At the Dawn of Belt and Road: China in the Developing World

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1 At the Dawn of Belt and Road China in the Developing World Andrew Scobell, Bonny Lin, Howard J. Shatz, Michael Johnson, Larry Hanauer, Michael S. Chase, Astrid Stuth Cevallos, Ivan W. Rasmussen, Arthur Chan, Aaron Strong, Eric Warner, Logan Ma C O N P O R A T I O R

2 www.rand.org/t/RR2273 For more information on this publication, visit is available for this publication. Library of Congress Cataloging-in-Publication Data ISBN: 978-0-8330-9991-4 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2018 RAND Corporation ® is a registered trademark. R Cover: China with sunset on Earth by harvepino / Adobe Stock. Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org

3 Preface This report documents research and analysis conducted as part of a project entitled China in the Developing World , sponsored by the United States Army Pacific. The purpose of the project is to examine China’s economic, political, and military activities in the Developing World and provide insights to help inform U.S. Army decisions regard - ing presence and force posture in the region. Specifically, the study explores China’s economic, political, and security roles in Southeast Asia, Oceania, Central Asia, South Asia, the Middle East, Africa, and Latin America and the Caribbean. The report also examines China’s bilateral relationships with the key states in each region. Finally, the report contemplates the consequences of the Chinese strategy toward the Developing World for the United States. It should be of interest to U.S. Army strategists and planners, other U.S. military personnel focusing on China, and anyone interested in China’s international relations. The Project Unique Identification Code (PUIC) for the project that produced this document is HQD156900. This research was conducted within the R AND Arroyo Center’s Strategy, Doctrine, and Resources Program. R AND Arroyo Center, part of the R AND Corporation, is a federally funded research and development center (FFRCD) sponsored by the United States Army. R AND operates under a “Federal-Wide Assurance” (FWA00003425) - and complies with the Code of Federal Regulations for the Protec tion of Human Subjects Under United States Law (45 CFR 46), also — -1 known as “the Common Rule,” as well as with the implementation —0 — +1 iii RR2273A_CC2015.indb 3 8/14/18 11:11 AM

4 iv At the Dawn of Belt and Road guidance set forth in DoD Instruction 3216.02. As applicable, this compliance includes reviews and approvals by R AND’s Institutional Review Board (the Human Subjects Protection Committee) and by the Ar my. The views of sources utilized in this study are solely their U.S. own and do not represent the official policy or position of DoD or the ernment. U.S. gov -1— 0— +1— RR2273A_CC2015.indb 4 8/14/18 11:11 AM

5 Contents ... iii Preface ix ... Figures ... xi Tables xiii ... Summary ... xxxiii Acknowledgments xxxv ... Abbreviations CHAPTER ONE Introduction ... 1 10 ... The Plan for the Report CHAPTER T WO China in the Zone: The Cold War and After ... 11 Maoist Foreign Policy Strategy and the Developing World, 13 ... 1949 –197 7 Dengist Foreign Policy Strategy and the Developing World, ... 16 1978 –1991 Globalization Strategy and the Developing World, 1992 to 18 ... Present ... 21 rld Wo Contemporary Chinese Foreign Policy and the Developing Drivers of Current Chinese Engagement with the ... 30 Developing World 36 ... Roadmap for Regional Chapters — -1 —0 — +1 v RR2273A_CC2015.indb 5 8/14/18 11:11 AM

6 vi At the Dawn of Belt and Road CHAPTER THREE China in Southeast Asia ... 37 ... 39 Drivers of Chinese Engagement 44 ... Political Engagement ... 55 Economic Engagement 62 ... Military and Security Engagement ... 70 Conclusion CHAPTER FOUR China in Oceania 75 ... ... 76 Drivers of Chinese Engagement 77 ... Political Engagement 80 ... Economic Engagement ... 85 Military and Security Engagement ... 86 Conclusion CHAPTER FIVE China in Central Asia ... 89 91 ... Drivers of Chinese Engagement ... 97 Political Engagement ... 101 Economic Engagement ... 107 Military and Security Engagement ... 114 Conclusion CHAPTER SIX China in South Asia ... 121 ... 123 Drivers of Chinese Engagement 128 ... Political Engagement ... 132 Economic Engagement ... 138 Military and Security Engagement 14 4 ... Conclusion CHAPTER SEVEN China in the Middle East ... 147 ... 148 Drivers of Chinese Engagement ... 153 Political Engagement -1— 0— +1— RR2273A_CC2015.indb 6 8/14/18 11:11 AM

7 Contents vii Economic Engagement ... 15 6 161 ... Military and Security Engagement ... 166 Conclusion CHAPTER EIGHT ... 171 China in Africa ... 173 Drivers of Chinese Engagement 178 ... Political Engagement ... 187 Economic Engagement 198 ... Military and Security Engagement ... 208 Conclusion CHAPTER NINE China in Latin America and the Caribbean ... 215 218 ... Drivers of Chinese Engagement ... 220 Political Engagement ... 226 Economic Engagement ... 236 Military and Security Engagement ... 241 Conclusion CHAPTER TEN Pivotal Regional Partnerships ... 245 ... 247 Pursuing Partnerships ... 251 Two Tiers of Pivotal Regional Partnerships 281 ... Conclusion CHAPTER ELEVEN Conclusion ... 285 ... 286 Regions and Rings 294 ... Pivotal Regional Partnerships ... 295 Ranking Regions by the Numbers The United States and China in the Developing World: 299 ... Partners in Parallel? ... 302 Two Caveats — -1 —0 — +1 RR2273A_CC2015.indb 7 8/14/18 11:11 AM

8 viii At the Dawn of Belt and Road APPENDIX A Actors Involved in Shaping or Influencing Chinese ... 303 Foreign Policy ... 309 References -1— 0— +1— RR2273A_CC2015.indb 8 8/14/18 11:11 AM

9 Figures S.1. ... xiv China’s Four Rings of Insecurity ... 25 Chi . na’s Four Rings of Insecurity 2.1 ... 29 2.2 . na’s Belt and Road Initiative, 2015 Chi ... 39 na’s Relations with Countries in Southeast Asia, 2015 3.1 . Chi . Chi nese Maritime Claims in the South China Sea and 3.2 ... 50 Land Reclamation, June 2015 ... 56 U.S . and Chinese Trade with ASEAN, 2000–2013 . 3.3 ... 57 Com position of Imports from Southeast Asia . 3.4 ... 58 3.5 Com position of Exports to Southeast Asia . ... 59 Lev 3.6 . el of Exports to and Imports from Southeast Asia 3.7 . Chi nese FDI Stock in Southeast Asia by Receiving ... 60 Country, 2013 81 ... . Com position of Imports from Oceania 4.1 ... 82 . Com position of Exports to Oceania 4.2 ... 83 4.3 Lev el of Exports to and Imports from Oceania . 83 ... Chi . 4.4 nese FDI Stock in Oceania by Receiving Country 91 ... Chi . 5.1 na’s Relations with Countries in Central Asia, 2015 ... 103 Com position of Imports from Central Asia 5.2 . ... 104 Com position of Exports to Central Asia 5.3 . ... 105 el of Exports to and Imports from Central Asia 5.4 Lev . . Chi na’s FDI Stock in Central Asia by Receiving 5.5 ... 106 Country 5.6 . Rus sia’s FDI Stock in Central Asia by Receiving ... 106 Country ... 122 Chi na’s Relations with Countries in South Asia, 2015 6.1 . ... 133 6.2 . Com position of Imports from South Asia — -1 —0 — +1 ix RR2273A_CC2015.indb 9 8/14/18 11:11 AM

10 x At the Dawn of Belt and Road 6.3. Composition of Exports to South Asia ... 134 135 ... Lev el of Exports to and Imports from South Asia . 6.4 6.5 na’s FDI Stock in South Asia by Receiving . Chi ... 135 Country . 7.1 Chi na’s Relations with Countries in the Middle East, ... 149 2 015 157 ... 7.2 . Com position of Imports from Middle East ... 158 . Com position of Exports to Middle East 7.3 159 ... Lev 7.4 el of Exports to and Imports from Middle East . 7.5 . Chi na’s FDI Stock in the Middle East by Receiving ... 160 Country ... 172 Chi na’s Relations with Countries in Africa, 2015 8.1 . 189 ... 8.2 . Com position of Imports from Africa 19 0 ... position of Exports to Africa Com . 8.3 ... 191 Lev el of Exports to and Imports from Africa 8.4 . 8.5 . Chi na’s FDI Stock in Africa by Top Receiving ... 192 Countries 9.1 . Chi na’s Relations with Countries in Latin America and ... 217 the Caribbean, 2015 229 ... . Com position of Imports from Latin America 9.2 ... 230 9.3 . Com position of Exports to Latin America ... 231 . Lev el of Exports to and Imports from Latin America 9.4 9.5 . Chi nese FDI Stock in Latin America and the Caribbean ... 232 by Receiving Country, 2013 10. 1. Chi na’s Share of Pakistan’s Arms Purchases, 1978–2012, ... 271 Percent -1— 0— +1— RR2273A_CC2015.indb 10 8/14/18 11:11 AM

11 Tables Chinese Economic, Political, and Military S.1. xxv ... gagement by Region En ... 26 The Ge ostrategy of China’s Concentric Circles 2.1 . 3.1 . Sel ected Chinese Combined Exercises in Southeast Asia, 66 ... 2002–2014 4.1 . Sel ected Chinese Combined Exercises in Oceania, 85 ... 2002–2014 Chi 5.1 . nese High-Level Military Visits to Central Asia, ... 109 2003–2014 ected Chinese Combined Exercises in Central Asia, 5.2 . Sel 112 ... 2002–2014 6.1 . Chi nese High-Level Military Visits to South Asia, 139 ... 2003–2014 Sel 6.2 . ected Chinese Combined Exercises in South Asia, ... 141 2002–2014 ... 167 7.1 Glo bal Attitudes Toward China . 242 ... Lat . in American Views of China, 2014 9.1 253 ... 10. 1. Piv otal Regional Partners by Region 11. 1. Chi nese Economic, Political, and Military Engagement ... 296 by Region — -1 —0 — +1 xi RR2273A_CC2015.indb 11 8/14/18 11:11 AM

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13 Summary The Developing World has never been more important to the People’s Republic of China (PRC) than it is today. China views its ties to develop - ing countries as critical for securing natural resources, developing export markets, expanding its geostrategic influence, and gaining advantages in its global competition with the United States. During the Cold War, the Developing World was a symbolic cause that China used to differ - entiate itself from the two superpowers, the United States and the Soviet Union, and trumpet mainly rhetorical support for the poorer countries of the globe. In the post-Cold War era, since the 1990s, the Developing World has become a real arena for competition with the United States and the site of significant Chinese political, economic, and military interests. This report evaluates China’s strategy toward and involvement in the Developing World and assesses its engagement on a regional basis: Southeast Asia, Oceania, Central Asia, South Asia, the Middle East, Africa, and Latin America and the Caribbean. This regional analysis is complemented by a focus on relations with five particular countries— Russia, Pakistan, Iran, South Africa, and Venezuela—with which China has developed deeper partnerships because of their significance to their particular neighborhoods and to China’s interests. China’s Approach to the Developing World, 1949 to Present The PRC has long seen itself as a leader of the Developing World. In — -1 the early years of the People’s Republic, founder and first leader Mao —0 — +1 xiii RR2273A_CC2015.indb 13 8/14/18 11:11 AM

14 xiv At the Dawn of Belt and Road Zedong presented China as a champion for the Developing World and provided China’s partners—particularly revolutionary governments - and anti-colonial liberation movements—with both military and devel opment assistance. The PRC identified itself as a developing country offering vocal and substantive support to the Developing World. In the late 1970s, following Mao’s death, China focused its “reform and opening” policy on developed economies that could help the PRC advance economically and technologically; nevertheless, China simul- taneously sought to gain access and influence in developing countries through military aid, arms sales, and rewards for switching diplomatic recognition from the Republic of China on Taiwan to the PRC. Then, in the early 1990s, China invigorated and broadened its outreach to the Developing World. China’s fast-growing economy required new sources of raw materials for Chinese factories and new export markets for Chinese-made products. Figure S .1 China’s Four Rings of Insecurity SOURCE: RAND, derived from Andrew J. Nathan and Andrew Scobell, China’s Search , New York: Columbia University Press, 2012, pp. 3–7. for Security -1— RAND RR2273A- S.1 0— +1— RR2273A_CC2015.indb 14 8/14/18 11:11 AM

15 Summary xv Since 2013, under President Xi Jinping, China has embarked upon an ambitious initiative to advance China’s engagement with the Developing World. Xi has promoted an extremely ambitious effort to build a vast web of infrastructure—roads, railways, ports, canals, and pipelines—intended to link China to its neighborhood and the wider world. Originally labeled One Belt, One Road and as of 2017 known as the Belt and Road Initiative, it includes an overland “Silk Road Eco - nomic Belt” and an over-water “Maritime Silk Road.” The former con - sists of a series of proposed networks linking Central Asia to South Asia, the Middle East, and onward to Africa and Europe; the latter envisions shipping routes through the South China Sea and the Indian Ocean toward South Asia, the Middle East, Africa, and Europe. With Belt and Road taking shape, we evaluate China’s activities in the Devel - oping World through the dawn of Belt and Road to note the trajectory of relations and where they are likely to head. China’s Rings of Insecurity and Drivers of Engagement China’s conceptualization of the Developing World is driven by Bei - jing’s insecurity about stability at home and around China’s periph - ery and results in special attention to its own neighborhood. Indeed, China sees its security environment in terms of four concentric circles (Figure S.1). The first and innermost ring encompasses China itself (including Taiwan, which it claims). China’s second ring contains the territory and bodies of water directly adjacent to China’s own land and maritime borders, including portions of Southeast Asia, Central Asia, and South Asia. Chinese leaders believe that peace on China’s periphery is essential to domestic harmony, and this leads China to seek extensive influence in these regions and limit influence by outside powers. The third ring includes China’s entire Asia-Pacific (includ - ing portions of Southeast Asia, Central Asia, South Asia, and all of Oceania), while the fourth ring includes everything beyond Asia—the rest of the globe: the Middle East, Africa, and Latin America and the Caribbean. Four drivers propel China’s desire and need for more engagement with the Developing World. First, China seeks to sustain its domestic — -1 economic growth and sees the Developing World as offering signifi - —0 — +1 RR2273A_CC2015.indb 15 8/14/18 11:11 AM

16 xvi At the Dawn of Belt and Road cant economic potential. Second, China wishes to work with develop - ing countries to increase its global influence. Third, with expanding international investments and growing numbers of PRC citizens living, working, and traveling abroad overseas, Beijing has concluded it must work to ensure the safety of these overseas interests. Finally, China seeks to increase its engagement and activism in open, accessible, and underdeveloped regions around the world to compensate for the less welcoming, constricted, and more developed regions—Northeast Asia, North America, and Europe—which tend to be dominated by the United States and its allies. China in Southeast Asia For China, Southeast Asia is the most important of the world’s devel - oping regions. It contains some of China’s most significant trading partners, is the conduit for much of Chinese global trade through the South China Sea and the Straits of Malacca, and is home to more overseas ethnic Chinese than any other region of the world. China has three overarching interests in Southeast Asia. First, Beijing aims to pro - tect Chinese sovereignty and territorial integrity, including upholding Chinese claims to features in the South China Sea and increasing Chi - na’s maritime presence and capabilities. Second, the PRC looks to pro - mote and protect trade, investment, and other linkages to the region to support China’s economic growth. Third, Beijing looks to promote and expand Southeast Asia cooperation with China as well as minimize the influence of other external actors. Politically and economically, Beijing seeks to increase coopera - tion with its neighbors and regional influence through greater con - nectivity and trade. China’s economic engagement with Southeast Asia in the past decade has been greater than with any other developing region. Unlike other developing regions, China’s trade with the region is weighted much more heavily toward two-way trade in manufactured items rather than by China’s purchase of raw materials. All ten mem - bers of the Association of Southeast Asian Nations (ASEAN) were -1— among the 57 prospective founding members of the China-led Asian 0— +1— RR2273A_CC2015.indb 16 8/14/18 11:11 AM

17 Summary xvii Infrastructure Investment Bank (AIIB), widely seen as a vehicle for funding the Belt and Road Initiative. China in Oceania Oceania—a developing region that includes the developed countries of Australia and New Zealand as well as 14 developing states and a number of non-sovereign territories—is, on the one hand, China’s least important region in the Asia-Pacific. On the other hand, its strategic importance to China is growing. Within the region, China prioritizes Australia and New Zealand, the largest geopolitical and economic actors in Oceania and the only two countries in the region with which China has signed “strategic partnerships.” Although Australia is a close U.S. ally and New Zealand is a key U.S. partner, Beijing believes that politi - cal and economic exchanges could discourage both from supporting U.S. measures to contain China or counter China’s maritime claims. Economically, Beijing is principally interested in Oceania for its natural resources. In 2006, China established the China-Pacific Island Countries Economic Development and Cooperation Forum (CPIC) to provide a forum for high-level regional dialogue and cooperation, such as the delivery of concessional loans to finance infrastructure develop - ment. China’s trade with Oceania is dominated by trade with Australia and New Zealand, from which China imports mostly crude minerals and mineral fuels and to which it exports manufactured goods and machinery. Beijing’s rapidly growing stock of foreign direct investment (FDI) in the region is concentrated almost entirely in Australia. China in Central Asia Central Asia has been a high priority region for China since 1991 when Beijing first engaged with the newly independent post-Soviet republics. Beijing focused on developing a cooperative and constructive relation - ship with this bloc of neighboring states. In the 2010s, Beijing has — -1 four overriding interests in the region. China’s first interest is to ensure —0 — +1 RR2273A_CC2015.indb 17 8/14/18 11:11 AM

18 xviii At the Dawn of Belt and Road its domestic stability and national unity, particularly by countering unrest among the minority Tibetan and Uighur populations in western China. The second interest is in maintaining peace, predictability, and secularism in Central Asia, principally by resolving border disputes and collaboratively managing cross-border minority populations. A third interest is increasing Chinese influence and limiting the influence of other outside powers, in large part through the multilateral Shanghai Cooperation Organization (SCO). A fourth interest is to promote and protect PRC economic interests in the region and beyond, in particular by constructing the infrastructure needed to access Central Asian oil and gas. Although Russia views Central Asia as its sphere of influence, Bei - jing and Moscow have found opportunities to collaborate on regional - initiatives through the SCO, and Beijing sees Russia—although geo - graphically on the periphery of Central Asia—as its most critical part ner in the region. Central Asia is also important as the first stage in President Xi’s Silk Road Economic Belt, and China has funded a range of infrastructure projects in the region. Although China dominates the - region’s trade, Chinese investment—which is concentrated overwhelm ingly in the Kazakhstan hydrocarbon sector—represents a small share of the overall stock of FDI in the region. China has pursued mining, oil, and gas deals in the region, especially in Kazakhstan and Turk - menistan. China has also engaged in a proactive program of high-level military visits, military-to-military exchanges, and combined exercises focused on anti-terrorism operations, suggesting that the region’s secu - rity is a high priority for China. Through deft use of high-profile diplo - macy, infrastructure investment, and military cooperation, Beijing has promoted the image of a powerful and benevolent China. China in South Asia South Asia has become a key region of expanding Chinese interests, influence, and involvement. China’s primary goals in the region are to mitigate regional threats to its internal stability, principally Uighur -1— nationalism stoked by Islamists from Pakistan and Afghanistan; to 0— +1— RR2273A_CC2015.indb 18 8/14/18 11:11 AM

19 Summary xix offset India’s growing geopolitical and economic strength; and to safe- guard Chinese investments and commerce in South Asia. Unlike with most other developing regions (but like Southeast Asia), China’s imports from South Asia include a high proportion of manufactured items, most of which originate in India. Neverthe- less, China’s closest partner in the region is Pakistan, which Beijing sees as the key to countering New Delhi—long China’s principal regional rival—especially as India grows stronger economically and more powerful militarily. China has little cultural influence in South Asia; indeed, it seems more concerned about the flow of the region’s cultures—particularly Islam and Tibetan Buddhism—into China. Whereas most of China’s regional trade is with India, most of its invest - ment has gone to Pakistan. In large part, this investment has focused on efforts to construct roads, railways, and an oil pipeline to connect China’s Xinjiang province to the Pakistani port of Gwadar. This aspi - rational transportation infrastructure—critical components of the Belt and Road Initiative—would facilitate oil and gas imports from the gulf - and, potentially, allow Chinese exports to be sent overland to a deep water port on the Arabian side of South Asia. Since 2000, China has been a key supplier of major conventional weapons to South Asia; Paki - stan and Bangladesh purchased more than half of China’s total arms exports from 2000 to 2014. China in the Middle East The Middle East is of growing importance to China—and rivals Africa - as the most important region to Beijing outside of the Asia-Pacific. Bei jing has three overarching interests in the Middle East. First, China seeks to maintain its access to the region’s energy resources (which comprise more than half of China’s oil imports), continue trade flows, and protect Chinese investments and the approximately half a million PRC citizens in the region. Second, China works to enhance its stat - ure and influence in a region of key geostrategic importance through involvement in high-profile issues, such as the Iran nuclear negotiations. — -1 Third, Beijing focuses on preserving internal and external stability and —0 — +1 RR2273A_CC2015.indb 19 8/14/18 11:11 AM

20 xx At the Dawn of Belt and Road security around the periphery by preventing moral and material sup - port for militant ethnic groups or heterodox religious sects. The Middle East is a central node of both the land and water parts of the Belt and Road Initiative. To date, China’s imports from the Middle East are dominated by petroleum, and it has been involved in many infrastruc - ture projects in the Gulf States and Iran. China military involvement in the region has been extremely modest. Nevertheless, the People’s Liberation Army (PLA) has been increasingly active, including participating in United Nations peace- keeping missions, conducting dozens of port visits, engaging in anti- piracy patrols off the coast of Somalia, and operations to evacuate PRC civilians from regional trouble spots, notably in Libya (in 2011) and Yemen (in 2015). China in Africa Long a key area of the globe for Beijing, Africa’s importance to China has grown, as have China’s influence and involvement. China currently has four overarching interests in the continent. First, Beijing seeks access to natural resources, particularly oil and gas. Second, China looks to enhance international political legitimacy as a global power and leader of the Developing World, and support the principle of noninterference in sovereign countries’ internal affairs. Third, Beijing is interested in export markets for Chinese manufactured items. Fourth, China desires sufficient political stability and security in Africa to assure the safety of its citizens and economic interests. China ensures ongoing high-level engagement with African countries bilaterally and multilaterally, the latter through the Forum on China-Africa Cooperation (FOCAC), under the auspices of which China announces regional engagement strategies; launches educational and cultural initiatives; and unveils large bilateral trade, investment, and aid initiatives and aspirations. China has engaged in a vigorous public diplomacy campaign in Africa to counter negative public per - - ceptions of China. This includes a massive outreach campaign by Chi -1— nese state media and the provision of thousands of scholarships, job 0— +1— RR2273A_CC2015.indb 20 8/14/18 11:11 AM

21 Summary xxi training programs, and people-to-people exchanges under FOCAC auspices. China’s foreign aid—roughly half of which goes to Africa—is by official pronouncement intended to produce mutual benefit rather than mitigate poverty. Much of China’s aid to Africa is given in the form of concessional loans and, in some cases, grants intended for con - - struction and infrastructure development, tied to the purchase of Chi nese goods and services. While China had long maintained a hands-off approach to secu - rity matters in Africa, terrorism, kidnappings, anti-Chinese protests, and civil unrest have affected Chinese citizens. Beijing decided to take a more proactive approach to security by building host nation capacity and making greater use of private Chinese security firms. China has expanded its participation in peacekeeping operations on the continent, including those in Mali, Liberia, Congo, Sudan, and South Sudan. This expansion culminated with the establishment of a base in Djibouti that China refers to as a facility to provide logistical support but that others have subsequently described as China’s first overseas military installation. China in Latin America and the Caribbean Latin America and the Caribbean is the least important region of the Developing World for China. It is geographically distant and com - prises a small share of total Chinese trade. China has three overarching interests in the region. First, Beijing pursues cooperation with Latin American countries to build regional support for PRC international initiatives. Second, Beijing seeks expanded trade and investment oppor - tunities to support China’s economic growth. Third, Beijing targets strengthened political legitimacy in the form of public acknowledge- ment in Latin America of the PRC being the sole political representa - tive of China and the weakening of Taiwan’s footholds in the region. Although Chinese trade with and investment in the region has increased dramatically in the last decade, it is still low compared with Chinese economic engagement with other developing regions. Latin America has been a source of food for China and raw materials for — -1 Chinese manufacturing as well as an export market for Chinese —0 — +1 RR2273A_CC2015.indb 21 8/14/18 11:11 AM

22 xxii At the Dawn of Belt and Road manufactured goods and machinery. China seeks to strengthen trade with major regional economies and has been willing to provide signifi - cant financial support in exchange for resources. To reduce the share of raw materials in China’s trade with the region, Beijing is increas - ingly focusing its investment on infrastructure, agriculture, and local production of value-added products. Countries that are in political turmoil or in financial crisis, such as Bolivia, Ecuador, and Venezuela, have particularly welcomed Chinese investment. Pivotal Regional Partnerships ) While China has formally established partner relations ( huoban guanxi with many countries around the globe, Beijing deems some capitals to be more important than others and tends to dub these “strategic - zhanlue huoban partnerships” ( ). In fact, in almost every region exam ined in this study, China appears to have identified one particular state as being pivotal within the specific geographic region and sought to establish comprehensive, long-term strategic partnerships there. We - label these states “pivotal regional partnerships” (PRPs). It is notewor thy that in only two regions—Southeast Asia and Oceania—can no single PRP be identified. The former is China’s most important region in the Developing World, while the latter is one of its least impor - tant. In Southeast Asia, Beijing appears to perceive multiple PRP can - didate states, depending on whether the primary criterion is economic (Malaysia), political (Indonesia), trustworthiness (Thailand), or geo - strategic risk (Vietnam). In Oceania, the two largest states—Australia and New Zealand—are the clearest PRP candidates, but their close ties to and security alignments with the United States preclude either having a more robust relationship with China, at least for now. PRPs Straddling the Second and Third Rings: Pakistan and Russia The highest priority is afforded to those PRPs that straddle Chi - na’s second and third rings of insecurity—countries that are on the PRC’s immediate periphery. Two of China’s five PRPs—Pakistan and -1— Russia—sit in both the second and third rings. 0— +1— RR2273A_CC2015.indb 22 8/14/18 11:11 AM

23 Summary xxiii Russia is China’s PRP in Central Asia. Although Russia is not geo - graphically located in the region, by dint of its size, proximity, history, and enduring influence in the six landlocked states that comprise the region—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbeki - stan, and Mongolia—Moscow is, without a doubt, Beijing’s most important partner in Central Asia. Russia’s strategic value to China is underscored by the extended land border the two share. Although - coordination between Moscow and Beijing has its limits, the two cap itals have pursued significant cooperation in both military relations and energy affairs. Within Central Asia, Russia concentrates more on military activities while China is focused more on economic efforts, but they share significant interests in countering terrorism, extremism, separatism, and Western ideas of democracy and human rights. Pakistan is China’s PRP in South Asia. For decades Islamabad has been the linchpin of Beijing’s South Asia policy precisely because it is a counterweight to New Delhi. But Pakistan appears to have become far more important for China than simply as a balance against India. - Beijing’s close, abiding partnership with Islamabad is linked to Paki stan’s importance in managing the threat posed by Islamic extremists and ethnic groups who spill across international borders, including into China and Afghanistan. Thus China works with Pakistan to maintain internal security and quash unrest among ethnic minorities, notably the Uighurs in westernmost China. China is also keen to nurture sta - bility and economic development in Pakistan and beyond, which has led Beijing to commit significant investments in Pakistan’s transporta - tion and energy infrastructure. Fourth Ring PRPs: Iran, South Africa, Venezuela China has three identifiable PRPs in the fourth ring—one in the Middle East, one in Africa, and one in Latin America. Certainly Bei - jing actively engages with multiple capitals in each region, and China has expansive relations with numerous states. Thus there are multiple viable candidates for Chinese PRPs. Nevertheless, China has deep, longstanding, and enduring ties with Iran, South Africa, and Venezu - - ela, and each of these states seems to be viewed by Beijing as the cen — -1 terpieces of its regional strategies. —0 — +1 RR2273A_CC2015.indb 23 8/14/18 11:11 AM

24 xxiv At the Dawn of Belt and Road China seeks friends in the oil-rich Middle East that are influen - tial but neither beholden to nor engaged in direct hostilities with the United States; that is, the Islamic Republic of Iran. Both China and Iran tend to think of themselves as having been great powers for millen - nia and as heirs to splendid ancient civilizations. Ostracism by Western capitals drove the PRC and Iran to significant and broad collaboration in political, economic, and military spheres. Beijing provided Tehran with military materiel during the Iran-Iraq war, and China continued to trade with Iran (and provide military technologies) during years of Western sanctions, which strengthened their high-level political and economic ties. China was a key actor in the signing of the 2015 Iran nuclear deal and stands to benefit considerably from the lifting of inter - national economic sanctions. In Africa, China’s strongest partner is the Republic of South Africa. South Africa has been a destination of choice for Chinese busi - - nesses because of its strong financial sector, rule of law, and infrastruc ture. While there are other significant partner states on the continent for China, including Angola, Nigeria, and Sudan, which are major oil exporters, and Ethiopia, where many Chinese companies have opened factories to take advantage of cheap labor, Beijing has singled out South Africa for a long-term relationship since at least the 1990s. As the most diversified economy on the continent, South Africa ranks as China’s most significant trade partner and a leading destination for Chinese investment. Moreover, South Africa’s reliable infrastructure and rule of law make it a convenient base from which Chinese businesses can access other African markets. In 2010, Beijing sponsored Pretoria’s bid to become a member of the BRIC group (Brazil, Russia, India, and China), turning it into the BRICS group (Brazil, Russia, India, China, and South Africa), a sign of the value China assigns to South Africa. In Latin America, although China has engaged with many regional states, Venezuela stands out based upon an array of economic and military indicators. Venezuela’s large oil deposits made it an attrac - tive partner for China, which rapidly offered Caracas significant levels of investment, military materiel, and loans, most of which Venezuela will pay for through future oil exports (if, given its economic collapse, -1— it ever pays). Beijing continues to support Caracas despite its severe 0— +1— RR2273A_CC2015.indb 24 8/14/18 11:11 AM

25 Summary xxv (and largely self-inflicted) economic crisis because there is money to be made and because Venezuela’s ability to pay back many Chinese loans is dependent on continued commodity exports. Ranking Regions by the Numbers Our detailed examination of Chinese involvement in seven different regions using a common template permits us to compare them using the same criteria (Table S.1). An analysis of the movement and magnitude Table S.1 Chinese Economic, Political, and Military Engagement by Region East Asia Asia Asia Latin Africa South Middle Central Oceania America Southeast Economic 39.5 Goods Trade $B 5.7 9.6 17. 0 12.5 9.8 2 .1 210.0 52.3 290.4 479.8 259.4 10 6 .1 14 4 .1 (2000, 2014) 587 57 45 477 520 376 Investment $M 472 28,238 21,370 (2003, 2012) 6,467 10,490 7,0 9 4 4,215 15,089 Political High-level visits 94 55 40 91 40 45 18 (2003–2014) 34 16 25 11 8 Confucius 11 32 Institutes (2014) Military Arms sales $M 0 1,635 0 7, 20 4 2,246 1,495 550 (2000–2014) 27 24 3 1 4 6 26 Field (2005 –14) (2004 –14) (2002–14) (2014) (2009 –14) (2010 –13) (2002–14) exercises SOURCE: Data sources described in the text. NOTE: The countries with the highest levels of each indicator are highlighted in a darker color for each category.

26 xxvi At the Dawn of Belt and Road of China’s economic, political, and military engagement can serve as indicators of Beijing’s relative priorities of Developing World regions. Each dimension is represented by two data points. To assess economic 2000 engagement, we provide the total value of two-way goods trade in and 2014 and the total value of China’s outward FDI in 2003 and 2012. To evaluate political engagement, we provide the number of senior leader visits (that is, PRC president, vice president, premier, min - ister of foreign affairs, and state councilor for foreign affairs) from 2003 to 2014 and the number of Confucius Institutes in 2014. To consider military engagement, we ranked the volume of arms sales from 2000 to 2014 and the number of military exercises the PLA conducted between 2000 and 2014, showing the dates of the first and last field exercise. These data show that Southeast Asia is China’s top priority region in the Developing World. Economically, Southeast Asia is far and away the most important of the seven regions with the largest trade volume—$479.8 billion or 31.1 percent of China’s total trade—with the Developing World in 2014 and the recipient of the largest amount of China’s outbound foreign direct investment in 2012: $28.2 billion or 30.4 percent of China’s total stock of FDI in all seven regions. In terms of political attention, China sent more high-level leaders to Southeast Asia than to any other region of the Developing World. Between 2003 and 2014, top PRC leaders visited Southeast Asia countries 94 times; that is 24.5 percent of all high-level visits to the Developing World. On military measures, Southeast Asia ranks third in volume of arms sales between 2000 and 2014, with $1.635 billion (behind South Asia and Africa), and second in the number of field exercises conducted between the PLA and regional militaries, with 26, behind only Central Asia. Beyond the Asia-Pacific, Africa is China’s second most impor - tant region in the Developing World and Beijing’s most important region outside of the Asia-Pacific, at least according to this analysis of Chinese resource allocations. Note, however, that Africa also has the most countries, which would inflate some of the numbers. Africa was the second largest recipient of the stock of Chinese FDI in 2012 with $21.4 billion—almost a quarter of the total (23.0 percent) Bei - jing sent to the entire Developing World. Africa ranks fourth in terms of the value of the two-way trade China conducted with all seven

27 Summary xxvii regions—$210 billion in 2014 (behind Southeast Asia, the Middle t, and Latin America). Africa is also home to the largest number of Eas Confucius Institutes—34—of any single region, 24.8 per cent of the total in the Developing World. Africa ranks second in terms of the most visited region by top-level PRC officials, well ahead of other regions, cent of the total. with 91 visits between 2003 and 2014, or 23.8 per Africa ranks second only to South Asia in terms of the value of Chinese llion between 2000 and 2014. Although Africa arms sales: $2.25 bi ranks low in terms of the number of military exercises, if one includes other measures of military presence, such as the number of port visits ween 2000 and 2014, PLA operational deployments on United bet (35) Nations peacekeeping missions in 2014 (seven), or establishing a naval facility in Djibouti in 2017, then this all only serves to underscore the level of importance Beijing attaches to Africa. The Middle East ranks as China’s third most important region in the Developing World and its second most important region outside of the Asia-Pacific. If one factors in the Middle East’s role as a critical source of China’s imports, its key linkages to China’s internal secu - rity, and its geopolitical significance for China, then the Middle East at least rivals Africa’s importance to Beijing. Nevertheless, the Middle East ranks ahead of Africa—and second only to Southeast Asia—in terms of the value of two-way trade China conducts with regions of the Develop - ing World. However, the Middle East ranks sixth in terms of the level - of stock of Chinese FDI, ahead of only South Asia. The political indica tors, meanwhile, almost certainly do not do justice to the level of impor - tance Beijing attaches to the region. The relatively low numbers of high- level political visits and Confucius Institutes in the region say more about Chinese political sensitivities and wariness where the Middle East is concerned. Chinese military attention to the region is limited but llion in arms sales between 2000 and 2014, as well bi noteworthy; $1.5 as anti-piracy task forces in the Gulf of Aden since 2008, 44 port visits between 2009 and 2014—more than any other region—and small PLA detachments on United Nations Peacekeeping Operations (UNPKOs) make the PRC a small-time military player in the region. Central Asia is China’s fourth most important region in the — -1 Developing World and second most important developing region in —0 — +1 RR2273A_CC2015.indb 27 8/14/18 11:11 AM

28 xxviii At the Dawn of Belt and Road the Asia-Pacific by the numbers. Economically, this region may not be hugely important—it ranks last in terms of the value of China’s two- way trade—but it ranks fourth in terms of the value of Chinese invest - ments in the seven regions. Politically, Central Asia is an important focus of PRC high-level leadership visits, ranking third behind South - east Asia and Africa. Militarily, Central Asia is considered particularly important at least in terms of the number of military exercises con - ducted in the region between 2002 and 2014: 27. This is the highest number the PLA conducted in any region of the world. This number becomes even more important given that the region has only seven countries, suggesting a high level of per-country activity. South Asia is the fifth most important region in the Developing World and the third most important developing region in the Asia- Pacific. Economically, South Asia does not rate highly for China, with a low level of trade and ranking sixth, ahead of only Central Asia. - ess, the region has a respectable volume of high-level leader thel Never ship visits but ranks last in terms of the number of Confucius Insti - tutes. It is in military metrics that South Asia truly stands out. It is first in terms of the value of Chinese armaments sold in the Devel - oping World, and South Asia ranks third in terms of the number of military exercises China conducts. Indeed, more than half of China’s total arms sales in the Developing World between 2000 and 2014 were - to South Asian countries, and more than a quarter of China’s mili tary exercises between 2002 and 2014 were conducted with South Asia states—mostly with Pakistan. One of China’s least important regions, Latin America and the Caribbean, is of increasing significance to China. Economically, the region is of growing importance and ranks third in terms of two-way trade in 2014 and fifth in terms of a recipient of the stock of Chinese FDI in 2012. Politically, Latin America is a significant destination for high-level Chinese leaders—40—and ranks second only to Africa in terms of the number of Confucius Institutes. Moreover, the region takes on even greater political significance to China as home to a dozen states, as of 2014 (Panama broke ties with Taipei in 2017), that continue to maintain ambassador-level diplomatic ties with Taiwan. -1— This represents the largest single bloc of holdouts to recognizing the 0— +1— RR2273A_CC2015.indb 28 8/14/18 11:11 AM

29 Summary xxix PRC and the government of China. Militarily, China’s profile in the region is extremely small as measured by arms sales and field exercises. While Oceania ranks last to China by the numbers as a region in the Asia-Pacific and low as a part of the Developing World, it is by no means unimportant to Beijing. Indeed, Oceania is of growing economic significance to China; it ranks third in terms of the stock of FDI—behind Southeast Asia and Africa—and fourth in the value of Beijing’s two-way trade. Much of this economic activity is focused on one country—Australia—but China is also economically engaged across this sprawling maritime region. Oceania plays host to the fewest number of senior leader visits but is home to a respectable number of Confucius Institutes. China also directs few military resources at the region, conducting only a handful of exercises and a negligible volume of arms sales. Conclusions China has been more active economically, diplomatically, and militar - - ily all across the Developing World, particularly since the 1990s. Bei jing’s activism has only increased in subsequent decades. China’s grow - ing presence in the various regions of the Developing World is likely to continue to expand under PRC President Xi Jinping and extend beyond his tenure. China’s global economic outreach has been reen - ergized by President Xi’s 2013 proclamations launching the Belt and Road Initiative and his subsequent follow-through efforts. Diplomati - cally, high-profile travel by senior leaders seems destined to continue - apace, and China should remain actively engaged in sustaining bilat - eral partnerships around the globe, as well as participating in multi eral forums. Militarily, the PLA is likely to be increasingly active fur - lat ther afield, conducting more port visits, field exercises, arms sales, and peacetime operational employments in the Developing World. China could set up more military bases, although may not call them bases. Chinese leaders perceive certain regions to be more important than others. Beijing appears to be far more concerned with those — -1 regions of the Developing World that abut China’s borders and that —0 — +1 RR2273A_CC2015.indb 29 8/14/18 11:11 AM

30 xxx At the Dawn of Belt and Road are in its immediate neighborhood than those at a distance. Regions along its borders—Southeast Asia, Central Asia, and South Asia— China’s second ring of security, are of greatest concern because insta - bility there poses a direct and proximate threat to internal security, to China’s first ring. These regions spill over into the third ring. Oceania, - also in China’s third ring, is a lower priority, but there is growing Chi nese interest in this region. Outside of the Asia-Pacific, in the fourth ring, are the Middle East, Africa, and Latin America and the Carib - bean. Although of lesser importance than those regions that occupy the second and third rings, the Middle East and Africa have loomed increasingly important for China during the past decade or so. The Middle East seems to garner greater attention because it is increas - ingly viewed as part of China’s extended periphery—intertwined with China’s first, second, and third rings of security. Meanwhile, Africa has - become an ever more central Developing World arena for Chinese eco nomic and political activity, while Latin America and the Caribbean is of lower priority but growing importance. The United States and China: Partners in Parallel Across the Developing World, the United States and China are neither in direct conflict nor working in close cooperation, although there is significant variation by region. In Southeast Asia, for example, Wash - ington and Beijing are in confrontation mode over Chinese activities in the South China Sea and China’s insistence that freedom of navigation does not extend to U.S. military vessels and aircraft traversing disputed waters claimed by China. But outside of Southeast Asia (and Northeast Asia, among developed regions), the United States and China appear to be “partners in parallel”—meaning that the two states work sepa - rately with no real collaboration in pursuit of similar ends but with no conflicts. Two caveats are in order. First, the partners in parallel concept risks oversimplifying and mischaracterizing a complex reality. In some regions, notably Southeast Asia, the United States and China are at log - gerheads. Second, this concept describes peacetime U.S.-China inter - actions. In wartime or during periods of escalating bilateral tensions, -1— these parallel Chinese and American trajectories are likely to converge 0— +1— RR2273A_CC2015.indb 30 8/14/18 11:11 AM

31 Summary xxxi toward confrontation or diverge in estrangement. How China might act economically, diplomatically, and militarily in the Developing World vis-à-vis the United States in time of war or on the road to war remains unclear. For now, the overriding trend is one in which both countries pursue their own ends, often similar, without conflict. There may even be some minimal coordination, such as in the Gulf of Aden anti-piracy missions or in post-2014 Afghanistan. These parallel efforts have tended to occur either within or at the fringes of existing frameworks, institutions, and regimes. More recently, the United States and China also appear to be acting as partners in parallel in separate universes as Beijing begins to operate in parallel institutions created by China. — -1 —0 — +1 RR2273A_CC2015.indb 31 8/14/18 11:11 AM

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33 Acknowledgments The authors thank Major General Todd McCaffrey, Major General Gregory Bilton, Rodney Laszlo, and Colonel Newman Yang of U.S. Army Pacific for their invaluable input and guidance. Briefings at Pacific Command and Pacific Air Forces also resulted in valuable com - ments. This report has also benefited from the trenchant peer reviews of Andrew Erickson, Eric Heginbotham, and Troy Smith, and from research assistance by Samuel Berkowitz. All errors of fact and inter - pretation remain the responsibility of the authors. The authors thank Kenneth Todd Duft and Cynthia Lyons, the R AND production editors who guided the manuscript through publication; Kathi Anderson, who provided expert copy-editing; and Katherine Wu, who designed the cover. xxxiii

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35 Abbreviations ASEAN-China Free Trade Area ACFTA ACJCC ASEAN-China Joint Cooperation Committee ASEAN-China Senior Officials Consultations ACSOC AIIB Asian Infrastructure Investment Bank ARF ASEAN Regional Forum ASEAN Association of Southeast Asian Nations bilateral investment treaty BIT BRIC Brazil, Russia, and India BRICS Brazil, Russia, India, China, and South Africa CABC China-ASEAN Business Council CASCF China-Arab States Cooperation Forum CASS Chinese Academy of Social Sciences CCP Chinese Communist Party CDB China Development Bank CEL AC Community of Latin American and Caribbean States CICA Conference for Interaction and Confidence- — -1 Building Measures in Asia —0 — +1 xxxv RR2273A_CC2015.indb 35 8/14/18 11:11 AM

