An Outlook on China-Southeast Asia Relations in 2016

By Dr. Xue Li  and Dr.Xu Yanzhuo, Department of International Strategy, IWEP/CASS

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

China is likely to accelerate its One Belt, One Road strategy, which will inevitably require cooperation with ASEAN countries. Negotiations on the Code of Conduct in the South China Sea might make some progress in 2016. If Tsai Ing-wen, chairwoman of Taiwan’s Democratic Progressive Party,is elected to be Taiwan’s leader in January, she will no doubt pursues de jure independence. In this case, China’s maritime priority will shift to the East ChinaSea, especially, the Taiwan strait, which means China will take on a more restrained approach in the South China Sea: finishing construction on civilian facilities on extended reefs and rocks to provide public goods to the region, including the two lighthouses brought into service this year. However, the possibility of further massive land reclamation is extremely low.

In the first half of 2016, the Permanent Court of Arbitration will decide on the arbitration case launched by the Philippines. The tribunal is likely to support some of the Philippines’ claims, which probably will trigger a big diplomatic battle between China and the Philippines. At the same time, US would send its support to Philippines as well, while ASEAN countries could not reach an agreement on how to show its support. Since Laos will take the rotating presidency of ASEAN in 2016, it is unlikely to comment on SCS issue in ways such as  chairman’s statement(as happened in Kuala Lumpur in 2015). Additionally, the new Philippines president will take office in June, the next president might take some measures to ease the tensions with Beijing and the two governments might return to the negotiating table.

The United States will continue to carry out "freedom of navigation Operation" in SCS, especially in the first half of 2016, as it on the one hand benefits the presidential election for Democratic Party and is compatible with the arbitral award on the other hand. US warships might sail within 12 nautical miles of China-controlled high tide elevations and claim its passage as peaceful transit, or innocent passage or transit passage, which would trigger the tensions between China and US from time to time and the debate on legal status of the water among these islands and reefs:is it territorial sea, EZZ or international straits? China might respond in a more assertive approach, as it regards US’s action as further escalation of the tensions. However, it is also worthy to note that US is unlikely to conduct a non-innocent passage, as it will push China into a corner.

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

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

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