China’s Influence in East Asia:

East Asia is the front line of Beijing’s attempts at creating a geopolitical sphere of influence through increased diplomatic engagement, economic coercion, and military adventurism. The region also serves as the focal point of Beijing’s Belt and Road Initiative (BRI) under which Beijing has offered large-scale investments in exchange for political and economic indebtedness. The CCP’s coercive economic statecraft in East Asia has sought to consolidate the CCP’s control over the strategic geography of the region, which includes numerous maritime chokepoints, as well as increase the reach of the CCP’s military while limiting the ability of the U.S. and others to operate freely. 

  • In Southeast Asia, the countries with the largest concentration of BRI investment are Indonesia, Cambodia and Vietnam.
  • The PRC counts 11 nations in East Asia as Belt and Road participants, not including participants among Pacific states.
  • The PRC’s investments in ports along the region’s strategic waterways is primarily to control these chokepoints, not for economic rationale. 
  • Over the last decade, in response to a steep increase in regional engagement by the PRC, the United States’ foreign policy has placed a renewed importance on forging and maintaining alliances and partnerships in the Asia-Pacific region. 

 

China’s Foreign Investment in East Asia:

East Asia is at the heart of the CCP’s Belt and Road Initiative which seeks to expand physical and digital infrastructure across the region and worldwide. Several of the projects in East Asia have become controversial as countries who took part in this initiative overborrowed from the PRC and in exchange for fiscal relief were forced to succumb to the CCP’s strategic interests.

Laos: Kunming-Vientiane Railway

  • The CCP’s railway line to Laos, a 414km (257 miles) link between the Yunnan’s provincial capital of Kunming and the Laotian capital Vientiane is a prime example of the CCP’s plan to rebuild infrastructure along the ancient Silk Road from the PRC to Africa and Europe. China’s Foreign Minister Wang Yi met with his Laos counterpart Saleumxay Kommasith in February 2021 in a virtual meeting to discuss progress on the China-Laos Economic Corridor. The railway is on schedule to be completed by December 2021.
  • CCP entities hold 70% equity in the project while Lao entities hold 30% of this $6 billion project. Laos’ financing commitments include $250 million from the annual Lao People’s Democratic Republic (PDR) budget and a $465 million concessional loan from China EXIM Bank. Analysts note that the Lao PDR government may also incur some $300 million in liabilities from resettlement claims from displaced Lao citizens.
  • Total Lao liabilities potentially represent roughly 12% of gross domestic product (GDP) in external public debt. Laos is a low-income country whose public debt level in 2016 had already reached 68 percent of GDP.

Myanmar: Deep-sea, dual-use Kyaukypu Port 

  • PRC state-owned firms had originally reached agreements with Myanmar to construct a $7.3 billion deep-water port at Kyaukpyu along the coast of the Bay of Bengal. However, due to debt-trap concerns, the National League for Democracy-led government renegotiated the port’s consortium-government share-holding ratio down from 85:15 to 70:30, while shaving the project’s total cost to $1.3 billion.
  • Even after renegotiation, a PRC state-owned conglomerate has a 70 % stake in the port project and has the rights to operate it for 50 years. 
  • The port is the keystone of the “China-Myanmar Economic Corridor,” (CMEC) a plan to connect the PRC’s Yunnan Province directly to the Bay of Bengal and the Indian Ocean, reducing the PRC’s dependence on the Strait of Malacca, where 80% of the PRC’s energy imports transit. CMEC is perceived as security threat by India, which has a nuclear submarine facility opposite Kyaukpu port. 
  • The port is already connected overland to China by a dual-strand oil and gas pipeline that became operational in 2017. The Kyaukpu port will also be adjacent to an industrial zone constructed by Chinese state-owned CITIC Group Corporation under a 51–49 partnership with Myanmar’s government.
  • The full price tag of CMEC is unknown, but Myanmar has approved $21 billion in CCP investment by March 2020- a major threat to Myanmar’s sovereignty.