36 xxxvi At the Dawn of Belt and Road CMC Central Military Commission CNPC China National Petroleum Corporation CPEC China-Pakistan Economic Corridor CPIC China-Pacific Island Countries Economic Development and Cooperation Forum CSTO Collective Security Treaty Organization EAS East Asian Summit EXIM Export-Import Bank of China FA RC Revolutionary Armed Forces of Colombia FDI foreign direct investment free trade agreement FTA FOCAC Forum on China-Africa Cooperation Freedom of Navigation Operations FONOP GCC Gulf Cooperation Council HADR humanitarian assistance and disaster relief IMF International Monetary Fund intermediate-range ballistic missiles IRMB LDC Least Developed Countries LSG Leading Small Group MINUSMA United Nations Multidimensional Integrated Stabilization Mission in Mali MOFA Ministry of Foreign Affairs MOOTW military operations other than war New Development Bank NDB -1— 0— +1— RR2273A_CC2015.indb 36 8/14/18 11:11 AM

37 Abbreviations xxxvii OPIC Overseas Private Investment Corporation PKO peacekeeping operation PLA People’s Liberation Army PLA AF People’s Liberation Army Air Force People’s Liberation Army Navy PLAN professional military education PME PRC People’s Republic of China pivotal regional partnerships PRPs RCEP Regional Comprehensive Economic Partnership RMB renminbi South Asian Association for Regional Cooperation SA ARC SABIC Saudi Basic Industries Corporation small arms and light weapons S A LW SCO Shanghai Cooperation Organization SIPRI Stockholm International Peace Research Institute SOE state-owned enterprise Trade and Development Agency TDA TPP Trans-Pacific Partnership UA E United Arab Emirates UAV unmanned aerial vehicle UC AV unmanned combat aerial vehicle UN United Nations United Nations Conference on Trade and UNCTA D Development — -1 —0 — +1 RR2273A_CC2015.indb 37 8/14/18 11:11 AM

38 xxxviii At the Dawn of Belt and Road UNIFIL United Nations Interim Force in Lebanon UNITA National Union for the Total Independence of Angola UNMOGIP United Nations Military Observer Group in India and Pakistan UNPKO United Nations Peacekeeping Operations UNSC United Nations Security Council United Nations Transitional Authority in Cambodia UNTAC UNTSO UN Truce Supervision Organization WTO World Trade Organization -1— 0— +1— RR2273A_CC2015.indb 38 8/14/18 11:11 AM

39 CHAPTER ONE Introduction China . . . [is] a large developing country . . . [that] faces mul - tiple and complex security threats, as well as increasing external impediments and security challenges. . . . [T]he armed forces will actively participate in both regional and international security cooperation and effectively secure China’s overseas interests. —PRC Defense White Paper, May 20 15 Since its establishment in 1949, the People’s Republic of China (PRC) has viewed itself as an underdeveloped country—economically backward, physically weak, and vulnerable to exploitation by much more powerful states. Indeed, the narrative of modern Chinese history ye ars of is the story of an enfeebled great civilization victimized by 100 humiliation at the hands of industrialized and militarized imperialist 1 - Even as the PRC has grown stronger economically and mili powers. tarily, especially since the launching of the reform and opening policy by the late Deng Xiaoping in 1978, PRC officials continue to insist that China is a developing country (see Chapter 2 for more discussion). The legacy of Marxist-Leninist-Maoist ideology has tended to reinforce an enduring perception in Beijing that China has more in common with the poorer and less developed states of the world than it 1 The so-called “Century of Humiliation” has been a central contextual feature of PRC foreign policy since 1949, and this continues in the twenty-first century. See Zheng Wang, — -1 Never Forget National Humiliation: Historical Memory in Chinese Politics and Foreign Rela - tions , New York: Columbia University Press, 2012. —0 — +1 1 RR2273A_CC2015.indb 1 8/14/18 11:11 AM

40 2 At the Dawn of Belt and Road does with the economically developed and militarily powerful states of Europe and North America. At the same time, this also meant Beijing unambiguously differentiated the PRC from the two superpowers that emerged out of the Second World War—the United States and the Soviet Union. Even during the 1950s, when Beijing viewed Moscow as an ally and a successful model of a communist-ruled country that modernized itself, Mao Zedong’s writings made clear that China saw itself as part of a vast “intermediate zone,” an expansive middle ground 2 In Mao’s view, the rivalry located between the two superpowers. between the two superpowers was being played out in this “intermedi - ate zone,” which Beijing eventually began to refer to as the “Develop - 3 For Mao, this meant that China had ing World” or “Third World.” emerged from the global periphery and moved to the center stage of geostrategic competition. From the perspective of Beijing, China was clearly the most important country in this zone and the natural leader of the group of weaker states and national liberation movements spread across Asia, Africa, and Latin America. The Developing World has never been more important to China than it is today. In the twenty-first century, China needs the Develop - ing World more than ever for a multitude of reasons. Ironically, in Mao’s day, while the Developing World rhetoric made these regions seem like the centerpiece of Chinese foreign policy, they were not (except in the sense that China saw itself as located at the center of the Develop - 4 Today the rhetoric has moderated, but in reality, China ing World). relies more on the Developing World than ever: for resources, markets, expansion of geostrategic influence, and for advantage in its global competition with the United States. During the Cold War, China was 2 Mao’s China and the Cold War , Chapel Hill: University of North Carolina Chen Jian, Press, 2001, p. 5. 3 For some prominent articulations of Beijing’s views of the Developing or Third World, see Lin Piao, “Long Live the Victory of People’s War!” Peking Review , September 3, 1 965, pp. 9– 30, and “Chairman of Chinese Delegation Teng Hsiao-ping’s Speech at the Special Session of the U.N. General Assembly,” Peking Review , April 19 , 1974, pp. 6– 11. 4 The reality was that Beijing was focused on the strategic triangle—dealing with two -1— superpowers—evidenced by rapprochement with Washington in the early 1970s. 0— +1— RR2273A_CC2015.indb 2 8/14/18 11:11 AM

41 Introduction 3 at least symbolically countering both superpowers and rhetorically promoting world revolution; in the post–Cold War era, China is actively engaged in competing with the United States for influence and promoting Chinese political, economic, and diplomatic interests. China seemed to cement the importance of the Developing World for its future development in 2013 when new Chinese leader Xi Jinping announced his vision for what has become the Belt and Road Initiative. First in Kazakhstan and then in Indonesia, Xi presented a - vision of land and sea corridors and linkages that would integrate Eur asia, involving Southeast Asia, Central Asia, the Middle East, and even 5 Oceania, stretching to Europe. This renewed interest raises a number of questions. What are Chi - na’s goals and interests, and do these run contrary to U.S. goals and interests? What is the scope and scale of China’s economic, diplomatic, and military activities in the Developing World? For example, does trade follow the flag or does the flag follow trade? And what are the - implications for the United States of Chinese activism in the Develop ing World? Focus, Context, Methodology, Outline This study is a comprehensive effort to analyze the range of Chinese involvements in developing regions. It focuses on China in the twenty- first century through late 2014, the early days of the Belt and Road Initiative. By doing so, it shows the trends that China was building on and can help explain how China might gain from Belt and Road. More important, it can show China’s interests and activities well beyond its Belt and Road Initiative, which is only one aspect of China’s policies, and one that remains not fully defined and, therefore, with uncertain prospects of success. Only a small number of studies have comprehensively exam - ined China’s policy toward the Developing World during the past five decades. Three of them were edited volumes published in recent — -1 5 “Chronology of China’s Belt and Road Initiative,” , 2015. Xinhua News , March 28 —0 — +1 RR2273A_CC2015.indb 3 8/14/18 11:11 AM

42 4 At the Dawn of Belt and Road 6 Somewhat surprising, few studies of China’s Cold War era years. policy toward the Developing World have been published; the most well known is a study examining China’s support for national libera - 7 - More studies focused on China’s policy toward par tion movements. ticular geographic regions, such as Africa and the Middle East, or on China’s relations with specific developing countries, such as India or 8 These studies have been empirically rich but largely descriptive. Iran. By contrast, this study concentrates on a more structured and quantitative approach. It is structured in that it analyzes China’s rela - tions with entire regions rather than just selected countries within a region. This study classifies regions of the world, rather than specific states, as developing. The developing regions examined in this report are all the areas of the world except Northeast Asia, Europe, and North America. Specifically, the following regions are the focus of this report: Southeast Asia, South Asia, Central Asia, Oceania, Middle East, Africa, and Latin America and the Caribbean. The study is quantitative in that it attempts to apply numerical information to measure China’s interac - tions with different regions. We do not ignore specific countries. In almost every developing region, we can identify one country that China considers the pivotal partner because of, in China’s view, the combination of its crucial sig - 6 Joshua Eisenman, Eric Heginbotham, and Derek Mitchell, China and the Developing World: Beijing’s Strategy of the Twenty-First Century , Armonk, N.Y.: M.E. Sharpe, 2007; Lowell Dittmer and George T. Yu, eds., China, the Developing World, and the New Global , Boulder, Colo.: Lynne Rienner Publishers, 2010. Dynamic 7 Joshua Eisenman and Eric Heginbotham, eds. China Steps Out: Beijing’s Major Power Engagement with the Developing World , New York: Routledge, 2018. Peter Van Ness, Revolu- tion and Chinese Foreign Policy: Peking’s Support of Wars of National Liberation , Berkeley: Univer - sity of California Press, 1971. For a more recent overview of China’s approach to the Developing World, see Peter Van Ness, “China and the Third World: Patterns of Engagement and Indiffer - ence,” in Samuel S. Kim, ed., China and the World: Chinese Foreign Policy Faces the New Millen - , 4th nium ., Boulder, Colo.: Westview Press, 1998, pp. ed 1–170. 15 8 See, for example, Philip Snow, The Star Raft: China’s Encounter with Africa , Ithaca, N.Y.: The Middle East in China’s Foreign Policy, Cornell University Press, 1988; Yitzhak Shichor, – 1949 - 1977 , New York: Cambridge University Press, 1979; John W. Garver, Protracted Con , Seattle: University of Washington Press, test: China-India Rivalry in the Twentieth Century -1— 2000; John W. Garver, China and Iran: Ancient Partners in a Post-Imperial World , Seattle: 0— University of Washington Press, 2006. +1— RR2273A_CC2015.indb 4 8/14/18 11:11 AM

43 Introduction 5 nificance to its particular neighborhood and to China’s interests. South - east Asia is the only region where there was no clear priority country, and we identify four key states rather than a single pivotal partner. For China, such pivotal countries and the four key states in Southeast Asia merit greater attention as partner states. Data and Methodology We examine China’s engagement with each region in several different ways. We first highlight China’s main interests in the region, and, in some regions, the actors involved in shaping Chinese policy. We then analyze China’s political, economic, and military activities. Within the political engagement section, we examine China’s foreign policy pri - orities and agenda, diplomatic relations with countries in the region, high-level leadership visits to the region, and its cultural influence in the region, and then identify the small set of countries China sees as its most important partners. In the economic sections, we dissect Chinese trade and investments in the region and economic agreements China has signed with local partners. We also discuss particular or special economic projects China has within the region. We then examine a range of ways China could be enhancing military or security coopera - tion with the region, including Chinese arms sales, high-level military visits, combined exercises, People’s Liberation Army (PLA) naval port visits, and other military activities. To be consistent across regions, we relied on several common sources of data. For political and military leadership visits, we referred to China Vitae’s biographical database of reports of Chinese Com - munist Party officials’ foreign travel and corroborated and supported this dataset with articles from the Chinese Ministry of Foreign Affairs (MOFA) website and . For the officials tracked, we Xinhua Online coded each visit by country, region, and date of travel; when possible, we identified counterparts visited and recorded whether the meeting took place as part of a summit, defined here as a meeting of counter - parts from three or more countries. Political, Economic, and Military Data — -1 For our political sections, information on China’s bilateral relations —0 with each country (the particular terms used to define the relationship) — +1 RR2273A_CC2015.indb 5 8/14/18 11:11 AM

44 6 At the Dawn of Belt and Road - were from official Chinese press statements, documents, and informa tion from the Chinese Ministry of Foreign Affairs website. Data on Confucius Institutes was compiled from the lists of Confucius Insti - 9 and tutes worldwide maintained at the University of Nebraska-Lincoln 10 China started Confucius on the Confucius Institute Online website. Institutes in 2004 as nonprofit institutions to promote Chinese language 11 Only university-level Confucius Insti - and culture in foreign countries. tutes, not the far more numerous but far less influential and established Confucius Classrooms, are counted in our dataset. Data on ethnic Chi - nese populations across the Developing World were gathered from the , 2013 Statistical Yearbook of the Overseas Community Affairs Council 12 However, our focus was on estimating Republic of China (Taiwan). the numbers of PRC citizens in regions around the world and there is no single authoritative or reliable source for these figures. We therefore used a range of different sources, as detailed in individual regional chapters. Our economic data focus on several different forms of economic exchange, specifically trade, direct investment, and agreements. For each region, we present data on China’s bilateral merchandise exports 13 Because of and imports drawn from the UN Comtrade Database. its availability, we provide data on trade from 2000 to 2013, in ten 14 (with the term we use in subsequent charts in different categories parentheses): Food an d live animals (food) • Bev • erages and tobacco (beverages and tobacco) Cru • de materials, inedible, except fuel (crude materials) 9 “Confucius Institutes Around the Globe,” University of Nebraska-Lincoln. 10 “Worldwide Confucius Institutes,” Confucius Institute Online. 11 Confucius Institute Headquarters, “About Confucius Institutes,” Beijing, China, 2014. 12 2013 Statistical Yearbook of the Overseas Community Affairs Council, Republic of China (Taiwan), Overseas Community Affairs Council, Republic of China (Taiwan), September 14. 20 13 United Nations, UN Comtrade Database, 2014. 14 - These are the top-level categories of the Standard International Trade Classification, revi -1— sion 3. 0— +1— RR2273A_CC2015.indb 6 8/14/18 11:11 AM

45 Introduction 7 • Mineral fuels, lubricants, and related materials (mineral fuels) • Ani mal and vegetable oils, fats, and waxes (animal and vegeta - ble oils) • Che micals and related products (chemicals) ufactured goods classified chiefly by material (manufactured • Man goods; this is one of three categories of manufactured items, although “chemicals and related products” can also be considered a manufactured item) • Mach inery and transport equipment (machinery and transport; this is one of three categories of manufactured items) - cellaneous manufactured articles (miscellaneous manufac Mis • tured; this is one of three categories of manufactured items) • modities and transactions not classified elsewhere (other). Com We use the United Nations Conference on Trade and Develop - ment (UNCTAD) foreign direct investment (FDI) database to show the stock of China’s outward FDI relations around the world. Direct investment is overseas investment for the purpose of controlling a - company or owning real estate; it is different from portfolio invest 15 The stock ment, which is investment into debt or equity securities. is the cumulative amount, whereas the flow is the annual amount of investment. In this report, we focus on the stock. For agreements, we 16 17 tax treaties, free trade present data on bilateral investment treaties, 18 and membership in the Asian Infrastructure Investment agreements, 15 United Nations Conference on Trade and Development, Bilateral FDI Statistics , 2014. 16 Bilateral Investment Treaty , Ministry of Commerce of the People’s Republic of China, Department of Treaty and Law, 2011; Investment Policy Hub: International Investment Agree - ments , UNCTAD, 2013. 17 United Nations Conference on Trade and Development, “China: Total Number of Double Taxation Agreements Concluded 1 June 20 11,” 2011; State Administration of Taxa - tion of the People’s Republic of China, “Zhongguo Shuishou Xieding Tanqian De Zongti Qingkuang” [“The Overall Situation of the Negotiation of China’s Tax Treaty”], 2013; Dezan Shira and Associates, “Understanding China’s Double Tax Agreements,” China Brief - ing , February 12 , 2014. 18 — -1 Asian Development Bank, “Free Trade Agreements,” Asia Regional Integration Center, 2 015. —0 — +1 RR2273A_CC2015.indb 7 8/14/18 11:11 AM

46 8 At the Dawn of Belt and Road 19 In terms of tax treaties, we focus specifically on treaties Bank (AIIB). that deal with treatment of income from foreign investment or with treatment of income and capital related to foreign investment. For our military indicators, we present a quantitative assessment of Chinese major conventional arms sales in each of the regions based on the Stockholm International Peace Research Institute (SIPRI) Arms Transfers Database (2000–2014), which measures the volume of arms 20 Although the term transfers in millions of trend-indicator values. “arms sales” in this report refers specifically to transfers of major con - ventional weapons, information on China’s sales of small arms and light weapons (SALW), taken from UN Comtrade data, is discussed where relevant. Since 2000, Chinese sales of major conventional weap - ons to South Asia, Africa, Southeast Asia, and Latin America and the Caribbean have increased; sales to the Middle East have decreased during that time. Notably, China has not sold major conventional arms to Central Asia or Oceania. Perhaps most interesting, more than three-fifths of China’s major conventional arms exports went to just three states: Pakistan, Bangladesh, and Myanmar. The data on PLA Navy (PLAN) port visits was compiled from several sources. We 21 with find - supplemented parts of a dataset compiled by Phil Baxter ings from the Chinese Ministry of Defense (MOD) website, Xinhua , and an article by Andrew S. Erickson and Online , China Daily Online 22 The data on PLA military exercises is based on Austin M. Strange. the list published in the Department of Defense’s 2015 annual report 19 “Prospective Founding Members,” webpage, 2015a; Asian Infrastructure Investment Bank, “50 Countries Sign the Articles of Agreement for the Asian Infrastructure Invest - ment Bank,” June 29 , 2015b. 20 Trend-indicator values (TIV) are expressed in constant 1990 USD and are assigned based on standardized values of each type of weapon rather than the actual value of the finan - cial transaction. For more information on how TIV is calculated, see http://www.sipri.org/ reSoutheastAsiarch/armaments/transfers/measuring. 21 War Phil Baxter, “What Crunching the Data Tells Us About China’s Naval Port Visits,” , March 3, 2 015. Is Boring 22 Andrew S. Erickson and Austin M. Strange, “China’s Blue Soft Power: Antipiracy, inter Engagement, and Image Enhancement,” Naval War College Review , Vol. 68, No. 1, W -1— –91. 2015, pp. 71 0— +1— RR2273A_CC2015.indb 8 8/14/18 11:11 AM

47 Introduction 9 - on China’s military; again, it is supplemented with data from the Chi nese MOD website. Caveats to the Data It is important to note that the data we use have limitations. For exam - ple, in the realm of political data, Chinese press statements, docu - ments, and information from the Chinese Ministry of Foreign Affairs website may be incomplete or incorrect. In the realm of economic data, China’s recorded trade data often does not match the trade data of - partner countries. For example, according to the UN Comtrade Data llion worth of goods exports to the United bi base, China reported $325 States in 2011 and $352 worth of goods exports in 2012. In contrast, in the same database, the United States reported $417 bi llion worth of llion worth of goods goods imports from China in 2011 and $444 bi imports in 2012. Differences may arise from how the two countries treat trade through Hong Kong, but there may also be instances of over - invoicing or underinvoicing for a variety of purposes. For some of our other indicators, anything that relies on media reporting may miss information or be incorrect. Our data on PLA Navy port visits provides an example. As noted, we initially relied on data compiled by one specialist and then built that out with government announcements, Chinese media reporting, and the findings of two other specialists. Yet, we have no doubt we missed some. In fact, at least in the case of Africa, other scholars have 23 found somewhat more port visits. We chose to stay with our data as compiled for several reasons. First, due to time and budget constraints, we needed a reasonable cutoff for data collection. We have no doubt new sources are available that can help further strengthen the data. Second, we wanted to be con - sistent by region in our methods of data collection. Third, and most important, all data sources appear to have similar trends and magni - tudes. Further data compilation is unlikely to change any findings. As a result, we are confident that our data can be used to give a reasonable 23 — -1 Andrew S. Erickson and Austin M. Strange, Six Years at Sea and Counting: Gulf of Aden Anti-Piracy and China’s Maritime Commons Presence , The Jamestown Foundation, June 201 5. —0 — +1 RR2273A_CC2015.indb 9 8/14/18 11:11 AM

48 10 At the Dawn of Belt and Road indication of China’s activities in the Developing World and be used to draw policy implications. The Plan for the Report This report proceeds as follows. In Chapter 2 it examines China’s policy and strategy toward the Developing World and surveys the range and pattern of Chinese activities across different regions of the world. In Chapters 3 through 9, the study examines the seven regions into which we have divided the Developing World. Then in Chapter 10, it con - siders China’s relations with pivotal states in each geographically dis - tinct developing region of the world. Chapter 11 offers conclusions and implications of our research for the U.S. Army and the United States. Appendix A discusses the actors involved in shaping or influencing Chinese policy toward its most important region, Southeast Asia, and its least important region, Latin America and the Caribbean, to pro - vide insight into how China manages its foreign policy priorities. -1— 0— +1— RR2273A_CC2015.indb 10 8/14/18 11:11 AM

49 CHAPTER TWO China in the Zone: The Cold War and After Although the Developing World has never really been a strategic focus of the PRC, it has invariably figured significantly in China’s official for - eign policy schema. According to China scholar Peter Van Ness, “One of the most consistent themes in Beijing’s foreign policy statements . . . 1 China’s official is the identification of China with the Third World.” pronouncements routinely insist that China “belongs” to the Develop - ing World, China supports the Developing World and stands in soli - darity with it, and China will maintain this stance even after it grows rich and strong, as Samuel Kim notes. On the basis of this official rhetoric, Kim observes, the developing states ought to be “central” to PRC foreign policy. And yet China has not demonstrated an endur - ing commitment to or engaged in close cooperation with states of the 2 While the Developing World has long figured Developing World. prominently in Beijing’s foreign policy, it was never a true central focus except during the 1960s when China was racked by political turmoil at home and passionately committed to supporting liberation movements 3 in Developing World countries. 1 Peter Van Ness, “China as a Third World State: Foreign Policy and Official National , China’s Quest for National Identity Identity,” in Lowell Dittmer and Samuel S. Kim, eds., Ithaca, N.Y.: Cornell University Press, 1993, p. 19 4. 2 Samuel S. Kim, “China and the Third World: In Search of a Peace and Development Line,” in Samuel S. Kim, ed., China and the World: New Directions in Chinese Foreign Rela - tions , 2nd ed ., Boulder, Colo.: Westview Press, 1989, p. 14 8. Kim actually uses the term “centrality of the Third World.” — -1 3 202 (Table 2), 204. Van Ness, 1993, pp. —0 — +1 11 RR2273A_CC2015.indb 11 8/14/18 11:11 AM

50 12 At the Dawn of Belt and Road PRC leaders have consistently identified China as a member of the Developing World, but they did not view China as merely another developing state. Rather, China holds a distinctive—if not unique— 4 In their eyes, as a former great status within the Developing World. power and natural leader, Beijing did not see itself merely as the cham - pion of the nonaligned movement but also on a preordained trajectory to reclaim its rightful place at the center of the world stage. As such, the Developing World has served as a key arena for Chinese geostra - tegic and diplomatic activities and a location where China needed to build up hard and soft power to elevate itself to the status of a great 5 And especially since 1979, developing countries have become power. 6 But while the Develop - important in another dimension—economic. ing World has always been a zone of competition for Beijing, China has never had a strategy specifically directed toward it. Rather, China’s - approach to the Developing World was always part of a broader strat 7 egy toward the superpowers and the larger world. Beijing’s approach to the Developing World in PRC foreign policy can be divided into three periods: the Maoist era (1949–1977); the Dengist era (1978–1991), and the Globalist era (1992–present). Two of these periods span the Cold War, while the third corresponds to the post–Cold War period. The earlier periods correspond with the tenures of particular leaders and foreign policy orientations; the current period - corresponds to a global orientation across the tenures of multiple para mount leaders. In this chapter, we analyze for each period PRC foreign 4 Van Ness, 1993, p. 213. 5 Of course, the term “soft power,” coined by Joseph Nye in the 1990s, was not in use in the 1950s, 1960s, 1970s, or 1980s. However, since the 1990s, Chinese leaders have embraced the term and consider it just as important as hard power. See Andrew J. Nathan and Andrew Scobell, China’s Search for Security , New York: Columbia University Press, 2012, Chapter 12. 6 According to Peter Van Ness, China has had four “consistent patterns” of goals in its policy toward the Developing World since 1949. The first is to build fruitful trade relation - ships; the second is to support Beijing in the UN; the third is to contain Taipei diplomati- cally; and the fourth is to lure Third World states away from the superpowers. See Van Ness, “China and the Third World: Patterns of Engagement and Indifference,” in Samuel S. Kim, ed. China and the World: Chinese Foreign Policy Faces the New Millennium , 4th ed ., Boulder, -1— 15 5. Colo.: Westview Press, 1998, p. 7 0— Nathan and Scobell, 2012, p. 14. +1— RR2273A_CC2015.indb 12 8/14/18 11:11 AM

51 China in the Zone: The Cold War and After 13 policy strategy and how the Developing World factors in, through an examination of global trends, and then examine Beijing’s views of the 8 Last, we outline three key elements of strategy: ends, ways, and means. how China prioritizes the globe, specifically the relative importance of different regions of the Developing World. Maoist Foreign Policy Strategy and the Developing World, 1949–1977 China assessed the global environment as tumultuous and rife with revolution and the ever-present specter of major war. At home, this corresponded to conditions of social upheaval, economic mobilization, and political struggle. Mao stressed the need for continuous revolu - tion domestically, which resulted in an internal situation of sustained turmoil in which Chinese Communist Party (CCP) leaders empha - sized the threat of ideological enemies and traitors inside China being controlled or orchestrated by outside forces. This produced a mix of heightened social paranoia and political and economic chaos, which at times plunged the country into widespread famine (for example, the Great Leap Forward, 1959–1962) and at other times erupted into civil war-like violence (for example, the Cultural Revolution, especially 1966–1969). The toll in death and human suffering was substantial. The upheaval also stunted China’s economic development and resulted in a rhetorically boisterous and ideologically charged foreign policy. In this environment, China was shadowed by the prospect of major military conflict, specifically attack from one or both of the superpow - ers. This entailed a primary foreign policy focus on the Soviet Union and the United States as the best way to safeguard China’s national 9 Initially, during the first decade of the PRC’s existence, it sec u r it y. involved an alliance with the Soviet Union to counter the United States 8 For a discussion of these elements of strategy, see Harry R. Yarger, Strategic Theory for the 21st Century: The Little Book on Big Strategy , Publication 641, Strategic Studies Institute, U.S. Army War College, Carlisle, Pa., February 06. 20 — -1 9 For a review of Beijing’s relations with Moscow since 1949, see Nathan and Scobell, 2012, —0 Chapter 3. — +1 RR2273A_CC2015.indb 13 8/14/18 11:11 AM

52 14 At the Dawn of Belt and Road (what Mao dubbed “leaning to one side”); then, during roughly the PRC’s second decade, following a split with Moscow, Beijing pursued an uneasy course having tense relationships with both Moscow and Washington and, later in the subsequent decade, consummating a rap - prochement with the United States to counter what China perceived as an escalating Soviet threat. By the time relations between Beijing and Moscow began to thaw in the late 1980s, the days of the Soviet Union were numbered. In the overall context of the Cold War, the Developing World became important as an arena in which China could appear stron - ger and more influential than it really was. China’s message was that Beijing was an authentic champion of the Developing World because, unlike Washington or Moscow, China was also a Developing World state. Beijing’s message resonated with a Developing World audience, although there was recognition that China was not capable of sup - - plying the armaments or economic support that the two superpow ers could. Moreover, China’s actions rarely lived up to the grandiosity of its rhetoric: spouting verbiage supporting global revolution was one thing, but backing this up with material goods and concrete acts was another matter. - Nevertheless, this high-decibel, militant rhetoric did grab atten tion and allowed China to project an image of being a major world player in the same league as the two superpowers. China’s actual support for communist regimes and national liberation movements around the world was modest in practice. Its most tangible assistance was to insur - gencies in the Asia-Pacific neighborhood, especially in Southeast Asia, with real success in a handful of countries, notably in Indochina. In the 1950s, in addition to China’s pivotal role in the Korean War, Chinese support helped the Viet Minh emerge victorious against France, and China played a key role brokering an agreement by which the French withdrew from Indochina. In the 1960s, China helped North Vietnam wage an ultimately successful extended armed struggle against South Vietnam backed by the military might of the United States. Then, in 10 the 1970s, China backed the victorious Khmer Rouge in Cambodia. -1— 10 See, for example, Nayan Chanda, Brother Enemy: The War After the War , New York: Har - 0— court Brace and Jonvanovich, 1986. +1— RR2273A_CC2015.indb 14 8/14/18 11:11 AM

53 China in the Zone: The Cold War and After 15 While China also supported other revolutionary movements with at least modest levels of assistance and training, none of these elsewhere in Asia were as successful as those in Indochina. China did maintain and cultivate relationships with a number of other regimes and movements around the globe. However, China was rarely the patron of choice since it was unable to provide the arma - ments and resources available to clients of Moscow or Washington. The means China employed were a mix of hard and soft power instruments with a heavy emphasis on the latter. China’s rhetoric was high powered and its revolution-for-export zeal was probably at its height during the 1960s, symbolized by Marshal Lin Biao’s impas - sioned 1965 address titled “Long Live People’s War!” At that time, 11 Such rhetorical support China reportedly supported 24 insurgencies. for the struggles of the peoples of the Developing World China iden - tified as oppressed was a constant feature of Chinese foreign policy from the 1950s through the 1970s. The themes of Beijing’s solidarity with the Developing World are evident in Premier Zhou Enlai’s speech at the 1955 Bandung Conference and Vice Premier Deng Xiaoping’s 12 address to the UN in 1974. China’s diplomatic clout and support for the countries of the Developing World was weak and limited until after Beijing was admitted to the UN in 1971. However, China played a weak hand very adeptly by making a considerable fuss over the rulers of small countries in Africa and Latin America. According to one of the first plomats to be stationed in Beijing during the mid-1970s, “Chi - di U.S. na’s attention to . . . Third World countries is amazing. In how many big countries do they give such a great stylist [sic] welcome to chiefs of state from tiny African countries for example. The airport is bedecked, downtown is colored [with] banners all over and big signs of welcome 13 in French or English.” 11 Van Ness, 1971, Chapters 4 and 6. 12 965; and 3, 1 Lin Piao, “Long Live the Victory of People’s War!” Peking Review , September “Chairman of Chinese Delegation Teng Hsiao-ping’s Speech at the Special Session of the U.N. General Assembly,” Peking Review , April 19 , 1974. — -1 13 - George H. W. Bush, The China Diary of George H. W. Bush: The Making of a Global Presi —0 dent , Jeffrey Engel, ed., Princeton, N.J.: Princeton University Press, 2008, p. 34 1. — +1 RR2273A_CC2015.indb 15 8/14/18 11:11 AM

54 16 At the Dawn of Belt and Road China’s military support in terms of weapons, training, and man - power during the Cold War was generally humble but significant for the specific movements involved, especially those in Asia. Similarly, economic aid and assistance were quite modest with some notable exceptions such as the 1970s construction of the TanZam railway con - 14 necting landlocked Zambian copper mines to ports in Tanzania. Nevertheless, such efforts earned Beijing much goodwill among devel - oping countries, and this is still evident today, especially in Africa. Dengist Foreign Policy Strategy and the Developing World, 1978–1991 Following the death of Mao Zedong in 1976, China was in a sorry condition, economically impoverished and with a populace weary of 15 Within two years, a leader who cham - domestic political struggle. pioned the priorities of economic development and opening up to the outside world came to power. Deng Xiaoping, although a protégé of Mao, was less of an ideologue and recognized the most logical way to modernize China was to rebuild its economy pragmatically and to reorient the country outward by engaging with the global economic system. Deng justified the logic of China focusing on economic reform by proclaiming that the world was entering a new era in which peace and development were the main trends of the times. While there would continue to be conflict and tensions in the world, notably persistent struggle between the two superpowers and real threats to China’s secu - rity, mainly from the Soviet Union and its proxies, China now faced a - period of strategic opportunity in which it could seize upon modern izing its backward economy. This external economic outreach focused on the developed world because this is where Deng and other Chinese leaders believed Beijing could find trading partners and investors who 14 For an overview of Chinese aid projects of that period, see Snow, 1988, Chapter 5. 15 For an excellent analysis of the political climate and conditions in China upon Mao’s - death in 1976, see Harry Harding, China’s Second Revolution: Reform After Mao , Wa shing -1— ton, D.C.: Brookings Institution Press, 1987, Chapter 2. 0— +1— RR2273A_CC2015.indb 16 8/14/18 11:11 AM

55 China in the Zone: The Cold War and After 17 - could help China grow through the official policy of “reform and open 16 ing to the outside world.” A high priority was for China to catch up with global advances in science and technology, and to this end the United States, Japan, and the countries of Western Europe would be of most value. In pri - oritizing reform and opening, by 1980 China had “turned its back 17 But this did not mean China completely on the Developing World.” ignored the Developing World. Indeed, the key prerequisite for eco - nomic development at home was peace and stability in the Asia-Pacific, especially in China’s immediate neighborhood. Yet here China was largely focused on countering the Soviet Union and its “adventurism” in the region—from the Red Army in Afghanistan to Soviet forces along their extended common border (including the Soviet satellite of Mongolia) and the Soviet client state of Vietnam. China sought to manage these problems and keep tensions from escalating into all-out war through actions aimed to deter Moscow and any of its allies from stirring up too much trouble. Moreover, China sought to maintain its identity as a champion and member of the Developing World. While China was focused on developed countries, it also sought to gain access and influence in developing countries. One of the most attractive aspects of China to some countries was the array of reason - ably priced weaponry and difficult to obtain items Beijing was willing to sell. For some countries, like Iran and Iraq in the 1980s, China was 18 China a useful source of armaments as they waged war on each other. was also willing to sell missiles and missile technology that other coun - tries, such as the United States, were unwilling to provide. China sold intermediate-range ballistic missiles (IRBMs) to Saudi Arabia. The rea - sons for this were not just to earn foreign exchange but also to help per - suade Riyadh that it should switch diplomatic relations from Taipei to Beijing. China worked to win diplomatic allies by wooing them away 16 Nathan and Scobell, 2012, Chapter 10. 17 206. Van Ness, 1993, p. 18 On arms sales to the Developing World during the Deng era, see John W. Lewis, Hua Di, — -1 and Xue Litai, “Beijing’s Defense Establishment: Solving the Arms Export Enigma,” Inter - national Security –109. , Vol. 15, No. 4, Sp ring 1991, pp. 87 —0 — +1 RR2273A_CC2015.indb 17 8/14/18 11:11 AM

56 18 At the Dawn of Belt and Road from Taiwan. Another reason China was engaged in the Developing World was to counter the Soviet Union. Beijing supported various anti- Soviet insurgent movements in Afghanistan and in various civil wars 19 in Africa. China used various instruments of hard and soft power. These - means included military support for anti-Soviet mujahedeen in Afghan istan and for the Khmer Rouge forces in Cambodia fighting against the Vietnamese troops that had invaded in late 1978. China also sup - ported groups such as the National Union for the Total Independence of Angola (UNITA), which was fighting against Cuban troops and the Soviet-backed government in Luanda. But economically China tended to concentrate mostly on the developed world. Moreover, in terms of messaging and rhetoric, Beijing was rather low-key where the Develop - - ing World was concerned because its primary focus was on the super powers and the developed world. Beijing also waged a diplomatic struggle against Taipei. In the 1980s and early 1990s, many countries, mostly in the Middle East and Latin America, switched ties from Taiwan to China. Globalization Strategy and the Developing World, 1992 to Present After the Cold War, Beijing determined that peace and development remained the main trends of the times. Moreover, in the aftermath of the Tiananmen Square crackdown in 1989, sparking Western condem - nation and sanctions, and of the collapse of the Soviet Bloc from 1989 to 1991, China revived its Developing World rhetoric and paid greater 20 attention to developing regions. Feeling diplomatically isolated, politically shunned, and economi - cally blocked by the United States and other countries in the developed world in the immediate aftermath of the Tiananmen Massacre, China 19 For a survey of China’s political and military involvement in Africa, see Snow, 1988, Chapter 4. -1— 20 Van Ness, 1993, pp. 213–214. 0— +1— RR2273A_CC2015.indb 18 8/14/18 11:11 AM

57 China in the Zone: The Cold War and After 19 launched an initiative to reach out energetically to Developing World 21 In the first countries, including other countries blackballed by the West. months and years of the post-Tiananmen crackdown, Beijing retrenched economically. However, by 1992, Chinese leaders had regained their confidence and paramount leader Deng Xiaoping had given a green light for a reinvigoration of economic reforms. Along with this second wave of reform came a realization that China’s industries needed to import more resources and raw materials for ramped-up production, and that further export-led growth required new markets beyond those in the developed world. In short, an economic logic prompted Beijing to 22 focus far greater attention on the Developing World. China’s goals were partly geostrategic in seeking to counter the United States in an era of a sole superpower. This meant looking for friends around the world and building Beijing’s status as a rising great power and champion of the Developing World. Moreover, China’s bur - geoning economy put a high priority on acquiring new sources of raw materials resources and commodities for Chinese factories and new markets for Chinese products. This quest necessitated China broad - ening out from the developed states and the Soviet bloc and into the Developing World. China took a far more activist stance than it had during the pre- vious two periods, internationally and within the Developing World, in an unprecedented range of ways, both multilaterally and bilaterally. This activism was characterized by mostly conciliatory rhetoric and nonviolent actions. First, China was particularly active economically through expanded trade and investment, especially in the Asia-Pacific but also further afield in the Middle East, Africa, and Latin America and the Caribbean. Second, China participated actively in existing global and regional organizations, including but not limited to the United Nations (UN), the World Trade Organization (WTO), the Associa - tion for Southeast Asian Nations Regional Forum (ARF), the South 21 Dittmer, “China’s Rise, Global Identity, and the Developing World,” in Dittmer and Yu, 2010, pp. 222– 223. 22 — -1 Evan S. Medeiros, China’s International Behavior: Activism, Opportunism, and Diversifica - 6. tion , Santa Monica, Calif.: R AND Corporation, MG-850-AF, 2009, p. 20 —0 — +1 RR2273A_CC2015.indb 19 8/14/18 11:11 AM

58 20 At the Dawn of Belt and Road - Asia Association for Regional Cooperation (SAARC), and the Orga nization of American States. Third, the PRC also started creating an “alternative universe” of multilateral institutions and mechanisms that tended to be China-centric. These newly established entities included the Conference for Interaction and Confidence-Building Measures in Asia (CICA), the Forum on China-Africa Cooperation (FOCAC), the Shanghai Cooperation Organization (SCO), the China-Community of Latin American and Caribbean States (CELAC) forum, the Brazil, Russia, India, China, South Africa grouping (BRICS), and later, the Asian Infrastructure Investment Bank (AIIB) and the New Develop - ment Bank (NDB, also known as the BRICS bank), among others. Fourth, China has vigorously pursued an array of bilateral partnerships with states around the world. Many of these partnerships are com - prehensive, involving not just economic, but diplomatic, cultural, and military components (see Chapter 10). China wielded a dizzying array of hard and soft power instru - levers. China offered ments. The greatest emphasis was on economic many countries the chance to modernize, prosper, and improve their infrastructure without the conditions required by many developed countries. Diplomatically—both bilaterally and multilaterally—China showed many countries attention and deferential treatment they had not expe- rienced before. Senior Chinese leaders paid visits, making leaders of developing countries look and feel important. When these leaders vis- ited China, Beijing rolled out the red carpet; when Chinese leaders visited their countries, they came bearing gifts and offering concrete 23 deliverables for their hosts. China promoted rhetoric of China also being a Developing World country and emphasized that they stood for different principles than those of the United States and other developed states. China claimed it respected the principle of noninterference in the internal affairs of other countries and did not insist on criticizing human rights viola - tions or insisting on democracy or rule of law. 23 Medeiros, 2009, and Phillip C. Saunders, China’s Global Activism: Strategy, Drivers, -1— 4, W To ol s , Institute for National Strategic Studies Occasional Paper No. ashington, D.C.: 0— 20 06. National Defense University Press, October +1— RR2273A_CC2015.indb 20 8/14/18 11:11 AM

59 China in the Zone: The Cold War and After 21 Security-wise, China paid increasing attention to military-to- military relations; peacekeeping deployments in the Middle East, Africa, and Latin America; port visits; and military exercises—often very small in scale. China also invited military officers to attend profes - sional military education (PME) institutions in China. Defense diplo - 24 macy was stressed more than it ever had been before. Contemporary Chinese Foreign Policy and the Developing World According to one leading scholar of Chinese foreign policy, many in China continue to view their country as a “developing state” and believe that China has common cause with other “developing 25 Although Beijing does not seem to have a specific strat - c ou nt rie s.” egy focused on the Developing World, China views the Developing World within a larger context of its relations with different types of international actors. China has long proclaimed a foreign policy mantra of “major powers are the key, surrounding countries are the first priority, developing countries are the foundation, and multilat - 26 Major powers have typically eral forums are the important stage.” included the most important and powerful countries internationally, - such as the United States, Russia, and the European Union. Neigh bors include more than two dozen countries that China borders by land or water. Chinese definitions of developing countries correspond to UN definitions. These three categories are not mutually exclusive, and countries could fall under more than one category. China has typically viewed developing countries as less important than major 24 For overviews of these activities and events, see the biannual PRC Defense White Papers. 25 However, according to Shambaugh, this is only one of seven “global identities” that he has discerned among Chinese elites. According to Shambaugh, China “possesses multiple international identities and is a conf licted country in its international persona.” See David Shambaugh, China Goes Global: The Partial Power , New York: Oxford University Press, 2012, p. . 43 26 Since the 18th Party Congress in 2012, China has also begun to talk about public diplo - — -1 mac y as a fifth type of diplomacy. See “Shibada Zhi Hou De Zhongguo Waijiao Xin Jumian” —0 Pa rty Congress”], Sina News , January 9, 2 014. [“China’s New Foreign Policy After the 18th — +1 RR2273A_CC2015.indb 21 8/14/18 11:11 AM

