ASEAN Regional Integration and Chinese Capitalism
The establishment of the ASEAN Economic Community (AEC) can be seen as an attempt to strengthen regional organization and its bargaining power. It has four objectives, namely the transformation of ASEAN into a single market and production base, creating a highly competitive economic region of equitable economic development and a region that would be fully integrated into the global economy by the end of 2015. As of early 2018, many indicators show that economic integration cannot be accomplished soon. A single market and production base requires that all members have a common interest and a high degree of cooperation. However, the authority of domestic political economy reigns over regional integration and cooperation. The political elite of the ASEAN countries tend to facilitate the monopoly of important domestic sectors to the Chinese economic elite, and their mutual interests are so intertwined that competition from neighboring firms are seldom tolerated. China’s rising influence in the region, or what Jones (2016: 24) calls the ‘the sinification of the ASEAN way’, has profoundly and negatively impacted the capacity of ASEAN to strengthen its integration. ASEAN’s connectivity master plan, for example, will be funded indirectly or directly by China to the extent that those infrastructural development projects serve Chinese interests, which are not necessarily those of ASEAN. China’s continuing attempts to dominate the South China Sea raise more critical issues that hinder regional integration. A shift in US foreign policy under a new leader drives another nail into the ASEAN regional integration coffin.
On his first day in office President Trump signed an executive order formally withdrawing the USA from the Trans-Pacific Partnership (TPP) trade deal. The abandonment of TPP marks the end of the US pivot toward Asia. TPP would have checked Beijing’s penetrating politico-economic influence in Asia and regained the USA as an important leverage. The decision to discard TPP shows that the American leader has little concern for the geopolitics that offer choices to ASEAN nations. Donald Trump ’s transactional view of the world leads him to prefer ‘deals’ over global leadership. In terms of security relations, Trump’s questioning of the established security relationship with NATO, Japan, and Korea, and how its economic burdens are shared marks the beginning of a decline of security commitments between the USA and old alliances. If long-established security relationships are subject to the strict calculus of economic self-interest, ties between old alliances may be weakened. The geopolitical map might collapse into the economic one, and China could become an even stronger player on the global political stage.
As the USA moves toward isolationist leaning under the “America First” banner, ASEAN countries are witnessing another round of power shifts in the global geopolitical landscape which could potentially lead to heightened tension between the superpowers on various issues ranging from currency manipulation to unfair trade and protectionism, Taiwan, North Korea, as well as territorial boundary disputes in the South China Sea. With the end of US President Obama’s rebalance policy and TPP Free Trade Area, ASEAN countries will pragmatically have little choice but to accommodate China’s bilateral relations. Individually, each country will negotiate to achieve the best possible deal with China. Growing bilateralism between China and ASEAN countries implies fragmentation rather than integration of the AEC. In turn, a low level of regional integration implies that convergence between ASEAN countries is limited and difficult to achieve. Additionally, regional and within-country inequality is high and in many countries steadily growing.
Within the context of ASEAN economic integration, this text asks the following questions: how will Chinese capitalism from China interact with ASEAN integration and its attempts at community building, and how will Chinese capitalism from China interact with diverse forms of Chinese capitalism in Southeast Asia? In other words, what are the challenges and prospects of Chinese capitalism in Southeast Asia?
On one hand, China’s rise and its growing economic engagement with ASEAN has presented new investment and business opportunities for local Chinese communities in Southeast Asia. On the other hand, China’s rise has also stimulated anxieties, ambivalences, and new politico-economic realignments. What are some of the creative strategies–desinicization, resinicization, rebalancing–utilized by local Chinese communities and ASEAN countries to cope with the challenges of Chinese capitalism?
This book begins with a discussion of the relations between Chinese capitalism and the AEC from a perspective of desecuritization . In Chapter 2, Hsing-Chou Sung focuses on the meaning of security issues in Southeast Asia and the political realist friend/foe dichotomy that securitization brings. The author applies the desecuritization concept to the relationship between China and ASEAN countries and demonstrates how security is constructed in economic terms. Desecuritization concepts problematize security as discursively established, dismissing the idea of objective threats. The chapter defines desecuritization as a critical strategy that tries to relocate the question of power and domination to a context of economic integration and development in which political relations are not perceived on the basis of existential insecurity. With that perspective in mind, Sung asks what types of strategies are used by Beijing to remove obstacles if a mutual trust relationship exists between China and ASEAN member countries. Although China remains a vital security concern for ASEAN, despite the issue of territorial disputes and naval bases in the South China Sea, China still actively participates in every movement of regional integration.
Sung shows that Beijing appears aware of the complex intertwining between political and economic situations and tries to reshape the structure of distrust in the ASEAN perception of China as a regional threat. The way to achieve its overall policy goal is desecuritization based on regionalism and soft power. Since the 1997 Asian financial crisis, China has been able to dismiss the anxiety of an objective threat by the premise of economic cooperation (trade, investment, foreign aid), regionalization and global connectivity (One Belt One Road [OBOR]). China has taken advantage of the new regionalism and has become a skilled practitioner of “commercial diplomacy” (Frost 2007: 95). If China continues to lead the way in regional integration (state-led), Chinese capitalism will integrate into AEC and become China’s essential strategy of desecuritization.
