China’s argument that 

its huge economic package for infrastructure development could bring 

about change in Pakistan’s social and economic makeup does not sound 

very convincing, given the past failures of large-scale U.S. and Western 

financial and military aid to the country.” Such comparisons between the 

levels of Western and Chinese economic support seem misplaced. Direct 

financial support, the bulk of which was provided to the Pakistani army, 

coupled with smaller volumes of aid focused on social development, is 

not the same as infrastructure investment. If the latter fails, it will fail 

for different reasons than the West’s efforts. The same is true politically. 

Chinese demands have been limited, and are likely to remain so. Beijing 

will press for a peace settlement in Afghanistan, which many in Pakistan 

and in the Taliban itself favor, rather than pushing Pakistan to rein in the 

Haqqani network or change its education system. The tendency is still to go 

with the grain rather than make demands that are liable to elicit a backlash. 

This is at times disappointing for the powers that would like to see China 

[ 171 ]

asia policy 

doing more, but keeping the relationship with Pakistan in decent working 

order is a higher-order objective for Beijing than any of these individual 

goals. In addition, even when there are aspects of discomfort, Pakistan 

gains far more from having its closest partner as the rising heavyweight 

power in the region than from any plausible alternative. The presence of a 

$46 billion carrot helps too. China is laying out—all at once—the package 

of benefits that can accrue to Pakistan if it is able to ensure a domestic and 

international situation that is sufficiently stable to make the investments 

possible. There is some degree of political consensus in Pakistan that this 

opportunity should be seized, despite concerns about whether the country 

has the capacity to do so quite as quickly as China would like. But if there 

are problems with specific projects, or the conditions for the investment do 

not obtain, the initiative will simply be scaled down. Either way, many of the 

principal beneficiaries of the supposed largesse will be Chinese companies. 

As risks go, CPEC is not especially egregious. 

The greater challenge may actually be if a substantial proportion of 

the project moves forward. China’s standing in Pakistan, which includes 

persistently stratospheric ratings in opinion polls, has partly reflected its 

remove from everyday politics. Now Beijing is embroiled in battles over 

corridor routes, debates about the social impact of its investments, and 

criticism over the entrenchment of Punjabi economic privilege—all of this 

even before a new wave of Chinese workers arrives in Pakistan. The fact that 

economic ties had been limited to a weak set of trade links and a few grand 

projects meant that the more quotidian aspects of the relationship were 

kept to a minimum. My bet is that a great deal more will come out of CPEC 

than the most skeptical views suggest, which will make for a more balanced 

relationship but also one that is increasingly demythologized. 

The final question is how to define the relationship. Khan understandably 

reacts against the connotations of the term “axis” in the title, but his 

analysis demonstrates the challenge of finding a more appropriate 

term for a partnership that is palpably more than just a “friendship” or 

“entente cordiale,” yet lacks the obligations of a formal alliance. Scobell 

describes the use of axis as “controversial” but “appropriate,” and Bruce 

Riedel’s elegant formulation in a review elsewhere—that, alongside the 

U.S.-India relationship, this will be one of the “dual axes…central to the 

global order in our times”—frames the term in the neutral sense in which 

[ 172 ]


it was intended. 1 This debate about terminology is not an idle one. While 

Pakistan is a unique case in Chinese foreign policy, the coming years 

are likely to see China developing more relationships that resist ready 

classification: partnerships with a heavy security component and attendant 

political expectations but without mutual defense obligations. I have been 

struck in the last year by references in Chinese sources to the China-Pakistan 

relationship being a “model to follow.” 2 That will be difficult. But this view 

is another indication that this oddly resilient friendship, whose descent 

into acrimony or irrelevance has been consistently predicted, remains in 

surprisingly good health. 

I will conclude by adding that I am very grateful to the reviewers for 

their kind comments and thoughtful analysis. For all the growing interest 

in the China-Pakistan relationship, material on it remains relatively thin, 

and their essays are an important contribution to correcting that deficit. 

1 Bruce Riedel, “‘The China-Pakistan Axis: Asia’s New Geopolitics,’ by Andrew Small,” Lawfare, February 

25, 2015 u https://www.lawfareblog.com/china-pakistan-axis-asias-new-geopolitics-andrew-small. 

2 See, for example, Liu Zongyi, “China Remains Faithful Partner of Pakistan,” Global Times, 

December 28, 2015 u http://www.globaltimes.cn/content/960904.shtml; and Yan Xuetong, “China- 

U.S. Competition for Strategic Partners,” China-U.S. Focus, October 29, 2015 u http://www. 

chinausfocus.com/foreign-policy/china-u-s-competition-for-strategic-partners. 

[ 173 ]

asia policy 




Asia Policy (ISSN 1559-0968) is a peer-reviewed journal devoted to bridging the gap 

between academic research and policymaking on issues related to the Asia-Pacific. 

The journal publishes peer-reviewed research articles and policy essays, roundtables 

on policy-relevant topics and recent publications, and book review essays, as well as 

other occasional formats. 

To help bridge the gap between academic research and the policymaking realm, we 

require that all submissions meet the criteria in the Guidelines for Submissions, which 

are available online and in each issue of the journal. Submissions should avoid, to the 

extent possible, the use of academic jargon and must include a one-page Executive 

Summary that describes the topic, main argument, and policy implications of the 

article. Each submission will be subject to an anonymous peer-review process. Authors 

or editors interested in having a book considered for review should submit a copy to 

the managing editor of Asia Policy at NBR, 1414 NE 42nd Street, Suite 300, Seattle, 

Washington 98105. Submissions may be sent to . 

Asia Policy is abstracted and indexed in the International Political Science 

Abstracts (IPSA) and the Bibliography of Asia Studies (BAS). Asia Policy is distributed 

by The National Bureau of Asian Research (NBR) and is available through Project 

MUSE at the Johns Hopkins University Press, EBSCOhost, and ProQuest. 

Asia Policy is published by NBR, in partnership with the S. Rajaratnam School of 

International Studies at Nanyang Technological University and the College of Asia 

and the Pacific at the Australian National University. 

Yearly subscription rates within North America are $60 for individuals and $150 for institutions. Yearly 

subscription rates outside North America are $90 for individuals and $180 for institutions. Two-year 

subscriptions receive a $10 discount. Subscription orders can be placed at . 

Asia Policy is part of the Project MUSE collection. For institutions, electronic subscriptions and combined 

print and electronic subscriptions can be ordered through Project MUSE at http://muse.jhu.edu. 

Asia Policy can also be accessed via EBSCOhost and via ProQuest. 

Asia Policy was launched with the support of the Henry M. Jackson Foundation. 

the national bureau 

of asian research

the national bureau of asian research 

1414 ne 42nd street, suite 300 

seattle, washington 98105 

the national bureau 

http://www.nbr.org http://asiapolicy.nbr.org 

of asian research 

http://asiapolicy.nbr.org

22vPaX

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?