60 22 At the Dawn of Belt and Road powers and neighboring countries. Multilateral forums, the fourth category, are growing in importance and becoming a means by which 27 China can partner with developing and developed countries alike. Increasing Chinese Prioritization of the Developing World Party Congress in 2012 Since the Chinese Communist Party’s 18th articularly after Chinese President Xi Jinping came to power, and, p there has been increasing Chinese attention to neighboring countries (of which a majority are developing countries) and the Developing 20 13, Xi headed the Peripheral Diplomacy Work World. In October Conference, the first major work conference on foreign policy since 2006. He emphasized the need for a more “proactive” peripheral diplo - macy to create a stable and beneficial environment for China’s develop - ment, protect China’s core interests, and strengthen China’s leadership 28 role in the region. This meeting was followed by a November 2014 Central Con - 29 At the conference, Xi fer ence on Work Relating to Foreign Affairs. 27 There was some discussion as to whether leaders in Beijing have placed neighboring coun - tries as more important than major powers since the 18th Pa rty Congress and particularly after the October 20 13 Peripheral Diplomacy Work Conference headed by Xi. A public statement to the contrary should not be taken at face value. See “Waijiaobu Yazhousi Sizhang Luo Zhaohui Tan Zhongguo Zhoubian Waijiao Xin Zhengcheng” [“Chinese Ministry of Foreign Affairs’ Department of Asian Affairs Director-General Luo Zhaohui Discusses New Directions in China’s Neighboring Country Policy”], Ministry of Foreign Affairs of the People’s Republic of China, December , 2013. 27 28 Timothy Heath, “Diplomacy Work Forum: Xi Steps Up Efforts to Shape a China-Centered Regional Order,” Jamestown China Brief , Vol. 13, No. 22 , November 7, 2 013, pp. 6– 9; Michael D. Swaine, “Chinese Views and Commentary on Periphery Diplomacy,” China Leadership Monitor , No. 20 14. 44 , July 29 Premier Li Keqiang presided over the conference, and an unprecedented number of Chi - nese leaders involved in foreign affairs attended, indicating that Xi’s remarks during the meeting represents the most authoritative statements by the current Chinese leadership on foreign policy. According to Michael Swaine, this meeting included “central and local Chi - nese civilian and military officials, nearly every Chinese ambassador and consul-general with ambassadorial rank posted overseas, and commissioners of the Foreign Ministry to the Hong Kong Special Administrative Region and the Macao Special Administrative Region.” See Michael D. Swaine, “Xi Jinping’s Address to the Central Conference on Work Relating to Foreign Affairs: Assessing and Advancing Major-Power Diplomacy with Chinese Character - -1— No. China Leadership Monitor , istic s,” 46 , Winter 2014, p. 1. 0— +1— RR2273A_CC2015.indb 22 8/14/18 11:11 AM

61 China in the Zone: The Cold War and After 23 began by assessing how the changing and new international situation required that China alter, broaden, and expand its diplomatic strategy— issuing what amounted to a directive to PRC diplomats to become more ambitious and forward leaning. After his assessment, he immedi - ately discussed the importance of neighborhood diplomacy, suggesting that periphery diplomacy is one of China’s top foreign policy priori - ties. In sequence (and likely priority), he also highlighted several other 30 major priorities for Chinese foreign policy: Strengthen relations with major countries and expand coopera • - ti on with major developing countries engthen unity and cooperation with developing countries and Str • closely integrate Chinese development with their development Adv ance multilateral diplomacy and reform the international • system and global governance to increase the representation and say of China and other developing countries. Xi’s speech and subsequent official and nonofficial commentary clarified Beijing’s current categorization of developing countries. Xi appears to divide developing countries into three different types. A first group is composed of neighboring countries. With greater Chinese power projection capabilities and more overseas citizens and assets, Bei - da zhou bian jing is increasingly thinking of extended neighborhoods ( ) and is more willing to identify countries that do not border China but 31 This more inclusive view of reside in nearby regions as neighbors. its neighborhood helps explain Xi’s calls for “pursuing an Asia-Pacific 32 dream” and for establishing a “new Asian security concept.” A second group comprises developing countries that play signifi - cant global or regional roles and qualify as major powers. These include, 30 “The Central Conference on Work Relating to Foreign Affairs Was Held in Beijing,” , 2014. Ministry of Foreign Affairs of the People’s Republic of China, November 29 31 “Lizhu Zhoubian, Moupian Quanqiu” [“To Gain a Foothold on the Periphery, We Must 015. , Look for Opportunities around the Globe”], Xinhua News 2, 2 March 32 “Full Text of Foreign Minister Wang Yi’s Speech on China’s Diplomacy in 2014,” Xinhua — -1 2014; “New Asian Security Concept for New Progress in Security News , December 26, Cooperation,” Ministry of Foreign Affairs of the People’s Republic of China, May 21 , 2014. —0 — +1 RR2273A_CC2015.indb 23 8/14/18 11:11 AM

62 24 At the Dawn of Belt and Road for example, Brazil, India, and South Africa. These major developing countries are important countries for China to work with to build 33 As Foreign Minister Wang Yi Xi’s “global network of partnerships.” explains, Xi’s vision of global partnerships represents China’s attempt to step out of the Cold War mind-set of needing military alliances. Instead 34 of allies, China can work with friends or close partners abroad. A third and final category of developing countries are those that are not in neighboring regions and do not qualify as major powers. China still views many of these countries as global partners and will continue to strengthen cooperation with these countries politically and economi - cally. Politically, China wishes to work with these countries to increase China’s and the Developing World’s representation and say in global institutions and governance. Economically, Chinese views close cooper - ation with the Developing World as critical to its economic development. China at the Center: Ringed by the Developing World - Chinese conceptualization of the Developing World gives special atten - tion to the Asia-Pacific, and such attention stems from Beijing’s insecu rity about stability at home, around China’s periphery, and in China’s neighborhood. Indeed, according to two U.S. scholars, China conceives 35 The of its environment in terms for four concentric circles (Figure 2.1). first or inner ring encompasses China itself—any territory that Beijing currently controls or claims as Chinese territory (the most significant feature in the latter is the island of Taiwan). China’s second ring con - tains the countries, territories, and bodies of water directly adjacent to China’s land and maritime borders. The third ring includes China’s entire Asia-Pacific neighborhood, while the fourth ring include every - thing beyond Asia—the rest of the globe. There is only one country in the early twenty-first century that has the capability, from Beijing’s perspective, to challenge China in all four of these rings, and that is the United States. China is most absorbed with the first three rings and most preoccupied with the innermost 33 “The Central Conference on Work Relating to Foreign Affairs Was Held in Beijing,” 2014. 34 “Full Text of Foreign Minister Wang Yi’s Speech.” -1— 35 Nathan and Scobell, 2012, pp. 3–7. 0— +1— RR2273A_CC2015.indb 24 8/14/18 11:11 AM

63 China in the Zone: The Cold War and After 25 Figure 2 .1 China’s Four Rings of Insecurity China’s Search SOURCE: RAND, derived from Andrew J. Nathan and Andrew Scobell, , New York: Columbia University Press, 2012, pp. 3–7. for Security RAND RR2273A- 2.1 one. Chinese leaders were extremely fearful in the wake of the collapse of the Soviet bloc in 1989 and the disintegration of the Soviet Union two years later. More recently, the CCP has been alarmed by a series of upheavals in locations around the world: the color revolutions that swept Eastern Europe and Central Asia, the Arab Spring that began in 2011, and the umbrella movement of 2014 in Hong Kong. Despite heavy paranoia, closing China’s borders and cutting China off from the world is not an option. Paradoxically, Beijing preoccupation with thinking locally drives China’s global engagement, including vigorous 36 involvement in the Developing World. But some regions are more important than others. The most important regions for Beijing are those inside the second ring. Less critical but still very important are those regions inside the third ring. — -1 36 . Nathan and Scobell, 2012 —0 — +1 RR2273A_CC2015.indb 25 8/14/18 11:11 AM

64 26 At the Dawn of Belt and Road Table 2.1 The Geostrategy of China’s Concentric Circles Goal Primary Strategy Ring First Continued CCP rule Control Buffer Restrict the United States Second Limit access to the United States Third Sphere of influence Fourth Competition Balance against the United States SOURCE: Derived from Figure 2.1. And of lesser importance are those regions in the fourth ring. As noted, the most sensitive ring is the innermost one, in which the CCP desires to maintain stability through careful control of its domestic situation and, hence, ensure continued CCP rule (Table 2.1). In the second ring around China’s periphery are the most proximate portions of three Developing World regions: Central Asia, South Asia, and Southeast Asia. In each of these regions Beijing has adopted a buffer strategy to keep countries and areas—both maritime and continental zones— friendly to China or at least neutral and pressed to expel outside powers and their armed forces, including the United States and its military. - Next is the third ring, encompassing the more distant portions of Cen tral Asia, South Asia, and Southeast Asia as well as Oceania, which is geographically well removed from China itself. In this ring, China’s goal is to limit U.S. access to the Asia-Pacific and establish a Chinese 37 Last, in the fourth ring, China is increasingly sphere of inf luence. active and engaged but also weakest in terms of power and influence. In the wider world outside of the Asia-Pacific, China has adopted a strategy of nonmilitary competition in an effort to balance against the influence of the United States. Nevertheless, China does not seek direct confrontation or con - flict with the United States. In fact, at a minimum, Beijing desires cordial relations with Washington. Indeed, U.S.-China coordination - is preferred, and U.S.-China cooperation is considered ideal. How -1— 37 The Asia security analyst Phillip C. Saunders notes that, among other goals, China seeks 0— to reduce U.S. inf luence in Asia (Saunders, 2006). +1— RR2273A_CC2015.indb 26 8/14/18 11:11 AM

65 China in the Zone: The Cold War and After 27 ever, coordination and cooperation are particularly difficult in rings 1, 2, and 3 because of Beijing’s heightened national security sensitivities over what China considers core interests. In terms of the ranked order of importance of developing regions to China, those that spill over from the second ring to the third ring are, primarily, Southeast Asia, Central Asia, and South Asia. Next, fully in the third ring is Oceania, following by the Middle East, which seems to be the one region ostensibly outside the Asia-Pacific that actu - - ally appears to straddle the third and fourth rings. Of growing impor tance but less vital are developing regions completely in the fourth ring: Africa and Latin America. The Belt and Road Initiative: China’s Flagship Initiative for the Developing World Under President Xi Jinping, Beijing is working to solidify its pres - ence in the second and third rings and to expand its involvement in the fourth ring. Since Chinese President Xi Jinping came to power, he has pushed for the realization of the “China dream” to rejuvenate the Chinese nation through constructing a “community of common ntury Maritime Ce destiny.” The “Silk Road Economic Belt” and “21st Silk Road,” known originally as One Belt, One Road but subsequently dubbed the Belt and Road Initiative, represents China’s strategic path 38 This for achieving this community in the next thirty or more years. flagship foreign policy initiative was officially launched less than twelve months into Xi’s tenure. The Belt and Road Initiative is a critical, longer-term objective as well as a near-term focus. As Chinese Foreign 20 15, China’s foreign policy agenda Minister Wang Yi noted in March in 2015 consisted of “one main focus,” the Belt and Road Initiative, 39 and “two themes,” peace and development. The Belt refers to the new Silk Road Economic Belt; it consists of a series of overland networks through Central Asia to South Asia, 38 “‘Yi Dai Yi Lu’ Jiang Shi Weilai 30 Nian Zhongguo Dui Wai De Da Zhan Lue” [“‘One Belt, One Road’ Will Be China’s Grand Diplomatic Strategy for the 30 Yea rs to Come”], Guangming Daily , February 26 , 2015. — -1 39 “Foreign Minister Wang Yi Meets the Press,” Ministry of Foreign Affairs of the People’s —0 Republic of China, March 8, 2 015. — +1 RR2273A_CC2015.indb 27 8/14/18 11:11 AM

66 28 At the Dawn of Belt and Road to the Middle East and onward to Africa and Europe (Figure 2.2). The Road refers to a 21st Ce ntury Maritime Silk Road stretching from China through the South China Sea to the India Ocean to South Asia, the Middle East, Africa, and Europe. It is an extremely ambitious and comprehensive effort to build a vast web of infrastructure—roads, rail - ways, canals, and pipelines intended to link China to its neighbor - - hood and the wider world. Xi also spelled out five types of “connec tivity”: policy or political coordination, transportation connectivity, trade and investment cooperation, financial integration and use of the renminbi (RMB, China’s currency) as a currency, and stronger 40 Almost the only portion of the globe people-to-people connections. 41 not explicitly part of this concept is the Western Hemisphere. While the Belt and Road Initiative constitutes a serious foreign policy concept, specific infrastructure projects may be overly ambi - tious and perhaps even unworkable. So how should one understand this heavily promoted initiative? Perhaps the prime value of the Belt and Road Initiative is that it presents China’s rise in nonthreatening terms to its Asia-Pacific neighbors and countries in the wider world. Moreover, the initiative portrays a more powerful China as a force for global good focused on building a peaceful and prosperous common - future. In this light, the Belt and Road Initiative is best viewed as Bei jing’s overarching rubric for positively framing contemporary Chinese - foreign policy toward all regions of the world—developed and under developed. Whether it will actually accomplish that is debatable. Beijing is aiming for what it calls a “win-win situation” by financ - ing a substantial part of the infrastructure construction needed to facil - itate greater trade and transportation connectivity. China is establish - 40 - “‘Yi Dai Yi Lu’ Zheng Gaixie Quanqiu Jingji Bantu” [“‘One Belt, One Road’ Is Remak , December ing the Global Economic Map”], People’s Daily Overseas Edition , 2014; See 29 also China Institute of International Studies, “Tiujin ‘Yidai Yilu’ Nengyuan Ziyuan Hezuo - De Waijiao Yunchou” [“Carry Forward ‘One Belt One Road’: A Diplomatic Plan for Coop eration on Energy and Natural Resources”], 2014. 41 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road , Beijing, March 28 . 2015. Issued by the National Development and Reform Com- mission, the Ministry of Foreign Affairs, the Ministry of Commerce of the People’s Republic -1— of China with State Council authorization. 0— +1— RR2273A_CC2015.indb 28 8/14/18 11:11 AM

67 China in the Zone: The Cold War and After 29 Figure 2.2 China’s Belt and Road Initiative, 2015 SOURCE: “Chinese Overseas Lending Dominated by One Belt, One Road Strategy,” Financial Times , June 18, 2015. As of October 14, 2015: http://www.ft.com/intl/cms/s/3/e9dcd674-15d8-11e5-be54-00144feabdc0.html #axzz3oaGo0kiB NOTE: There is no single official map of Belt and Road Initiative. Figure 2.2 displays one of several different maps, one of the few that includes Oceania. RR2273A- RAND 2.2 ing new international financial institutions to help fund the Belt and Road Initiative, including the Asian Infrastructure Investment Bank, - the BRICS New Development Bank, and the Silk Road Fund. Nota bly, however, much of the financing will still come from purely Chinese - institutions, such as China’s Export-Import Bank and the Develop ment Bank of China. In the new financial institutions, China seeks to play a leadership role or serve as a veto player. Beijing will also involve the China-ASEAN Interbank Association in financing Belt and Road 42 In funding infrastructure initiatives, these new Initiative activities. institutions will help internationalize the use of the RMB. China, for example, is encouraging the AIIB and Silk Road Fund to use the RMB 42 — -1 The Philippa Brant, “One Belt, One Road? China’s Community of Common Destiny,” 31 , 2015. Interpreter , Lowry Institute for International Policy, March —0 — +1 RR2273A_CC2015.indb 29 8/14/18 11:11 AM

68 30 At the Dawn of Belt and Road 43 Some Chi - in the basket of currencies to denominate and settle loans. - nese experts, however, are critical of China’s ability to fund and real 44 While the fate of the Belt and Road ize such an ambitious initiative. Initiative in terms of building concrete infrastructure projects around the world remains to be seen, its effectiveness in portraying China as a positive and influential global player is already evident. Drivers of Current Chinese Engagement with the Developing World Several factors drive China’s desire and need for more engagement with the Developing World. First, China seeks to sustain its domestic eco - nomic growth and sees the Developing World as offering significant economic potential. Second, China believes the international system is heading toward multipolarity and wishes to work with developing countries to increase China’s global influence. Third, as China invests abroad and its citizens venture overseas, Beijing needs to increasingly work with or partner with developing countries to ensure their safety and security. Finally, China’s increasing engagement with developing countries, mainly countries to its west, helps alleviate the pressure and tensions in Northeast Asia caused by the U.S. rebalancing to the Asia- Pacific and Chinese territorial disputes with Japan. Sustaining Chinese Economic Growth China sees partnering with the Developing World as critical to enabling Chinese economic development and growth. China’s rapid growth over the past 30 ye ars has been fueled first by the introduction of markets into its agricultural sector, which is massive in terms of employment, then by the expansion of low-skill manufacturing and assembly driven in large part by the movement of rural farmers to coastal cities; and 43 “China Seeks Role for Yuan in AIIB to Extend Currency’s Global Reach,” South China 27 Morning Post , April , 2015. 44 Shi Yinhong, “Tuijin ‘Yi Dai Yi Lu’ Jianshe Yingyou Shenshen Xintai” [ “In Advancing ] 5, the Construction of ‘One Belt, One Road,’ We Must Be Prudent” , People’s Daily , July -1— 2 015. 0— +1— RR2273A_CC2015.indb 30 8/14/18 11:11 AM

69 China in the Zone: The Cold War and After 31 - more recently, by levels of investment far above those of other coun tries at its stage of development, including the East Asian economies that grew rapidly in the past. However, the investment- and export-led growth model is no longer delivering, and China is trying to make the difficult transition to an economy fueled by innovation and consump - tion. China views the Developing World as important to its transition. The Developing World is viewed as a site of increased Chinese invest - ment for its firms that have difficulty expanding in China; as a growing market for Chinese goods; and as a location for Chinese construction and infrastructure activity, which is also declining in China. Regard - less of China’s growth path, it will continue to need resources, which the Developing World has in abundance. The importance of the Developing World was elevated for China after the 2008 financial crisis. One of China’s lessons from the 2008 financial crisis was that it is too risky for China to tie its develop - ment mainly to Western developed countries. Instead, China needed to increase its engagement with developing countries that are growing 45 at a rapid pace and have significant market demand. Increasing China’s International Influence in the Transition to a Multipolar World China sees partnering with the Developing World as critical to increas - ing China’s global influence as the international system becomes, in its view, more multipolar. Chinese leaders and strategists have repeatedly stated that “peace and development” are the “underlying trends” of the current times and the global march toward economic globalization 46 China has long advocated for a and multipolarity cannot be stopped. more dispersed international governance system where the interests of developing countries are more equitably reflected in international insti - tutions and governing structures. 45 Sun Zhiyuan, “‘Yi Dai Yi Lu’ Zhanlue Gouxiang De Sanzhong Neihan” [“The Three Major Details of the Strategic Concept of ‘One Belt, One Road’”], Information Office of the State Council of the People’s Republic of China, August 11 , 2014. 46 For example, see “The Central Conference on Work Relating to Foreign Affairs Was Held — -1 in Beijing,” 2014; The Diversified Employment of China’s Armed Forces , Information Office of the State Council of the People’s Republic of China, April 20 13. —0 — +1 RR2273A_CC2015.indb 31 8/14/18 11:11 AM

70 32 At the Dawn of Belt and Road After the 2008 financial crisis, Chinese experts have recognized the growing political and economic influence of the Developing World and the narrowing of the power gap between developed and develop - ing countries. As then Chinese Foreign Minister Yang Jiechi remarked in 2011: Developing countries are gaining equal status in the G20 and other global economic governance mechanisms, with signifi - cantly increased representation and voice. At the same time, major developing countries have enhanced cooperation among themselves, and the BRICs, the BASIC and other cooperation mechanisms have moved into a new stage of development. The BRIC countries, in particular, have shown great promise. Their combined GDP makes up nearly one sixth of the world’s total, and they are expected to enjoy faster growth than the developed countries in the medium and long term. The above-mentioned mechanisms carry not only considerable economic weight, but 47 also increasing political influence. As China seeks to become a more important international player, Bei - jing will need to win the support of developing countries. As a developing country itself, China also identifies with the concerns of fellow developing countries and views the United States, Japan, and other Western countries as dominating decisions in existing international institutions. Despite China’s rapid economic growth in the past decades, its economic power has not translated into propor - tional vote shares in the International Monetary Fund (IMF), World Bank, or the Asian Development Bank. For example, while China’s per cent, and the U.S. share was share of global GDP in 2014 was 13.3 per 22.4 - per cent, less than twice as much, the U.S. vote share of 16.74 ent in the IMF is more than four times China’s vote share, 3.81 per - c 48 China and other major developing countries have repeatedly c ent. 47 Yang Jiechi, “The Evolving International Pattern and China’s Diplomacy,” China Insti - 22 , 2011. tute of International Studies, August 48 “IMF Members’ Quotas and Voting Power, and IMF Board of Governors,” International -1— World Development 12 , 2015 ; GDP shares are from World Bank, Monetary Fund, October 0— 12 , 2015. Indicators , last updated November +1— RR2273A_CC2015.indb 32 8/14/18 11:11 AM

71 China in the Zone: The Cold War and After 33 - asked for more equitable representation, and there has been little prog 49 ress to date. Protecting Chinese Citizens and Assets Abroad Protecting Chinese citizens and assets abroad is also becoming an increasing focus and concern of the Chinese government. Currently, China has millions of citizens traveling or working abroad. Some esti - mi llion Chinese citizens abroad, including 2 mi llion mate that there 5 50 In 2012, Chinese companies had invested almost $532 bil - in Africa 51 bi n in direct investment abroad, up from only $33.2 llion in 2003. lio Many Chinese abroad are traveling or working in unstable or unsafe developing countries. In 2011, China rescued 47,000 Chinese abroad, of which more than 35,000 were workers in Libya. This number is more than the total number of citizens it has had to rescue abroad since the founding of the People’s Republic of China in 1949. Similarly, in 2015, China evacuated more than 600 of its citizens from Yemen. To ensure the safety and security of its citizens and investments abroad, - China is becoming more proactive and is building stronger relation 52 ships with the local governments. Moreover, the PLA appears to be wrestling with the scope and scale of its impending roles and missions in support of Chinese activi - ties in the Developing World. The impetus for this discourse is Presi - dent Xi Jinping’s formal launching of the Belt and Road Initiative in late 2013. Clearly, the PLA recognizes that it faces a daunting chal - 53 According lenge to protect China’s burgeoning “overseas interests.” 49 19 , , 2012; “China “BRICS Pour Cash into the IMF in Exchange for Bigger Say,” RT July Leads Nations Costing IMF’s Firewall to $456 Bi llion,” Bloomberg , June 19 , 2012; see also Ding Yifan, “China’s IMF Contribution, a Move of Multiple-Layered Meaning,” China-US Focus , July 13 , 2012. 50 Jonas Parello-Plesner and Mathieu Duchâtel, “How Chinese Nationals Abroad Are , 2015. 19 Transforming Beijing’s Foreign Policy,” Caixin , June 51 United Nations Conference on Trade and Development, Bilateral FDI Statistics , 2014. 52 Parello-Plesner and Duchâtel, “How Chinese Nationals Abroad Are Transforming Bei - jing’s Foreign Policy”; “Expanding Global Footprint Forces China to Rethink Its Policy of ‘Noninterference,’” Japan Times , June 16 , 2015. — -1 53 , Information Office of the State Council of the See, for example, China’s Military Strategy —0 People’s Republic of China, May 20 15. — +1 RR2273A_CC2015.indb 33 8/14/18 11:11 AM

72 34 At the Dawn of Belt and Road to many Chinese civilian and military analysts, how the armed forces of the PRC are supposed to provide security for the Belt and Road Initiative has yet to be properly addressed. Conversations in late 2015 with an array of analysts at think tanks and universities in Beijing and Shanghai reveal that many experts do not believe the PLA is yet capa - 54 ble of protecting Chinese interests beyond the borders of the PRC. There is widespread recognition that considerable hurdles must be - surmounted and that major reassessments of PRC foreign policy prin ciples and defense policy tenets are required. China, for example, must enhance security cooperation with other states and probably establish 55 At the very least, logistical facilities, or “Southeast overseas bases. Asia posts”— such as that in Djibouti—are needed west of Singapore 56 It seems all but inevitable that around the rim of the Indian Ocean. the PLA will increase its global deployments and employments, but this growth is most likely to occur gradually, playing out over many 57 The barriers to a more expansive role for China’s military are years. many, including hesitancy in Beijing and agreement by relevant capi - tals to have Chinese forces operate on or occupy portions of their sov - 58 It is possible that greater PLA activism overseas could ereign territory. be accelerated if unforeseen global tensions emerge or serious crises arise in the Developing World. - Several preliminary observations can be drawn from the ongo ing discourse on the topic, especially the discussion among Chinese military analysts. First, no definitive policy decision or new doctrinal edict has been reached regarding PLA roles and missions in the Third World beyond a general commitment by President Xi, in an address 20 15 that the to the United National General Assembly in September 54 Author conversations, Beijing and Shanghai, September 2015. 55 20, Andrea Ghiselli, “The Belt, the Road and the PLA,” in China Brief , Vol. XV, No. . 19 , 2015, p. ctober 16 O 56 Morgan Clemens, “The Maritime Silk Road and the PLA: Part One,” China Brief , 6, M Vol. XV , No. 8; Morgan Clemens, “The Maritime Silk Road and arch 19 , 2015, pp. 7– China Brief , Vol. XV, No. the PLA: Part Two,” 3, 2 7, A pril 014, pp. 10 –11. 57 12. Clemens, 2014, p. -1— 58 Ghiselli, 2015, pp. 15–16; Clemens, 2014, p. 10. 0— +1— RR2273A_CC2015.indb 34 8/14/18 11:11 AM

73 China in the Zone: The Cold War and After 35 59 If more spe- PRC will commit greater resources to UN peacekeeping. cific decisions had been reached then almost certainly public discourse about the appropriate global roles and missions for China’s armed 60 forces would have been quashed or at least significantly dialed back. Second, the lively discourse has provided a window into the cur - rent state of military service rivalries. Analysts affiliated with the Peo - ple’s Liberation Army Navy (PLAN), for example, have emphasized the “Maritime Silk Road” and the importance of Southeast Asia power 61 Ground force-affiliated analysts, meanwhile, have requirements. stressed the “Silk Road Economic Belt,” the land power requirements, and the importance of cooperation with the PLA Air Force to provide 62 - Looming major national security deci airlift to ground force units. sions or important changes in PLA doctrine provide the opportunity for different components of the Chinese armed forces to advocate for 63 the particular service. Moving Westward to Circumvent Tensions in the East Finally, and on its immediate periphery, China’s greater emphasis on - the Developing World is also reflective of the increasingly tense North east Asian strategic environment. In the recent years, as the United States rebalanced as the Asia-Pacific and the Sino-Japanese dispute over the Senkakus and Diaoyu islands escalated, Chinese academ - ics and strategists have increasingly pushed Beijing to “move west” or 59 Xi announced that the PRC would take the lead in creating an 8,000 man standby force for UN peacekeeping. Cited in Ghiselli, 2015, p. 14 . 60 See, for example, the high-profile article on the subject: “‘Yi Dai Yi Lu’ Huo You Li Yu Huanqiu Shibao Jiefangjun Gaige” [“‘One Belt One Road’ Might Benefit PLA Reforms”], [ Global Times ], October 6. T , 2015, p. he article, which is a summary translation of the 21 October 19, 2015, China Brief article by Andrea Ghiselli cited earlier, appears in a very prominent PRC media outlet, the Global Times . 61 Ghiselli, 2015, pp. 14–17. 62 Ghiselli, 2015, pp. 14–17. 63 For prior PLA discourse on a contentious doctrinal issue, see Andrew Scobell, “Discourse in 3-D: The PLA’s Evolving Doctrinal, Circa 2009,” in Roy Kamphausen, David Lai, and — -1 Andrew Scobell, The PLA at Home and Abroad: Assessing the Operational Capabilities of Chi - na’s Military , Carlisle Barracks, Pa.: U.S. Army War College, 2010, pp. 99 –134. —0 — +1 RR2273A_CC2015.indb 35 8/14/18 11:11 AM

74 36 At the Dawn of Belt and Road adjust its strategy toward strengthening relations with countries to its west, which includes Southeast Asia, Central Asia, South Asia, and the Middle East. They argue that the relatively tense environment in Northeast Asia increases the potential that China may find itself in an unwanted military clash with Japan, which could drag in the United States, should Beijing continue to push east. Instead, countries to China’s west and southwest largely welcome—or hedge against—greater Chi - nese engagement and most have less means to resist Chinese influ - 64 Implied in such assessments is that China should strengthen ence. relations with countries to its west to prevent strategic encirclement. Most of the countries to China’s west are developing countries. China can use its strengths of increasing trade and investment and building infrastructure to win local support. Moving westward would also help China avoid the fact that it is still militarily weaker than the 65 United States and its allies. Roadmap for Regional Chapters The following chapters examine Chinese activities in the Developing World by region. We divide the Developing World into seven regions: Southeast Asia, Oceania, Central Asia, South Asia, Middle East, Africa, and Latin America and the Caribbean. We cover all developing coun - tries within each region, although we excluded entities currently on 66 - The exception is Ocea the UN list of non-self-governing territories. nia, where we also included more developed countries in the region (Australia and New Zealand), because it is a predominately developing region and strategically important to China. 64 Yun Sun, “March West: China’s Response to the U.S. Rebalancing,” Brookings Institu- tion, January 31 , 2013. 65 Lin Hongyu, “‘Haishang Sichou Zhi Lu’ Guoji Zhanlue Yiyi Touxi” [“In-Depth Analysis - Septem People’s Tribune of the International Strategic Value of the ‘Maritime Silk Road’”], , ber 1, 2 014. 66 015. 10, 2 United Nations, Non-Self-Governing Territories , website, undated. As of October -1— 0— +1— RR2273A_CC2015.indb 36 8/14/18 11:11 AM

75 CHAPTER THREE China in Southeast Asia Southeast Asia is the most important developing region for China and a neighboring region that shares land and maritime borders. It is per cent one of China’s most significant trade partners (making up 17 1 in part because of production net - of Chinese global trade in 2013), works in which countries throughout the region trade both inputs and final goods with China. In addition to trade with the region, much of Chinese global trade transits the South China Sea and the Strait of Malacca, and China has significant interests to maintain secure maritime shipment and Southeast Asia lines of communication. China also has unresolved territorial disputes with Vietnam, the Philippines, Malaysia, and Brunei in the South China Sea. Southeast Asia is a focal region for PRC initiatives. It is a crit - ical link in the country’s important Belt and Road Initiative, or the tury Maritime Silk Road, Cen Silk Road Economic Belt and the 21st which aims to build “an interdependent economic and political com - munity” between China and key trade partners. Beijing is also pushing for regional free trade agreements between China and the Association of Southeast Asian Nations (ASEAN) as well as China and the larger Asia- Pacific region. Beijing hopes that greater integration with the region will encourage regional actors to accept China’s growing influence as well as its territorial claims. Maritime Southeast Asia, in particular, is becom - ing an arena of strategic competition and hedging between China, its neighbors, and, increasingly, the United States, Japan, and even India. — -1 1 UN Comtrade Database. —0 — +1 37 RR2273A_CC2015.indb 37 8/14/18 11:11 AM

76 38 At the Dawn of Belt and Road Key Chinese Activities in the Region China is engaging in several different types of activities in the region. Politically and economically, Beijing seeks to increase cooperation with its neighbors and regional influence through greater connectivity and trade. Beijing’s core agenda for the region and the larger Developing World is the Belt and Road Initiative. Beyond Belt and Road there are supporting initiatives that can increase China’s involvement in the region, such as the Asian Infrastructure Investment Bank (AIIB), which will help finance infrastructure projects in ASEAN as well as greater Asia. China also supports the completion of the Regional Compre- hensive Economic Partnership (RCEP) trade agreement with ASEAN and four other countries (16 total, including China) that was often portrayed as competing with the now defunct Trans-Pacific Partner - ship (TPP) trade agreement. RCEP includes China and excludes the United States (the TPP included the United States, excluded China, and also included four ASEAN countries as well as three non-ASEAN countries in RCEP). Militarily, China has stepped up its regional involvement with - more high-level exchanges, arm sales, combined exercises, and human itarian and disaster relief operations. Beijing has provided substantial arms to Myanmar and is strengthening military ties with Thailand. In the South China Sea, China has been willing to use maritime militia, coast guard, and law enforcement agencies—all operating under the shadow of the Chinese People’s Liberation Army—to stake out and defend its territorial claims. Beijing has also undertaken extensive and rapid land reclamation activities to strengthen its claims in the South China Sea. China is likely to further expand its maritime civilian and military presence in the region. Beijing views four countries in Southeast Asia—Indonesia, Malay - sia, Thailand, and Vietnam—as the most important states for its inter - ests (Figure 3.1). Indonesia, Malaysia, and Thailand have not taken firm stances against Chinese territorial claims in the South China Sea, have friendly relations with China, and are among ASEAN’s largest, most developed economies. Vietnam, on the other hand, still has strong ties to China given the two countries’ shared communist political ideology, -1— but it has also repeatedly challenged China’s maritime claims. China 0— +1— RR2273A_CC2015.indb 38 8/14/18 11:11 AM

77 China in Southeast Asia 39 Figure 3 .1 China’s Relations with Countries in Southeast Asia, 2015 Overall relationship with China: Key state Major partner Diplomatic relations Vietnam Myanmar Laos Philippines Thailand Cambodia Brunei Malaysia Singapore Indonesia Timor-Leste NOTE: Due to small scale of map, not all countries are displayed and color-coded. RR2273A-3.1 RAND views most of continental Southeast Asia as major regional partners. In contrast, Beijing views Manila as a troublemaker in the region, and relations between the two countries have suffered. Drivers of Chinese Engagement Chinese Activities in the Region Prior to 2000 China has had extensive historical involvement in the region. It — -1 largely divides the region into continental and maritime Southeast Asia, —0 — +1 RR2273A_CC2015.indb 39 8/14/18 11:11 AM

78 40 At the Dawn of Belt and Road although Vietnam falls into both categories. Continental Southeast Asia includes Cambodia, Laos, Myanmar, Thailand, and Vietnam. China has sought to exert more influence on these countries and has been willing to provide significant political, economic, and military assistance to create friendly or buffer states along its border. Under Mao, China also supported Communist insurgencies, both verbally and materially, in half a dozen Southeast Asia countries, and the insur - gencies drew heavily from ethnic Chinese in the region. - Countries have not uniformly welcomed greater Chinese influ ence. Vietnam, for example, has consistently sought to maintain its autonomy from China by either aligning with external powers or attempting to dominate its smaller neighbors. China’s land borders - with continental Southeast Asia also continue to present it with ongo ing problems of cross-border crime and illegal trafficking of drugs, 2 goods, and people. China’s relations with maritime Southeast Asia—Brunei, Indone- sia, Malaysia, the Philippines, Singapore, and Vietnam—have largely centered on two goals: promoting trade and investment in the region and enhancing China’s territorial claims in the South China Sea. In the 1970s, countries surrounding the South China Sea gained both the naval and commercial capability to stake claims and exploit resources. Since then, China has repeatedly clashed with its Southeast Asian neighbors, particularly the Philippines and Vietnam, over its claims - to all four clusters of land features in the South China Sea—the Para cel Islands (called Xisha Islands by China), the Spratly Islands (called Nansha Islands by China), the Pratas Islands (called Dongsha Islands by China), and the Macclesfield Bank (Zhongsha Islands). China has been willing to use military force to protect its claims and used force against the Republic of Vietnam (then South Vietnam) over the Para - cel Islands in 1974 and against the Socialist Republic of Vietnam over 3 By the mid-1990s, after Johnson Reef in the Spratly Islands in 1988. the Taiwan Strait Crisis, Beijing recognized that its assertive actions in North and Southeast Asia had damaged its image internationally and 2 Nathan and Scobell, 2012, pp. 148–154. -1— 3 141–146. Nathan and Scobell, 2012, pp. 0— +1— RR2273A_CC2015.indb 40 8/14/18 11:11 AM

79 China in Southeast Asia 41 its relations with its neighbors. China introduced a “new security con - cept,” in which countries should “rise above one-sided security and seek common security through mutually beneficial cooperation” and began 4 In 2002, Beijing signed the considering more cooperative approaches. Declaration of Conduct of Parties in the South China Sea, but the dec - laration did not contain any specific provisions on how to resolve the sovereignty disputes. Current Chinese Policy Toward the Region Chinese Priorities and Policies China has three overarching interests in Southeast Asia: Pro mote and protect trade, investment, and other linkages to 1. the region to support China’s economic growth. This includes protecting China’s sea lines of communication and developing Ce ntury Maritime Silk Road to further expand politi - the 21st cal and economic cooperation. Pro tect Chinese sovereignty and territorial integrity, including 2. upholding Chinese claims to features in the South China Sea, enlarging these features, and increasing China’s maritime pres - ence and capabilities. Mai ntain regional stability and promote regional solidarity and 3. cooperation with China by minimizing unwanted influence of external actors and increasing Chinese exchanges with the region. China does not have a white paper focused on Southeast Asia, but - many policy documents point to the importance of the region in Chi nese strategic thinking. Among its top priorities in the region, China seeks to protect its territorial claims in the South China Sea. Beijing has labeled “protecting national sovereignty and territorial integrity” as one of China’s most important national interests or “core national ). While official Chinese documents discussing interests” ( hexin liyi 4 — -1 China’s Position Paper on the New Security Concept (July 31, 2002) , Ministry of Foreign 002. Affairs of the People’s Republic of China,” August 6, 2 —0 — +1 RR2273A_CC2015.indb 41 8/14/18 11:11 AM

80 42 At the Dawn of Belt and Road territorial integrity as a core interest mention Taiwan, Xinjiang, and Tibet, senior Chinese leaders have yet to explicitly and uniformly iden - tify features in the South China Sea as a core interest. There is, how - ever, increasing quasi-official and nonofficial commentary linking the 5 China also released an South China Sea to Chinese core interests. official position paper on the South China Sea in late 2014 arguing for its “indisputable sovereignty over the South China Sea Islands . . . and 6 the adjacent waters.” Chinese strategists view the South China Sea as a critical body of water to be secured for Chinese development and protection. Eco - cent of per nomically, 21 of China’s 39 maritime trade routes and 60 Chinese trade pass by the Spratly Islands, a quarter of global maritime per - trade flows through the South China Sea annually, and over 85 c ent of Chinese oil imports arrive via the South China Sea. The South China Sea also boasts vast, unexplored natural resources. Geopoliti - cally, control over the South China Sea provides China with maritime - and border security for a significant portion of southern China. Mili tarily, it helps China transition to a stronger naval power, including providing a secure location for the training and positioning of China’s nuclear submarines and aircraft carriers. China has also invested in space launch facilities on Hainan Island, and the South China Sea area may be a critical region where China continues to invest in its space 7 capabilities. China’s 2015 Defense White Paper notes that some “offshore - neighbors [are] tak[ing] provocative actions and reinforce their mili tary presence on China’s reefs and islands that they have illegally occu - pied” and “some external countries are also busy meddling in South 5 “Zhongguo Hexin Liyi Bu Rong Tiaozhan” [“China’s Core Interests Are Not to Be Xinhua News , May 25 Challenged”], , 2015; “Zhongmei Zai Nanhai Wenti Shang Bu Ying Tiaozhan Duifang De Hexin Li Yi” [“China and America Should Not Challenge Each Oth - er’s Core Interests in the South Southeast Asia”], CRI Online , August , 2015; “Security 11 , Law Suggests a Broadening of China’s ‘Core Interests,’” New York Times 015. 2, 2 July 6 7, 2014, “China’s Position Paper on South China Southeast Asia,” December China Daily . 7 “Nanhai Zai Zhongguo Guofang Anquan Zhanlue Zhong Duju Zhongyao Diwei” [“The South China Sea Holds a Uniquely Important Position in China’s National Defense and -1— Security Strategy”], CRI Online , August 14 , 2015. 0— +1— RR2273A_CC2015.indb 42 8/14/18 11:11 AM

81 China in Southeast Asia 43 China Sea affairs.” The paper also mentions “a tiny few maintain close- 8 Against in air and sea surveillance and reconnaissance against China.” these threats, Beijing seeks an active defense military strategy. Among other elements, this strategy includes the PLA Navy shifting from con - ducting only “offshore waters defense” to also engaging in “open sea 9 China will be developing “modern maritime military protec t ion.” force structure” to “safeguard its national sovereignty and maritime rights and interests, protect the security of strategic sea lines of commu - nication and overseas interests, and participate in international maritime 10 China has already established an Air Defense Identi - cooperation.” fication Zone in the East China Sea—where it has similar maritime territorial disputes with Japan—and Beijing has not ruled out the pos - 11 sibility of establishing one in the South China Sea. China’s desire to stake its claims in the South China Sea and protect its sea lines of communication is balanced by its interests in promoting trade, investment, and other forms of cooperation with Southeast Asia and maintaining a peaceful and stable external envi - ronment to facilitate China’s continued political and economic growth. Senior Chinese leaders have stated that China will be more proac - tive in fostering a periphery policy that supports its growth and “will firmly prioritize ASEAN member countries in the country’s peripheral 12 Southeast Asia also features prominently in China’s Belt d iplom ac y.” and Road Initiative, and some have characterized Southeast Asia as 13 While official Chinese the most important region for Belt and Road. 8 China’s Military Strategy , 2 015. 9 “China Rolls Out Military Roadmap of ‘Active Defense’ Strategy,’” Ministry of National Defense of the People’s Republic of China, May 26 , 2015. 10 China’s Military Strategy , 2 015. 11 “Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference on May 7, 5,” Ministry of Foreign Affairs of the People’s Republic of China, May 201 7, 2 015. 12 “Premier Li Keqiang’s Keynote Speech at 10th China-ASEAN Expo,” September 4, 2013, Xin hua News . 13 “Dongnanya Zai ‘Yi Dai Yi Lu’ Jianshe Zhong Jiang Fahui Zhongyao Zuoyong” [“South - — -1 east Asia Will Play an Important Role in the Construction of ‘One Belt, One Road’”], Infor - 015. mation Office of the State Council of the People’s Republic of China, July 6, 2 —0 — +1 RR2273A_CC2015.indb 43 8/14/18 11:11 AM

82 44 At the Dawn of Belt and Road policy does not seek to exclude the United States or other external actors from involvement in Southeast Asia, some regional initiatives China supports—such as Belt and Road and RCEP—will significantly increase China’s relative connectivity to the region. Overall, Chinese strategists recognize that China needs to address a number of challenges in Southeast Asia. These include anxiety among - Southeast Asian countries over China’s growing military power, inten sification of territorial disputes in the South China Sea, and involve- ment of external powers in Southeast Asia that negatively impact and complicate the strategic situation. Chinese experts are also concerned with the domestic situations in Southeast Asian countries, such as 14 Myanmar’s political transition and internal stability. To advance its interests in Southeast Asia, China engages with the region on a bilateral and multilateral basis. Since the early 1990s, China has viewed ASEAN as a preferred multilateral vehicle for reach - ing out to Southeast Asia. Beijing established relations with ASEAN in 1991. China has participated in several additional political, security, - and economic groupings with ASEAN serving a leading role, includ ing ASEAN+1, ASEAN+3, East Asian Summit (EAS), and ASEAN Regional Forum (ARF). In 2010, China also signed the ASEAN-China Free Trade Area (ACFTA). Appendix A discusses the various actors in China involved in shaping policy toward Southeast Asia. Political Engagement China has multiple and competing political interests in Southeast Asia. It seeks to safeguard its territorial claims in the South China Sea against rival regional claimants, increase the region’s political and eco - nomic linkages with China, minimize external powers from interfering in the region to China’s detriment, and maintain peace and stability in Southeast Asia. While China has typically sought to balance these competing objectives, there are more recent indications that it will not 14 He Shengda, “Dongnanya Diqu Zhanlue Geju Yu Zhongguo—Dongmeng Guanxi” [“The Strategic Situation in the Southeast Asian Region and China-ASEAN Relations”], -1— 014. Southeast Asia and South Asia Studies , No. 1, 2 0— +1— RR2273A_CC2015.indb 44 8/14/18 11:11 AM