There is no doubt that China is now a superpower in global affairs. But how effectively does China make use of its growing power (resources, including the military) and influence (exercise of power) to achieve desirable goals? Drezner (2009) cogently argues that China was unable to exert much meaningful leverage over US financial policy despite its position as the leading holder of US debt. Similarly, China was unable (or unwilling) to change North Korea’s nuclear policies despite increasing economic dependency. Additionally, China was unable to persuade Vietnam to deflect the territorial claims in the South China Sea. Conversely, increasing dependency on China has turned the Myanmar’s Tatmadaw into a more balanced and diversified strategic relations with Japan, the USA, and Europe.
In economic terms, however, China has used its central position in regional production network and its huge market potential to influence ASEAN countries’ choices. Its ultimate goal, however, is to consolidate its position as the region’s economic driver by initiating East Asian regionalism (Ravenhill 2006), AEC (Jetin and Mikic 2016), and OBOR global economic order linking Asia to the Middle East, Africa, and Europe. It is using its economic influence to induce, coerce, and force ASEAN countries into actual regional economic integration. China has proliferated its economic power and influence over the AEC (Goh 2014: 834) in two fundamental ways: (1) by stimulating economic growth in the least developed countries in the region (see Chapter 9), and (2) by multiplying the more developed parts toward a trading bloc.
Chapter 3 by Liu and Zhou examine the historical and politico-economic contexts of Chinese capitalism in Southeast Asia and its relations with the Chinese diaspora. The authors contend that China’s rapid growth in terms of economy and outward foreign direct investment (OFDI) has lent itself to a new wave of Chinese capitalism that increasingly blurs the boundaries between state, private, and public interests. This new Chinese economic statescraft or the state’s intention to provide impetus for Chinese entrepreneurs to generate business ventures that are conducive to the state’s and public interests has been the essence of China’s outgoing policy aimed at promoting outward investment and elevating China’s status as a global superpower.
How has the Chinese economic statescraft (Norris 2016) interacted with the AEC? Using Indonesia, Malaysia and Singapore (the more developed parts of AEC) as case studies of both private and state-sanctioned Chinese investments, Liu and Zhou delineate the geographical and sectorial distributions of Chinese OFDI and discuss how those Chinese enterprises penetrate ASEAN countries and with whom they have collaborated in their business endeavors.
From those cases, the authors found that the new Chinese capitalism is transnational and foreign. Although the overseas Chinese entrepreneurs were migrants who had settled down and integrated into their new “homes” and identified themselves as Chinese-cum-Southeast Asian, the new Chinese diaspora are highly mobile but retain a strong identification with the homeland. The rise of China and its economic power in terms of trade and investments provides an impetus for a resinicization process of the Chinese communities and a reproduction of Chinese cultures and identities among the ethnic Chinese in ASEAN countries.
The Chinese economic statescraft and the transnational Chinese entrepreneurs have not disrupted the preexisting structure of Chinese enterprises, but have been able to establish networks of cooperation in terms of joint ventures for the benefit of both sides. In their examination of the business practices of the top echelons of Chinese businesses, Liu and Zhou are optimistic that the new Chinese capitalism is reflective of both a different consciousness among China’s big businesses and the state in their mutual goal of enhancing China’s international image as a peaceful and responsible world power.
Domestic Politics and Economic Regionalism
The roles of the military, bureaucracies, and political elite will be important in shaping the business practices and policies of developing countries toward the world economy. Contrary to Yeung’s assertion that the future of Chinese capitalism in the era of globalization will no longer be “sustained by politico-economic alliances with powerful political elites” (Yeung 2004: 254), we believe that the preexisting alliances between ethnic Chinese capitalists and ruling power elite have not been disrupted by China’s rise. Additionally, the alliances have also been extended to include closer ties between new Chinese entrepreneurs and the power elite, with the ethnic Chinese serving as bridges. However, the political elite in ASEAN may have a greater ability than previously acknowledged to shape policy directions toward trade and investment. The question is how China’s rising influence over regional integration affects the transformation of the ASEAN political elite and domestic politics. Lessons learned from Thailand, the Philippines, and Cambodia provide a partial answer to that question.
The Chinese have been the prominent economic minority in Thailand for hundreds of years. Traditional Thai political elite ethnicize key economic roles to the Chinese entrepreneurs while simultaneously denying them access to political power. In this context, the Chinese economic elite become what Hamilton (1978) calls ‘pariah capitalists’. Contrary to popular contention, the Chinese have not been fully assimilated (Skinner 1957, 1958) to their host country. The Chinese in Thailand and elsewhere in Southeast Asia have developed double ‘social embeddedness’ (Liu and Na 2017: 58–59) reaffirming their Chinese identity while at the same time maintaining their Thai identity.
Chapter 4 by Wasana Wongsurawat portrays the life of Banharn Silpa-acha, a successful businessman, a former Thai Prime Minister, and a prominent leader of Chinese descent in Thai history. Banharn’s life as both an economic and political elite testifies well to the process of resinicization of Chinese identities and cultures in Thailand. Banharn was born in 1932, when the patrimonial system was successfully challenged. The role of Chinese entrepreneurs as dependent subjects and agencie...
