Chinese Capitalism and Economic Integration in Southeast Asia

Abstract

The Association of Southeast Asian Nations (ASEAN) was founded in 1967 to coordinate its members’ security policy during the Cold War as part of the anti-communist containment strategy led by the United States of America. At the same time, historically and geopolitically, China has always viewed ASEAN as an integral part of its security environment. Over the last two decades, a changing global context has however provided opportunities for China and ASEAN countries to forge closer ties with each other. The constructive role played by the government of China in dealing with the Asian Financial Crisis coupled with changing U.S. priorities in Asia during the late 1990s led to a marked improvement in relations between ASEAN and her northern neighbor. The considerable distrust that once defined their relationship has thus been replaced by a more positive and intimate economic and political connectivity. However, China’s territorial claims in the South China Sea reveal its increasing naval capabilities and its willingness to deploy these for politico-economic purposes; and hence the contemporary relationship between China and ASEAN is marked by a combination of cooperation and tension. China’s rise exerts a powerful gravitational pull on ASEAN economies. Since the full enactment of the ASEAN-China Free Trade Area (ACFTA) in 2010, ASEAN’s trade with China has gone from a surplus to a deficit that reached US$45 billion in 2013. More significantly, poorer ASEAN members depend heavily on China. For example, Vietnam’s share of Chinese export and import flows with ASEAN has increased substantially while Singapore’s share has dropped (Liu 2016, pp. 314–16).