83 China in Southeast Asia 45 back down on its territorial claims, even when Chinese actions come at the cost of worsening relations with particular regional claimants. Recent Chinese political engagement with Southeast Asia has been defined by initiatives announced by Chinese leaders during their visits to the region. The most important of these visits occurred in 13, when both President Xi Jinping and Premier Li Keqiang October 20 made their first visits to Southeast Asia as new leaders of China and to - celebrate the ten-year anniversary of the establishing of strategic rela tions between China and ASEAN. Xi visited Indonesia and Malaysia and attended the twenty-first APEC Economic Leaders Summit, where he met with Asian leaders on the side, including Thai Prime Minister 15 Li commenced his first visit to Southeast Asia Yingluck Shinawatra. soon afterward. Following the APEC summit, Xi traveled to Brunei, 16 Thailand, and Vietnam. In his speech to the Indonesian Parliament on October 3, Xi listed key C hinese objectives for the region for the coming years: - Dev elop maritime cooperation and build a 21st Ce ntury Mari • time Silk Road that puts the China-ASEAN Maritime Coopera - tion Fund to use. ablish an Asian Infrastructure Investment Bank that would Est • give priority to ASEAN countries’ needs. Upg • rade the China-ASEAN Free Trade Area and strive to expand two-way trade to one trillion U.S. dollars by 2020. vide ASEAN countries with 15,000 government scholarships Pro • for cultural exchanges in the next three to five years. All those efforts would help “build a more closely-knit China- 17 ASEAN community of common destiny.” 15 Wang Yi, “Creating a New Landscape for the Diplomacy with Neighboring Countries and Boosting the Asia-Pacific Regional Cooperation,” Ministry of Foreign Affairs of the People’s Republic of China, October 9, 2 013. 16 , October “Li Keqiang Starts First Southeast Asia Visit,” Global Times 013. 9, 2 17 — -1 Xi Jinping, “Speech by Chinese President Xi Jinping to Indonesian Parliament,” Jakarta, 013. Indonesia, October 3, 2 —0 — +1 RR2273A_CC2015.indb 45 8/14/18 11:11 AM

84 46 At the Dawn of Belt and Road Premier Li echoed all of Xi’s points during his trip and coined the Chinese strategy toward ASEAN as following a “2+7 coopera - tion framework.” The “2” refers to China trying to achieve political consensus on two issues: deepening mutual trust and good neighborly relations to promote cooperation and focusing on economic develop - ment as a driver of cooperation. The “7” includes all the proposals in the previous bullet points as well as increasing regional financial cooperation via more bilateral currency swaps, full leveraging of the China-ASEAN Inter-Bank Association, strengthening cooperation on - the Chiang Mai Initiative Multilateralization. Li also included increas ing security ties as one of the seven proposed areas of cooperation, and he pushed for hosting a formal China-ASEAN defense ministers meet - ing and increasing cooperation on humanitarian assistance and disas- 18 - This could be an attempt by China to develop an alterna ter relief. tive security forum to the ARF and one in which the United States 19 Along with region-wide agreements, Xi’s and would be excluded. Li’s trips led to the strengthening of China’s relationship with all five visited countries, including the elevation of China’s relationship with Malaysia and Indonesia to “comprehensive strategic partnerships” and agreements to exploit energy resources with Brunei, invest in high- speed rail technology with Thailand, and engage in potential maritime 20 exploration with Vietnam. Maritime Cooperation and the 21st Century Maritime Silk Road Since signing the Declaration of Conduct in 2002, China has engaged in continuous diplomatic and political measures to resolve its territo - rial disputes in the South China Sea and to strengthen relations with ASEAN countries. Chief among these are efforts to set aside the dis - pute and engage in joint economic development and extraction of 18 Li Keqiang, “Remarks by H. E. Li Keqiang Premier of the State Council of the Peo - AN-China Summit,” Bandar Seri Begawan, Brunei, ple’s Republic of China at the 16th ASE October 9, 2 013. 19 The authors thank Andrew Erickson for this observation. 20 Prashanth Parameswaran, “Beijing Unveils New Strategy for ASEAN–China Relations,” -1— Jamestown China Brief , Vol. 13, No. 21 , October 24 , 2013. 0— +1— RR2273A_CC2015.indb 46 8/14/18 11:11 AM

85 China in Southeast Asia 47 21 In practice, this has mainly resources from the South China Sea. translated into Chinese use of bilateral negotiations with individual dispute claimants despite the fact that multiple actors claim the same territory. Not surprising, Chinese bilateral efforts have been met with little success, as Southeast Asian countries are afraid of being left with the short end of the stick in any bilateral agreement and see that they have more bargaining power against China in a multilateral or inter - 22 national setting. In 2011, China further established a China-ASEAN Mari - bi time Cooperation Fund that had an initial capital of RMB 3 llion mi llion). The fund promotes maritime partner - (approximately $500 ship through increased maritime economy, greater connectivity, more scientific research and environmental protection, and cooperation on navigation safety and search and rescue. In 2013, Xi announced that - Ce ntury Mar the fund would also support the construction of the 21st 23 itime Silk Road. Century Maritime Silk Road extends beyond Although the 21st Sou theast Asia, Chinese strategists view the region as crucial to the 24 The Silk Road envisions increasing Chinese success of the initiative. trade via merchant vessels traveling through the South China Sea and potentially stopping at several key ports. These ports are also connected to critical rail and road transportation routes. An early blueprint of Belt and Road suggests that China may be considering ports in Vietnam, 21 “Set Aside Dispute and Pursue Joint Development,” Ministry of Foreign Affairs of the People’s Republic of China. 22 For examples of limited bilateral agreements China concluded with Southeast Asia coun - tries, see Joint Statement Between the People’s Republic of China and Brunei Darussalam , Ministry of Foreign Affairs of the People’s Republic of China, April 013; Carl Thayer, 6, 2 “China-ASEAN Joint Development Overshadowed by South China Southeast Asia,” The Diplomat , October 25 , 2013. 23 In 2014, the fund announced supporting a second round of projects, including proj - ects on disaster relief and environmental protection. See Bao Haibin, “China-ASEAN Mari - time Cooperation Fund,” Ministry of Foreign Affairs of the People’s Republic of China, Ma rch 20 14. — -1 24 “Dongnanya Zai ‘Yi Dai Yi Lu’ Jianshe Zhong Jiang Fahui Zhongyao Zuoyong,” 2015. —0 — +1 RR2273A_CC2015.indb 47 8/14/18 11:11 AM

86 48 At the Dawn of Belt and Road 25 Malaysia, and Indonesia. Both Malaysia and Indonesia welcome Chi - 26 Chinese policy - nese investment in port and railway infrastructure. makers are also portraying the Silk Road as part of a larger effort for China to move up the production value chain, shifting less competitive and labor-intensive Chinese industries in Southeast Asia, where labor is 27 still relatively cost effective in at least some countries. Chinese experts argue that Southeast Asia is a testing ground for using infrastructure connectivity to achieve a community of common destiny. Southeast Asia is geographically close to China and is one of the anchoring regions on which other portions of the Maritime Silk Road will depend. It is also a region with some of the most favor - able conditions for forming a community of common destiny. It is one of the more advanced developing regions with significant trade with China and the region that is more culturally similar to China and has the most overseas ethnic Chinese. At the same time, Chinese experts recognize that Beijing’s ability to manage territorial disputes in the South China Sea is crucial to realizing the Maritime Silk Road and 28 ensuring China’s peripheral security. Chinese Activities in the South China Sea Along with political and diplomatic measures to increase maritime cooperation, China continues to strengthen its territorial claims in the South China Sea. China currently holds eight outposts in the - Spratly Islands, the most disputed area of the South China Sea. Viet nam has 48 outposts, the Philippines has eight, Malaysia has five, and Taiwan holds one. All the claimants have engaged in various degrees of outpost upgrade and land reclamation, but Vietnam was the most active from 2009 to 2014, reclaiming approximately 60 acres 25 Xinhua News , website, undated. As of October 10, 2 015. “New Silk Road, New Dreams,” 26 “Indonesia, China Committed to Infrastructure Co-Op: Indonesian Spokesman,” , April Xinhua News 24 , 2015. As of October 10, 2 015; Vincent Wee, “Malaysia Hoping to Tap on Chinese for New Port Investment,” Seatrade Maritime News , June 12 , 2015. 27 Sun Zhiyuan, 2014. -1— 28 “Dongnanya Zai ‘Yi Dai Yi Lu’ Jianshe Zhong Jiang Fahui Zhongyao Zuoyong,” 2015. 0— +1— RR2273A_CC2015.indb 48 8/14/18 11:11 AM

87 China in Southeast Asia 49 29 Several Southeast Asian claimants have also built airstrips of land. 30 201 In December - 3, China began land rec and other installations. lamation on its outposts. As of June 20 15, Chinese reclamation has proceeded at a rapid pace and China has reclaimed approximately tares) of land, or 17 mes more land than all the 2,900 acres (1,700 hec ti other claimants combined. China’s recent reclamation efforts in the South China Sea are different in nature and scope than the actions by other actors; its activities can enable the PRC to have a more robust power projection capability in the South China Sea. China is con - structing significantly larger airstrips for deployment of various types of aircraft and excavating deeper channels and berthing areas for 31 As an example, while five countries have built airstrips larger ships. in the South China Sea, China’s 3,000 meter airstrip on Fiery Cross Reef was, in late summer 2015, more than twice as large as the next 32 largest and was the only one that could accommodate bombers. 3. Figure 2 displays the location of China’s reclamation efforts on the Spratly Islands. China’s strategy in the South China Sea is largely one of divide and conquer: encourage ASEAN countries with no disputes with China to stay on the sidelines and deal with dispute claimants on a bilateral basis. China is proceeding cautiously to prevent ASEAN countries from uniting against China. To dampen regional concerns of Chinese military strength, Beijing has opted to use its coast guard, not the PLA Navy, as the frontline actor in preserving Chinese territo - rial claims. Beijing has also engaged in a media campaign to portray its actions in the South China Sea as defensive and the other claimants— particularly the Philippines and Vietnam—as instigating problems in 29 David Shear, “Statement of David Shear Assistant Secretary of Defense for Asian and Pacific Security Affairs,” Senate Committee on Foreign Relations, May 13 , 2015. 30 Vietnam, Philippines, Taiwan, and Malaysia all have airstrips in the disputed territories. CNN , “Satellite Images Suggest China ‘Building China is building its third airstrip. See Third Airstrip’ in South China Southeast Asia,” September 15 , 2015. 31 Asia-Pacific Maritime Security Strategy Department of Defense, 20 , August –17. 15, pp. 16 32 — -1 Asia Maritime Transparency Initiative, “Airpower in the South China Sea,” Center for Strategic and International Studies, July 29 , 2015. —0 — +1 RR2273A_CC2015.indb 49 8/14/18 11:11 AM

88 50 At the Dawn of Belt and Road Figure 3.2 Chinese Maritime Claims in the South China Sea and Land Reclamation, June 2015 SOURCE: “Pentagon Says China Has Stepped Up Land Reclamation in South China Sea,” Wall Street Journal , August 20, 2015. As of September 19, 2015: http://www.wsj.com/articles/pentagon-says-china-has-stepped-up -land-reclamation-in-south-china-sea-1440120837 RAND RR2273A- 3.2 -1— 0— +1— RR2273A_CC2015.indb 50 8/14/18 11:11 AM

89 China in Southeast Asia 51 33 Beijing has repeatedly assured the United States and other the region. actors that its claims and activities in the South China Sea will not affect the freedom of navigation. While there has been little progress settling conflicting claims, China and ASEAN are negotiating a code of conduct in the South China Sea and seek to set up a China-ASEAN hotline for maritime search and rescue and a China-ASEAN senior foreign officials hotline for emergencies. China also held the first spe- - cial meeting of China-ASEAN defense ministers in Beijing in Octo 34 Beijing offered to hold joint military drills with ASEAN 20 15. ber countries in the disputed South China Sea to increase military ties between the PLA and Southeast Asian militaries and to diminish 35 These measures aim to decrease the potential for mutual suspicion. clashes in the South China Sea. Beijing, however, has demonstrated willingness to press its territo - rial claims at the cost of worsening some bilateral relationships. This includes China’s relocation of an oilrig close to the Vietnamese coast in 20 14 that sparked massive and deadly anti-Chinese riots in Viet - May nam and a significant dip in bilateral relations between the communist 36 It also includes China’s continued assertion of its Nine- neighbors. Dash Line claim that covers almost the entirety of the South China Sea, efforts to interfere with the Philippines resupply of its outpost at the Second Thomas Shoal, and its efforts to restrict the access of fisher - 37 Since mid-2014, men from ASEAN states to disputed fishing zones. 33 For example, see “Waijiaobu Jie Feibin Yuenan Nanhai Feifa Qinquan Huodong: Yaoqiu Liji Tingzhi” [“Foreign Ministry Exposes Philippines and Vietnams Illegal Activities Xinhua Infringing on Sovereignty in the South Southeast Asia, Demands Immediate End”], News , April , 2015; “Yuenan Deng Guo Zai Nai Hai Fengkuang Tianhai Xifang Shi Er 29 Bu Jian Zhi Pi Zhongguo” [“Vietnam and Other Countries Reclaim Land Like Mad in the South Southeast Asia, West Ignores and Criticizes Only China”], Sina News , June , 2015. 21 34 Zhou Bo, “China-ASEAN Hotlines: The Best Fruits in an ‘Early Harvest,’” China-US Focus , August 20, 2 015; Prashanth Parameswaran, “China to Hold First Meeting with 3, 2 ASEAN Defense Ministers in Beijing,” The Diplomat , June 015. 35 Kristine Kwok, “China Offers Joint Drills with ASEAN in South China Southeast Asia South China Morning Post , Octo - to Check US Plan to Send Warships Near Spratly Islands,” ber 16 , 2015. 36 — -1 “How an Oil Rig Sparked Anti-China Riots in Vietnam,” CNN , May 19 , 2014. 37 —0 David Shear, May 13, 2015. — +1 RR2273A_CC2015.indb 51 8/14/18 11:11 AM

90 52 At the Dawn of Belt and Road Vietnamese fishermen have reported increasing confrontations with 38 Chinese Coast Guard and civilian ships. Diplomatic Relations and Presence China has diplomatic relations with all of Southeast Asia. China has close political relations and signed comprehensive strategic cooperative partnerships with Cambodia, Laos, Myanmar, Thailand, and Vietnam. These agreements do not necessarily result in strong partnerships. China and Vietnam signed their agreement in 2008, but Beijing’s - relations with Hanoi have deteriorated in recent years due to territo rial disputes in the South China Sea. Similarly, China and Myanmar signed their agreement in 2011, but domestic economic and political reforms in Myanmar have complicated recent bilateral relations. China has comprehensive strategic partnerships with Malaysia and Indonesia, two countries that are friendly to China and have not taken sides or sig - nificantly opposed Chinese territorial claims in the region. China also has some form of partnership agreement with Timor-Leste, ASEAN, Brunei, and the Philippines. Pivotal Partners, Key States, and Major Partners Unlike in other regions, there is no single pivotal state for China in Southeast Asia. Among these relationships, four are especially impor - tant and can be categorized as key states—those with Indonesia, Malaysia, Thailand, and Vietnam. Beijing views these four South - east Asian states as capable of either significantly helping or hindering attempts to consolidate and extend Chinese influence throughout the region. In summarizing President Xi Jinping’s trip to Southeast Asia in 2013, Chinese Foreign Minister Wang Yi explicitly stated that Indone- sia and Malaysia have “always ranked at the top of China’s relationships 39 Between these two countries, Chi - with other ASEAN countries.” nese leaders typically mention Indonesia first, signifying that it is most important. Geographically and economically, Indonesia is the largest state in Southeast Asia and an important emerging market and large 38 USNI “Report: Chinese Navy Warship Rammed Two Vietnamese Fishing Vessels,” -1— 7, 2 News , August 015. 0— 39 Wang Yi, 2013. +1— RR2273A_CC2015.indb 52 8/14/18 11:11 AM

91 China in Southeast Asia 53 - developing country. It is politically stable, undertaking naval modern ization under the new administration of President Jokowi, and pursues a moderate foreign policy that has earned it regional and global respect. Some Chinese experts point to Indonesia as the most critical state in its 40 Maritime Silk Road project and as a priority target for engagement. Similarly, Malaysia is China’s largest trading partner in ASEAN and has largely remained on the sidelines in China’s territorial disputes in the South China Sea. China has also increased outreach to Thailand, and the two countries enjoy strong relations despite the fact that Bang - kok is a U.S. treaty ally. Vietnam, on the other hand, is pivotal but not a potential partner for China. Although both countries embrace com - munist ideology, Beijing increasingly views Hanoi as a troublemaker in the region because of its stance on the South China Sea territorial disputes and the resulting confrontations between the two countries. High-Level Exchanges China engages in significant high-level exchanges with Southeast Asian countries, and such exchanges have been increasing. From 2003–2014, 41 Most there were 94 Chinese leadership visits to ASEAN countries. - of these visits (62 visits) occurred from 2009 onward. Chinese lead ers were in the region to attend bilateral and multilateral meetings, including ASEAN, APEC, Greater Mekong Subregion, and East Asian Summits. The countries most visited by Chinese leaders were Indonesia, Thailand, and Vietnam. Among ASEAN countries, Myanmar was the only country Chinese presidents did not visit during this period, although Chinese premiers and other high-level officials did visit the country. Not surprising given the tensions in Sino-Philippines relations in the recent years, there has not been a single high-level Chinese visit to the Philippines since 2007 through 2014. There were no high-level visits to Timor-Leste. 40 “Zhiku Luntan: Yi Dai Yi Lu Tiaozhan Yu Jiyu Dongnanya Zhongyao” [“Think Tank Forum: The Challenges and Opportunities of One Belt, One Road, Southeast Asia Is Impor - tant”], CRNTT News , June 23 , 2015. — -1 41 Chinese political leaders include the president, premier, vice president, minister of foreign —0 affairs, and state councilor in charge of foreign affairs. — +1 RR2273A_CC2015.indb 53 8/14/18 11:11 AM

92 54 At the Dawn of Belt and Road Cultural Influence Chinese experts perceive that China can exert significant cultural influ - ence on Southeast Asia given the region’s close historical ties to China, geographical proximity, and large numbers of ethnic Chinese. China has 25 Confucius Institutes in Southeast Asia. Most countries—except for Brunei, Timor-Leste, Myanmar, and Vietnam—have one or more insti - tutes. Thailand (12 institutes), Indonesia (six institutes), and the Philip - pines (three institutes) each have more than one Confucius Institute. Across the Developing World, Southeast Asia is the region with the most ethnic Chinese. According to Taiwanese government statis - cent of all overseas ethnic Chinese (or nearly per tics, approximately 69 42 - There are signifi llion people) were in Southeast Asia in 2012. mi 29 cant numbers of ethnic Chinese in most of the countries in the region. They make up over half the population in Singapore, over a fifth of the population in Malaysia, and approximately a tenth of the population in Thailand and Brunei. In the remaining countries, ethnic Chinese are per cent of the local population. less than 5 - The entire Chinese ethnic diaspora is well assimilated into South east Asian states in which they reside and hold citizenship, but there are variations as to how they are viewed and treated in each. Ethnic Chinese in region are a diverse group and do not share any special bond - with the PRC beyond cultural affinity. Virtually none would compro mise their status to help the PRC. Indeed the Chinese diaspora tends to be vulnerable to scapegoating and racial discrimination in their respec - tive Southeast Asian states. They are not willing to lose their political 43 and economic privileges to serve Chinese interests. Notably, the flows of Chinese citizens have been large. One scholar estimates that from the 1980s through about 2009, Southeast 42 For Taiwanese statistics, see 2013 Statistical Yearbook of the Overseas Community Affairs Council , Republic of China (Taiwan). Taiwanese statistics correspond to but are lower than official Chinese figures of approximately 30 llion ethnic Chinese in South- mi llion to 40 mi east Asia. See “Dongna nya Zai ‘Yi Dai Yi Lu’ Jianshe Zhong Jiang Fahui Zhongyao Zuoy - on g ,” 2 015. 43 Amy Chang, “Beijing and the Chinese Diaspora in Southeast Asia: To Serve the People,” -1— 13. NBR Special Report , No. 43 , June 20 0— +1— RR2273A_CC2015.indb 54 8/14/18 11:11 AM

93 China in Southeast Asia 55 Asia received more than 2.5 million migrants from China. This does 44 not i ndicate the number that have returned to China. Economic Engagement China economic engagement with Southeast Asia has accelerated in the past decade and has been greater than with any other region of the Developing World. Not only has it been greater, it also has been quali - tatively different. This is due in part to its economic potential. ASEAN 45 as a bloc, for example, is the second fastest growing economy in Asia, 46 However, it also stems from per cent in 2013. with GDP growth of 5 the fact that ASEAN is more developed than other developing regions and has a strong consumer market, a strong manufacturing base, and the ability to use Chinese inputs or provide Chinese manufacturers with intermediate inputs; intra-Asian production networks that rely on ars. ye trade in intermediate products have developed over the last 30 As a result, China’s trade with ASEAN is weighted much more heav - ily toward imports and exports of manufactured items rather than raw materials, as it is with other developing regions. And although this is changing, these production networks have tended to be controlled by 47 companies from developed countries and regions. Today, China is not only ASEAN’s most important trade part - ner but also competes with the region for market share, manufacturing, and foreign direct investment. In 2009, China surpassed both the United States and Japan to become ASEAN’s largest trade partner, 44 Zhuang Guotu, “Dongnanya Huaqiao Renshuliang De Xin Gusuan” [“A New Estimate of the Ethnic Chinese Population in Southeast Asia”], Journal of Xiamen University (Arts & Social Sciences) , General Serial No. 19 3, No. 3, 2 009, pp. 62 –69. 45 ASEAN Matters for America “ASEAN GDP and GDP per Capita,” , East-West Center, 2013. 46 “Global Recovery Should Carry ASEAN Through the Economic Headwinds,” Forbes , 19 , 2014. January 47 Organization for Economic Cooperation and Development, World Trade Organization, and World Bank Group, Global Value Chains: Challenges, Opportunities, and Implications for — -1 Policy , report prepared for submission to the G20 Trade Ministers Meeting, Sydney, Austra - lia, July , 2014. 19 —0 — +1 RR2273A_CC2015.indb 55 8/14/18 11:11 AM

94 56 At the Dawn of Belt and Road Figure 3.3 U.S. and Chinese Trade with ASEAN, 2000–2013 600 PRC total (mainland, 500 Hong Kong, and Macao) PRC mainland 400 United States 300 200 100 Total trade (U.S. $ billions) 0 2001 2011 2013 2002 2010 2012 2009 2003 2000 2005 2004 2007 2006 2008 Year SOURCE: UN Comtrade Database. RAND RR2273A- 3.3 and ASEAN has been China’s third largest external trade partner since 48 A China-ASEAN free trade agreement (FTA) for 2011 (Figure 3.3). goods entered into force in July 05, and one for services entered into 20 49 Currently, approximately half of the Southeast Asian force in 2007. countries have bilateral investment treaties with China and roughly cent have tax treaties. per 40 Trade Southeast Asia is China’s largest source of imports and largest destina - tion for exports. As part of the ASEAN-China Free Trade Area (which - includes all Southeast Asian countries except East Timor), the coun tries have signed agreements on goods, services, and investment. In 48 Meredith Miller, “China’s Relations with Southeast Asia,” testimony for the U.S.-China Economic and Security Review Commission, May 13 , 2015. 49 “China-ASEAN FTA,” China FTA Network , Ministry of Commerce of the People’s -1— Republic of China, undated; see also “Overview of ASEAN-China (ACFTA),” Singapore 0— Government, 2014. +1— RR2273A_CC2015.indb 56 8/14/18 11:11 AM

95 China in Southeast Asia 57 2013, Chinese Premier Li Keqiang called for upgrading the free trade area, and China hoped to wrap up talks upgrading the agreement by the end of 2015. In 2014, ASEAN and China further agreed to expand two-way trade to $1 trillion in 2020, a roughly 60 per cent increase llion bi over 2013 trade levels, and achieve two-way investment of $150 by 2020. There is no guarantee trade or investment figures will reach these levels. In 2013, Chinese trade with Southeast Asia made up 15 per cent of lion in bil China’s total global trade. China’s imports grew from $22.2 llion in 2013 with growth in every sector. Roughly bi 2000 to $199.6 cent of imports have been manufactured goods and machinery 55 per throughout the entire time, although there was an increase in machinery imports in the mid-2000s, with corresponding decreases in manufactured goods and mineral fuels that have since reversed course (Figure 3.4). Figure 3.4 Composition of Imports from Southeast Asia 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2013 2004 2011 2000 2010 2002 2006 2003 Year Crude materials Beverages and tobacco Food Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Manufactured goods Machinery and transport manufactured Other — -1 SOURCE: UN Comtrade Database. —0 RR2273A-3.4 RAND — +1 RR2273A_CC2015.indb 57 8/14/18 11:11 AM

96 58 At the Dawn of Belt and Road Exports from China to Southeast Asia have grown from $17.3 bil - lio n in 2000 to $244.0 bi llion in 2013, with growth in every sector. Manufactured goods and machinery were roughly 75 cent of all per exports to Southeast Asia in 2000 and roughly 83 per cent in 2013 (Figure 3.5). In contrast, the share of food and mineral fuel exports has fallen even though there has been a more then eightfold increase in the level of food and mineral fuels exports from 2000 to 2013. Southeast Asia has had a small trade surplus for much of the 2000 to 2013 period, although this has reversed in 2012 and 2013 (Figure 3.6). llion in bi China’s largest trade surplus is with Vietnam, at almost $32 llion 2013, and the largest trade deficit is with Malaysia, at $14.2 bi - in 2013. The largest trading partners are Malaysia, Singapore, Thai land, Indonesia, and Vietnam. Figure 3.5 Composition of Exports to Southeast Asia 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2013 2004 2011 2000 2010 2002 2006 2003 Year Crude materials Beverage Food Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Manufactured goods Machinery manufactured Other -1— SOURCE: UN Comtrade Database. RR2273A-3.5 RAND 0— +1— RR2273A_CC2015.indb 58 8/14/18 11:11 AM

97 China in Southeast Asia 59 Figure 3.6 Level of Exports to and Imports from Southeast Asia 300 Exports to Southeast Asia 250 Imports from Southeast Asia 200 150 U.S. $ billions 100 50 0 2000 2011 2005 2013 2004 2007 2001 2009 2008 2002 2010 2012 2006 2003 Year SOURCE: UN Comtrade Database. RAND RR2273A- 3.6 Foreign Direct Investment and Lending Singapore is the largest recipient of China’s FDI (Figure 3.7), with over cent of the regional FDI stock in 2013 ($14.7 bi llion). All other per 40 countries are minor by comparison. Only Brunei, Philippines, and llion in FDI stock from China. bi East Timor did not have at least $1 Singapore has long been a site of inward FDI from around the world, instituting its first tax incentives to attract FDI in the 1960s. As it developed, it became the site not only of manufacturing facilities but also of regional headquarters and of its own major companies, the latter two of which conduct their own FDI activities. In 2010, it received half 50 of all FDI flows into ASEAN from all sources worldwide. Agreements and Other Issues China has long engaged in economic diplomacy with Southeast Asia. For example, China has signed bilateral investment treaties (BITs) with 50 — -1 Locknie Hsu, “Inward FDI in Singapore and Its Policy Context,” Columbia FDI Profiles, Vale Columbia Center on Sustainable International Investment, Columbia University, 2012. —0 — +1 RR2273A_CC2015.indb 59 8/14/18 11:11 AM

98 60 At the Dawn of Belt and Road Figure 3.7 Chinese FDI Stock in Southeast Asia by Receiving Country, 2013 PRC OFDI Stock ($USD), 2013 >$5 billion $3–$5 billion $2–$3 billion Vietnam $1–$2 billion Myanmar Laos <$1 billion Philippines Thailand Cambodia Brunei Malaysia Singapore Indonesia Timor-Leste SOURCE: UNCTAD. NOTE: Due to small scale of map, not all countries are displayed and color-coded. Singapore and Brunei, not visible on the map, received $14.7 billion in Chinese FDI stock and less than $1 billion in Chinese FDI stock, respectively. RR2273A-3.7 RAND all ten ASEAN countries, of which nine are in force. It signed its first BITs with Thailand and Singapore, both in 1985, had signed seven by 1995, and had signed all ten by 2001. Likewise, China has income or income and capital tax treaties with eight of the ten ASEAN members. The first of these were completed in 1985 with Malaysia and 1986 with Thailand. China’s involvement with Southeast Asia goes well beyond simple -1— trade, investment, and legal agreements. Unlike China’s trade with 0— +1— RR2273A_CC2015.indb 60 8/14/18 11:11 AM

99 China in Southeast Asia 61 other regions, China’s trade with Southeast Asia involves numerous production sharing networks. These networks include affiliated and unaffiliated companies that sell parts and components from mul - tiple destinations for assembly in a different destination and then for sale globally. Southeast Asia’s role in these networks started in 1968 when two U.S. electronics companies established component- 51 One recent estimate of network manufacturing plants in Singapore. trade—defined as parts, components, and final assembly within pro - cent of all ASEAN exports to duction networks—finds that 64 per China in 2007–2008 were parts and components, as were 40 per - 52 An estimate by country ent of ASEAN imports from China. c per cent of all Philippines from 2005–2006 found that more than 75 - per exports to China were parts and components, as were almost 70 c ent of Malaysian exports. Import proportions were much lower, but 53 per almost 22 cent for all of ASEAN. Just as Southeast Asia is closely linked with China in economic exchange, it is closely linked with China’s recent institutional initia - - tives, and Chinese leaders and commentators have consistently empha sized how critical the region is to trade routes and to the success of projects aimed at reviving both the land and maritime silk road. All ten ASEAN members were among the 57 prospective founding members of the China-led Asian Infrastructure Investment Bank, widely seen as a vehicle for helping fund Belt and Road. Notably, when the articles 29, 2015, seven of the ASEAN of incorporation were signed on June countries were among the 50 signing founding members: Brunei, Cam - bodia, Indonesia, Laos, Myanmar, Singapore, and Vietnam. Malaysia 51 Prema-chandra Athukorala, “Global Production Sharing and Trade Patterns in East 13/10, Working Papers in Trade and Development, Arndt- Asia,” Working Paper No. 20 Corden Department of Economics Crawford School of Public Policy, ANU College of Asia and the Pacific, June 20 13. 52 Athukorala, 2013, p. 28 (Table 5). 53 Prema-Chandra Athukorala and Jayant Menon, “Global Production Sharing, Trade , ADB Patterns, and Determinants of Trade Flows in East Asia,” Working Paper No. 41 — -1 Working Paper Series on Regional Economic Integration, Asian Development Bank, Januar y 201 0. —0 — +1 RR2273A_CC2015.indb 61 8/14/18 11:11 AM

100 62 At the Dawn of Belt and Road 21, and Thailand signed in late September. As of signed on August 54 ly October 20 15, Philippines had not yet signed. ear These developments mean that Southeast Asia will continue to - be strongly intertwined with China. Proximity, existing trade rela tions, and ongoing negotiations about region-wide free trade all argue for deepening economic relations. This may not necessarily translate into political or military influence, however, as the overall relation - ships remain complicated. Moreover, major external powers, notably the United States, Japan, and India, continue to conduct significant trade with and invest in Southeast Asia too. Military and Security Engagement China has significantly increased its military and security engagement with Southeast Asia. Chinese arms sales to the region have increased, and Myanmar is China’s top customer in the region. Compared to other developing regions, Chinese military leaders have paid the most visits to Southeast Asia and have particularly focused on increasing ties with the Thai military. The PLA also engages in a number of combined - exercises, port visits, and military operations other than war in South east Asia. Increasing maritime cooperation, counterterrorism, and humanitarian assistance and disaster relief are the drivers for many of - these activities, although the PLA does appear to be expanding coop eration and exercises beyond such, particularly with Thailand. PRC Arms Sales Chinese arms sales to countries in Southeast Asia are increasing but have remained lower than those from the United States over the past 54 For the 57 prospective founding members, see Asian Infrastructure Investment Bank, “Prospective Founding Members,” webpage, undated; for the 50 original signing members, see Asian Infrastructure Investment Bank, “Fifty Countries Sign the Articles of Agreement for the Asian Infrastructure Investment Bank,” June 29 , 2015; for the date of signing for 28, 2015; for the The Star Online , August Malaysia, see “Malaysia Backs China over AIIB,” date of signing for Thailand, see “Thailand’s Ambassador to China Signed Articles of Agree - -1— ment of the Asian Infrastructure Bank,” Asian Infrastructure Investment Bank, Septem- ber , 2015. 29 0— +1— RR2273A_CC2015.indb 62 8/14/18 11:11 AM

101 China in Southeast Asia 63 years, according to the SIPRI Arms Transfers Database. Myanmar 15 is Ch ina’s key customer in the region, and the third-largest recipient of Chinese arms worldwide in the five years through 2014, after Pakistan 55 Sales to Myanmar have included items such as frig - and Bangladesh. 56 Beijing also appears to be ates, tanks, and infantry fighting vehicles. interested in increasing its arms sales to Thailand, which has purchased items such as multiple rocket launch systems and anti-ship missiles from Beijing in recent years. Regional media reports indicate China is one of a small number of countries Thailand is considering as a poten - 57 tial supplier of submarines. PLA Military Diplomacy Chinese military diplomacy, particularly exchanges of high-level visits, is an important feature of Chinese military engagement with coun - tries in Southeast Asia. Notably, China has conducted at least 38 high- level military visits to the region from 2003 to 2014, with 28 from the 2009–2014 period, making Southeast Asia by far the most frequently visited region under consideration as part of this study. Some of the key - destinations have included Brunei, Cambodia, Indonesia, Laos, Myan - mar, Singapore, Vietnam, and Thailand. Indeed, one of the most nota ble aspects of China’s military diplomacy in Southeast Asia involves high-level exchanges and other military engagement events with Thai - land, which is one of the five U.S. treaty allies in Asia but also enjoys a 58 strong and growing relationship with the PRC. - Since the May 2014 coup in Thailand, China appears to be con trating on increasing its ties to the new leadership in Bangkok, cen with security cooperation a prominent item on the agenda, in addition 55 According to SIPRI, Myanmar accounted for 12 percent of Chinese arms sales from 2010 –2014. 56 Kyle Mizokami, “A Look at China’s Growing International Arms Trade,” USNI News , May 7, 2 015; H. Shivananda, “Sino-Myanmar Military Cooperation and Its Implications for India,” Journal of Defence Studies , Vol. 5, No. 3, J 11. uly 20 57 Wassana Nanuam, “Submarine Plan Resurfaces with Backing from Prawit,” Bangkok Post , March 25 , 2015. — -1 58 See, for example, Prashanth Parameswaran, “Thailand Turns to China,” The Diplomat , —0 December 20, 2 014. — +1 RR2273A_CC2015.indb 63 8/14/18 11:11 AM

102 64 At the Dawn of Belt and Road - to boosting economic ties and infrastructure investments. Demon strating the importance Beijing appears to attach to cultivating its ties with Bangkok, there have been several high-level military visits there recently. In February 20 15, PRC Defense Minister Chang Wanquan met with Thai Prime Minister Prayuth Chan-ocha and Thai Defense Minister Prawit Wongsuwan in Thailand. During these meetings, Chang reportedly highlighted strategic communication between the two sides as well as strengthening joint training and cooperation 59 In early related to multilateral security and defense industry issues. 20 - April 15, Thai Defense Minister Prawit traveled to Beijing for meet ings with PLA leaders, and just a few weeks later, Central Military Commission (CMC) Vice Chair Xu Qiliang visited Bangkok, where he met with Prawit and Prime Minister Prayuth. Official media reports on Xu’s meetings in Bangkok highlighted infrastructure projects, eco - nomic cooperation, and security cooperation. PLA media reports stated the two sides would enhance their comprehensive strategic cooperative partnership and noted that Xu and his hosts discussed subjects such as strengthening “exchange and cooperation in the sectors of joint mili - tary exercises and joint training, military medicine, arms equipment 60 and technology, multilateral security and fighting against terrorism.” Media reports from Thailand also highlighted other areas of coop - eration, such as intelligence exchanges, and a proposal to establish a 61 defense hotline between the PLA and Thailand’s armed forces. The PLA has also conducted a number of other lower-level engage- 20 ment events with the Thai military. For example, in February 15, Royal Thai Navy ships visited the PLAN South Sea Fleet, arriving at 62 In Zhanjiang in Guangdong province for a four-day goodwill visit. 59 “Thai PM Meets with Chang Wanquan,” China Military Online , February 9, 2 015; this trip also included South Korea. 60 24 , 2015. “Thailand, China Agree to Deepen Military Ties,” China Military Online , April 61 See Patsara Jikkham and Wassana Nanuam, “Thailand, China Deepen Defence Ties,” , April Bangkok Post 24 , 2015. 62 The Royal Thai Navy taskforce consisted of three ships led by Telist Panst, vice president of the Royal Thai Naval Academy. See “Thai Warships Visit South China Southeast Asia -1— Fleet,” China Military Online , February 10, 2 015. 0— +1— RR2273A_CC2015.indb 64 8/14/18 11:11 AM

103 China in Southeast Asia 65 addition, following its four “air ballet” performances at the Langkawi 15, the People’s Liberation Army Air Air Show in Malaysia in March 20 Force (PLAAF) Bayi Aerobatics Team stopped at Don Mueang Royal Thai Air Force Base in Thailand on the way back to China for a mili - tary exchange program. The Bayi Aerobatics Team’s J-10s and one of its IL-76 transports flew alongside two Royal Thai Air Force Gripen 63 and the exchange also fighter jets as part of a welcoming ceremony, featured a meeting between PLAAF Major General Feng Aiwang, deputy chief of staff of the Beijing Military Region Air Force and com - manding officer of the Bayi Aerobatics Team, and a senior Royal Thai 64 Air Force officer. As the example of the Bayi Aerobatics Team’s visit to Thailand illustrates, China has started employing the team as an instrument 65 In addition to exchanges with other coun - of military diplomacy. tries’ air forces, China has also sent it to participate in international air shows, with its most recent international performances taking place in 15 at the Langkawi International Maritime and Aerospace 20 March Exhibition in Malaysia. The PLAAF sent seven J-10 fighters as well as two IL-76 transport aircraft responsible for carrying the team’s equip - 66 ment, supplies, and members of its support crew. 63 Jeffrey Lin and P. W. Singer, “Chinese Fighter Jets Fly South for Spring Break,” Popular 25 , 2015. Science , March 64 PLA media and the Ministry of National Defense of the People’s Republic of China web - site published a number of photos from this stopover, emphasizing China’s growing military ties with Thailand. See Guo Renjie, “PLA AF Aerobatics Team Stops Over in Thailand,” China Military Online , March 25 , 2015. 65 The Bayi Aerobatics Team’s first international performance was at the 2013 Moscow Air Show. See “Chinese Air Force Bayi Aerobatics Team Arrives in Russia with Seven J-10 Fight - ers,” People’s Daily Online , August , 2013; and Yan Meng and Zhang Qian, “China’s 29 J-10 Presence at Russian Air Show Shows Good Relationship Between the Two Militaries,” , August 28 , 2013. People’s Daily Online 66 According to a PLA media report, the PLA AF aircraft departed from a PLA AF base in 11 Southwest China on March , 2015, and they made a stopover in Thailand for refueling before their arrival at Langkawi Airport in Malaysia, where they performed in the air show — -1 from March 17 –21. See “PLA AF Aerobatic Team Arrives in Malaysia for Stunt Shows,” , 2015. China Military Online , March 12 —0 — +1 RR2273A_CC2015.indb 65 8/14/18 11:11 AM

104 66 At the Dawn of Belt and Road Combined Exercises - As in other regions, PLA participation in combined exercises in South east Asia is another important means of strengthening its military ties with countries that China sees as important diplomatic, economic, and security partners. The PLA has participated in more than two dozen combined exercises in Southeast Asia from 2002 through 2014. Among the countries China has conducted exercises with most often in the region are Thailand, Vietnam, Indonesia, and Singapore. These com - bined exercises have focused mainly on topics such as counterterrorism, special operations, and various types of military operations other than war (MOOTW) (Table 3.1). Table 3.1 Selected Chinese Combined Exercises in Southeast Asia, 2002–2014 Year Name of Exercise Partner(s) Exercise Content 2005 Thailand Search and rescue China-Thailand Friendship 2007 Strike 2007 Thailand Special operations 2007 WPNS Forum Singapore ASEAN; Others Maritime exercises 2008 Strike 2008 Thailand Special operations 2009 Cooperation 2009 Singapore MOOTW Thailand Blue Strike/Blue Assault 2010 Counterterrorism 2010 Singapore MOOTW Cooperation 2010 2010 Thailand Strike 2010 Counterterrorism 2010 2010 [Unknown] Vietnam Search and rescue Special operations 2011 Sharp Knife 2011 Indonesia 2011 Vietnam Maritime [Unknown] Blue Strike 2012 Thailand Marine training 2012 Sharp Knife 2012 2012 Indonesia Counterterrorism 2012 [Unknown] Vietnam Maritime search and rescue Singapore Maritime exercise 2013 Sino-Singaporean Maritime -1— Exercise 0— +1— RR2273A_CC2015.indb 66 8/14/18 11:11 AM

105 China in Southeast Asia 67 Table 3.1—Continued Year Name of Exercise Partner(s) Exercise Content 2013 ADMM+ Exercise in Brunei 2013 ASEAN; Others Maritime search and rescue; HADR (humanitarian assistance and disaster relief) 2013 ADMM+ Exercise in Indonesia 2013 ASEAN; Others Counterterrorism Maritime security ADMM+ Exercise in Australia 2013 2013 ASEAN; Others Sharp Knife 2013 Indonesia Counterterrorism 2013 Counterterrorism 2013 Strike 2013 Thailand 2014 Cobra Gold 2014 United States; Humanitarian civil Thailand; assistance portion of Others exercise only Indonesia; Humanitarian rescue 2014 Komodo Others 2014 Combat in mountainous Singapore Cooperation 2014 environment WPNS Maritime Cooperation 2014 ASEAN; Others Maritime exercise 2014 Sharp Knife 2014 Indonesia Counterterrorism 2014 2014 Peace and Friendship-2014 Malaysia HADR SOURCE: Department of Defense China Military Power Report and Chinese Ministry of Defense website. NOTE: China did not begin engaging in combined exercises with foreign militaries until 2002. Two large bilateral PRC exercises with Southeast Asian countries in 2015 are particularly noteworthy. In September, the PLA conducted its first joint naval exercise with Malaysia and its largest exercise to date with an ASEAN country. The exercise involved more than 1,000 PLA personnel and took place around the Strait of Malacca. The Chinese Air Force was planning to hold a three-week long joint drill in late 67 November with the Thai Air Force. 67 — -1 Minnie Chan, “PLA Air Force Joins Thai Military for Joint Drills,” South China Morning Post , November 12 , 2015. —0 — +1 RR2273A_CC2015.indb 67 8/14/18 11:11 AM