Cambodia: Ream Naval Base 

  • In 2019, the PRC and Cambodia signed an agreement that gives the CCP exclusive rights to part of a Cambodian naval installation on the Gulf of Thailand. 
  • This agreement would allow the CCP to use the base for 30 years, with automatic renewals every 10 years after that. The CCP would be able to post military personnel, store weapons and berth warships. The facilities, if managed by the CCP, could support visiting ships and aircraft of the People’s Liberation Army Navy engaged in operations in the South China Sea.
  • Some 70 km (40 miles) northwest of Ream, a PRC company is building a runway at the Dara Sakor resort that is capable of taking some of the world’s biggest planes to serve what for now consists of a rundown casino and a golf course.
  • In late 2020, the Cambodian government demolished a U.S.-built facility at Ream Naval Base. This was the second US-funded facility at the base that has been torn down in what can potentially be seen as part of a greater Chinese-led expansion project at the base.

Vanuatu: Wharf

  • The $114 million Beijing-funded wharf is the largest in the South Pacific. Strategically located in the same harbor in which the US based tens of thousands of troops during World War II, it has been built with the option of converting it in the future to a naval base.
  • Despite the government of Vanuatu’s assurances, experts said the terms in the contract between Vanuatu and the PRC’s EXIM Bank, with Shanghai Construction Group Co. Ltd. as supplier or builder, are heavily weighted in China’s favor in the event of a default.
  • Vanuatu already has a debt-to-GDP ratio around 30 percent, with half the debt owing to the PRC and the other half owed largely to the Asian Development Bank, making it extremely susceptible to being another victim of China’s dept-trap diplomacy.

 

China’s Investment in East Asia’s Energy Sector:

Even as the PRC claims to cut politically sensitive air pollution at home, the country has been investing massively in coal projects outside its shores, notably in places linked to the Belt and Road Initiative.

  • Bangladesh has the most proposed coal-fired capacity and funding from the CCP, totaling over $7 billion for 14GW of capacity, followed by Vietnam and Indonesia.
  • In Vietnam — a country highly dependent on coal — the CCP is a major investor in the energy sector. The CCP is involved in 15 coal power plants in operation, six under construction and at least two in the planning stages.
  • In some cases including in Cambodia, older and dirtier coal plants from the PRC are simply disassembled, exported, and re-built in developing countries.

During the past two decades, PRC companies have invested heavily in ASEAN’s energy sector, including oil and gas pipelines, power generation and transmission in countries such as Myanmar, Laos, Indonesia, Vietnam, Cambodia, and Malaysia. 

  • This investment pre-dates the BRI. In 2009, the FDI in ASEAN’s energy sector already was about $3.5 billion. In 2015, after BRI was proposed, the investment only increased, hitting a level of more than $6 billion.
  • Beijing often targets a country’s lack of finance and market capabilities when investing in the energy-abundant East Asia region. For example: PRC firms invest in the majority of hydro power projects in Laos, Cambodia and Myanmar – countries which would be unable to finance their own energy infrastructure without foreign assistance. 

 

China’s “Soft Power” Initiatives in East Asia:

As the PRC has become an economic powerhouse in East Asia, there has been unease among journalists, scholars, and policymakers within these countries who view the CCP’s growing assertiveness as a threat to their national sovereignty. To counter this, the CCP has invested heavily in “soft power” initiatives in an attempt to re-shape the narrative. 

Between 2000 and 2016, the CCP entertained more visiting dignitaries and elites each year than any other East Asia Pacific (EAP) country, while its own leaders traveled to regional countries regularly. 

  • Beijing has made use of its senior leaders and diplomats as information ambassadors to promote a positive media narrative about the CCP through giving interviews or placing op-eds with EAP news outlets, particularly in democratic countries in the region. 

Other public diplomacy tools include Confucius Institutes, sister cities and exchange programs.

  • The advanced economies (e.g., Japan, South Korea, and Australia) attracted the highest volume and most diverse set of CCP public diplomacy activities: they received a disproportionate share of CCP sister cities partnerships, Confucius Institutes, and official visits.
  • The populous and fast-growing economies of Southeast Asia (e.g., Indonesia, Cambodia, and Malaysia) received the second highest volume of CCP public diplomacy, primarily driven by financial diplomacy. 

Between 2002-2017, Beijing arranged 82 press trips for EAP journalists to visit the PRC. Many of these press trips (41 percent) targeted journalists from EAP democracies such as South Korea, Japan, Indonesia, and the Philippines. 

  • The CCP attempts to promote its narratives in EAP countries through content-sharing partnerships, journalist exchanges, guest op-eds, and interviews. Between 2000 and 2017, CCP media outlets brokered 73 known partnerships with counterparts in EAP countries. Beijing partners with a wide range of EAP media, which reprint or share content from CCP state-run newspapers.

 

*Last Updated: 3/16/2021

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