106 68 At the Dawn of Belt and Road PLAN Port Visits - From 2000 to 2014, the PLA Navy conducted 33 port visits to South east Asia. Since 2009, the PLAN has visited 23 ports in Southeast Asia; 11 of these visits were associated with the PLAN’s anti-piracy mission in the Gulf of Aden. With ten PLAN port visits from 2000 to 2008, Southeast Asia was the most frequently visited region prior to the PLAN’s involvement in the anti-piracy mission. Several ports across the region have been visited at least twice since 2009: Changi, Sin - gapore (four), and Sattahip, Thailand (three), were the two most fre- quently visited ports in the region. Port Klang, Malaysia; Port Muara, Brunei; Yangon, Myanmar; and Ho Chi Minh City, Vietnam, have each been visited twice over the same time period. In 2013, the PLAN Peace Ark hospital ship made four port visits to the region, stopping 71 68 70 69 Indonesia, and Cambodia to provide free Myanmar, in Brunei, medical treatment to local residents. As noted under the later section describing Chinese MOOTW in the region, the Peace Ark also traveled 13 to provide humanitarian relief 20 to the Philippines in November and medical attention, and to carry out epidemic prevention in areas 72 affected by the Typhoon Haiyan disaster. UN Peacekeeping Operations Chinese participation in UN Peacekeeping Operations (PKO) is an important aspect of PRC engagement with the Developing World, 68 “Chinese Hospital Ship ‘Peace Ark’ Provides Free Medical Checkups for Brunei Resi - Xinhua News dents,” Ministry of National Defense of the People’s Republic of China, , June 17 , 2013. 69 “Chinese Hospital Ship ‘Ark Peace’ [sic] Arrives in Yangon,” Ministry of National Defense Xinhua News , August of the People’s Republic of China, 29 , 2013. 70 “‘Peace Ark’ Hospital Ship Participates in Joint Medical Tour in Indonesia,” Ministry of , 2013. National Defense of the People’s Republic of China, China Military Online , September 12 71 CNTV , September 24, “Chinese Hospital Ship Arrives in Cambodia for Goodwill Visit,” 2 013. 72 China Daily Peng Yining, “Medics Soon at Work as Peace Ark Sails In,” , , November 26 2013; “‘Peace Ark’ Hospital Ship Carries Out Remote Consultation for Philippine Patients,” , Ministry of National Defense of the People’s Republic of China, China Military Online -1— December 9, 2 013. 0— +1— RR2273A_CC2015.indb 68 8/14/18 11:11 AM

107 China in Southeast Asia 69 but there are no current UN peacekeeping missions in Southeast Asia. Nevertheless, Southeast Asia has an important place in the history of Chinese participation in UNPKOs. In 1992, Beijing sent a unit of engineering troops to participate in the United Nations Transitional Authority in Cambodia (UNTAC), the UNPKO that was active in - Cambodia from 1991 to 1993. This marked the first time China dis patched a military unit to participate in a UNPKO. According to one scholar, the involvement of the Chinese engineering troops in the mis - 73 China also sent sion helped improve Beijing’s image in Cambodia. a small number of observers to participate in UN mission in Timor- Leste, which was active from 2006 to 2012. Military Operations Other than War Participation in MOOTW is another important component of PLA - engagement with Southeast Asia. As in other regions, it has the poten tial to help China develop its image as a responsible major power and to bolster China’s relationships with key countries. At the same time, however, having the capacity to conduct such operations may raise questions when China does less than other countries expect of it given its growing capabilities, as was demonstrated by the criticism Beijing endured as a result of its limited offer of disaster relief assistance to the Philippines immediately following Super Typhoon Haiyan in Novem - 74 After a slow response that many observers interpreted as a 20 13. ber consequence of a tense diplomatic relationship stemming from China’s territorial dispute with the Philippines in the South China Southeast Asia, Beijing eventually sent its hospital ship to assist the victims of the 75 typhoon. 73 Miwa Hirono, “China’s Charm Offensive and Peacekeeping: The Lessons of Cambodia— What Now for Sudan?” International Peacekeeping , Vol. 18, No. 3, 2 011, pp. 32 8–343. 74 Some commentators lambasted China for providing less assistance at first than the furni - ture company Ikea. See, for example, Will Oremus, “China Is Finally Sending Its ‘Peace Ark’ to the Philippines,” Slate , November 20, 2 013. 75 See, for example, “Chinese Hospital Ship Peace Ark Arrives in the Philippines,” Xinhua — -1 News , 2013; Jane Perlez, “China Offers Hospital Ship to the Philippines,” , November 25 New York Times , November 19 , 2013. —0 — +1 RR2273A_CC2015.indb 69 8/14/18 11:11 AM

108 70 At the Dawn of Belt and Road Conclusion Southeast Asia is the most challenging but also possibly the most important developing region for China. In the past decade, Beijing has steadily increased its involvement in the region through a range of political, economic, and military means. Politically, China has contin - ued to press its territorial claims while increasing linkages to the region to reassure the region that China’s growing influence and territorial claims do not threaten regional stability. From 2003 through 2014, es, making countries in tim Chinese political leaders visited ASEAN 94 the region among the most visited across the Developing World. Eco - nomically, China is advancing large trade and connectivity initiatives and has become ASEAN’s most important trade partner. Southeast Cen tury Asia is particularly crucial for realizing China’s vision for a 21st Maritime Silk Road. Militarily, China is selling arms to the region and has engaged in more than two dozen exercises with ASEAN countries hig h-level from 2002 to 2014, 33 port visits from 2000 to 2014, and 66 military visits to the region from 2003 to 2014. All of this has occurred as Beijing began engaging in significant land reclamation activities in the South China Sea in late 2013. Looking forward, Beijing is likely to continue to deepen economic and political engagement with the region as a whole and with particu - lar friendly countries on a bilateral basis. At the same time, Beijing is likely to continue to use all necessary means to advance and secure its territorial claims in the South China Sea. Although Chinese public statements emphasize that the region is large enough to accommodate a growing China and the United States, there is significant Chinese concern that activities in the region are becoming more complex, zero- sum, and competitive between China, select Southeast Asian coun - tries, the United States, and other external actors. There is also a clear recognition that China needs to be firm but very cautious; how China deals with South China Sea disputes and relations with its southeastern neighbors will be crucial to its ability to peacefully develop and trans - form internally and internationally. Within the region, China has mixed success in achieving its -1— political objectives of decreasing regional anxiety over China’s growing 0— influence and strengthening its territorial claims in the South China +1— RR2273A_CC2015.indb 70 8/14/18 11:11 AM

109 China in Southeast Asia 71 - Sea. Most ASEAN countries are hedging against China, wary of Bei jing, and not willing to accept China’s territorial claims in the South China Sea. Countries are avoiding clear alignments against China and are cautious of appearing too close to other countries involved in the region, such as the United States. They recognize that it is difficult to balance against China given their high levels of political and economic linkages to China. They also wish to avoid being potential pawns in any U.S.-China competition. Chinese military and economic power dwarfs most of its southeastern neighbors, and being the frontline state in a crisis against China could have significant negative consequences. With regard to the South China Sea, most countries have not been willing to challenge Chinese claims directly and openly. Instead, most countries urge regional stability and rule of law and may support lower- key and less public means to pushback against Chinese claims. Lassen Regional responses to the United States’ sending of the USS to engage in Freedom of Navigation Operations (FONOP) in the 20 15 are examples of the hedging behavior South China Sea in October ASEAN countries engage in. Philippines and Malaysia welcomed the 76 Vietnam did not immediately release a statement U.S. Navy patrol. and provided only a relatively noncommittal response to U.S. actions 77 Singapore, a close U.S. partner in the region, released a when pressed. statement supporting the right of freedom of navigation and overflight, but also urged all parties to manage their differences calmly and peace- 78 Indonesian President Joko Widodo similarly supported freedom f u l ly. 79 of navigation but also called for restraint in the South China Sea. Soon after the FONOP, both Vietnam and Singapore hosted President Xi Jinping for a visit and Xi stated in Singapore that “there has been 76 Matthew Southerland, “U.S. Freedom of Navigation Patrol in the South China Southeast Asia: What Happened, What It Means, and What’s Next,” U.S.-China Economic and Secu- rity Review Commission, Issue Brief, November 5, 2 015. 77 “Vietnam Gives Noncommittal Response to US Patrol in S. China Southeast Asia,” Voice of America , October 29 , 2015. 78 “MFA Press Statement: Introductory Calls on Minister for Foreign Affairs Minister Dr. Vi vian Balakrishnan,” Ministry of Foreign Affairs of Singapore, October 28 , 2015. — -1 79 Prashanth Parameswaran, “Indonesia Calls for South China Southeast Asia Restraint —0 Amid US-China Tensions,” The Diplomat , October 28, 2015. — +1 RR2273A_CC2015.indb 71 8/14/18 11:11 AM

110 72 At the Dawn of Belt and Road no problem with maritime navigation or overland flights [in the South 80 China Sea], nor will there ever be in the future.” Implications for the United States The United States should act judiciously and deliberately in Southeast Asia. Although Beijing’s use of paramilitary assets in the South China Sea in territorial disputes inhibits immediate escalation to the use of military assets, China is not backing down from its sovereignty claims. U.S. allies and partners in the region, on the other hand, are actively contesting Chinese territorial claims and have engaged in similar land reclamation activities, albeit at a much smaller scale. The United States does not take a position or stance on South China Sea disputes and has urged for a peaceful resolution of maritime disputes. The United States, however, is obligated to support—and, if needed, restrain—its allies and partners. While current and past Chinese actions in the region have not affected the free transit of maritime goods through the South China Sea, there is considerable uncertainty over the long-term Chinese agenda for the region. Does China, for example, seek to control all of the maritime territory within its self-proclaimed Nine-Dash Line in the South China Sea? China’s growing military capabilities and its activities in the South China Sea—including building military infrastructure on its outposts that will enhance its power projection capabilities—are also changing the regional balance of power and providing China with more options and capability to impact freedom of navigation in the future should it choose to do so. Current trends put ASEAN countries at a disadvantage if China has more expansive ambitions in Southeast Asia. Greater Chinese trade and economic development benefits ASEAN countries economically but also makes them increasingly vulnerable to Chinese coercion. - Countries may be more willing to disregard provocative Chinese behav ior in the region as long as PRC actions do not affect them directly or they continue benefiting from positive interactions with China. Most 80 Rachel Chang, “There Will Never Be a Problem with Freedom of Navigation in South -1— 015. China Southeast Asia: Xi Jinping,” Strait Times , November 7, 2 0— +1— RR2273A_CC2015.indb 72 8/14/18 11:11 AM

111 China in Southeast Asia 73 Southeast Asian countries are, thus, hesitant or incapable of contesting Chinese influence individually and have sufficiently different interests that prevent them from working together. In their attempt to hedge against China, most ASEAN countries are also reluctant to be seen as too close to the United States and may only provide lukewarm public support for—and may even openly criticize—U.S. efforts to promote regional stability and ensure freedom of navigation. — -1 —0 — +1 RR2273A_CC2015.indb 73 8/14/18 11:11 AM

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113 CHAPTER FOUR China in Oceania Oceania is a Developing World region important to China despite the small size of the region’s economy and population. Stretching thou - sands of miles, the region contains dozens of Pacific Ocean islands scattered along key Chinese maritime trade routes. It includes the developed countries of Australia and New Zealand, as well as many developing ones, such as Papua New Guinea, 13 independent, self- 1 and a number of non-sovereign territories and depen - governing states, 2 dent territories such as Guam. In the last decade, Beijing has paid more attention to Oceania and has increased political and economic engagement. President Xi Jinping became the first Chinese president to visit a country in the region other than Australia and New Zealand. Chinese goods trade with the region llion in 2000 to bi ti mes, from approximately $10 increased by over 14 3 Xi also seeks to involve the region in llion in 2013. bi more than $153 Beijing’s Belt and Road Initiative and the Asian Infrastructure Invest - 4 China currently has limited military engagement with ment Bank. the region. 1 These 13 Pacific Island countries include: Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Republic of Marshall Islands, Nauru, Niue, Palau, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. 2 Although Australia and New Zealand are developed countries, we have included them in this analysis because they are located in a developing region. 3 UN Comtrade Database. 4 — -1 “China, Pacific Island Countries Announce Strategic Partnership,” Xinhua News , Novem - , 2014. 23 ber —0 — +1 75 RR2273A_CC2015.indb 75 8/14/18 11:11 AM

114 76 At the Dawn of Belt and Road Drivers of Chinese Engagement Several factors drive China’s engagement with the region. Politically, China seeks to win international support, facilitate political and eco - nomic cooperation, and isolate Taiwan. As China continues to press its territorial claims in the East and South China Seas, Beijing seeks to reassure Oceania that China is not a regional threat and discourage regional countries from taking sides in territorial disputes against Chi - nese interests. This has become even more important with the U.S. rebal - ance to the Asia-Pacific and U.S. movement of military assets to the region. Key Chinese maritime trade routes also pass through Oceania and there are Chinese concerns that islands in the region can serve as part of a second island chain around; such a chain is a flexible concept in Chinese strategic doctrine but that includes the idea of a barrier to contain China, a springboard from which to use force against China, 5 and as a benchmark for marking China’s progress in power projection. Economically, Beijing is interested in Oceania for its natural resources, such as iron ore from Australia and natural gas and minerals from 6 Papua New Guinea. Chinese policy toward the region has been largely centered on economic cooperation and development, with the hope that greater eco - nomic linkages would bind the region toward China. Beijing has repeatedly emphasized the need to deepen cooperation with the region on a number of areas, including trade, agriculture and fisheries, energy - and resources, marine industry, and infrastructure construction. Presi dent Xi Jinping has further pledged to increase high-level interactions, people-to-people exchanges, and contributions to the region’s economic development. To facilitate greater linkages to the region, Beijing’s Belt Ce n- and Road Initiative is likely to include an eastern leg of its 21st tury Maritime Silk Road that connects Oceania to the rest of its trade 5 Andrew S. Erickson and Joel Wuthnow, “Barriers, Springboards and Benchmarks: China Conceptualizes the Pacific ‘Island Chains,’” China Quarterly , Vol. 225, March 201 6, pp. 22; Yu Chang Sen, “The Pacific Islands in Chinese Geo-Strategic Thinking,” paper 1– - presented to the “China and the Pacific: The View from Oceania” conference, National Uni –27, 2015. versity of Samao, Apia, Samoa, February 25 -1— 6 Terence Wesley-Smith, China in Oceania: New Forces in Pacific Politics, East-West Center, 0— Pacific Islands Policy, No. 2, 2 007. +1— RR2273A_CC2015.indb 76 8/14/18 11:11 AM

115 China in Oceania 77 - routes. Beijing also aims to involve the region in its Asian Infrastruc 7 ture Investment Bank. Unlike its policy toward Africa or Latin America (Chapters 8 and 9, respectively), Beijing does not have a policy paper on its rela - tions with Oceania. China also does not have a dedicated ambassador or special envoy to the region, although it does send special envoys to attend key regional meetings. Like most other regions, China engages with the countries bilaterally and multilaterally. In 2006, China estab - lished the China-Pacific Island Countries Economic Development and Cooperation (CPIC) Forum to provide a multilateral forum for high- level dialogue and cooperation between China and Oceania. There have been only two high-level Forum meetings as of 2015. Political Engagement Unlike neighboring Southeast Asia, where China enjoys diplomatic relations with all of ASEAN, China has diplomatic relations with ten 8 These include the most populous and of the 16 states in Oceania. largest regional economies of Australia, New Zealand, and Papua New Guinea. Six states (Kiribati, Marshall Islands, Nauru, Palau, Solomon Islands, and Tuvalu) continue to recognize Taiwan. Despite the lack of diplomatic relations with these six states, all 16 states are part of the Pacific Islands Forum Secretariat, and China is a dialogue partner to 9 the forum. As in other regions, China has been willing to engage with authoritarian regimes sanctioned by the West. In Oceania, the most notable case of this is China’s close relationship with Fiji after the country underwent a military coup in 2006. Some have criticized China for providing support and development funding to sustain the authoritarian government while others have pointed to the fact 7 “China, Pacific Island Countries Announce Strategic Partnership,” Xinhua News , Novem- ber 23 , 2014. 8 These ten are: Australia, the Cook Islands, Federated States of Micronesia, Fiji, New Zea - — -1 land, Niue, Papua New Guinea, Samoa, Tonga, and Vanuatu. —0 9 See Pacific Islands Forum Secretariat, “About Us,” webpage, undated. — +1 RR2273A_CC2015.indb 77 8/14/18 11:11 AM

116 78 At the Dawn of Belt and Road that China contributed $780,000 to support elections in Fiji in 10 September 20 14. During President Xi Jinping’s November 2014 visit to Australia, New Zealand, and Fiji, China sought to strengthen relations with Oceania countries. China upgraded relations with Australia and New Zealand to comprehensive strategic partnerships, and China and 15. With New Zealand, Australia signed a bilateral FTA in June 20 China agreed to strengthen and increase existing economic ties and expand bilateral trade to 30 llion New Zealand dollars by 2020. bi China also signed Antarctic Cooperation agreements with Australia 11 and New Zealand. Within the region, China prioritizes Australia and New Zealand because these two countries are the largest geopolitical and economic actors in the region. Australia and New Zealand are also the only two countries in the region with which China has signed comprehensive strategic partnerships, and neither has taken a stance on the South China or East China Seas disputes. Between the two countries, China views Australia as more important. Chinese strategists are aware of Australia’s important role as a U.S. ally in the Asia-Pacific and in sup - porting U.S. rebalancing to the Asia-Pacific. Beijing, however, believes there are factors that could diminish Australia’s willingness to cooper - ate with the United States. Greater Chinese political and economic exchanges with Australia could show Canberra the benefits of a healthy relationship with China and discourage Australia from engaging in measures to contain China’s growth or counter China’s claims in the 12 - In contrast, China has lesser forms of stra South or East China Seas. 10 “Big Fish in a Big Pond,” The Economist , March 25 , 2015; Lucy Craymer, “Fiji Attracts Old Friends as China’s Clout Grows,” Wall Street Journal , October 30, 2 014. 11 Wang Yi, “Foreign Minister Wang Yi Talks About President Xi Jinping’s Attendance at the G20 Summit and Visits to Three Countries Including Australia,” Ministry of Foreign Affairs of the People’s Republic of China, November 23 , 2014. 12 Sun Junjian, “Aodaliya Dui Meiguo ‘Chongfan Yatai’ Zhanlue De Fanying” [“Australia’s Response to the United States’ ‘Pivot to Asia’ Strategy”], Contemporary International Rela- tions , No. “Zihuo Xieding Li Zhongao Xingfen Meimei Danyou ‘Yatai Zhanlue 014; 8, 2 Luokong’” [“Free Trade Agreement Excites China, Australia, U.S. Media Worries About -1— , 2015. June ‘Asia-Pacific Strategic Failure’”], Global Times , 19 0— +1— RR2273A_CC2015.indb 78 8/14/18 11:11 AM

117 China in Oceania 79 - tegic partnership deals with the remaining eight countries it has diplo matic relations with in Oceania. Overall, Chinese leaders visit Oceania relatively infrequently. From 2003 to 2014, there were 18 visits to the region by Chinese lead - ers, of which ten occurred from 2003 to 2008 and eight occurred from 13 In the last decade, Chinese presidents and premiers 2009 to 2014. have visited only three countries in Oceania: Australia, New Zealand, and Fiji. President Xi Jinping’s visit to Fiji in November 20 14 was the first time a Chinese president had visited Fiji. China has limited cultural presence and influence in the region. China currently has 16 Confucius Institutes in three coun - tries in the region, with 12 in Australia, three in New Zealand, and one in Fiji. There are also low numbers of ethnic Chinese in the region. According to Taiwanese government statistics, approximately llion people) cent of all overseas ethnic Chinese (or nearly 1 per mi 3 14 Australia has the most ethnic Chinese— lived in Oceania in 2012. per approximately 900,000 ethnic Chinese, or 4 cent of the country’s - cent of New Zealand’s popu per total population. Approximately 4 lation (170,000 people) is ethnic Chinese. Ethnic Chinese account per for 0.3 cent (20,000 people) of the population of Papua New Guinea. China is Australia and New Zealand’s largest source of for - 15 eign students. In terms of people actually from China, one source notes that, as 16 of 2017, about 500,000 residents of Australia were born in China. 17 As of 2013, 89,000 residents of New Zealand were born in China. 13 Chinese political leaders include the president, premier, vice president, minister of foreign affairs, and state councilor in charge of foreign affairs. 14 For Taiwanese statistics, see 2013 Statistical Yearbook of the Overseas Community Affairs , Republic of China (Taiwan). Council 15 Wang Yi, 2014. 16 Helen Clark, “Should Australia Fear an Inf lux of Chinese?” , South China Morning Post June 30, 2 017. 17 Stats New Zealand—Taturanga Aotearoa, “2013 Census QuickStats About Culture and — -1 Identity,” Wellington, April 15 , 2014. —0 — +1 RR2273A_CC2015.indb 79 8/14/18 11:11 AM

118 80 At the Dawn of Belt and Road Economic Engagement China has been increasing its economic engagement with the region, particularly in the last decade. Two high-level CPIC forums took place in 2006 and 2013 and China has used them to increase economic cooperation and announce economic commitments to the region. In llion in preferential loans, bi the 2006 forum, China promised RMB 3 a zero-tariff policy to the majority of exports from Least Developed Countries (LDC) in the region that have diplomatic ties to China, anti-malaria medicine, training and scholarships, increased tourism, 18 By 2013, China had set up 150 enterprises in and disaster assistance. 19 In the most recent November 2013 forum, China prom - the region. ised $ 1 bi llion in concessional loans over a four-year period, with most 20 of the loans to be used in infrastructure-related projects. Aside from the previously noted China-Australia FTA, which entered into force on December 20 , 2015, Australia and New Zea - land are also negotiating partners in the Regional Comprehensive Economic Partnership trade deal, of which the United States is not a partner. Both are also partners in the recently completed Trans- Pacific Partnership (TPP) trade deal, in which the United States was a partner. Trade China’s trade with Oceania is dominated by trade with Australia and, to a lesser extent with New Zealand. All the other countries are minor by comparison. China is Australia’s largest trade partner, and it buys approximately a third of all Australian exports. The commodity com - position of goods trade between China and Oceania is similar to that of China with most developing regions except for Southeast Asia. 18 “Wen’s Speech at the China-Pacific Island Countries Forum,” China Daily , April 5, 2 006. 19 China-Pacific Island Countries Economic Develop “Address of Wang Yang at the 2nd - nd Cooperation Forum and the Opening Ceremony of 2013 China International ment a Show on Green Innovative Products and Technologies,” Ministry of Commerce of the Peo - ple’s Republic of China, November 12 , 2013. 20 - “Chinese Development Aid in Pacific Island Countries and Opportunities for Coopera -1— 14. tion,” United Nations Development Programme, China, Issue Brief No. 7, D ecember 20 0— +1— RR2273A_CC2015.indb 80 8/14/18 11:11 AM

119 China in Oceania 81 The majority of Chinese imports from Oceania are crude minerals and mineral fuels (Figure 4.1). Imports in those two categories made up more than 50 per cent of total imports and almost 10 per cent of total imports from the region, respectively, in 2000 and grew to nearly cent, respectively, in 2013. China imported more cent and 13 70 per per than $70 llion in crude minerals alone from Australia. bi Chinese exports to Oceania are in the form of manufactured goods and machinery, with machinery taking an increasing role over the past decade (Figure 4.2). As with other regions that China imports raw materials from, such as the Middle East, Oceania has a significant trade surplus with China (Figure 4.3). Figure 4 .1 Composition of Imports from Oceania 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2004 2013 2011 2000 2010 2002 2006 2003 Year Crude materials Food Beverages and tobacco Chemicals Animal and vegetable oils Mineral fuels Miscellaneous Manufactured goods Machinery and transport manufactured Other — -1 SOURCE: UN Comtrade Database. RAND RR2273A-4.1 —0 — +1 RR2273A_CC2015.indb 81 8/14/18 11:11 AM

120 82 At the Dawn of Belt and Road Figure 4.2 Composition of Exports to Oceania 100 90 80 70 60 50 Percent 40 30 20 10 0 2003 2002 2006 2001 2000 2010 2008 2009 2007 2012 2005 2004 2013 2011 Year Crude materials Food Beverages and tobacco Chemicals Animal and vegetable oils Mineral fuels Miscellaneous Manufactured goods Machinery and transport manufactured Other SOURCE: UN Comtrade Database. RR2273A-4.2 RAND Foreign Direct Investment and Lending Chinese investments in Oceania are mainly concentrated in Austra - llion lia. In 2013, China’s stock of FDI in Australia reached $13.8 bi (Figure 4.4). In 2015, China became the largest investor in Austra - lia, overtaking the United States. Most of this investment has been in real estate and is driven in part by the decline in the Australian 21 dollar, making real estate investment in Australia relatively attractive. In contrast, none of the other countries in Oceania have more than $1 bi llion in Chinese FDI. 21 “Zhongguo Qudai Meiguo Chengwei Aodaliya Zui Da Waizi Laiyuan” [“China Replaces -1— 015. the U.S. as Australia’s Largest Source of Foreign Investment”], Sina News , April 30, 2 0— +1— RR2273A_CC2015.indb 82 8/14/18 11:11 AM

121 China in Oceania 83 Figure 4.3 Level of Exports to and Imports from Oceania 120 Exports to Oceania 100 Imports from Oceania 80 60 U.S. $ billions 40 20 0 2001 2011 2010 2009 2012 2013 2003 2002 2008 2000 2006 2004 2005 2007 Year SOURCE: UN Comtrade. 4.3 RR2273A- RAND Figure 4.4 Chinese FDI Stock in Oceania by Receiving Country 16,000 Australia 14,000 New Zealand 12,000 Fiji 10,000 Marshall Islands Papua New Guinea 8,000 Samoa 6,000 Vanuatu U.S. $ millions 4,000 2,000 0 2010 2003 2012 2011 2009 2004 2008 2006 2005 2007 Year — -1 SOURCE: UNCTAD. 4.4 RR2273A- RAND —0 — +1 RR2273A_CC2015.indb 83 8/14/18 11:11 AM

122 84 At the Dawn of Belt and Road In addition to FDI, China provides significant aid to the region. From 2006 to 2013, China provided $1.5 bi llion to nine states, with the l- mi llion) to Papua New Guinea, followed by Fiji ($339 mi most ($440 llion), and Samoa ($208 - lion), Vanuatu ($224 mi llion). Beijing pro mi vided aid in the form of concessional loans and grants, and the aid packages and much of the other aid went to infrastructure-related proj - ects. Although Chinese aid to the region during this period exceeded llion) and bi Japanese aid, it is still less than U.S. aid to the region ($1.8 22 less than a fifth of Australian aid to its neighbors ($6.8 bi llion). Agreements and Other Issues China has bilateral investment treaties in force with Australia, New Zealand, and Papua New Guinea and a signed treaty that is not in force with Vanuatu. It has income and capital tax treaties with the - same three countries with which it has BITs. Australia and New Zea - land are also among the 50 founding members of the Asian Infrastruc ture Investment Bank. Similar to its activities elsewhere, there is some local wariness over China’s growing economic clout. Tonga exemplifies the mixed feelings people have regarding increased Chinese economic engage- ment and readily available Chinese funding. As of 2015, Tonga’s debt was approximately half of its GDP, and two-thirds of that debt was - owed to the Export-Import Bank of China and denominated in Chi nese yuan. Many had mistakenly assumed that Beijing would convert the loans to grants, but it has not done so. Instead, the Pacific nation welcomed available finance and became severely indebted to China. Its leadership now worries about China’s growing influence on the country given the amount of debt Tonga owns. Aside from growing government debt, some have also criticized China for bringing its own workers to Tonga to engage in infrastructure and other construction 23 activities. 22 Philippa Brant, “Chinese Aid in the Pacific,” Lowy Institute for International Policy, 9, 2 March 015. -1— 23 Michael Field, “China’s ‘Gift’ Troubles New Prime Minister,” Nikkei Asian Review , 0— 28 March , 2015. +1— RR2273A_CC2015.indb 84 8/14/18 11:11 AM

123 China in Oceania 85 Military and Security Engagement China has limited military engagement with Oceania as a region. Since 2000, China has not sold major conventional arms to the region. It has engaged in some combined exercises with countries in the region and mainly with Australia and New Zealand (Table 4.1). From 2003 to 2014, China conducted nearly a dozen port visits to three countries in Oceania: Australia, New Zealand, and Papua New Guinea. In 2014, the Peace Ark engaged in Mission Harmony-2014, where it provided free medical assistance to Tonga, Fiji, Vanuatu, and Papua New Guin - 24 25 paid its first-ever port visit to Australia. In 2015, it Along with ea. exercises and port visits, Chinese military leaders have been making more trips to the region in recent years. From 2003 to 2008, no CMC member traveled to Oceania. In contrast, CMC members made eight visits to Oceania from 2009 to 2014. Table 4.1 Selected Chinese Combined Exercises in Oceania, 2002–2014 Exercise Content Partner(s) Name of Exercise Year 2004 Search and rescue Australia [Unknown] Australia; Maritime search and Joint Maritime Search and 2007 Rescue rescue New Zealand Maritime exercises New Zealand; Joint Maritime Maneuver; Joint 2010 Australia Maritime Maneuver and Exercise HADR 2011 Australia Cooperative Spirit 2011 2012 Cooperative Spirit 2012 Australia; HADR New Zealand Exercise Kowari-14 Survival training Australia; 2014 United States SOURCE: Department of Defense China Military Power Report and Chinese Ministry of Defense website. NOTE: China did not begin engaging in combined exercises with foreign militaries until 2002. 24 , 2014. “Peace Ark Hospital Ship Returns to Zhoushan,” CCTV , September 29 — -1 25 Prashanth Parameswaran, “China’s Peace Ark Completes First-Ever Australia Visit,” The —0 Diplomat , October 16 , 2015. — +1 RR2273A_CC2015.indb 85 8/14/18 11:11 AM

124 86 At the Dawn of Belt and Road Within the region, China has particularly sought to strengthen defense ties with Australia. Australia is the only Western country that 26 In 2014, has engaged in live-fire exercises with the Chinese military. China and Australia engaged in 45 events of military cooperation or exchanges, and these activities accounted for a significant portion of the Australian armed forces’ activities with foreign militaries. In Decem - ber of the same year, the two countries agreed to further boost their 27 201 5, both countries again affirmed In November military relations. their desire to boost military relations, and China sought to improve communication and cooperation between the two militaries in areas like “peacekeeping, army training, humanitarian rescue and relief, strengthen personnel exchanges like communication between middle and young age officers, and two-way visit and learning between stu - - dents.” Australian Defense Minister Marise Payne also stated that Aus tralia does not hold a position or take a side in the South China Sea 28 disputes. Conclusion China has been increasing political and economic engagement with Oceania in the past decade. Chinese trade and investment in the region has grown significantly, and Beijing aims to increase such linkages by Cen tury Maritime Silk Road to the region. There is extending the 21st limited but growing PRC military engagement, mainly with Australia and New Zealand. Beijing hopes that greater economic and political ties with the region will prevent regional actors from taking a stance on territorial disputes in the South and East China Seas against China’s interests. These ties, as well as more military-to-military exchanges, are part of Beijing’s efforts to assure regional actors that China is not a 26 “South China Southeast Asia: Australia’s Live Fire Exercise with China’s Navy Could Be ‘PR Disaster,’ Expert Warns,” ABC News , November 2, 2 015. 27 Xinhua News “China, Australia Agreed to Boost Military Ties,” 014. , December 2, 2 28 “China, Australia Vow to Promote Bilateral Defense Cooperation,” Xinhua News , Novem - -1— 015. ber 4, 2 0— +1— RR2273A_CC2015.indb 86 8/14/18 11:11 AM

125 China in Oceania 87 threat and there is no need for Pacific nations to form a second island chain containing or threatening China. While Oceania is within China’s third ring, China has not afforded the region as a whole the same level of attention as those in the same ring or regions in the fourth ring further away from China. Beijing, for example, has not designated a special envoy or ambassador for Oceania and has yet to issue a policy paper spelling out its regional goals and activities. Similarly, whereas there have been only two high- level CPIC Forum summits in 2006 and 2013, its equivalent organiza - tion in Africa (which is in the fourth ring), the Forum on China-Africa Cooperation, was scheduled to hold its sixth ministerial meeting in 15. 20 South Africa in December - A number of circumstances explain Beijing’s relatively lower pri oritization of the region as a whole. China has selected to focus on particular countries, such as Australia and New Zealand. In addition, the smaller Pacific Island nations are not as resource rich as geographi - cally large developing countries elsewhere. Given their smaller size and economic weight, Beijing does not view most countries in the region as actors with substantial international influence. Instead, China is likely to continue to steadily increase its influence in the region and prioritize relations with Australia and New Zealand. With respect to its goals in the region, China’s outreach and activities have had some success; it is encouraging countries to hedge instead of taking a clear stance against China. A recent example of such behavior is Australia’s reactions to the United States’ FONOP 15. The Australian Ministry of 20 in the South China Sea in October Defense issued a statement that simultaneously supported U.S. activi - 29 A week ties and also spelled out that Australia did not participate. later, Australia also engaged in a live-fire exercise with China in the South China Sea, causing some to question the extent to which Can - berra supports Washington’s efforts to ensure freedom of navigation in 30 While Australian defense planners are reportedly looking the region. 29 Australian Department of Defence, “Minister for Defence—Statement—Freedom of , 2015. Navigation in the South China Southeast Asia,” October 27 — -1 30 “South China Southeast Asia,” 2015. —0 — +1 RR2273A_CC2015.indb 87 8/14/18 11:11 AM

126 88 At the Dawn of Belt and Road into the possibility of engaging in their own sail-through or fly-by (but 31 there has been a signifi - have not publicly stated that they will do so), cant divide in public commentary on what Australia should do. Some Australian defense and security analysts argue that it is not in Austra - 32 Instead, they contend lia’s best interests to engage in such an activity. Australia should use diplomacy to maintain regional stability. Implications for the United States Overall, China is not changing the balance of power in Oceania con - trary to U.S. interests. Politically, China is not exerting the same coer - cive influence vis-à-vis U.S. allies and partners in Oceania as it is doing in Southeast Asia. Economically, China’s efforts to promote economic development are mostly welcome, and increasing trade via its Belt and Road Initiative is also a positive for the region. Though China is pro - viding significant aid to the region, the amount that China is providing is still less than what the United States provides and only a fifth of what Australia is giving to its neighbors. Militarily, China’s engagement with Australia and New Zealand is unlikely to diminish the importance of their relationships with the United States. Looking forward, one area that the United States does need to pay attention to is that increased Chinese engagement with Oceania - may diminish the willingness of regional actors to counter more asser tive Chinese moves in the South China Sea or other regions. China is building relations with Oceania, not only to exert influence in the Pacific but also to buy influence—or buy acquiescence—elsewhere. 31 Wall Street Jour Rob Taylor, “Australia Prepares Option of Sail-Through to Test China,” - , 2015. nal , October 28 32 For example, see Bob Carr, “South China Southeast Asia Would Be a Lonely Patrol for Australia,” Financial Review , November , 2015; Sam Bateman, “Australia and the US: 11 Great Allies but Different Agendas in the South China Southeast Asia,” The Lowy Interpreter , November , 2015. 12 -1— 0— +1— RR2273A_CC2015.indb 88 8/14/18 11:11 AM

127 CHAPTER FIVE China in Central Asia In the broad sweep of thousands of years of history, Central Asia— on China’s northern and western frontiers—has consistently posed the country’s greatest geostrategic threats. The nomadic peoples of the steppe constituted perennial challenges as raiders and, sometimes, invaders. The Mongols were particularly troublesome—in the thir - teenth century, these horsemen conquered China, establishing the Yuan dynasty (1271–1368) and ruling the country for almost one ars. In modern history, the main geostrategic challenge to China ye 100 from Central Asia has come from Russia—first under the tsars and then under the Bolsheviks. These threats came both in the form of the strength of imperial Russia and, subsequently, the Soviet Union, and then in the form of weakness and collapse of successive regimes. The disintegration of the Soviet Union in 1991 created China’s most imme- diate post–Cold War national security challenge. Beijing’s response to the new realities in Central Asia evolved from purely security cooperation to a ramping up of economic interactions. Cognizant of Russia’s interests, China sought to tread lightly in the region militarily while playing to its strength and offering economic opportunities to its new neighbors. Certainly China did not ignore the security dimension, resolving territorial disputes and demilitarizing frontiers. Moreover, China has conducted near-annual field exercises since 2002 with other member states of the Shanghai Cooperation Organization (SCO), but these were quite modest displays. The result was that none of the Central Asian states—with the possible exception — -1 of Mongolia—see China as a threat; to the contrary, Central Asian —0 — +1 89 RR2273A_CC2015.indb 89 8/14/18 11:11 AM

128 90 At the Dawn of Belt and Road capitals mostly consider Beijing to be an economic windfall. In fact, the precursor for the Belt and Road foreign policy initiative formally announced by President Xi Jinping in September 20 13 in Kazakhstan appears to be a continuation of the economic relationship launched by Xi’s two predecessors to develop economic cooperation with, and 1 major infrastructure projects in, Central Asia in the 1990s and 2000s. Even Mongolia has created important links with China, including its first joint military exercise in the field of special operations, Hunting 2 Eagle 2015, focused solely on operations against terrorism. Key Chinese Activities in the Region China is engaging in several different types of activities in the region. Politically and economically, Beijing seeks to increase cooperation with its neighbors and regional influence through greater connectivity and trade. Its most important new initiative is Belt and Road. Not only is Central Asia to have better connections to facilitate resource flow, but Central Asia also serves as the land bridge to West Asia and Europe as it has for millennia. As of fall 2015, rail routes from China through Central Asia went to Madrid (through Kazakhstan and Russia); Duis - burg and Hamburg in Germany, and Warsaw (different routes through Kazakhstan, Mongolia, and Russia); and Azerbaijan (through Kazakh - stan) with continuation expected through to Turkey. The rail route shortens the time to ship goods from China to Europe from four to six 3 - However, rail ship ys by rail. da weeks by Southeast Asia routes to 14 ping remains more expensive than ocean shipping. Beyond the Belt and Road effort, there are supporting initiatives that can increase China’s involvement in the region, such as the AIIB, which will help finance infrastructure projects in Central Asia; the New Development Bank, also known as the BRICS bank, established with bil BRICS partner Russia; and China’s own Silk Road Fund, a $40 lion fund, open to other investors and focused on infrastructure in Asia. 1 Author conversations with Chinese civilian and military analysts in Beijing and Shang - 15. 20 hai, September 2 - B. Amarsaikhan, “Two Countries’ Servicemen Join in Military Exercises Against Terror -1— 12 , 2015. ism,” Montsame National News Agency , October 0— 3 , April “Mapping China’s New Silk Road Initiative” Forbes 8, 2 015. +1— RR2273A_CC2015.indb 90 8/14/18 11:11 AM

129 China in Central Asia 91 Militarily, China increased the number of joint exercises in 2013, from one or two most years to five that year. High-level visits also increased as of about 2010. Much of this cooperation has focused on counterterrorism and anti-trafficking. Arms sales have not played a major role in China’s military engagement with the region. Beijing views Russia as its most important regional partner, although the two are also regional competitors (see Chapter 10). Note that we do not consider Russia to be part of the Central Asia region; rather, given its size and interests, it is the most important country for the region, possibly even including China. Kazakhstan and Mongolia are viewed as major regional partners (Figure 5.1). China does not have conflictual relations with any of the Central Asian countries. Drivers of Chinese Engagement Chinese Activities in the Region Prior to 2000 China confronted six new and unattached Central Asian neighbors in the 1990s with the collapse of the Soviet bloc and disintegration of the Soviet Union. Mongolia became a nonaligned state in 1989, while Figure 5 .1 China’s Relations with Countries in Central Asia, 2015 Russia Kazakhstan Mongolia Uzbekistan Kyrgyzstan Turkmenistan Tajikistan Overall relationship with China: Pivotal state Major partner Diplomatic relations — -1 —0 RR2273A-5.1 RAND — +1 RR2273A_CC2015.indb 91 8/14/18 11:11 AM

130 92 At the Dawn of Belt and Road Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan all became independent states in 1991. All six continued to have sub - stantial Russian influence, yet all moved slowly but seemingly inexora - bly into China’s orbit. While Russia’s economy was in crisis in the early 1990s, the Chinese economy boomed. China was thirsty for energy - resources and commodities, and the peoples of the six landlocked Cen tral Asian states were hungry for inexpensive consumer goods. But China’s immediate motivation for engaging with its new neighbors was to establish a predictable and stable security framework on its Central Asian borders. Beijing worked hard to resolve border dis - putes with Kazakhstan, Kyrgyzstan, and Tajikistan. The negotiations were completed in a matter of years, but the actual demarcations took a decade or more to resolve. In addition, China cooperated to demili - tarize the border regions and develop confidence-building measures. These efforts led to the formation of an informal grouping dubbed the “Shanghai Five” in 1996—China, the three Central Asian states, and Russia. In 2001, this bloc of five states formalized their association in the establishment of the Shanghai Cooperation Organization (SCO). The organization as of late 2015 also included Uzbekistan as a member; Afghanistan, India, Iran, Mongolia, and Pakistan as observer states; 4 and Belarus, Sri Lanka, and Turkey as dialogue partners. Current Chinese Policy Toward the Region Behind the aforementioned activism was an underlying sense of vul - nerability and weakness. China’s response to the complex challenges it confronts to the west during the past two decades has been to adopt 5 The Empty Fortress strategy is an an “Empty Fortress” strategy. ancient strategic ruse to trick an adversary into believing one is power - ful when, in fact, one is weak. China’s leaders recognize the country’s westernmost regions are poorly defended and vulnerable to internal dissent and external threats. China’s defense posture is heavily skewed 4 “Brief Introduction to the Shanghai Cooperation Organization,” webpage, 2015. India and Pakistan were admitted as full members in 2017. 5 For more on this strategy, see Andrew Scobell, Ely Ratner, and Michael Beckley, China’s -1— Strategy Toward South and Central Asia: An Empty Fortress , Santa Monica, Calif.: R AND 0— Corporation, RR-525-AF, 2014. +1— RR2273A_CC2015.indb 92 8/14/18 11:11 AM

131 China in Central Asia 93 toward the east, where the most prosperous and densely populated areas are located. But Beijing refuses to accept its weaknesses. China will not abandon western areas, grant independence to the non-Han inhabitants, or cede tracts of territory to its neighbors. On the con - trary, China has boldly projected an image of proactive strength in Central Asia. Chinese Priorities and Policies Where Central Asia is concerned, Beijing has had four overriding interests: ure domestic stability and China’s national unity Ens 1. Mai ntain peace, predictability, and secularism in the region 2. Inc 3. rease Chinese influence and limiting the influence of other outside powers Pro mote and protect Chinese economic interests in the region 4. and beyond. - B eiji ng’s pa ra 1. Ensure Domestic Stability and National Unity. mou nt concern is internal security. Chinese leaders are most absorbed with stability in the ethnic Han heartland in eastern and coastal China, where the bulk of China’s populace is concentrated. However, Beijing has become increasingly alarmed over a rise in disaffection among ethnic minorities, notably the Tibetans and Uighurs, who tend to be concentrated inland in westernmost China, often in remote but strategically important frontier areas, and spill across national borders. This disaffection is manifest in subtle and not-so-subtle ways and in peaceful as well as violent acts of resistance and defiance. In the twenty-first century, Chinese leaders have tended to view the Central Asia challenge first and foremost as “an unpredictable zone from which Turkic nationalism and Islamic ideologies could radiate 6 This threat is “most directly and concretely manifest into Xinjiang.” 6 Central Lena Jonson, “Russia and Central Asia,” in Lena Jonson and Roy Allison, eds., — -1 Asian Security: The New International Context , Washington, D.C.: Brookings Institution —0 . Press, 2001, p. 22 — +1 RR2273A_CC2015.indb 93 8/14/18 11:11 AM

132 94 At the Dawn of Belt and Road 7 Indeed, there has been a dramatic rise in radicalism and in Uighurs.” activism among the Turkic Uighurs, who are geographically concen - trated in the Xinjiang Uighur Autonomous Region. The protests and acts of violence in recent years are especially alarming for Chinese leaders because they have occurred not only in the Xinjiang Uighur Autonomous Region but also in major eastern cities, including Beijing and Guangzhou. China has worked to gain the cooperation of Central Asian states, notably the members of the SCO, to combat transnational Uighur activism and terrorist activity. 2. Maintain Peace, Predictability, and Secularism. Although Beijing is focused most on internal security, its worst nightmare is the linkage of domestic enemies with what it considers to be foreign 8 Thus, Chinese leaders consider that the country must troublemakers. be vigilant on its borders and do its utmost to develop and maintain a buffer of stability all the way around China. In short, peace on China’s periphery is considered essential to domestic harmony. This presumes significant Chinese influence in these regions and limited inf luence by outside powers. In the aftermath of the Soviet collapse of 1991, China sought to adjust to the new realities just beyond its borders. Internally, strength - ening the CCP’s grip on power was considered key, while externally, affirming the precise boundaries of its expansive land borders to the 9 Beijing worked hard to estab- north and west was the highest priority. lish relations with these new states as well as the post-communist gov - ernments in Russia and Mongolia. By the mid-1990s, these efforts began to bear fruit, with the resolution of territorial disputes and confidence-building measures resulting in demilitarized borders. Bei - jing also worked to manage the threat posed by ethnic minorities inside China, who spilled across borders, through a combination of repression, economic development, and cooperation with its Central Asian neighbors. 7 Zhao Huasheng, - Zhongguo De Zhongya Waijiao [ China’s Central Asian Diplomacy ], Bei jing: Shishi Chubanshe, 2008, p. 61 . 8 -1— This section draws upon Scobell, Ratner, and Beckley, 2014, pp. 18–19. 0— 9 Zhao Huasheng, 2008, p. 38. +1— RR2273A_CC2015.indb 94 8/14/18 11:11 AM

133 China in Central Asia 95 The five former Soviet republics in Central Asia all have authori - tarian and secular regimes. Each seeks to stay in power by suppressing religious extremism and ruling populations that are ethnically mixed and flow over borders. Major ethnic groups in the region include Afghans (who are themselves of multiple ethnicities) and Tajiks (who are related to Iranians or Persians), Kazakhs, Turkmens, and Uzbeks (a Turkic people), and sizable Russian populations. Only Mongolia could be properly described as a democracy. Beijing quickly recognized all the post-Soviet states (setting aside its discomfort with these new entities) and, on the basis of its usual principles of noninterference, established good relations with whom - ever was in charge. There has been active diplomacy, including frequent high-level Chinese visits to these capitals. As noted, China settled all its border disputes with the post-Soviet states, but this took considerable time and effort to accomplish. China and Kazakhstan reached general agreement in 1994, with supplemental accords in 1997 and 1998, and demarcation was eventually concluded in 2002. The border with Kyr - gyzstan was addressed by two accords, in 1996 and 1999; demarcation work began in 2001, and a boundary protocol was penned in 2004. The border with Tajikistan was settled in 2002, although the actual process of demarcation did not begin until 2006, and the process was not officially concluded until the Tajik parliament ratified the protocol 10 11. 20 in January 3. Increase China’s Influence and Limiting That of Other States. China also works to maintain a gentle but pervasive influence in Central Asia and deny or at least strictly limit the influence of other 11 outside powers, notably Russia and the United States. Central Asia is geographically surrounded by three major powers: Russia to the north and west, China to the east, and Iran to the south - west. Other major powers are more distant but still have influence and interests in the region. These include Turkey, India, and the United 10 - See, for example, Fravel, Strong Borders, Secure Nation: Cooperation and Conflict in Chi na’s Territorial Disputes , Princeton, N.J.: Princeton University Press, 2008, pp. 1–167 (for 16 — -1 16 Kazakhstan), p. 16 4 (for Kyrgyzstan), and p. 6 (for Tajikistan). —0 11 These paragraphs draw upon Scobell, Ratner, and Beckley, 2014, pp. 34–35. — +1 RR2273A_CC2015.indb 95 8/14/18 11:11 AM

134 96 At the Dawn of Belt and Road States. Other lesser powers have interests and influence in Central Asia, notably Afghanistan and Pakistan. All these outsiders—especially Russia and the United States—compete for influence in varying degrees, diplomatically, economically, and militarily. Beijing seeks to increase its influence in Central Asia and at the same time limit that of 12 other powers. The SCO is particularly important because it enhances China’s stature and provides Beijing with a vehicle to achieve greater influ - ence in the region. It is the first multilateral organization to be estab - lished by China and be headquartered in China. With a Chinese city in the name, Beijing is proud of its central role. Moreover, rhetorically at least, SCO member states support Chinese stands on a variety of issues. Most obviously, this verbal support comes on the matter of the so called “three evils” of terrorism, separatism, and extremism but also on other matters of importance to Beijing. China has played the leading role in the SCO. The SCO eased China’s way into regional influence, providing a way to get involved without overtly challenging Russia. Although the organization dimin - ishes Russian influence in the region, Russia’s participation in the SCO also helps dilute Chinese influence in Central Asia. Russia continues to see other benefits in its SCO involvement, even if China’s role is grow - ing. In the absence of other comparable strong organizations, including the limited role of the Russian-led Collective Security Treaty Organi - zation (CSTO), the SCO is a means for Russia to engage Central Asian 13 According to some, there is a division of labor in states and China. the SCO, with Russia focusing on security issues and China on eco - 14 nomic issues. 4. Promote and Protect Chinese Economic Interests. China has worked hard to tap the energy resources of Central Asia as well 12 For more on great power competition in Central Asia, see Alexander Cooley, Great , New York: Oxford University Press, 2012. Games, Local Rules 13 Of course Moscow would prefer a higher profile for the CSTO but is willing to utilize the SCO to exert Russian inf luence. Cooley, 2012, pp. 70 –71. 14 Nicola P. Contessi, “China, Russia and the Leadership of the SCO,” China & Eurasia -1— 1–123. Forum Quarterly , Vol. 8, No. 4, 2 010, pp. 10 0— +1— RR2273A_CC2015.indb 96 8/14/18 11:11 AM

135 China in Central Asia 97 as the markets. It has facilitated both through the construction of infrastructure—including roads, railways, and pipelines. For example, the Central Asia-China Gas Pipeline runs 1,830 kilometers from the Turkmenistan-Uzbekistan border, through Kazakhstan, to Horgos in the Xinjiang Uighur Autonomous Region. A multiline pipeline, the first line became operational in 2009, the second in 2010, and the third bi llion cubic meters in 2014. Overall capacity was expected to hit 55 15 In 2014, China and Tajikistan agreed per year by the end of 2015. to build a fourth line that would run from Turkmenistan through Uzbekistan, Tajikistan, and Kazakhstan before reaching China, with the expectation that the four lines together would be able to supply 16 llion cubic meters per year by 2020. bi 80 Political Engagement In recent years, Central Asia and the surrounding countries have been 17 2011, for exam In June - important destinations for China’s leaders. pl e, President Hu Jintao undertook a nine-day trip and “conducted intensive diplomatic activities, visited three countries (Kazakhstan, Russia, and Ukraine) and five cities (Astana, St. Petersburg, Moscow, Kiev, Yalta), attended two international conferences (the annual SCO etersburg International Economic St. P heads of state summit and 15th Forum), and participated in more than 50 bilateral and multilateral 18 activities.” More recently, in September 2013, Hu’s successor, President Xi Jin ping, undertook an extended excursion in Central Asia. In doing 15 China National Petroleum Corporation, “Flow of Natural Gas from Central Asia,” web - page, 2015. 16 Yen Ling Song, “Fourth Line of Central Asia-China Gas Pipeline to Start Construction This Year,” Platts , March 10, 2 014. 17 This section draws upon Scobell, Ratner, and Beckley, 2014, pp. 28–29. 18 “China, Ukraine Set Up Strategic Partnership,” Xinhua News , June 20, 2 011; “Building and Enhancing the Strategic Partnership and Writing a New Chapter of Friendly Cooperation— — -1 Foreign Minister Yang Jiechi Talks About the Outcome of President Hu Jintao’s Visits,” Ministry of Foreign Affairs of the People’s Republic of China, June , 2011. 21 —0 — +1 RR2273A_CC2015.indb 97 8/14/18 11:11 AM

136 98 At the Dawn of Belt and Road so, he became the third consecutive PRC head of state to pay such con - certed attention to the region. Xi began his tour with a two-day visit to Turkmenistan, where the focus was on expanded energy cooperation. The Chinese president ceremonially opened a new gas field at Galkynysh and committed to the construction of a new multibillion-dollar natural gas pipeline as part of the Central Asia-China Gas Pipeline. Known as Route D, this pipeline will become the second route and reaffirm Chi - na’s status as the number one customer for Turkmenistan’s gas. From there, Xi flew to Russia, where he attended the G-20 Summit meeting in St. Petersburg. Following this high-profile meeting, President Xi vis - ited Kazakhstan. There he gave a major speech focusing on PRC policy toward Central Asia at Nazarbayev University. It was in that speech that Xi first promoted the idea of a “Silk Road economic belt,” one part - of the Belt and Road Initiative, and announced a number of new Chi nese initiatives, including a ten-year program to fund scholarships for 30,000 students from SCO countries and another to pay for 10,000 teachers and students from SCO member state Confucius Institutes to visit China. Xi’s next stop was Uzbekistan, where the Chinese leader llion. The bi signed deals on oil, gas, and gold reportedly worth $15 PRC president’s final stop was in Kyrgyzstan, where he participated in his first annual SCO heads of state summit in Bishkek and signed deals llion, including funding for a with his Kyrgyz counterpart worth $3 bi 19 gas pipeline from Turkmenistan to China and an oil refinery. Diplomatic Relations and Presence China has diplomatic relations with all Central Asian countries. This facilitates Beijing’s ability to engage multilaterally with the region, and Chinese policy has concentrated on creating a stable condominium- like arrangement that is attentive to Chinese interests and constrains 19 This paragraph draws on the following sources: Wu Jiao and Zhang Yunbi, “Xi Pro - poses a ‘New Silk Road’ with Central Asia,” China Daily (US Edition), September 8, 2 013; Martha Brill Olcott, “China’s Unmatched Inf luence in Central Asia,” Carnegie Endowment for International Peace, September , 2013; “China in Central Asia: Rising China, Sinking 18 , 2013; “China to Allocate $3Bln to Kyrgyzstan— The Economist , September 14 Russia,” Reports” RIA Novosti (Moscow), September , 2013; Simon Denyer, “China Bypasses 11 -1— , 2013. 14 , October Washington Post American ‘New Silk Road’ with Two of Its Own,” 0— +1— RR2273A_CC2015.indb 98 8/14/18 11:11 AM

137 China in Central Asia 99 the future growth of Russian power. Meanwhile, Russia has found the SCO to be not just a worthwhile venue for basic Sino-Russian coopera - tion but also a way for Moscow to mitigate Beijing’s influence in the 20 Moreover, China uses the organization to limit the influence region. of outside powers, such as the United States. In short, the SCO is a key management mechanism that Beijing uses to demonstrate growing influence in Central Asia. Pivotal State and Major Partners In designing their outreach strategy for this region, Chinese leaders must take into account a pivotal state that, in fact, exists outside of it. - Five of the six states of Central Asia have for centuries been under Rus sian domination—first as territories fully incorporated into the Russian Empire and then as nominally sovereign republics within the Soviet Union. The remaining state, Mongolia, was a Soviet client throughout the Cold War. The Mongolian People’s Republic acted as a buffer against China, and in return, the USSR shielded it from Mao Zedong’s revanchist claims to “Outer Mongolia.” In the view of a leading Chi - 21 Today, the five former nese expert, these states are “deeply Russified.” Soviet republics remain part of Russia’s near abroad and are members of various Russia-led regional organizations, including the Common - wealth of Independent States, the Collective Security Treaty Organiza - tion, and for some, the Eurasian Economic Union, which was upgraded from the previous Eurasian Economic Community in response to Ukraine’s attempt in 2014 to sign an association agreement with the European Union. That being said, China has made significant inroads into Central Asia. It currently has a range of bilateral partnership agreements with all countries in this region. For example, Kyrgyzstan, Tajikistan, 20 Mohan Malik, “The Shanghai Cooperation Organization,” in Sumit Ganguly, Joseph Liow, and Andrew Scobell, eds., , New York: The Routledge Handbook of Asian Security Studies Routledge, 2010, pp. 74 , 81. 21 — -1 Zhao Huasheng, Zhongguo De Zhongya Waijiao [ China’s Central Asian Diplomacy ], , 142 . pp. 141 —0 — +1 RR2273A_CC2015.indb 99 8/14/18 11:11 AM

138 100 At the Dawn of Belt and Road Turkmenistan, and Uzbekistan are all strategic partners. Both Kazakh - stan and Mongolia are comprehensive strategic partners. Kazakhstan is the most significant of these six states, with the largest population— more than 17 mi llion inhabitants—the largest area, the most sizeable economy, and largest number of men and women in its armed forces. Moreover, the overwhelming majority of China’s trade with Central Asia is conducted with Kazakhstan. China’s key multilateral vehicle for inserting itself into the region has been the Shanghai Cooperation Organization. Of these Central Asian states, only Turkmenistan and Mongolia are not members, although Mongolia has observer status in the organization and rou - tinely attends SCO summits. The organization does not restrict mem - bership to the immediate region—in 2017 the SCO welcomed India and Pakistan as full members. High-Level Exchanges In the three years through 2014, senior Chinese leaders made 23 visits to Central Asia at the level of head of state or head of government. The most frequent destination was Kazakhstan, which received six such visits. Kyrgyzstan and Uzbekistan came next, at four visits each. Finally, Mongolia, Tajikistan, and Turkmenistan each received three 22 Chinese leaders also regularly meet with Russian leaders either visits. in Moscow or annually in China or Central Asia at SCO summits. Cultural Influence Beyond these very visible manifestations of China’s growing hard power, less noticeable soft power aspects have also expanded in the region. The Chinese model of economic development and its educa - tion system have increasing appeal. For example, as of 2010, reportedly 23 more Central Asian students study in China than in Russia. China currently has 11 Confucius Institutes across five of the six countries of Central Asia. Kazakhstan has the most, with four insti - - tutes. Kyrgyzstan has three. Uzbekistan has two. Mongolia and Tajiki 22 Compiled from RAND databases. -1— 23 45–46. Scobell, Ratner, and Beckley, 2014, pp. 0— +1— RR2273A_CC2015.indb 100 8/14/18 11:11 AM

139 China in Central Asia 101 stan have one each. Turkmenistan, however, has no institutes. Russia 24 has 22. There is no definitive measure of Chinese citizens in Central Asia. Alternate measures at various times in the late 2000s and early 2010s suggest anywhere from 40,000 to 450,000 Chinese citizens in the five former Soviet Central Asian republics. These include up to 200,000 in the capital of Kazakhstan and up to 100,000 in Kyrgyz- stan, although official sources put the numbers much lower, such as 25 citing only 9,500 legal workers in Kazakhstan. Economic Engagement China’s economic footprint in Central Asia has grown significantly 26 in the twenty-first century, both in terms of trade and investments. China is particularly dominant as a trade partner with the countries of the region and by 2012 appeared to have surpassed Russia as Central Asia’s top trader. In terms of FDI in the region, while China’s share has per cent of the region’s total. been growing, it has never exceeded 10 FDI in Central Asia tends to be dominated by the United States and Europe, and the lion’s share of this investment is focused on Kazakh - per perc ent of all FDI flowing into the entire region cent to 90 stan (80 27 According in each year from 1999 to 2008 has gone to Kazakhstan). to the IMF, in 2009, the United States and the Netherlands together cent of the total foreign investment in per accounted for just over 50 24 Data from Russia are from Confucius Institute Online, “Worldwide Confucius Insti - tutes,” webpage, 2014. 25 Zhu Yongbiao, “Zai Zhongya Zhongguo Laodong Quanyi Mianlin De Fengxian” [“The Risks Facing Chinese Labor Rights in Central Asia”], Journal of Xinjiang Normal University , No. 4, 2 017. 26 This section draws upon Scobell, Ratner, and Beckley, 2014, p. 42. 27 — -1 According to United Nations Conference on Trade and Development (UNCTAD) data analyzed by R AND. —0 — +1 RR2273A_CC2015.indb 101 8/14/18 11:11 AM

140 102 At the Dawn of Belt and Road 28 By contrast, China and Russia were more significant Kazakhstan. foreign investors in Kyrgyzstan, although the total FDI in Kyrgyzstan 29 was a fraction of the FDI in Kazakhstan. Although Russian results have proved disappointing, Chinese success in Central Asia has come, slowly but surely; in particular Chi - na’s efforts at tapping petroleum in Kazakhstan and natural gas in Turkmenistan. The China National Petroleum Corporation (CNPC) akhstan bought a majority stake in the Aktyubinsk and Petro Kaz oilfields. In June 97, CNPC and the governments of China and 19 Kazakhstan agreed to build an oil pipeline. But construction did not 20 04, and the Chinese-financed pipeline did begin until September not begin delivering crude oil from central Kazakhstan to western - 06. Then, in Decem 20 China along its 650-mile length until May 9, the Central Asia-China Natural Gas Pipeline began pump - 200 ber ing natural gas from Turkmenistan to Xinjiang through more than 1,000 les of rugged terrain across Uzbekistan and Kazakhstan into mi China. The official opening ceremony was attended by then PRC president Hu Jintao and his Turkmenistan, Uzbekistan, and Kazakh - 30 2013, recently elected In September stan counterpart heads of state. PRC President Xi Jinping and his Turkmen counterpart signed agree- ments to expand energy cooperation between their two countries, including a contract to construct a new gas pipeline, informally known - as Route D. When finished, the pipeline will stretch some 850 kilo 31 meters through Turkmenistan, Uzbekistan, and Kyrgyzstan. 28 Reliable data are hard to find. The IMF data conf lict with data provided by the Kazakh National Bank. According to the bank, the United States and the Netherlands do not make up 50 per cent of total FDI. See National Bank of the Republic of Kazakhstan, “Gross Domestic Investment from Abroad: Inf lows by Country.” 29 U.S. Department of State, “2010 Investment Climate Statement—Kyrgyz Republic,” webpage, March 20 10. 30 “China Turns West: Beijing’s Con- On Chinese energy interests, see Kevin Scheives, Pacific Affairs , Vol. 79, No. 2, S ummer 2006, temporary Strategy Toward Central Asia,” pp. 21 5–217. On the oil pipeline completion, see Medeiros, 2009, p. 13 8, and “Xinjiang Pipeline Oils Wheels,” The Standard , December 14 , 2009. 31 The Central Asia- Tavus Rejepova, “Turkmenistan, China Reach New Energy Deals,” -1— Caucasus Analyst , October 16, 2013. 0— +1— RR2273A_CC2015.indb 102 8/14/18 11:11 AM

141 China in Central Asia 103 Trade Trade between Central Asia and China has changed considerably between 2000 and 2013. In 2000, roughly 50 per cent of imports from Central Asia were mineral products and 10 per cent were oil and gas. The remainder consisted of manufactured goods. By 2013, this had per cent of imports consisted of oil completely changed. More than 70 ent were and gas, 13 perc perc ent were mineral products, and only 9 manufactured items (Figure 5.2). These large increases in imports of oil and gas were driven by trade with Kazakhstan. China’s main imports from Kazakhstan, on a more disaggregated basis, for example, are metals and minerals such as steel, copper, and aluminum, as well Figure 5.2 Composition of Imports from Central Asia 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2013 2004 2011 2000 2010 2002 2006 2003 Year Crude materials Food Beverages and tobacco Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Manufactured goods Machinery and transport manufactured Other SOURCE: UN Comtrade Database. RR2273A-5.2 RAND — -1 —0 — +1 RR2273A_CC2015.indb 103 8/14/18 11:11 AM

142 104 At the Dawn of Belt and Road Figure 5.3 Composition of Exports to Central Asia 100 80 60 40 Percent 20 0 2008 2007 2012 2001 2005 2009 2013 2004 2011 2000 2010 2002 2006 2003 Year Crude materials Food Beverages and tobacco Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Machinery and transport Manufactured goods manufactured Other SOURCE: UN Comtrade Database. RAND RR2273A-5.3 as crude oil; meanwhile China’s main exports are clothing, electronics, 32 and household appliances. The composition of exports to Central Asia has remained rela - - tively constant since 2003, mainly the three categories of manufac tured items (Figure 5.3). The region as a whole had a large trade deficit during the mid- 2000s. That has reversed as China’s gas imports have increased ). Kazakhstan, Mongolia, and Turkmenistan had trade (Figure 5.4 surpluses in 2013, driven by Chinese resource imports from these three countries. Kazakhstan and Turkmenistan have always had a trade surplus. 32 On trade, see Calla Wiemer, “The Economy of Xinjiang,” in S. Frederick Starr, ed., Xinjiang: China’s Muslim Borderland , Armonk, N.Y.: M.E. Sharpe, Inc., 2004, p. 18 5, and -1— New York Edward Wong, “China Quietly Extends Its Footprints Deep into Central Asia,” 0— (Washington edition), January 011, pp. A4, A10. 3, 2 Times +1— RR2273A_CC2015.indb 104 8/14/18 11:11 AM

143 China in Central Asia 105 Figure 5.4 Level of Exports to and Imports from Central Asia 35 Exports to Central Asia 30 Imports from Central Asia 25 20 15 U.S. $ billions 10 5 0 2011 2013 2001 2012 2002 2000 2003 2009 2010 2008 2004 2007 2005 2006 Year SOURCE: UN Comtrade Database. RAND RR2273A- 5.4 Foreign Direct Investment and Lending There has been considerable buildup of the stock of FDI in Central Asia since 2003, again driven largely by resources (Figure 5.5). In 2003, mi llion in FDI stock in Central Asia compared China had only $44 to about $7.5 llion in 2012. Much of this increase in investment has bi llion in Chi - been to Kazakhstan, which in 2012 had more than $6 bi 14 , 2014, Kazakhstan nese FDI stock. Most recently, on December and China signed 30 agreements totaling at least $14 llion. bi Chinese FDI stock has outstripped that of Russia in Central Asia, although for both, Kazakhstan has been the major recipient (Figure 6). Russian FDI in Central Asia totaled $4.1 5. bi llion in 2012, bi llion in 2009. up from $2.9 Agreements and Other Issues China moved to enable a well-regulated investment environment in Central Asia soon after the end of the Soviet Union. It now has BITs — -1 with all six countries in the region. The original BITs were all signed —0 by 1993 and in force by 1995, but the BIT with Uzbekistan was — +1 RR2273A_CC2015.indb 105 8/14/18 11:11 AM

144 106 At the Dawn of Belt and Road Figure 5.5 China’s FDI Stock in Central Asia by Receiving Country 7 Kazakhstan 6 Kyrgyzstan 5 Tajikistan Uzbekistan 4 3 U.S. $ billions 2 1 0 2009 2011 2010 2012 2003 2008 2004 2005 2006 2007 Year SOURCE: UNCTAD. RR2273A- RAND 5.5 Figure 5.6 Russia’s FDI Stock in Central Asia by Receiving Country 3.0 2.5 Kazakhstan 2.0 Tajikistan Mongolia 1.5 Uzbekistan Kyrgyzstan 1.0 U.S. $ billions 0.5 0 2011 2010 2009 2012 Year SOURCE: UNCTAD. -1— RAND RR2273A- 5.6 0— +1— RR2273A_CC2015.indb 106 8/14/18 11:11 AM

145 China in Central Asia 107 terminated in 1994. A new BIT was signed and entered into force in 2011. China also has double tax treaties with all six countries, the first of which was signed with Mongolia in 1991 and entered into force in 1993. Uzbekistan was signed in 1996, and the rest were signed in the 2000s. Almost all Central Asian countries are participants in the Asian Infrastructure Investment Bank. Only Turkmenistan did not sign the articles of incorporation as a founding member at the end of 15. 20 June Military and Security Engagement This section presents a brief overview of Chinese military engagement activities as an instrument of Chinese foreign and security policy in Central Asia. It addresses Chinese arms sales, military diplomacy, joint exercises, and port visits, as well as Chinese participation in UNPKOs and PLA MOOTW activities. PRC Arms Sales Since 2000, China has not sold any major conventional weapons to - Central Asian countries. China has sought to increase its military inf lu ence with its neighbors in the region by providing modest military aid, especially to its primary regional trade partner Kazakhstan, which also has received free transfers of decommissioned military equipment from China. Support to other countries in the region has come in the form of equipment and training to border services, a trend that conforms to the overarching counterterrorism and anti-trafficking aims of China’s 33 However, China is careful security cooperation with Central Asia. not to take actions that would create friction with Russia, which still views Central Asia as its sphere of influence and which has continued to be the primary supplier (and donor) of major conventional weapons 33 — -1 Sébastien Peyrouse, “Military Cooperation Between China and Central Asia: Break - 010. through, Limits, and Prospects,” China Brief , Vol. 10, No. 5, M arch 5, 2 —0 — +1 RR2273A_CC2015.indb 107 8/14/18 11:11 AM

146 108 At the Dawn of Belt and Road to Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, 34 and Mongolia. China provides modest amounts of light weaponry and security equipment to at least several of the five Central Asian states, although not formally under the auspices of the SCO. Moreover, these deals are all bilateral agreements. China reportedly provided some $4.5 mil lion worth of military assistance to Kazakhstan between 1997 and 2003. The aid consisted of communication equipment and vehicles. Between llion worth of military aid to mi 1993 and 2008 China provided $15 Tajikistan, and in 2009 Beijing promised $1.5 llion more. In 2000, mi China shipped sniper rifles to Uzbekistan and nine years later agreed to provide mobile scanning equipment to monitor border crossings. In llion loan to allow Turkmenistan to mi 2007, China also provided a $3 purchase unspecified “military hardware” and uniforms for soldiers. Under the terms of an agreement signed in 2002, China promised to provide Turkmenistan with $1.2 mi llion in “technical military assis - - tance.” In 2008, China’s Ministry of Public Security reportedly pro vided computers and motor vehicles to the Kyrgyz agency in charge 35 These military packages are miniscule compared of border security. with the size and volume of weapons systems transferred to Pakistan (see Chapter 10). PLA Military Diplomacy With 17 trips of CMC members to Central Asia from 2005 to 2014, including 12 since 2010 alone, the region is clearly a very high priority for China’s military diplomacy in the Developing World (Table 5.1). Six of these visits were for SCO-related events (SCO defense ministers meetings in 2007, 2008, 2011, 2013, and 2014, and an SCO chiefs of 34 International Crisis Group, “China’s Central Asia Problem,” Asia Report No. 244, Febru- ary , 2013. 27 35 11–12. On Chinese military transfer to Central Asia generally, see Peyrouse, 2010, pp. On Tu rkmenistan, see Viktoriya Panfilova, “China Will Dress Turkmenistani Army—Pekin Generously Credits Central Asian Countries,” Nezavisimaya Gazeta , November 29 , 2007b, Moscow (in Russian), translated by World News Connection, CEP20071129380002. On Kyrgyzstan, see Viktoriya Panfilova, “Kyrgyzstan to Get 0.5 m Dollars of Chinese Military -1— A id,” Kabar News Agency , November 12 , 2007a, Bishkek (in Russian), translated by World 0— News Connection, CEP20071112950147. +1— RR2273A_CC2015.indb 108 8/14/18 11:11 AM

147 China in Central Asia 109 Table 5.1 Chinese High-Level Military Visits to Central Asia, 2003–2014 Year Country Visited CMC Member Foreign Counterparts Summits of Visit Tajikistan Cao Gangchuan, CMC 2005 DM Sherali Khairullaev Vice Chair/Defense Minister (DM) 2005 Kazakhstan Cao Gangchuan, CMC DM Mukhtar Altynbayev Vice Chair/DM 2007 Mongolia Liang Guanglie, CGS Pres. Nambaryn Enkhbayar; DM Ts. Togoo 2007 Cao Gangchuan, CMC Kyrgyzstan DM Rustam Niyazov SCO DM (Uzbekistan) Vice Chair/DM meeting 2008 Tajikistan Liang Guanglie, DM Pres. Emomali Rakhmon SCO DM meeting 2010 Pres. Gurbanguly Turkmenistan Liang Guanglie, DM Berdymukhamedov; DM Yaylym Berdiyev; NSM Carymyrat Amanov 2010 Kazakhstan Liang Guanglie, DM Pres. Nursultan Nazarbayev; DM Adilbek Dzhaksybekov Dep. DM and Chief of Staff Chen Bingde 2010 Kazakhstan of Armed Forces Saken Zhasuzakov Kazakhstan DM Adilbek Dzhaksybekov SCO DM 2011 Liang Guanglie meeting 2011 Liang Guanglie Pres. Islam Karimov; Uzbekistan DM Kabul Berdiev 2012 Uzbekistan Chen Bingde DM Kabul Berdiev Mongolia Xu Caihou, CMC Pres. Tsakhia Elbegdorj; 2012 DM Jadambaa Enkhbayar Vice Chair 2012 Turkmenistan Chen Bingde, CGS Pres. Gurbanguly Berdymukhamedov; DM Begenc Gundogdiyev; Chief of Staff of Army Ismail Ismailov 2012 Tajikistan Chen Bingde, CGS PM Oqil Oqilov SCO Chief of Staff meeting Chang Wanquan, DM 2013 Kyrgyzstan SCO DM Pres. Almazbek Atambayev; DM Taalaibek Omuraliev meeting 2013 Kazakhstan Fan Changlong, PM Serik Akhmetov; — -1 Vice Chair CMC DM Adilbek Dzhaksybekov —0 2014 Tajikistan Chang Wanquan, DM Pres. Emomali Rakhmon; SCO DM DM Sherali Mirzo meeting — +1 RR2273A_CC2015.indb 109 8/14/18 11:11 AM

148 110 At the Dawn of Belt and Road staff meeting in 2012). The most frequently visited countries during this time were Kazakhstan with five visits and Tajikistan with four visits. Other destinations for such high-level visits included Uzbekistan and Turkmenistan. China is also active in military-to-military exchanges with the Central Asian states, but language is a significant hurdle. High-level visits by defense officials routinely utilize skilled interpreters, but train - ing courses in China for officers from Central Asia present more of a challenge. All courses for Central Asian officers at Chinese institutions of professional military education are conducted in Russian. Central - Asian soldiers generally do not speak Chinese, and their Chinese coun terparts generally cannot speak the various indigenous languages of the region. The number of Central Asia officers sent to study in China is modest but seems to be increasing. For example, while the first wave of Kazakh officers sent to China (starting in the 1990s) comprised just over a dozen, the second wave (since the mid-2000s) numbered more than 60. Smaller batches of officers from Kyrgyzstan and Tajikistan 36 were sent to China in the 2000s. Combined Exercises China has expanded its participation in combined exercises with part - ners in Central Asia over the years, with many of the drills taking place under the auspices of the SCO. According to Chinese media, the China-Kyrgyzstan combined Exercise 01 was the first PLA joint - military maneuver with a foreign army and the first bilateral coun terterrorism exercise conducted by SCO members. The first time the PLA participated in a multilateral joint military maneuver under SCO auspices was during the Coalition 2003 exercise, which also involved troops from Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. About 1,300 troops participated in the Coalition 2003 exercise, according to 37 Chinese media reports. 2005, with The Peace Mission series of exercises began in August a Chi na-Russia joint exercise that took place over a period of one week 36 Peyrouse, 2010, p. 12. -1— 37 Lin Zhi, “Backgrounder: SCO Anti-Terror Military Drills,” Xinhua News , September 9, 2 010. 0— +1— RR2273A_CC2015.indb 110 8/14/18 11:11 AM

149 China in Central Asia 111 in Vladivostok and the Shandong Peninsula and reportedly focused on counterterrorism operations. The second Peace Mission exercise, which was held in 2007, expanded participation to all six of the SCO coun - tries (China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbeki - - stan), and involved more than 4,000 troops. Subsequent Peace Mis sion exercises have involved China and Russia (Peace Mission 2009) or China and multiple SCO members (Peace Mission 2010, Peace Mis - sion 2012, Peace Mission 2013, and Peace Mission 2014). Through 2014, the most recent, and in some ways the most nota - ble, exercise in this series was Peace Mission 2014, which was held in - 14 at Zhurihe in Inner Mongolia. The exercise, which report 20 August - edly focused on antiterrorism operations, included a total of approxi mately 7,000 troops from China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan (about 5,000 of the troops were from China). This made it the largest Peace Mission exercise to date, according to the PRC Min - istry of National Defense. A senior PLA officer said the exercise was intended to play an important role in deterring the “three evil forces” of terrorism, separat - ism, and extremism and in safeguarding regional peace and stability. “The drill focuses on joint multilateral decision making and action, with exchanges of anti-terror intelligence among the SCO members to effectively boost the troops’ coordinated ability to fight terrorism,” then 38 Xinhua Deputy Chief of General Staff Department Wang Ning said. reported that the exercise scenario involved “a separatist organization, supported by an international terrorist organization, plotting terrorist incidents and hatching a coup plot to divide the country. The SCO - dispatches military forces to put down the insurrection and restore sta bility at the request of the country’s government.” 38 See Mu Xuequan, “China’s Drone Blasts Off Missile in SCO Anti-Terror Drill,” Xinhua News , August 26 , 2014; Xiang Bo, “‘Peace Mission-2014’ Scale: More than Ever,” Xinhua News , August 28 , 2014; Fu Peng, “China Focus: SCO Anti-Terror Drill Kicks Off in China,” Xinhua News , 2014,” , August 24 , 2014; “Defense Ministry’s Regular Press Conference on August 28 28 , 2014; and Jeffrey Ministry of National Defense of the People’s Republic of China, August — -1 Lin and P. W. Singer, “Biggest Anti-Terrorist Exercise in the World Stars Chinese Drones, Rus - sian Troops and a Ukraine-Inspired Wargame,” Popular Science , September 014. 2, 2 —0 — +1 RR2273A_CC2015.indb 111 8/14/18 11:11 AM

150 112 At the Dawn of Belt and Road Another notable aspect of Peace Mission 2014 involved the types of PLA forces that participated in the exercise. Peace Mission 2014 was the first time PLAAF unmanned combat aerial vehicles (UCAVs) took part in an international exercise, according to Chinese official media. Xinhua reported that an unidentified model UCAV fired several mis - siles during the exercise. PLAAF spokesperson Shen Jinke stated, “The drone, tasked with surveillance, reconnaissance and ground attacks, will play a vital role in fighting against terrorism.” Additional Chi - nese forces participating in the exercise, included PLAAF fighter planes, early warning aircraft, and airborne troops, and Chinese tanks, oup Army, and Gr armored vehicles, ground forces from the PLA’s 38th WZ-10 and WZ-19 armed helicopters. In addition to exercises held under the auspices of the SCO, China has held other combined exercises in Central Asia in recent years (Table 5.2). For example, it has participated in the U.S.-Mongolian Table 5.2 Selected Chinese Combined Exercises in Central Asia, 2002–2014 Year Name of Exercise Partner(s) Exercise Content 2002 Exercise 01 Kyrgyzstan Counterterrorism 2003 [Unknown] Russia Illegal border crossing Russia; Kazakhstan; Coalition 2003 Counterterrorism 2003 Kyrgyzstan; Tajikistan Russia Counterterrorism Peace Mission 2005 2005 Tianshan I Counterterrorism 2006 Kazakhstan 2006 Coordination 2006 Tajikistan Counterterrorism 2007 Cooperation 2007 Russia Counterterrorism 2007 Counterterrorism Russia; Kazakhstan; Peace Mission 2007 Kyrgyzstan; Tajikistan; Uzbekistan Peace Mission 2009 2009 Russia Counterterrorism Maritime security (in Peace Shield 2009 2009 Russia the Gulf of Aden) -1— 2009 Country-Gate Sharp Sword Russia Counterterrorism 0— +1— RR2273A_CC2015.indb 112 8/14/18 11:11 AM

151 China in Central Asia 113 Table 5.2—Continued Name of Exercise Exercise Content Year Partner(s) 2009 Peacekeeping 2009 Mongolia Peacekeeping operations Peace Mission 2010 2010 Counterterrorism Russia; Kazakhstan; Kyrgyzstan; Tajikistan; Uzbekistan 2011 Khan Quest-11 Mongolia Peacekeeping operations 2011 [Unknown] Kazakhstan Joint border patrol 2011 Russia; Kazakhstan; Counterterrorism Tianshan II Kyrgyzstan; Tajikistan; Uzbekistan 2012 Peace Mission 2012 Russia; Kazakhstan; Counterterrorism Kyrgyzstan; Tajikistan; Uzbekistan 2012 Joint Sea 2012 Russia Anti-submarine operations; maritime search and rescue Counterterrorism Russia Cooperation 2013 2013 Russia Maritime search and Joint Sea 2013; Maritime 2013 Joint Exercise 2013 rescue Russia; Kazakhstan; 2013 Peace Mission 2013 Counterterrorism Kyrgyzstan; Tajikistan; Uzbekistan 2013 Frontier Defense Joint Kyrgyzstan Counterterrorism Determination 2013 Prairie Pioneer 2013 2013 Mongolia Disaster relief 2014 Counterterrorism Russia; Kazakhstan; Peace Mission 2014 Kyrgyzstan; Tajikistan 2014 [Unknown] Russia Counterterrorism Joint Sea 2014 2014 Russia Maritime security Illegal border crossing Russia 2014 Border Defense Cooperation 2014 SOURCE: Department of Defense China Military Power Report and Chinese Ministry of Defense website. — -1 NOTE: China did not begin engaging in combined exercises with foreign militaries —0 until 2002. — +1 RR2273A_CC2015.indb 113 8/14/18 11:11 AM

152 114 At the Dawn of Belt and Road Khaan Quest series of exercises in Mongolia, which focuses on peace - keeping operations. Conclusion Beijing has executed its Empty Fortress strategy since 1991 through sustained diplomatic efforts in Central Asia. These efforts have been combined with very modest security cooperation. These include high- profile displays of military power—small-scale exercises conducted with security forces from other SCO member states. These initiatives, which have been undertaken under the umbrella of the SCO, have enabled China to project the image of a mighty and influential power. China’s influence in Central Asia has grown significantly in the past decade in diplomatic, economic, and even military spheres, albeit 39 The Central Asian states starting from a very low level in each case. will likely continue to work to maintain good relations with China, in part out of a desire to avoid antagonizing Beijing and in part out of an - interest in balancing against Moscow. Just as important are the eco nomic opportunities that China provides. Nevertheless, Central Asian countries continue to look to Russia to balance against the prospect of Chinese domination in the realms of the economy, diplomacy, and defense, and some appear to see Russia as a more reliable partner and 40 less of a threat to their sovereignty than China. Despite this, China’s management of its relations with neighbors to the west in the twenty-first century has been quite impressive. Bei - jing’s response to the daunting problems it confronts in Central Asia and western China has been to skillfully project an image of great strength and outward confidence to mask extreme weakness and inner insecurity: an Empty Fortress strategy. Through deft use of high- profile diplomacy and modest military exercises, combined with grow - ing economic clout, Beijing has promoted the image of a powerful and 39 These paragraphs draw upon Scobell, Ratner, and Beckley, 2014, p. 48. 40 The adeptness of Central Asian states at balancing the inf luence of great powers is a key -1— . finding of Alexander Cooley. See his Great Games, Local Rules 0— +1— RR2273A_CC2015.indb 114 8/14/18 11:11 AM

153 China in Central Asia 115 benevolent China. This is in spite of a defense posture in the west that is Spartan and stretched; the Western Theater Command—formerly the Lanzhou Military Region—is vast, and major military units are 41 deployed well away from its borders with Central Asia. Moreover, SCO multilateralism and China’s bilateral military engagement activities allow Beijing to project the image of a military great power in a manner that is nonthreatening to China’s partners and neighbors. By planning cooperative small-scale activities with the security forces of other SCO member states and targeting nontradi - tional security threats, Beijing’s military power does not loom too large in Moscow, Astana, Bishkek, Dushanbe, Tashkent, or other capitals. But all China’s security efforts pale in comparison to Russia’s much greater military footprint and extensive program of military engage- ment with the armed forces of the region. In addition to the military bases mentioned, under the auspices of the CSTO, Russia conducts regular military exercises with a higher level of interoperability than is evident in SCO exercises. Moreover, Russia provides a significant amount of the weaponry and equipment used by the armed forces of the Central Asian states. The CSTO functions much more like a tra - ditional military alliance than the SCO, with Russia very much in the 42 center. Implications for the United States The centerpiece of China’s Empty Fortress strategy in Central Asia ye is the SCO, which has evolved over the past 15 ars from a focus on border security to counterterrorism into a multifaceted, multilateral organization involved not only with security issues but also with energy 43 More recently, it has been joined on the and economic cooperation. economic side by Belt and Road. 41 Scobell, Ratner, and Beckley, 2014, pp. 12–14. 42 Alexander Frost, “The Collective Security Treaty Organization, the Shanghai Coopera - China and Eurasia Forum tion Organization, and Russia’s Strategic Goals in Central Asia,” Quarterly , Vol. 7, No. 3, 2 008, pp. –102. 83 — -1 43 30–31. These paragraphs draw upon Scobell, Ratner, and Beckley, 2014, pp. —0 — +1 RR2273A_CC2015.indb 115 8/14/18 11:11 AM

154 116 At the Dawn of Belt and Road - The SCO has been institutionalized with regular summit meet ings and military exercises. Measured by the yardstick of Beijing’s Empty Fortress strategy, the SCO has proved to be a success promot - ing the image of a strong and secure China in a region where the PRC is actually very weak and insecure. Especially considering that three , 2001, paved the way 11 months after its birth the attacks of September for U.S. military intervention in Afghanistan and expanded U.S. secu - - ity cooperation with Central Asian states, the SCO has survived, dem r onstrated its staying power, and it appears durable for the foreseeable - future. What would constitute failure in China’s Empty Fortress strat egy? Probably the only development that would be viewed as such by Beijing would be the disintegration of the SCO. Thus, the bar for suc - cess is very low. By another yardstick, the SCO bears up less impressively— whether the organization is “relevant.” In other words, can the SCO address the real problems of the region in practical and meaningful ways? In terms of practical effects, the SCO’s performance to date has proved disappointing—the organization has been disengaged from the domestic political crises of member countries and been little more than a bystander on Afghanistan. Indeed, the organization seemed strangely - aloof from the U.S.-led Global War on Terrorism and in danger of dis 44 Some Chinese analysts openly express their appearing into oblivion. 45 - There are built-in limita frustration with the SCO’s limited progress. tions on its capabilities and potential because of loose organizational structure and cohesion and little economic and military compatibility. Moreover, other members are wary of Chinese hegemony. The United States has found itself excluded from the SCO, but 46 The responses to feelers by Wash - not necessarily by Chinese design. ington on the possibility of establishing some formal affiliation with 44 Marc Lanteigne, “In Medias Res: The Development of the Shanghai Cooperation Orga - 4, W nization as a Security Community,” Pacific Affairs , Vol. 79, No. inter 2006–2007, p. 612 . 45 See, for example, Sun Zhuangzhi, “SCO Summit in Tashkent Opens ‘New Chapter,’” People’s Daily Online (in English), June - 12 , 2010; author conversations with Chinese ana lysts, spring 2011. -1— 46 30–31. These paragraphs draw upon Scobell, Ratner, and Beckley, 2014, pp. 0— +1— RR2273A_CC2015.indb 116 8/14/18 11:11 AM

155 China in Central Asia 117 SCO have been cool. Since the organization operates on the basis of - consensus, an invitation to the United States would require the unan imous consent of the member states—something that is difficult to obtain. While China is wary of Washington’s involvement in Central Asia, Beijing also seeks to exploit the U.S.-led counterterrorism cam - paign to justify suppressing Uighur unrest in the name of contributing to a worldwide counterterrorism struggle. And while China works to mitigate U.S. influence in the region, it also treads cautiously so as not 47 Indeed, as one West - to unnecessarily antagonize the United States. ern analyst noted, “the SCO has pursued a policy of accommodation 48 with the United States on Central Asia policy.” Although the SCO is a potential instrument for checking U.S. influence in the region, China and other SCO members are not ada - mantly opposed to a temporary U.S. presence. However, Beijing does not desire a permanent U.S. military footprint in Central Asia and is wary of perceived U.S. efforts to constrain China. Yet no single country totally dominates the SCO. While some have interpreted Bei - jing’s stance on U.S. involvement in the region as hostile, it can also be viewed as a low-key effort by China to guard against a permanent 20 05 U.S. military presence in the region. At the conclusion of the July SCO heads of state summit in Astana, Kazakhstan, the six countries issued a statement urging the U.S.-led coalition forces to “determine a deadline” for withdrawal of its forces from SCO member countries. 05, the United States was forced to close down its airfield 20 In July at Karshi-Khanabad in Uzbekistan. But the pressure had come from individual countries and not the SCO itself. Indeed, the 2005 state - ment appears to have been prompted by states other than China, nota - 49 In short, China has not spearheaded SCO efforts to bly Uzbekistan. expel U.S. military forces from Central Asia. 47 Scheives, 2006, pp. 219–222; Hasan H. Karrar, The New Silk Road Diplomacy: China’s , Vancouver: University of British Columbia tral Asian Foreign Policy Since the Cold War Cen Press, 2009, pp. 58 –66. 48 Lanteigne, 2006–2007, p. 613. — -1 49 It appears Uzbekistan was a driving force behind the statement. See, for example, Scheives, —0 2006, p. 22 1, and Cooley, 2012, p. 52 . — +1 RR2273A_CC2015.indb 117 8/14/18 11:11 AM

156 118 At the Dawn of Belt and Road The SCO is an enigmatic organization that defies easy categori - 50 It has a diplomatic component, with annual meetings of heads zation. of state, heads of governments, and other multilateral governmental meetings. Although the SCO has a key military component, it is not 51 It may be akin a military alliance; certainly it is no “Asian NATO.” to the Association of Southeast Asian Nations in the sense of being a regional organization that is often derided as little more than a “talk 52 And even though it is billed as a regional organization, it is shop.” clearly a Chinese creature in the sense that it would not exist without Beijing’s initiative and funding. But the SCO is not Beijing’s lapdog, nor is it Beijing’s attack dog. Moreover, the SCO is by no means anti- American, but neither is the SCO by any stretch of the imagination a pro-American entity. The SCO is a useful multilateral mechanism by which Beijing can maintain Central Asia as a de facto Chinese sphere of influence without appearing overbearing or heavy-handed. There- fore, the United States should not have undue alarm regarding the organization. The fact that the SCO has raised concerns in the United States is testament to China’s successful implementation of the Empty Fortress strategy. The effect of Belt and Road on China, Central Asia, and the United States is much harder to judge. This is largely because it is new. On the one hand, it gathers together under one umbrella a number of disparate projects that are already occurring, such as railway lines to Europe and pipelines to China. On the other hand, its inspirational vision combined with new financing vehicles and existing Chinese financing institutions could result in increased investment and greater links with China. The fact that the United States does not participate in these financing vehicles may make it more difficult for U.S. companies 50 72–86. Malik, 2010, pp. 51 Global Times , June See, for example, “SCO’s Purpose Is Not to Challenge NATO,” 7, 201 2. 52 Michael J. Green and Bates Gill, “Unbundling Asia’s New Multilateralism,” in Green and Gill, eds., Asia’s New Multilateralism: Cooperation, Competition, and the Southeast Asiarch for Community , New York: Columbia University Press, 2009, p. reen and Gill note that is a 3. G -1— common criticism leveled at many Asian multilateral forums. 0— +1— RR2273A_CC2015.indb 118 8/14/18 11:11 AM

157 China in Central Asia 119 - to participate directly in any economic advances in the region. How ever, this negative effect is far from certain and may even be unlikely. Just as the Central Asian countries do not want to be dominated by China militarily, they do not want to be dominated by it economi - cally. They have found value historically to playing great powers off against each other. And the great powers have been willing to join in this playing off. In 2015, China and Kazakhstan signed 33 deals, bi llion, in March, followed by India and Kazakhstan worth $23.6 signing five key agreements in July and agreeing to expand bilateral trade, followed by Pakistan and Kazakhstan signing memoranda of 53 Second, as suggested understanding in August to strengthen trade. by these many agreements, once most infrastructure is built, anyone can use it. Finally, any lending for projects in Central Asia must earn a return. With China’s growth slowing and its demand for commodi - ties slowing as well, it is not clear yet as to what types of investment opportunities are actually available. Belt and Road may offer tremen - dous opportunities to China, or it may be a case of “loud thunder and 54 small raindrops.” U.S. Strategy in the Absence of a “Great Game” While the “Great Game” may have been an apt characterization of contestations over Central Asia in an earlier age of empires, this is no 55 In the longer an appropriate metaphor to use for the region today. early twenty-first century, there is no great power rivalry. The United States does have security interests in the region, but it is not engaged in - a zero-sum contest with other great powers. Rather, America’s adver saries are nonstate actors. That said, the absence of a “great game” does not mean the United States concedes the region to a Chinese (or 53 Ben Blanchard, “China, Kazakhstan Sign $23.6 Billion in Deals,” Reuters , Mar ch 27 , 2015; 8, 2 Press Trust of India, “India, Kazakhstan Sign Five Key Agreements,” The Hindu , July 015; APP, “Pakistan, Kazakhstan Sign MOUs to Strengthen Trade Ties,” , August The Nation 25 , 2 015. 54 George Magnus, “China, the New Silk Road, Loud Thunder and Small Raindrops,” M a y 15, 2 015. — -1 55 80–81. These paragraphs draw upon Scobell, Ratner, and Beckley, 2014, pp. —0 — +1 RR2273A_CC2015.indb 119 8/14/18 11:11 AM

158 120 At the Dawn of Belt and Road Russian) sphere of influence. Moreover, countries of the region have proven quite adept at managing the influence of powerful states on their periphery. While the states of the region are weak, especially com - pared with the major powers that seek influence in the region, none of them are powerless. China, along with Russia and other great powers, will continue to play key roles in shaping the security environment in Central Asia. Chinese activities and aspirations also directly impact U.S. interests and initiatives in the region. But China is not currently a major threat to U.S. interests in Central Asia and is unlikely to pose one in the near future. Therefore, at present, China is not a decisive factor in determin - ing U.S. policy, military strategy, or posture in this region. -1— 0— +1— RR2273A_CC2015.indb 120 8/14/18 11:11 AM

159 CHAPTER SIX China in South Asia Although South Asia is geographically and topographically removed from China, in the twenty-first century distances have shortened because of technological developments, and mountain ranges have effectively shrunk because improvements in communication and transportation technology have enabled transnational ethno-religious identities to intensify. Advanced weaponry has put China and India closer than ever before in terms of ballistic missile striking distances; PRC politi - cal repression and economic inequalities have exacerbated tensions in China’s far west between ethnic minorities and the Han majority, encouraging those minorities to reach across the Himalaya and Pamir mountain ranges. Continued tensions between China and India coex - - ist with growing economic interaction. Indeed, China’s greater mari time activism has meant Chinese commercial vessels traversing the sealanes of the Indian Ocean on their journeys to and from Europe, - Africa, and the Middle East. It is China’s economy that has led to Bei jing’s far greater interest and involvement in both the continental and maritime reaches of South Asia. Key Chinese Activities in the Region Persistent disaffection among ethnic Tibetans and rising alienation among Uighurs has increased the unease of PRC leaders. Under Xi Jin - ping, China’s relations with its neighbors have been reemphasized and the Belt and Road Initiative means that South Asia has become ever more important to the PRC, both as a key overland node and a critical maritime nexus. — -1 —0 — +1 121 RR2273A_CC2015.indb 121 8/14/18 11:11 AM

160 122 At the Dawn of Belt and Road Among the South Asian countries, Pakistan is China’s closest partner (Figure 6.1). This relationship was capped in April 20 15 when China and Pakistan signed agreements promising investments of up to $46 - bil lion and the construction of a China Pakistan Economic Cor 1 The corridor is to run from ridor of roads, rail lines, and pipelines. Gwadar port in Pakistan, now envisioned as part of the Maritime Silk Road (the “Road” of Belt and Road) through Lahore and Islamabad to Xinjiang Uighur Autonomous Region in China. China’s biggest rival, but also a partner, is India, the world’s other giant. Although Figure 6 .1 China’s Relations with Countries in South Asia, 2015 Afghanistan Bhutan Nepal Pakistan India Bangladesh Overall relationship with China: Pivotal state Major partner Sri Lanka Diplomatic relations No relations Maldives NOTE: Due to small scale of map, not all countries are displayed and labeled. RR2273A-6.1 RAND -1— 1 20, 2 015. “China’s Xi Jinping Agrees $46bn Superhighway to Pakistan,” BBC News , April 0— +1— RR2273A_CC2015.indb 122 8/14/18 11:11 AM

161 China in South Asia 123 they are rivals for influence in South Asia and Central Asia, China has also envisioned India as part of the Maritime Silk Road, and India recently joined the SCO as an observer; as of late 2015, it was expected to become a member. The greatest threat to China within the region stems from Afghanistan. Although the country is a partner, the unrest there, its production of heroin, and its proximity to Xinjiang raises the specter of terrorism that Chinese leadership fears. Finally, within the region, Bhutan alone does not recognize China. Drivers of Chinese Engagement Chinese Activities in the Region Prior to 2000 The history of the four decades prior to 2000 is largely one of tensions and rivalry with India. After an initial decade of warm ties between Beijing and New Delhi during the 1950s, relations soured following the flight into exile of the Dalai Lama (after violence in Tibet in 1959), the spiritual leader of Tibetan Buddhism, and the two countries fought a brief border war in 1962. China became a key patron of India’s nemesis, Pakistan, and backed Islamabad in a series of Indo-Pakistan conflicts, notably in 1965 and 1971. Nevertheless, since the 1980s, China has - attempted a rapprochement with India with some success. Prime Min ister Rajiv Gandhi visited Beijing is 1988—the first visit by an Indian head of government in more than thirty years. PRC Premier Li Peng visited New Delhi three years later—becoming the most senior Chi - nese official to step foot in India since Premier Zhou Enlai did so in 1960. The road has been bumpy but China-India relations have become more cordial, and Beijing has shifted to more neutral positions on issues between New Delhi and Islamabad. Border clashes and periodic ten - sions between India and Pakistan—including the Kargil Crisis of 1999, a limited war following Pakistan’s incursion into the Kargil-Dras sector 2 —witnessed corresponding upsurges of disputed Jammu and Kashmir in tensions between China and India. China has provided considerable 2 Ashley J. Tellis, C. Christine Fair, and Jamison Jo Medby, Limited Conflicts Under the — -1 Nuclear Umbrella: Indian and Pakistani Lessons from the Kargil Crisis , MR-1450-USCA, Santa Monica, Calif.: R AND Corporation, 2001. —0 — +1 RR2273A_CC2015.indb 123 8/14/18 11:11 AM

162 124 At the Dawn of Belt and Road military assistance to Pakistan, including helping to develop Islamabad’s nuclear program (see Chapter 9). These tensions have become more dangerous, with both Pakistan and India conducting nuclear tests in 98 and becoming full-fledged nuclear powers. May 19 Current Chinese Policy Toward the Region Chinese Priorities and Policies Since the 1990s China has expanded its South Asia policy well beyond simply India and Pakistan, paying more attention to other states in the region, including Bangladesh and Sri Lanka. China’s broader eco - nomic interests necessitate taking a more comprehensive approach rather than perceiving South Asia only in terms of the India-Pakistan dyad. Although China has continued to align itself with Pakistan since 2000, it has also sought to stabilize relations with India and adopted a more equidistant approach on Indo-Pakistan issues, such as the dispute over Kashmir. Beijing’s rivalry with New Delhi contains elements of 3 Despite this, Pakistan continues cooperation as well as competition. 4 China continues to to be “the linchpin of China’s South Asia policy.” maintain its very close ties with Pakistan for three overarching reasons: To en 1. sure China’s internal stability To ba lance against India 2. To de fend China’s burgeoning economic interests, including 3. safeguarding trade and transportation routes, and protecting PRC citizens. Pakistan is considered key 1. Ensuring China’s Internal Stability. fo r maintaining stability inside the PRC, especially in China’s far west autonomous regions of Xinjiang and Tibet. Since 2000, China has faced an increasingly restive Uighur ethnic minority, of Turkic stock, 5 Islamabad approximately ten million strong concentrated in Xinjiang. 3 T.V. Paul, ed., The China-India Rivalry in the Globalization Era , Washington, D.C.: George - town University Press, forthcoming, 2018. 4 62 , p. Scobell, Ratner, and Beckley, 2014 . 5 See Gardner Bovingdon, , New York: Columbia The Uyghurs: Strangers in Their Own Land -1— University Press, 2010, and Scobell, Ratner, and Beckley, 2014, pp. 10 –12. 0— +1— RR2273A_CC2015.indb 124 8/14/18 11:11 AM

163 China in South Asia 125 is considered a key capital to help Beijing deal with the challenge both in terms of cracking down on radical Islamic groups supporting and training Uighurs in Pakistan as well as helping to cast China as friend of the Muslim world. While Beijing has used extremely repressive tactics against Uighurs in recent years, it has worked hard to portray itself as a regime that is tolerant and indeed supportive of Muslims within the borders of the PRC. Pakistan is also important to China because it is considered criti - cal to stabilizing neighboring Afghanistan—a country that has become of growing concern to China as a source of terrorism and heroin. Since the early 1990s, China has viewed Afghanistan as the regional center of Islamic radicalism, which Beijing fears, if unchecked, can spread throughout Central Asia and spill over into Xinjiang. According to one prominent Chinese analyst, “Afghanistan is still a crucial focus for China” because terrorists remain active in that country, “Afghanistan remains the spiritual pillar” for radicals, and Afghanistan’s “production and transaction of narcotics,” provides “significant funds” for terrorists 6 - Although there is no easy access from Afghan throughout the region. istan directly to China (the Wakhan Corridor is remote, the terrain 7 Pakistan provides is inhospitable, and infrastructure is nonexistent), better access to Xinjiang, and China complains that Uighur extremists 8 have received weapons, explosives, and training in Pakistan. Pakistan has also long been important vis-à-vis Tibet because it serves as a massive distraction for India. The threat to the west meant that New Delhi could not focus greater attention on complicating mat - ters for Beijing in the Himalayas. 6 On the significance of Afghanistan, see Pan Guang, “The Role of a Multilateral Anti- Terror Mechanism in Central Asia,” in Charles Hawkins and Robert R. Love, eds., The New - , Fort Leavenworth, Kan.: Foreign Military Stud Great Game: Chinese Views on Central Asia ies Office, 2006, p. 11 3. 7 See Michael Swaine, “China and the ‘Af Pak’ Issue,” China Leadership Monitor , No. 31 , 6– February 23 , 2010, pp. The Chinese have built some infrastructure for troops stationed 7. near the border. See Russell Hsiao and Glen E. Howard, “China Builds Closer Ties to China Brief , Vol. 10, No. Afghanistan Through Wakhan Corridor,” anuary 1, J 7, 2 010. 8 — -1 For example, Brian Spegele, “China Points Finger at Pakistan Again,” Wall Street Journal , 8. March 8, 2 012, p. —0 — +1 RR2273A_CC2015.indb 125 8/14/18 11:11 AM

164 126 At the Dawn of Belt and Road 2. Balancing Against India. Pakistan’s greatest geostrategic value 9 For Beijing, Islamabad has proved China has been to offset India. to to be an invaluable friend in South Asia. This is especially because relations between Beijing and New Delhi have been tumultuous and prickly. While Beijing-New Delhi ties have improved noticeably, major problem areas persist—significant mutual distrust continues and border disputes remain unresolved. Pakistan is seen as an extremely important counterweight to India. India is the only state on the Asian landmass that compares with China in terms of size, population, economic potential, and military power. Geopolitically, it may be China’s only long-term rival in Asia, since Japan appears weakened by economic malaise and an aging population, and Russia confronts severe demographic distress in addition to chronic economic and 10 In recent years, India has been the only state in the political problems. Asia-Pacific to rival China’s economic growth rates, and, according to a United Nations Department of Economic and Social Affairs report, the South Asian giant is poised to surpass the PRC as the world’s most 11 The result is considerable populous country by approximately 2030. 12 Thus, wariness by Beijing of New Delhi’s intentions and capabilities. China’s main geopolitical interest in its relationship with Pakistan is, as Stephen Cohen puts it, to pursue a “classic balance of power strategy,” using Pakistan to confront India with a potential two-front 13 Nevertheless, there is a fundamental ambivalence about India’s war. challenge to China in Beijing: India is not considered China’s equal— 9 This section draws upon Scobell, Ratner, and Beckley . 65 , 2014, p. 10 For a systematic comparison of China and India, see George J. Gilboy and Eric Hegin - , New York: Cam- botham, Chinese and Indian Strategic Behavior: Growing Power and Alarm bridge University Press, 2012. 11 United Nations Department of Economic and Social Affairs, Population Challenges and , New York, 2005, p. Development Goals 5. 12 For a good overview of China-India relations, see Murray Scot Tanner, Kerry Dumbaugh, and Ian Easton, Distracted Antagonists, Wary Partners: China and India Assess Their Security , Alexandria, Va.: Center for Naval Analyses, September Relations 20 11. 13 The Future of Pakistan , Washington, D.C.: Brookings Institution Stephen P. Cohen, -1— Press, 2011, p. 60 . 0— +1— RR2273A_CC2015.indb 126 8/14/18 11:11 AM

165 China in South Asia 127 either as a partner or adversary. Despite this, Beijing desires cordial relations and a modicum of cooperation with New Delhi, including in such multilateral forums as the BRICS and the SCO (India has been an observer in the latter and was admitted to membership in the SCO—along with Pakistan—in 2017). 3. Safeguarding Transportation and Economic Interests and While China views Pakistan as a valuable Protecting PRC Citizens. co unterweight to India, Beijing has no interest in increased tensions or military conflict between Islamabad and New Delhi. A heightened state of tensions between India and Pakistan or a war—even a limited one—along the lines of the Kargil crisis of 1999 is something China would strongly prefer to avoid. China’s strong preference is for stability in South Asia because turmoil on China’s periphery is alarming for Beijing and very bad for business. A top priority for PRC leaders is robust economic growth for China and continued material prosperity for China’s people. This is predicated upon unimpeded and flourishing economic interactions between China, its neighbors, and the wider world. From China’s perspective Pakistan has a key role to play both in sustaining stability and peace on the subcontinent and in actively advancing China’s economic relations with the region and the world. Beijing seeks a government in Islamabad that can maintain order inside Pakistan and also help stabilize Afghanistan. China also wants Islamabad to get along with New Delhi and refrain from provoca - tions, including supporting terrorist activity in India or elsewhere. But beyond this, Beijing has ambitious plans for Pakistan to play a central role in China’s economic plans for South Asia—as a maritime and con - tinental transportation and trading hub. Along with increased economic activity beyond China’s borders, growing numbers of Chinese citizens are traveling for temporary or extended business and leisure abroad. The challenge for Beijing is how to protect all these burgeoning overseas interests. China looks to Islam - abad to help protect China’s interests in Pakistan and in neighboring Afghanistan. There are an estimated 13,000 PRC citizens in Pakistan, — -1 and their safety has been increasingly precarious, including the threat —0 — +1 RR2273A_CC2015.indb 127 8/14/18 11:11 AM

166 128 At the Dawn of Belt and Road 14 The one episode that crystalized the of being kidnapped or killed. problem for China and prompted Beijing to demand action from Paki - stan was the Red Mosque incident of 2007, when PRC citizens were 15 seized by Islamic radicals in the heart of Islamabad. Political Engagement In the 2013 to 2015 period, China made 18 visits to South Asia at the level of head of state or head of government. Moreover, South Asia and Central Asia together receive more high-level visits from Chinese lead - ers than any other regions in the world. The distribution of visits, how - ever, has been uneven. The most frequent destination was India, which received six such visits, and the frequency has continued to increase. The Maldives, Nepal, Pakistan, and Sri Lanka received three visits each. Bangladesh has received one head of government, in 2005, but also had a visit from the vice president in 2010 and the foreign minister in 2014. Afghanistan is not a regular stop for senior PRC leaders, but this does not mean that Beijing has ignored Kabul. China reopened its 02 following the overthrow of the Taliban, and 20 embassy in February PRC Foreign Minister Tang Jiaxuan visited Kabul in June 2. As of 200 late 2015, the most senior Beijing official to visit Afghanistan was then CCP Politburo Standing Committee Member Zhou Yongkang, who 12. Moreover, made a four-hour stopover in Kabul in September 20 Afghanistan leaders are regular visitors to Beijing—former president - Hamid Karzai visited China five times during his tenure, and his suc cessor Ashraf Ghani’s first visit abroad as head of state was to Beijing 4. Furthermore, Chinese and Afghan leaders also meet in October 201 16 each other at venues such as the annual SCO heads of state summit. 14 Isaac B. Kardon, China and Pakistan: Emerging Strains in the Entente Cordial Project 2049 , Washington, D.C.: Project 2049, 2011, pp. 14 –16. 15 Andrew Small, - , New York: Oxford Uni The China-Pakistan Axis: Asia’s New Geopolitics versity Press, 2015, preface. 16 Andrew Scobell, “China Ponders Post-2014 Afghanistan: Neither ‘All In’ nor Bystander,” -1— 8–329. Asian Survey , Vol. 55, No. 32 2, M arch-April 20 15, pp. 0— +1— RR2273A_CC2015.indb 128 8/14/18 11:11 AM

167 China in South Asia 129 Diplomatic Relations and Presence China maintains ambassador-level relations with diplomatic mission in all countries in South Asia with the exception of Bhutan. This bilateral relationship is unusual because of Bhutan’s special status since 1947 as a protectorate of India. New Delhi handled all aspects of the kingdom’s foreign relations until the 1970s when Bhutan became a member state of the UN. While China and Bhutan still do not have formal diplo - matic ties, the two countries have held routine dialogues on matters of 17 common interest since the 1980s. Pivotal State and Major Partners For China, the pivotal state in South Asia is Pakistan. Underscoring this is the fact that it is the only country in the region to have a free 18 Pakistan is also an “all weather” strate- trade agreement with China. gic cooperative partner—the only country anywhere in the world that is so described by Beijing. That being said, China has not neglected other countries in the region. It has, for example, various forms of comprehensive cooperative partnerships with Nepal, the Maldives, and Bangladesh and is negotiating free trade agreements with both 20 19 More broadly, India is a negotiating and the Maldives. Sri Lanka partner in the Regional Comprehensive Economic Partnership trade deal, which includes China, the ten ASEAN countries, Japan, Korea, Australia, and New Zealand. In addition, since 2005 China has been an observer of the South Asian Association for Regional Cooperation (SAARC). China holds one of nine SAARC observer seats, the others being held by Australia, Iran, Japan, the European Union, Myanmar, Mauritius, South Korea, and the United States. 17 175–186. Thus, Bhutan is a sovereign state, unlike Sikkim, which was Garver, 2000, pp. abs orbed by India. 18 “China-Pakistan FTA,” Ministry of Commerce of the People’s Republic of China, undated. 19 “China-Sri Lanka FTA,” Ministry of Commerce of the People’s Republic of China, undated. 20 — -1 “China-Maldives FTA,” Ministry of Commerce of the People’s Republic of China, undated. —0 — +1 RR2273A_CC2015.indb 129 8/14/18 11:11 AM

168 130 At the Dawn of Belt and Road India is by far the most powerful state in the region, whether economically, politically, or militarily. However, relations with China have historically been tense since a 1962 border war, and today, there remain many outstanding issues, including competing claims to Aksai Chin and Arunachal Pradesh. Despite this, China maintains a stra - tegic cooperative partnership with India, just as it does formally with Afghanistan and Sri Lanka. China and India investigated the possibil - ity of establishing a regional trading arrangement and established a Joint Study Group to consider the issue. The group rendered its report - in 2007, arguing that such an arrangement would be mutually advan 21 tageous, but there has since then been little follow-up. High-Level Exchanges Of particular note were high profile visits by top Chinese leaders to India, Pakistan, the Maldives, and Sri Lanka, all since 2012. PRC Pre- 20 13. Li’s visit to mier Li Keqiang visited India and Pakistan in May New Delhi was clouded by an incident on the disputed Sino-Indian border. Earlier in the year a small detachment of Chinese troops reportedly crossed into remote territory controlled by India, pitched tents, and remained encamped for weeks even after being discovered by Indian forces. The Chinese troops withdrew just prior to Li Keq - iang’s visit. Beijing’s message appeared to be that it desires cooperation with New Delhi but China is in no mood to compromise or make - concessions to India in the on-again off-again border talks. In Septem 14 PRC President Xi Jinping paid a state visit to New Delhi in 20 ber an effort to maintain cordial relations with a key rival on the subconti - nent. Xi’s visit occurred a week after an extended incursion by several hundred PLA troops into disputed territory in a remote western por - 22 tion of the Sino-Indian Himalayan frontier. India was the third stop in a 2014 regional trip that also took Xi to the Maldives and Sri Lanka—the latter both strategic locations in 21 “China-India Regional Trade Arrangement Joint Feasibility Study,” Ministry of Com- merce of the People’s Republic of China, undated. -1— 22 Jason Burke and Tania Branigan, “India-China Border Standoff Highlights Tensions 0— Before Xi’s Visit,” The Guardian , September 16 , 2014. +1— RR2273A_CC2015.indb 130 8/14/18 11:11 AM

169 China in South Asia 131 - the Indian Ocean. In the Maldives, the Chinese president signed agree ments on infrastructure projects, including one to construct a bridge linking the capital with the country’s international airport. By visiting Sri Lanka, Xi became the first PRC head of state in three decades to set foot in that country. There he discussed economic issues, including the 15, Xi negotiation of a free trade agreement. Most recently, in April 20 paid a state visit to Islamabad where he emphasized Beijing’s continued commitment to Pakistan with the announcement of China’s intent to llion in infrastructure projects in the country. invest $46 bi Cultural Influence China currently has established eight Confucius Institutes across six countries in South Asia. India and Pakistan have two each. Afghani - stan, Bangladesh, Nepal, and Sri Lanka each have a single institute. The small states of Bhutan and Maldives do not possess any Con - fucius Institutes. Overall, China’s cultural influence in South Asia is weak. This reality is highlighted by the fact that cultural influence has tended to flow in the other direction. Arguably, South Asia’s most important export to China over the centuries was cultural—Buddhism traveled northward into China. In the twenty-first century, it is per - haps not surprising that Beijing seems most worried about the penetra - tion into China from South Asia of religious influences—radical Islam via Afghanistan and Pakistan and Tibetan Buddhism via the Tibetan Government-in-Exile headquartered in Dharamsala, India. - In general, the estimates of Chinese citizens in South Asia sug 23 and gest low numbers. These include fewer than 10,000 in Pakistan 24 - each. We believe these figures to be low, however. Other esti India, 25 mates place the number in Bangladesh much higher. 23 Zahid Gishkori, “Economic Corridor: 12,000-Strong Force to Guard Chinese Workers,” 015. The Express Tribune , March 30, 2 24 Megha Mandavia, “Why India Remains a Difficult Terrain for 7,000 Chinese Expatriates Living in the Country,” The Economic Times , August 31 , 2015. 25 A source of which the accuracy we cannot fully assess reports that 168,000 Chinese reside in Bangladesh. See “1 Nian You 16 Wan Duo Zhongguo Renmin ‘Yimin’ Mengjiala? Hai — -1 Zheng You Ke Neng” [“160,000 Chinese ‘Immigrating’ to Bangladesh in a Year? It Actually Is a Possibility”], Aboluowang , October 16 , 2016. —0 — +1 RR2273A_CC2015.indb 131 8/14/18 11:11 AM

170 132 At the Dawn of Belt and Road Economic Engagement Despite its large population, South Asia as a whole does not play a large role in China’s international economic engagement. However, this may 20 change. During an April 15 visit to Pakistan, PRC President Xi bi llion in the Jinping announced that China intended to invest $46 country to fund various infrastructure projects, including overland and 26 maritime as part of a China-Pakistan Economic Corridor (CPEC). If China’s investment plans for Pakistan succeed, if RCEP negotia - tions succeed, and if China’s Maritime Silk Road plans are carried out, then South Asia will have stronger links to China. But it will also have stronger links to the rest of the world, as will the rest of the world with it, enabling greater economic exchange beyond China. Trade India is by far China’s largest trading partner in the region and is both its largest source of imports and its largest export destination. Indeed, China’s two-way trade with India now dwarfs that with Pakistan. Between 2000 and 2013, Sino-Indian two-way trade jumped 22-fold bi llion. In contrast, Sino-Pakistani two-way trade has increased to $65 bi llion in 2013. very slowly over the same period, to reach a modest $14 Unlike most other developing regions, China’s imports from South Asia include a high proportion of manufactured goods (Figure 2). 6. This is largely due to India, which exports mainly manufactured goods to China. Most other South Asian countries export raw mate- rials. During the commodities boom of the mid-2000s, the share of commodities in imports rose dramatically, but the commodity mix has returned to what it had been at the beginning of the 2000s. Along the lines of China’s exports to other regions, China’s exports to South Asia are almost completely manufactured items of various types, including machinery and transportation equipment per per cent in 2013), manufactured goods (27 (39 cent), chemicals cent) for a cent), and miscellaneous manufactured items (14 per per (17 26 Louis Ritzinger, “The China-Pakistan Economic Corridor: Regional Dynamics and , Seattle, Wash.: National Bureau of Asian China’s Geopolitical Ambitions,” Commentary -1— 015. Research, August 5, 2 0— +1— RR2273A_CC2015.indb 132 8/14/18 11:11 AM

171 China in South Asia 133 Figure 6.2 Composition of Imports from South Asia 100 90 80 70 60 50 40 Percent 30 20 10 0 2010 2001 2009 2008 2000 2007 2002 2012 2005 2004 2013 2011 2003 2006 Year Crude materials Beverages and tobacco Food Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Machinery and transport Manufactured goods manufactured Other SOURCE: UN Comtrade Database. RR2273A-6.2 RAND total of 97 percent (Figure 6.3). This has been consistent through time, alt hough the share of machinery and transportation equipment exports has risen dramatically. South Asia has had a large trade deficit with China, which has only expanded over the 2000 to 2013 time period (Figure 6.4). China is in surplus with all South Asian countries, but the South Asia trade deficit is driven mainly by India, which in 2013 recorded a trade deficit llion. bi of almost $30 Foreign Direct Investment and Lending There has been a buildup of the stock of China’s FDI in South Asia mi llion in FDI since 2003 (Figure 6.5). In 2003, China had only $45 stock in South Asia. By 2012, this was more than $4 bi llion—an increase of almost 100-fold. In contrast to trade flows, much of this — -1 increase in investment has been to Pakistan, which in 2012 had more —0 — +1 RR2273A_CC2015.indb 133 8/14/18 11:11 AM

172 134 At the Dawn of Belt and Road Figure 6.3 Composition of Exports to South Asia 100 90 80 70 60 50 Percent 40 30 20 10 0 2002 2006 2001 2009 2008 2000 2003 2007 2010 2012 2005 2013 2004 2011 Year Crude materials Beverages and tobacco Food Chemicals Animal and vegetable oils Mineral fuels Miscellaneous Machinery and transport Manufactured goods manufactured Other SOURCE: UN Comtrade Database. RR2273A-6.3 RAND than $2 billion in Chinese FDI stock. Despite the much larger size of In dia’s economy, there is very little investment by China in that - bi llion in 2012. By comparison Chi country—hardly more than $1 nese corporations have made substantial investments in Afghanistan. In 2007 a consortium of two Chinese companies successfully won a contract to develop the Aynak Copper Mine 35 les from Kabul, mi reportedly agreeing to invest more than $4 llion. Four years later bi another Chinese corporation won the rights to look for oil in north - 27 Certainly, not all of this has been invested. But western Afghanistan. by 2012, China had FDI stock of $483 mi llion in Afghanistan. 27 Erica Downs, “China Buys into Afghanistan,” SAIS Review , Vol. 32, No. 2, S ummer-Fall -1— 56 2012, pp. –72. 0— +1— RR2273A_CC2015.indb 134 8/14/18 11:11 AM

173 China in South Asia 135 Figure 6.4 Level of Exports to and Imports from South Asia 80 70 Exports to South Asia Imports from South Asia 60 50 40 30 U.S. $ billions 20 10 0 2001 2011 2013 2012 2009 2000 2010 2003 2002 2008 2004 2007 2006 2005 Year SOURCE: UNCTAD. RAND 6.4 RR2273A- Figure 6.5 China’s FDI Stock in South Asia by Receiving Country 2.5 Afghanistan Bangladesh 2.0 India Nepal 1.5 Pakistan Sri Lanka 1.0 U.S. $ billions 0.5 0 2011 2009 2010 2003 2012 2008 2004 2006 2005 2007 Year — -1 SOURCE: UNCTAD. RR2273A- RAND 6.5 —0 — +1 RR2273A_CC2015.indb 135 8/14/18 11:11 AM

174 136 At the Dawn of Belt and Road Agreements and Other Issues China has BITs with half the countries in South Asia. It negotiated BITs in the 1980s with Pakistan and Sri Lanka, and then Bangla - desh in the mid-1990s. Emblematic of China’s recent reaching out to India, the two countries negotiated their BIT in 2006; it entered into force in 2007. China has five tax treaties—covering either income only or income and capital. Pakistan was the first, in 1989, but India came soon after, in 1994. Others include Bangladesh, Nepal, and Sri Lanka. China is exploring the possibility of a free trade agreement with 28 But even before that, China and India were both negotiat - India. ing partners in the RCEP. Although there had been hope of complet - ing negotiations before the end of 2015, negotiations have continued well beyond that date. No South Asian countries are partners with the 15. 20 United States in the TPP, signed in October While China has focused on Belt and Road, of which it pic - tures India being part, India has countered this with Project Mausam, aimed at making India the dominant trade force in the Indian Ocean region. These competitive initiatives are manifestations of the rivalry - between China and India. Such efforts do not automatically put Bei jing and New Delhi at loggerheads; indeed, these projects can be jus - tifications for greater cooperation. However, of the two, China’s Belt and Road Initiative is far more ambitious and is already a work in progress. China’s vision is to link the port of Gwadar in Pakistan to Xin - 29 Pakistan has drawn jiang with roads, railways, and an oil pipeline. up plans to build a railway between Havelian, a Pakistani city close to Islamabad, and Kashgar in Xinjiang. This railway would roughly paral - lel the Karakoram highway. In 2006, Pakistan awarded a $1.2 llion mi contract to an international consortium to carry out a feasibility study for establishing this rail link, but so far no plans have been finalized to begin construction. In 2006, the Pakistani government presented 28 “China FTA Network,” Ministry of Commerce of the People’s Republic of China, web - page, undated. -1— 29 73–75. These three paragraphs are drawn from Scobell, Ratner, and Beckley, 2014, pp. 0— +1— RR2273A_CC2015.indb 136 8/14/18 11:11 AM

175 China in South Asia 137 plans for a 3,300 km oil pipeline between Gwadar and Kashgar cost - 30 And then in April 2015, llion. llion to $5 bi ing an estimated at $4.5 bi PRC P bi llion resident Xi Jinping announced the intention to fund $46 worth of CPEC projects. Beijing is especially concerned about energy security, especially where petroleum is concerned. China has been a net importer of oil since 1993, and the overwhelming majority of this petroleum from overseas arrives in the PRC via Southeast Asia. The CPEC is an effort to diversify the routes. Nevertheless, China is likely to continue to rely heavily on the sea-lanes to supply its external energy needs. To improve security in the Indian Ocean China has adopted what one U.S. consulting firm dubbed a “String of Pearls” strategy working to establish a network of port facilities in countries around the Indian 31 Ocean region. A key element in this strategy is developing Pakistan’s port of mi Gwadar, a remote fishing village some 50 les from the Iranian border es from the Strait of Hormuz. The port was mil and approximately 300 32 Gwadar was reported to reportedly leased by a Chinese company. me be 11.5 ters deep, enough to accommodate submarines and aircraft carriers, and as of late 2015 could already function as a “listening post” 33 to monitor U.S. naval activity in the Indian Ocean and Persian Gulf. China also reportedly sent 450 engineers to provide technical expertise llion to build a 725 km highway connecting mi and committed $200 30 For an overview of these developments, see Vijay Sakhuja, “The Karakoram Corridor: China’s Transportation Networks in Pakistan,” China Brief , Vol. 10, No. 20, O ctober 8, 2 010, pp. 5– 7; Fazal-ur-Rahman, “Prospects of Pakistan Becoming a Trade and Energy Cor - ridor for China,” Strategic Studies , Vol. 28, No. 2, S ummer 2007. 31 , Juli A. MacDonald, Amy Donahue, and Bethany Danyluk. Energy Futures in Asia McLean, Virginia: Booz Allen Hamilton, 2004. The term was actually suggested by two Indian participants at a workshop. See also Christopher Pehrson, String of Pearls: Meeting the Challenge of China’s Growing Power Across the Asian Littoral , Carlisle Barracks, Pa.: U.S. Army War College Strategic Studies Institute, 2006. These ports, including Gwadar, have everyday economic value and, in the event of a conf lict, considerable military value. 32 - Summer Zhen, “Chinese Firm Takes Control of Gwadar Port Free-Trade Zone in Paki sta n,” South China Morning Post , 2015. 11 , November 33 — -1 On the current depth, see Li Xuanmin, “Gwadar Port Benefit to China Limited,” The , 2016. Global Times , November 23 —0 — +1 RR2273A_CC2015.indb 137 8/14/18 11:11 AM

176 138 At the Dawn of Belt and Road Gwadar with Pakistan’s largest city, Karachi, which is itself connected 34 to the northern Pakistan via railway. Military and Security Engagement This section presents a brief overview of Chinese military engagement activities as an instrument of Chinese foreign and security policy in South Asia. It examines Chinese arms sales, military diplomacy, joint exercises, and port visits, as well as Chinese participation in UNPKOs and PLA MOOTW activities. PRC Arms Sales Since 2000, China has been a key supplier of major conventional weap - ons to South Asia, especially Pakistan and Bangladesh. Arms sales to these two countries alone comprised over half of China’s total arms per cent and sales from 2000 to 2014, with Pakistan accounting for 42 Bangladesh 11 per cent, thus helping China to supplant Germany as the world’s third-largest arms exporter. Chinese arms sales to South Asia appear to be increasing and have exceeded U.S. arms sales to the region (although U.S. arms sales also appear to be increasing). While arms transfers from China have made up roughly half of Pakistan’s total arms imports since 2009, China has supplied approximately three-quarters of - Bangladesh’s arms imports since 2006 (in years where Bangladesh pur chased arms), making China the primary supplier of arms to both coun - tries in recent years. Probably the most notable Chinese sale to South Asia was the sale of JF-17 fighters to Pakistan followed by an agreement to build the jets in Pakistan as part of a Sino-Pakistani joint venture: the 35 Pakistan Aeronautical Complex/Chengdu Aerospace Corporation. PLA Military Diplomacy Between 2004 and 2014, CMC members made 11 visits to five countries in the region. Pakistan and India received three visits each (Table 6. 1). 34 4, and Sudha Ramachandran, “China’s Pearl in Pakistan’s Waters,” Pehrson, 2006, p. Asi a Times Online , March 005. 4, 2 -1— 35 See, for example, Franz-Stefan Gady, “Déjà Vu: Pakistan and Nigeria to Sign JF-17 0— Fighter Jet Deal in November,” The Diplomat , September 19 , 2016. +1— RR2273A_CC2015.indb 138 8/14/18 11:11 AM

177 China in South Asia 139 Other destinations for such high-level visits were Nepal and Sri Lanka. There were no high-level military visits to Afghanistan, Bhutan (with which China has no official relations), or the Maldives. One important example of Chinese military diplomacy in South Asia is Sri Lanka, a country in which many analysts view China as Table 6.1 Chinese High-Level Military Visits to South Asia, 2003–2014 Year Country Visited CMC Member Foreign Counterparts Summits of Visit 2004 Pakistan Cao Gangchuan, PM Zafarullah Khan Jamali; DM Rao Sikander CMC Vice Chair/DM 2004 India Cao Gangchuan, PM Atal Bihari Vajpayee; CMC Vice Chair/DM DM George Fernandes 2005 India Liang Guanglie, CGS DM Pranab Mukherjee; NSA M. K. Narayanan 2007 Bangladesh Chen Bingde Pres. Iajuddin Ahmed; Naval Chief Sarwar Jahan Nizam; Army and Air Force Chiefs Liang Guanglie, DM DM Chaudhry Ahmad 2010 Pakistan Mukhtar Nepal Chen Bingde Chief of Staff of Army 2011 Chhatra Man Singh Gurung; PM Jhalanath Khanal; Pres. Ram Baran Yadav 2012 Sri Lanka Liang Guanglie, DM Pres. Mahinda Rajapaksa; First Chinese DM Gotabaya Rajapaksa defense minister visit to Sri Lanka PM Manmohan Singh; 2012 India Liang Guanglie, DM DM A. K. Antony Pres. Mamnoon Hussain; 2014 Pakistan Chang Wanquan, DM PM Nawaz Sharif; DM Khawaja Asif Pres. Mahinda Rajapaksa 2014 Sri Lanka Xu Qiliang, Vice Chair CMC — -1 2014 Bangladesh Xu Qiliang, Vice Pres. Abdul Hamid; Chair CMC PM Sheikh Hasina —0 — +1 RR2273A_CC2015.indb 139 8/14/18 11:11 AM

178 140 At the Dawn of Belt and Road 36 In attempting to make inroads despite India’s traditional influence. 20 August 20 12, Chinese Defense Minister Liang 12 to September Guanglie visited Sri Lanka on the way to India. This was the first ever 37 Following Liang’s visit to Sri Lanka by a Chinese defense minister. groundbreaking visit, in May 20 14, CMC Vice Chair Xu Qiliang vis - ited Colombo, where he met with Sri Lanka President Mahinda Raj - apaksa as well as the head of Sri Lanka’s Ministry of Defense and 38 - High several high-ranking officers from Sri Lanka’s armed forces. lighting the linkage between China’s high-level military exchanges and its overall diplomacy in the region, Xu’s visit preceded President Xi 14 state visit to Colombo, during which Xi and Jinping’s September 20 Rajapaksa promised to strengthen the two countries’ strategic coop - 39 Sri Lanka followed up with a high-level defense erative partnership. delegation visit to Beijing later in September, during which Xu and Sri Lanka’s defense secretary pledged to strengthen cooperation and 40 enhance military-to-military ties. Combined Exercises China has held a number of combined exercises in South Asia in recent years, including with Pakistan, India, and Sri Lanka (Table 6.2). Many of these exercises have focused on counterterrorism operations. Chinese combined field exercises tend to be small scale, relatively few in number, and infrequent. They are purposefully selected and are 36 China’s approach may prove much more challenging following the recent leadership change in Colombo. See, for example, Ellen Barry, “New President in Sri Lanka Puts China’s Plans in Check,” New York Times , January 9, 2 015. 37 During Liang’s visit, he met with Sir Lankan President Rajapaksa and Sri Lanka’s defense secretary. In addition, the two sides announced plans for China to provide development assistance for an academic bu ilding complex for the Sri Lanka Military Academy. See “Gen- eral Liang Guanglie Calls on Secretary [of ] Defence,” Ministry of Defense, Sri Lanka, August 31 , 2012. 38 Guo Renjie, “Sri Lanka President Meets with Xu Qiliang,” , China Military Online 19 , 2015. May 39 Dharisha Bastians and Gardiner Harris, “Chinese Leader Visits Sri Lanka, Challenging , September India’s Sway,” New York Times , 2014. 16 -1— 40 See “China, Sri Lanka Pledge Military Cooperation,” Xinhua News , September 23 , 2014. 0— +1— RR2273A_CC2015.indb 140 8/14/18 11:11 AM

179 China in South Asia 141 Table 6.2 Selected Chinese Combined Exercises in South Asia, 2002–2014 Year Partner(s) Exercise Content Name of Exercise 2003 Dolphin 0311 India Naval search and rescue Dolphin 0310 2003 Naval search and rescue Pakistan 2004 Friendship 2004 Pakistan Counterterrorism 2004 China-India Mountaineering India Training 2005 China-India Friendship India Naval search and rescue 2005 China-Pakistan Friendship Naval search and rescue Pakistan Friendship 2006 Pakistan 2006 Counterterrorism 2007 Aman 2007 Pakistan; Others Maritime counterterrorism 2007 Hand-in-Hand 2007 India Counterterrorism 2007 2nd Western Pacific Naval India; Pakistan; Maritime Forum Others 2008 Hand-in-Hand 2008 India Counterterrorism Maritime security Aman 2009 Pakistan; Others 2009 Pakistan Counterterrorism Friendship 2010 2010 2011 Shaheen I Pakistan Air Force training Pakistan; Others Aman 2011 Maritime anti-piracy 2011 2011 Friendship 2011 Pakistan Counterterrorism 2012 Cormorant Strike 2012 Sri Lanka Special operations Counterterrorism 2013 [Unknown] Pakistan Pakistan; Others Maritime counter- 2013 Aman 2013 terrorism, anti-submarine warfare, anti-piracy, and search and rescue 2013 Shaheen II Pakistan Air Force training 2013 Hand-in-Hand 2013 India Counterterrorism 2014 Peace Angel 2014 Pakistan Medical drill 2014 Shaheen III Pakistan Air force training 2014 Hand-in-Hand 2014 India Counterterrorism SOURCE: Department of Defense China Military Power Report and Chinese Ministry of Defense website. — -1 NOTE: China did not begin engaging in combined exercises with foreign militaries —0 until 2002. — +1 RR2273A_CC2015.indb 141 8/14/18 11:11 AM

180 142 At the Dawn of Belt and Road important indicators of China’s interests and intentions. It is significant - that from 2002 to 2014, two-thirds of all the exercises China con - ducted with South Asian states (16 of 24) were with one country: Paki stan. From Beijing’s perspective, the security relationship with Islam - abad is quasi-alliance in nature. But it is also noteworthy that during the same period China has held five field exercises with India, suggest - ing Beijing does not want its close ties with Islamabad to come at the expense of a confrontational relationship with New Delhi. China has not held any military exercises with Bangladesh. PLAN Port Visits From 2000 through 2014, China conducted 18 port visits to countries in this region. Of note, 17 of the 18 total port visits, including nine asso - ciated with Chinese anti-piracy task forces conducting escort missions in the Gulf of Aden and five port visits by the PLAN’s hospital ship, took place from 2009 to 2014, representing a major increase in China’s naval activity in the region in the years since it began conducting anti- piracy operations in the Gulf of Aden. The most notable and prob - ably most controversial Chinese port calls in the region were a pair of PLAN submarine port calls in Colombo, Sri Lanka, in 2014. China 03 9 Song- made headlines throughout the region when a PLAN Type class conventional submarine and the PLAN’s Changxing Dao sub - 4 201 marine support ship visited Colombo, Sri Lanka, in September on the way to participate in counter-piracy operations in the Gulf of Aden. The same submarine visited Colombo again in October– 14 port 20 14 on the way back to China. The September 20 November call was the first PLAN submarine foreign port visit, reportedly mark - ing the second instance of a PLAN submarine operating in the Indian 41 Sri Lanka called it a routine “good-will visit,” but it exacer - Ocean. 41 The first PLAN submarine to operate in the Indian Ocean was a Type 093 SSN that oper - ate 14. China notified India and d in the Indian Ocean from December 20 13–February 20 several other countries in advance of that deployment. See Felix K. Chan, “Chinese Subma- -1— rines and Indian ASW in the Indian Ocean,” Geopolitcus , November 24 , 2014. 0— +1— RR2273A_CC2015.indb 142 8/14/18 11:11 AM

181 China in South Asia 143 bated India’s concerns about Chinese naval operations in the Indian 42 Ocean. UN Peacekeeping Operations There is no Chinese participation in UN peacekeeping operations in South Asia at this time. The only UNPKO in the region is the United Nations Military Observer Group in India and Pakistan (UNMOGIP)—in the disputed territory of Jammu and Kashmir— and China is not among the participant nations. Military Operations Other than War Chinese military operations other than war activities are also an impor - tant aspect of Chinese military engagement in South Asia. For exam - ple, the PLA played a prominent role when China provided disaster relief to Nepal following the devastating earthquake that killed thou - sands of people and caused massive damage in Kathmandu and other 20 15. Within days, China parts of the mountainous country in April 43 along with two teams dispatched four PLAAF Il-76 transport aircraft of PLA relief personnel and specialized rescue equipment to aid in the 44 Some analysts in the region see Nepal as a strate- search for survivors. - gically important country where China and India are increasingly com 45 suggesting that, peting for influence diplomatically and economically, in addition to humanitarian concerns, China likely intended its support to signal its commitment to Nepal in the aftermath of the disaster. 42 For more on the submarine visiting Sri Lanka, see “PLA Navy Submarine Visits Sri , 2014; “Sri Lanka Allows Chinese Submarine Lanka,” China Military Online , September 24 to Dock,” , November China Daily 3, 2 014; “China Says Its Submarine Docked in Sri Lanka ‘for Replenishment,’” The Hindu , November , 2014. 28 43 China Military Online “Four Chinese Military Aircraft to Join Nepal Earthquake Relief,” , 27 , 2015. April 44 Chinese media highlighted the team’s experience participating in other earthquake relief operations in recent years, including in the aftermath of major earthquakes in Sichuan and Yunnan Provinces. See “Chinese Army Rescuers Leave for Nepal After Quake,” Xinhua , April 27 , 2015. 45 See, for example, Natalie Obiko Pearson, Sandrine Rastello, and David Tween, “Nepal — -1 27 Has Powerful Friends in High Places: India and China,” Bloomberg , April , 2015. —0 — +1 RR2273A_CC2015.indb 143 8/14/18 11:11 AM

182 144 At the Dawn of Belt and Road Conclusion In the twenty-first century, China’s national priority is economic devel - opment and therefore Beijing has no interest in a state of heightened tensions or conflict in South Asia. Moreover, China foreign economic goals have become more ambitious under the leadership of Xi Jinping, - and the region is an integral part of these plans. More notably, Chi na’s Belt and Road Initiative entails multiple overland routes through South Asia, and Southeast Asia lanes through the Indian Ocean. This vision builds on existing Chinese efforts to develop roads, railways, and pipelines across mountain ranges and through jungles and to build ports and facilities around the rim of the Indian Ocean. Nevertheless, there are elements of continuity in China’s policy toward South Asia with pre-2000 and Cold War eras. These include alarm over internal dangers to domestic stability combining with significant external challenges, which threatens to undermine CCP rule and split China apart. The persistent traditional security threat has been India, while a more recent nontraditional security threat has emerged—terrorism in the form of Islamic extremism. India, regarded as China’s long-term geostrategic rival in South Asia, poses a more significant challenge if it aligns with the global hegemon, the United States. Moreover, India also poses a threat to Chinese territorial integrity and national unity through its territorial claims in the Himalayas and its tacit support for the Tibetan Government- in-Exile. Despite enduring Sino-Indian tensions, “because so many sources of dispute exist between China and India, both sides have come to recognize the need to prevent these tensions from leading to costly overt rivalry,” the result is what one U.S. scholar dubs “quiet 46 competition.” China’s continuity and change in policy toward South Asia come together in one partner: Pakistan. Islamabad continues to be seen as the key to countering New Delhi, especially as India grows stronger economically and more powerful militarily. And while India has sig - 46 Mark W. Frazier, “Quiet Competition and the Future of Sino-Indian Relations,” in Fran - cine R. Frankel and Harry Harding, eds., The India-China Relationship: What the United -1— 5. States Needs to Know , New York: Columbia University Press, 2004, p. 29 0— +1— RR2273A_CC2015.indb 144 8/14/18 11:11 AM

183 China in South Asia 145 naled an interest in maintaining cordial relations with China, it has also indicated a desire to improve security and economic relations with other states, including the United States and its allies. Beijing perceives these developments as threatening. As the most powerful and sprawl - ing state in South Asia, India not only dominants the subcontinent but also straddles the Indian Ocean. Chinese observers worry about India’s dominant position astride China’s most important oil routes and Chi - nese naval and maritime affairs publications closely track Indian naval 47 And yet, China sees its rivalry with India as one that developments. 48 can and should be managed in the near to medium term. Implications for the United States For Beijing, South Asia is only likely to become more important and China is only likely to become more active in the region. These trends raise the prospect of both cooperation and conflict. Rising tensions between China and India are certainly possible but so is greater coop - eration to counter nontraditional security threats and protect the global commons. The Indian Ocean, for example could become a venue for 49 At least some Chinese analysts argue greater cooperation or conflict. that China should seek international cooperation to manage the secu - rity of the Southeast Asia lines of communication in the Indian Ocean 50 because China is not strong enough to secure them itself. In a cooperative future trajectory for South Asia, Pakistan is likely to continue to be an important partner for China. However, in a more - conflictual future for the region, Pakistan takes on even greater impor tance to China. Pakistan’s political stability and national unity is crucial to China, not only to ensure that Islamabad remains a counterweight to 47 Scobell, Ratner, and Beckley, 2014, p. 73. 48 Frazier, 2004. 49 For research highlighting the potential for increased maritime tensions, see Geoffrey Till, Asia’s Naval Expansion: An Arms Race in the Making? London: International Institute for Strategic Studies, 2012. For research that provides a more balanced approach outlining both the prospects for cooperation and conf lict, see John Garofano and Andrea J. Dew, eds., Deep Currents and Rising Tides: The Indian Ocean and International Security , Washington, D.C.: Georgetown University Press, 2013. 50 Scobell, Ratner, and Beckley, 2014, p. 76.

184 146 At the Dawn of Belt and Road India but also because, as an Islamic state and nuclear power its insta - bility or disintegration would send shockwaves cascading far and wide. Moreover, severe upheaval or cataclysmic violence in Pakistan almost certainly will spill over into Afghanistan (and China). Beijing considers Afghanistan to be the terrorist epicenter of Central Asia and fears an overflow of Islamic extremism into neighboring states, including China. While U.S. intervention in Afghanistan in late 2001 and subse - quent persistent U.S. military presence in Afghanistan made China uneasy, Beijing is worried that an American drawdown will create a power vacuum and facilitate the return of the Taliban to power in Kabul. Therefore, there is the possibility of greater Chinese involve- ment in Afghanistan. This has already been seen in a modest manner diplomatically, but there is also potential for greater security involve- ment. China is unlikely to step up its involvement unilaterally; rather it would almost certainly require cooperation with Pakistan and might 51 include coordination with other powers, including the United States. Therefore, greater counterterrorism cooperation with China vis-a-vis Afghanistan and Pakistan is possible, although the potential is rather modest. The CPEC is likely to encounter difficulties and delays but Pakistan’s seaports are certain to remain strategically and economically valuable for China. The narrative in recent years about China establishing a “string of pearls” in the Indian Ocean is overhyped. Nevertheless, if conceived of as a network of ports of call for a range of PRC civilian and military vessels, from merchant ships to oil tankers to PLAN warships, then the “string” is more mundane but still significant. In particular, the new port facility at Gwadar is a useful “pearl” for Chinese commercial or military vessels. But even if China were to turn Gwadar into a naval base, it would likely not undermine American and Indian dominance of the Indian Ocean. India’s navy has seven bases and three listening posts along the shores of the Indian Ocean, and the U.S. Navy main - 52 tains a large presence at Diego Garcia. 51 For more discussion and analysis, see Scobell, 2015. 52 77. For more discussion, see Scobell, Ratner, and Beckley, 2014, p. -1— 0— +1— RR2273A_CC2015.indb 146 8/14/18 11:11 AM

185 CHAPTER SEVEN China in the Middle East The Middle East is the Developing World region of greatest grow - ing importance to China outside of its Asia-Pacific neighborhood. The Middle East is geographically well beyond China’s immediate neigh - cent of total Chinese goods per borhood and made up a modest 6.3 trade with the world in 2013, although this was almost double the 2000 share. Nevertheless, the Middle East is important to China’s Belt and Road Initiative, the flagship foreign policy initiative of PRC President Xi Jinping. Chinese involvement in the Middle East has expanded in recent decades and China is now an important presence in the region. In 2015 Beijing had significant interests in the Middle East and was grappling with how best to protect these. While keen to increase its influence, China is wary of escalating its involvement in the region and reluctant to enhance its commitments in the Middle East 1 At for fear of becoming ensnared in regional tensions and upheaval. the same time, it is aware of new opportunities, as suggested by a visit to Iran by PLA Deputy Chief of Staff Admiral Sun Jianguo in Octo - ber 20 15, during which Sun said China wants to deepen cooperation 2 and “exchange views with Iran on bilateral military ties.” 1 Andrew Scobell and Alireza Nader, China in the Middle East: The Wary Dragon , Santa Monica, Calif.: R AND Corporation, RR-1229-A, 2016. 2 “China Said to Seek Deeper Military Ties with Iran,” Radio Free Europe/Radio Liberty, — -1 15, O c t o b e r 2 015. —0 — +1 147 RR2273A_CC2015.indb 147 8/14/18 11:11 AM

186 148 At the Dawn of Belt and Road Key Chinese Activities in the Region China is not seeking to challenge or confront the United States in the Middle East. Economics and trade have been the main focus of Bei - jing’s engagement with the region, and the Middle East is an important source of energy (petroleum) for China. After Iraq opened its oilfields to outside operators starting in the late 2000s and held four bid rounds for 11 oil field and three gas field technical service contracts, China 3 - China also exports machin became a foreign partner in five oil fields. ery and consumer goods to the region and is investing in infrastructure and telecommunications. Nevertheless, since the end of the Cold War, geopolitical con - siderations have played a greater role in Chinese engagement with the Middle East. China seeks to strengthen its relations with developing countries and increase its influence in a pivotal part of the world. - Beijing cultivates the support of Middle Eastern capitals for poli cies China favors in key forums such as the UN Indeed, Beijing has worked hard to maintain good relations with all states in the region, and as of 2015, China was the only major power in the world to enjoy cordial relations with every country or governing authority in the Middle East, including Iran, Israel, Saudi Arabia, and the Palestin - - ian Authority. Beijing views Iran and Saudi Arabia as its most impor tant regional partners (Figure 7.1). Other major partners in the region include Egypt, Israel, and members of the Gulf Cooperation Council (GCC). Drivers of Chinese Engagement Chinese Activities in the Region Prior to 2000 In the Cold War era, Beijing felt largely closed out of the Middle East as Washington and Moscow fought for influence and power via regional proxy forces. Moreover, until the 1980s, the PRC’s Chinese rival, the Republic of China on Taiwan, continued to be the one China diplo - 3 U.S. Energy Information Administration, “Country Analysis Brief: Iraq,” U.S. Depart - -1— 015. ment of Energy, January 30, 2 0— +1— RR2273A_CC2015.indb 148 8/14/18 11:11 AM

187 China in the Middle East 149 Figure 7.1 China’s Relations with Countries in the Middle East, 2015 Syria Lebanon Iran Iraq Israel Jordan Kuwait Bahrain Qatar Saudi Egypt U.A.E Arabia Oman Overall relationship with China: Pivotal state Major partner Yemen Diplomatic relations NOTE: Due to small scale of map, not all entities are displayed and labeled. RR2273A-7.1 RAND matically recognized by many states in the region. Until the 1990s, the PRC was almost completely absent from the Middle East economically and militarily with the exception of serving as a supplier of bargain- priced or hard-to-get weaponry for states such as Iraq, Iran, and Saudi 4 Arabia. In the months following the June 1989 Tiananmen Massacre, the - Mid dle East leapt to prominence for China as Western capitals ostra cized Beijing and imposed sanctions. China reached out to developing countries to counter the cold shoulder from developed states. Middle Eastern capitals were central targets of Beijing’s counterstrategy in the 4 — -1 See, for example, John Calabrese, “From Flyswatters to Silkworms: The Evolution of 86 2–876. China’s Role in West Asia,” Asian Survey , Vol. 30, No. 9, S eptember 19 90, pp. —0 — +1 RR2273A_CC2015.indb 149 8/14/18 11:11 AM

188 150 At the Dawn of Belt and Road 5 e a rly 199 0 s. Moreover, this initiative coincided with growing demand for imported energy resources and commodities as China reinvigorated its economic reform and opening policy. By 2000, all states in the Middle East had broken official ties with Taiwan and established full diplomatic relations with the PRC, which they recognized as the sole legitimate government of China. The PRC is now a key economic actor in countries throughout the region with modest but significant military relationships with many Middle East - ern states. Current Chinese Policy Toward the Region Chinese Priorities and Policies By 2015, the region had become of greater importance to China than ever before. Beijing seems to perceive the Middle East as an exten - sion of China’s periphery as well as a zone of fragile stability. More- over, China has become concerned about the stability of regimes in 6 Factors causing the region after being largely agnostic for many years. this include the advent of color revolutions in former communist states, the emergence of the Arab Spring in 2011, and continued turmoil in a range of Middle Eastern states. In addition, the rise of radical Islamic movements such as the Islamic State (also known as the Islamic State of Iraq and Syria [ISIS]) has forced China to rethink its preferences. All these dynamics not only threaten Chinese economic interests in the Middle East, including energy supplies, transportation routes, and PRC citizens in the region, but also are seen to pose a threat to CCP rule. Beijing is worried that these popular and extremist movements may inspire ethnic Han dissidents to push for greater democracy in China and Uighur activists to press for greater autonomy or religious 7 freedom in Xinjiang. 5 See, for example, Yitzhak Shichor, “China and the Middle East Since Tiananmen,” The Annuals of the American Academy of Political and Social Science , Vol. 519, January 19 92, pp. 86 –100. 6 Jon B. Alterman and John W. Garver, The Vital Triangle: China, the United States, and the , Washington, D.C.: CSIS, 2008, p. Middle East 7. 12 -1— 7 10–12. For elaboration on this point, see Scobell and Nader, 2016, pp. 0— +1— RR2273A_CC2015.indb 150 8/14/18 11:11 AM

189 China in the Middle East 151 Beijing has three overarching interests in the Middle East: 1. Sus taining Chinese access to the energy resources, continuing the flow of trade, protecting Chinese investments, and ensuring the safety of PRC citizens in the region - ancing China’s stature and influence in a region of geostra Enh 2. tegic importance 3. Pre serving China’s domestic stability, defending China’s sov - ereignty and territorial integrity, as well as securing the PRC’s periphery in an ostensibly distant out-of-area region that Beijing has concluded is intimately intertwined with pressing security challenges back home. 1. Sustaining Energy Security, Protecting Investments, and Ensuring the Safety of People. The Middle East is an important source of imported energy for China. China is thirsty for petroleum; in 2014, mi llion barrels China was the largest net oil importer in the world at 6.1 per day. In 2014, the region supplied 52 per cent of China’s gross imports, 8 Moreover, in recent years China has mi or 3.2 llion barrels per day. invested billions in the region. Protecting these economic interests is of great concern for Beijing. Also at risk are PRC citizens living and working overseas, although reliable figures on the number of Chinese nationals in various countries and regions of the world are notoriously difficult to come by. Nevertheless, according to one Chinese analyst, in the second decade of the twenty-first century there are some five million Chinese citizens overseas around the globe, and of these he estimates approximately 9 550,000 are living and working in the countries of the Middle East. 2. Enhancing Regional Influence and Global Status. Beijing has taken steps to raise its profile in the Middle East in search of greater 8 U.S. Energy Information Administration, “China,” U.S. Department of Energy, May 14, 2 015 . 9 See Niu Xinchun, “China’s Interests in and Inf luence over the Middle East,” - Contempo 20 1, J anuary/February , Vol. 24, No. 14, pp. rary International Relations 42 –43, and Mathieu Duchâtel, Oliver Bräuner, and Zhou Hang, Protecting China’s Overseas Interests: The Slow — -1 Shift Away from Non-Interference , Policy Paper No. 41, Stockholm, Sweden: Stockholm –42. International Peace Research Institute, 2014, pp. 41 —0 — +1 RR2273A_CC2015.indb 151 8/14/18 11:11 AM

190 152 At the Dawn of Belt and Road regional influence and projecting the image of a major power. These efforts include the creation of the position of PRC special envoy to the Middle East in 2002 and releasing a conspicuous but bland formal 10 By publicly proclaiming proposal for Israeli-Palestinian peace in 2013. an interest in addressing the Israeli-Palestinian problem, Beijing has made a grand albeit symbolic gesture that projects to a troubled region the image of an engaged outside power and morally upright pillar of the world community. According to one analyst, China’s involvement in the Middle East peace process has been “merely diplomatic rhetoric,” 11 and “China’s impact,” has been assessed as having “hardly been felt.” Although Beijing has issued several policy statements that out - line its objectives in the region, the PRC has yet to issue a white paper on the Middle East as it has done for Africa and other areas of the world. The reason appears to be because of the extreme sensitivity of the region: China does not want to jeopardize its unique status as the - one outside power to have cordial relations with every Middle East ern state. Therefore, China tends to spout high-minded rhetoric and make very modest but high profile diplomatic gestures and small but well publicized tangible commitments of resources. Yet, on occasion, Beijing has been an energetic team player. One case in point is China’s efforts to facilitate the now-completed nuclear deal between Iran and the P5+1, the five permanent members of the UN Security Council plus Germany. Indeed, according to some accounts, China’s role was 12 China likely had a major interest in the vital in making the deal. deal because it would mean the lifting of economic sanctions that were 13 hampering Chinese trade with and investment in Iran. Beijing is fearful 3. Preserving Domestic Stability in China. that dynamics in the Middle East, notably the persistence of Islamic 10 , May The Atlantic See Matt Schiavenza, “What Is China’s Plan for the Middle East?” 10, 2 013; President Xi actually invited both Mahmoud Abbas and Benjamin Netanyahu to China and they both came but did not meet each other while there. 11 Modechai Chaziza, “China’s Policy in the Middle East Peace Process After the Cold 1, 199. Wa r,” China Report , Vol. 49, No. 16 1, 2 013, pp. 12 , Harold Pachios, “Let’s Look at China’s Role in the Iran Nuclear Deal,” The Hill -1— 21 , 2015. August 0— 13 Conversations with knowledgeable U.S. experts, 2015. +1— RR2273A_CC2015.indb 152 8/14/18 11:11 AM

191 China in the Middle East 153 extremism, chronic political instability, and ethnic feuds, will penetrate into China. Although the region does not geographically border the PRC, ethnic, religious, and cultural linkages do extend from the Middle East through Central and South Asia to China. “As the strategic extension of China’s western border region,” according to a prominent PRC Middle East analyst, “the trends governing the situation in the Middle East and the region’s pan-nationalisms and extremist religious ideological 14 In trends have a direct influence on China’s security and stability.” Beijing’s eyes, these dynamics all come together in the case of the Uighurs, a mostly Muslim Turkic ethnic group. A formally recognized ethnic minority in China, the Uighurs officially have autonomy in the Xinjiang Uighur Autonomous Region in the westernmost portion of the PRC. The reality is quite different, and there is considerable disaffection among China’s Uighur populace manifest in high profile episodes of violence across China and harsh PRC repression in the Xinjiang Uighur 15 Beijing is especially alarmed Autonomous Region in recent years. by cooperation and coordination between PRC Uighurs, the Uighur diaspora abroad, and Muslim groups in Central Asia, South Asia, and the Middle East. Uighur radicals have reportedly been trained in Pakistan, fought with the Taliban in Afghanistan, and joined the ranks of ISIS in Syria and Iraq. As a result, the PRC has become more vocal 16 about the threat of terrorism and is energized to take action. Political Engagement - China’s main political interest in the Middle East is to increase rela tions with regional countries to provide international support and 14 - Li Weijian, “Zhongdong Zai Zhongguo Zhanlue Zhong De Zhongyaoxing Ji Shuang bian Guanxi” [“The Middle East’s Importance in China’s Strategy and Bilateral Relations”], , No. Western Asia and Africa 18 6, 2 004, pp. –19. 15 See, for example, the excellent treatment in Bovingdon, 2010 . 16 , 2 015. See, for example, “Part I National Security Situation” in China’s Military Strategy — -1 See also Andrew Scobell, “Terrorism and Chinese Foreign Policy,” in Yong Deng and Fei- ling Wang, eds ., China Rising: Power and Motivation in Chinese Foreign Policy , Lanham, Md.: —0 30 5–324. Rowman and Littlefield, 2004b, pp. — +1 RR2273A_CC2015.indb 153 8/14/18 11:11 AM

192 154 At the Dawn of Belt and Road legitimacy. China seeks closer relations with countries that have either significant regional or global roles. In the twenty-first century, Beijing has been actively engaged in the Middle East with greater diplomatic activity in the region. This 02, 20 activity included one trip by then president Jiang Zemin in April when he visited Iran and three other developing states: Libya, Tuni - sia, and Nigeria. Jiang’s successor, Hu Jintao, made three trips to the Middle East during his ten-year tenure, in 2004, 2006, and 2009. On his first trip, President Hu visited Egypt, and while there also met with the Arab League Chairman Amr Moussa and delegates from all of the organization’s 22 member states; Hu also visited Algeria on the trip. The Arab League Secretariat and PRC Foreign Ministry issued a joint communiqué proclaiming the establishment of the China-Arab States Cooperation Forum (CASCF)—a mechanism intended to facilitate 17 In fact, China has cooperation between Beijing and the Arab world. leveraged CASCF as a mechanism for emphasizing China’s rhetorical and symbolic solidarity with the Arab states on the Middle East peace process and also to inoculate itself against Arab criticism of Chinese 18 policies in Xinjiang. During Hu Jintao’s second trip to the region, in 2006, the PRC head of state visited Saudi Arabia and Morocco. During Hu’s third trip to the Middle East he once again visited Saudi Arabia. In addition to meeting with King Abdullah and other Saudi officials, Hu also met - with Secretary General Abdul Rahman Al-Attiyah of the Gulf Coop eration Council (GCC) to explore cooperation between the GCC and PRC. Under President Xi Jinping’s leadership, China’s relations with the Middle East have remained generally good but politically shallow. In fact, top tier PRC leaders have largely ignored the region. President Xi 17 Degang Sun and Yahia H. Zoubir, “China’s Economic Diplomacy Towards the Arab 95 , 2015, Countries: Challenges Ahead?” Journal of Contemporary China, Vol. 24, No. p. 912 . 18 - See the fascinating analysis in Dawn Celeste Murphy, “Rising Revisionist? China’s Rela tions with the Middle East and Sub-Saharan Africa in the Post–Cold War Era,” dissertation, -1— George Washington University, August 20 12, pp. 17 2–178. 0— +1— RR2273A_CC2015.indb 154 8/14/18 11:11 AM

193 China in the Middle East 155 2016, after he had traveled did not visit the Middle East until January to al most every other region of the world during the first three years of his tenure, including two visits to far-flung Latin America. As of late 19 The reason 2015, Premier Li Keqiang had yet to visit the Middle East. for the dearth of high-level attention appears to be that the current Beijing leadership considers the Middle East a complicated and opaque 20 minefield to be navigated extremely carefully. Diplomatic Relations and Presence - Along with Southeast Asia, the Middle East is one of two develop ing regions in which China has diplomatic relations with all regional actors. China has one embassy in each of the 14 regional countries and five consulates across the region. Beijing also has an embassy-level mis - sion to the Palestinian Authority. China may be the only major power from outside the region to be on good terms with every state in the Middle East, including Saudi Arabia, Iran, Israel, and even Syria. Pivotal State and Major Partners Within the Middle East, the pivotal state from the Chinese perspec - tive is Iran. That being said, China has also attempted to maintain - generally friendly relations throughout the region. It has, for exam ple, strategic partnership agreements with both Qatar and the United - Arab Emirates. It has further established a strategic cooperative rela tionship with Egypt. Also important is China’s cooperative and strate- gic friendly relationships with Saudi Arabia and the Saudi-dominated 21 To date, China has successfully balanced robust ties with the GCC. 22 two major Middle East rivals—Iran and Saudi Arabia. 19 Mu Chunshan, “Revealed: How the Yemen Crisis Wrecked Xi Jinping’s Middle East , 2015. Travel Plans,” The Diplomat , April 22 20 Liu Zhongmin, “Zhongguo Bugai Zhuiqiu Zhong Dong Shiwu Lingdaozhe Jiaose” Oriental Morn - [“China Should Not Pursue a Leadership Role in Middle Eastern Affairs”], ing Post , August 26 , 2011. 21 “China-GCC FTA,” Ministry of Commerce of the People’s Republic of China, undated. — -1 22 Scobell and Nader, 2016. —0 — +1 RR2273A_CC2015.indb 155 8/14/18 11:11 AM

194 156 At the Dawn of Belt and Road High-Level Exchanges From 2003 to 2014, Chinese political leaders paid 40 visits to 15 coun - tries or entities in the Middle East. Of these, four were visits by the presi - dent, and another five were visits by the premier. The key countries vis- ited during this period were Egypt, Saudi Arabia, and the United Arab Emirates (UAE). Moreover, since 2003, there has been an increasing frequency of visits to Iran and the UAE and a simultaneous decreasing frequency of visits to Saudi Arabia. There were no visits to the region at the level of head of state since 2011 through the end of 2015. Cultural Influence Beijing has neglected—although not completely ignored—cultural and educational exchanges with countries of the Middle East and has 23 China has focused almost single-mindedly on economic cooperation. a modest number (11) Con fucius Institutes across seven countries in the Middle East. The United Arab Emirates, Israel, Jordan, and Egypt each host two institutes. Bahrain, Lebanon, and Iran also each have a single institute. The remaining states in this region—Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Syria, and Yemen—have no Confucius Institutes. The Middle East has traditionally not had significant concentra - tions of ethnic Chinese but the region now reportedly contains more than half a million PRC citizens who live and work there. The larg - est concentration is in Dubai, where as many as 200,000 Chinese are working as traders. There are other concentrations, including report - 24 edly more than 16,000 PRC citizens in Saudi Arabia. Economic Engagement The Middle East is most important to China as a source of energy. Because oil is one world market, it is possible to make too much of bilateral trade relationships—suppliers can be substituted. But long- term relations develop, and China has been concerned about the security of its energy supplies. Beyond energy, China has included 23 Sun and Zoubir, 2015, p. 920 (on neglect of culture), p. 913 (on cultural and educational -1— exc hanges). 0— 24 Sun and Zoubir, 2015, p. 919. +1— RR2273A_CC2015.indb 156 8/14/18 11:11 AM

195 China in the Middle East 157 the region in its Belt and Road Initiative. Linking China to Europe through the Persian Gulf and West Asia is noted in the main Belt and 25 And emblematic of China’s good relations with all Road document. parties in the Middle East, the Maritime Silk Road includes Israel, in which China is building a new port in Ashdod on the Mediterranean 26 with the idea of rail link from Eilat on the Red Sea. Trade Trade between China and the Middle East is dominated by imports per of mineral fuels, which make up more than 80 cent of the total cent of total imports are per 7. 2). Additionally, roughly 13 (Figure Figure 7. 2 Composition of Imports from Middle East 100 80 60 40 Percent 20 0 2008 2007 2012 2001 2005 2009 2004 2013 2011 2000 2010 2002 2006 2003 Year Crude materials Beverages and tobacco Food Chemicals Animal and vegetable oils Mineral fuels Miscellaneous Manufactured goods Machinery and transport manufactured Other SOURCE: UN Comtrade Database. RAND RR2273A-7.2 25 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime , 2 015. Silk Road — -1 26 Aryeh Tepper, “China’s Deepening Interest in Israel,” , No. 30, The Tower Magazine —0 20 15. S eptember — +1 RR2273A_CC2015.indb 157 8/14/18 11:11 AM

196 158 At the Dawn of Belt and Road chemicals driven mainly by petrochemical products such as plastics. Saudi Arabia provides roughly a third of all fuel from the region and cent of per per 16 cent of China’s worldwide fuel imports. Another 50 fuel imports from the region is equally divided between Iran, Iraq, and Oman. Exports to the Middle East are dominated by manufactured items perc ent over the entire 2000 to and machinery, which totaled over 90 2013 time period (Figure 7.3). The largest destinations for exports in the Middle East are Iran, Saudi Arabia, and the United Arab Emirates, although exports to the UAE may be destined for other countries due to UAE’s role as a global entrepôt. There is a significant trade imbalance between the Middle East and China in favor of the Middle East (Figure 7.4). Of the petroleum Figure 7. 3 Composition of Exports to Middle East 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2004 2013 2011 2000 2010 2002 2006 2003 Year Crude materials Beverages and tobacco Food Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Machinery and transport Manufactured goods manufactured Other -1— SOURCE: UN Comtrade Database. RAND RR2273A-7.3 0— +1— RR2273A_CC2015.indb 158 8/14/18 11:11 AM

197 China in the Middle East 159 Figure 7. 4 Level of Exports to and Imports from Middle East 180 160 Exports to Middle East Imports from Middle East 140 120 100 80 U.S. $ billions 60 40 20 0 2001 2011 2009 2010 2013 2012 2003 2002 2008 2000 2005 2004 2006 2007 Year SOURCE: UNCTAD. RAND RR2273A- 7.4 exporting countries, only the United Arab Emirates had a trade deficit with China in 2013. As noted, this may be because many of China’s exports there may have been destined to be re-exported. Foreign Direct Investment and Lending There have been large investments into the Middle East by China since 2008. The most dramatic increase has been in Iran since 2009, llion in 2012 (Figure 7.5). bi with FDI stock reaching more than $2 There have also been growing Chinese investments in the UAE bil bil ($1.3 lion), Saudi Arabia ($1.2 lion), and Iraq (which stood at bi llion in 2003, declined to $21 bil lion in 2008, but had risen $437 to $754 bil lion by 2012). Not only have the Chinese been large inves - tors in Saudi Arabia but also there has been considerable investment by the Saudis in China. In 2012, Saudi Basic Industries Corporation (SABIC) announced plans to build an $11 bi llion project for petro - 27 By 2015, the Sinopec chemical plants in Tianjin and Chongqing. — -1 27 —0 http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120411000118&cid=1103 — +1 RR2273A_CC2015.indb 159 8/14/18 11:11 AM

198 160 At the Dawn of Belt and Road Figure 7. 5 China’s FDI Stock in the Middle East by Receiving Country 2.5 Lebanon Bahrain Oman Egypt 2.0 Qatar Iran Iraq Saudi Arabia 1.5 Syria Israel United Arab Emirates Jordan Yemen Kuwait 1.0 U.S. $ billions 0.5 0 2011 2009 2010 2012 2003 2008 2004 2006 2005 2007 Year SOURCE: UNCTAD. RR2273A- 7.5 RAND SABIC Tianjin Petrochemical Company was producing 260,000 tons 28 ann ually of polycarbonate. Agreements and Other Issues China has bilateral investment treaties in force with every country in the region except Iraq and Jordan, and a treaty with Jordan has been signed but is not in force. The treaty with Kuwait was signed in 1985, and all others, except the treaties with Jordan and Iran, were signed in the 1990s. Likewise, China has tax treaties with all but Iraq, Jordan, Leba - non, and Yemen. These were negotiated somewhat later than the BITs. Just as the Middle East is a component of China’s Belt and Road, Middle Eastern countries have signed up to participate in the Asian Infrastructure Investment Bank. Of the 50 signing founding members, eight are from the Middle East: Egypt, Iran, Israel, Jordan, Oman, Qatar, Saudi Arabia, and UAE. A ninth, Kuwait, enlisted as a prospec - 28 Dania Saadi, “Sabic Retains Expansion Plans Despite Oil Drop,” The National , Janu - -1— , 2015. ary 12 0— +1— RR2273A_CC2015.indb 160 8/14/18 11:11 AM

199 China in the Middle East 161 tive founding member but did not sign the articles of incorporation in June 20 15, deferring its membership. Beyond regional participation, China has zeroed in on Israel for innovation cooperation. One of China’s main economic challenges is shifting from manufacturing and assembly to innovation. Accordingly, it has deepened its relations with Israeli innovators and venture capital - ists. Israel’s leading high-tech university, the Technion, announced in 2013 that it would open a campus at Shantou University in Guang - 29 And as of June 2015, it was expected that China would invest dong. 30 mi llion in venture capital funds in Israel during the calendar year. $50 0 Military and Security Engagement This section presents a brief overview of Chinese military engagement activities as an instrument of Chinese foreign and security policy in the Middle East. It surveys Chinese arms sales, military diplomacy, joint exercises, and port visits as well as Chinese participation in UNPKOs and PLA MOOTW activities. PRC Arms Sales Total Chinese arms sales to countries in the Middle East over the ye 15 ars from 2000 have been far lower than total U.S. arms sales to countries in the region during the same period. Moreover, unlike in some other parts of the Developing World, PRC arms sales to coun - tries in the Middle East have declined in recent years, according to the SIPRI Arms Transfers Database. Nevertheless, Chinese arms sales still offer Beijing some opportunities to bolster relations with key partners 20 14, China agreed to sell in the Middle East. For example, in April Wing Loong (Pterodactyl) medium-altitude long-endurance UCAVs 31 The Wing Loong is similar in appearance to the to Saudi Arabia. 29 Tepper, 2015. 30 Globes Idan Rabi, “China VC to Invest $500m in Israel in 2015,” 015. , June 3, 2 31 — -1 On the sale of armed UAVs to Saudi Arabia, see Zachary Keck, “China to Sell Saudi Arabia Drones,” The Diplomat , May 8, 2 014. —0 — +1 RR2273A_CC2015.indb 161 8/14/18 11:11 AM

200 162 At the Dawn of Belt and Road U.S. Predator UCAV and is capable of carrying two air-to-ground mis - - siles. China’s UCAV sale to Saudi Arabia is suggestive of China’s poten tial to become a major global supplier of UCAVs and appears intended to further strengthen China’s relationship with Saudi Arabia. China has also supplied hundreds of millions of dollars of weap - ons to Iran since 2000. In fact, Beijing is second only to Moscow in terms of the value of armaments sold to Tehran during the 2000s. China has provided Iran with hundreds of anti-ship and antiaircraft 32 Beijing has a long history of cooperation with Tehran’s cruise missiles. missile and nuclear programs although Chinese support for the latter 33 In addition, China has on occasion sought to appears to have ended. purchase select systems from countries of the region. At the turn of the century, for example, Beijing attempted to purchase the airborne early warning radar system Phalcon from Israel, but Tel Aviv relented under 34 intense U.S. opposition to the proposed sale. PLA Military Diplomacy Chinese military diplomacy is another important part of PLA engage- ment in the Middle East, as reflected by eight high-level trips to the region between 2004 and 2011. This puts the Middle East on par with Africa in terms of the number of visits, but well below South and Cen - tral Asia and Southeast Asia, which are by far the most frequent des - tinations during the ten-year period of 2003–2014. The following are the high-level visits to the Middle East between 2004 and 2011: In Ju 20 ly 04, CMC Vice Chair (VC) Guo Boxiong visited Egypt. • 20 In Ap 05, CMC VC and Defense Minister (DM) Cao Gang - • ril chuan visited Egypt. 32 See, for example, John Garver, “China-Iran Relations: Cautious Friendship with Ameri - ca’s Nemesis,” China Report , Vol. 49, No. 1, 2 013, p. 84 . 33 Evan S. Medeiros, Reluctant Restraint: The Evolution of China’s Nonproliferation Policies , Stanford, Calif.: Stanford University Press, 2007. See also Scobell and Practices, 1980–2004 and Nader, 2016, pp. –57. 55 34 See, for example, Sameer Suryakant Patil, “Understanding the Phalcon Controversy,” -1— 008, pp. Israel Journal of Foreign Affairs , Vol. 2, No. 2, 2 91 –98. 0— +1— RR2273A_CC2015.indb 162 8/14/18 11:11 AM

201 China in the Middle East 163 In November 20 07, CMC VC and DM Cao Gangchuan visited • Kuwait. • In Ja nuary 20 08, CMC VC and DM Cao Gangchuan visited Saudi Arabia. vember 08, DM Liang Guanglie visited UAE, Oman, • 20 In No Bahrain, and Qatar. 10, CMC Vice Chair Xu Caihou traveled to • In No vember 20 UAE, Syria, and Jordan. 11, PLAN Commander Wu Shengli visited Israel. In Ma y 20 • 11, CGS Chen Bingde visited Israel. ust In Aug • 20 However, since the flowering of the Arab Spring in 2011 and its aftermath—the fall of Gadhafi in Libya, the continuing civil war in Syria, and the rise of ISIS—PRC high-level military visits have been curtailed just like high-level civilian diplomatic travel. Combined Exercises As of late 2015, China had conducted just one combined exercise in 20 14, the PLA Navy visited Iran for the Middle East. In September the first time, bringing two warships associated with the PLAN’s anti- piracy task force in the Gulf of Aden—the guided missile destroyer and the frigate Changzhou —to the Iranian port of Bandar Changchun Abbas to conduct four days of basic search and rescue exercises with the 35 Roughly 650 Chinese sailors reportedly participated in Iranian navy. 36 this unprecedented exercise. PLAN Port Visits PLAN port visits, many of them associated with anti-piracy patrols, are also becoming a regular feature of Chinese military engagement in the Middle East. Indeed, the Middle East was the region with the 35 Sam LaGrone, “Chinese Ships in Iran for Joint Exercises,” 014; USNI News , September 22, 2 Ankit Panda, “China and Iran’s Historic Naval Exercise,” , September 23 , 2014; The Diplomat “Zhongguo Haijun Jianting Biandui Shouci FangwenYilang” [“Chinese Navy Ship Formation Visits Iran for the First Time”], PRC government web portal, September 20, 2 014. 36 — -1 Thomas Erdbrink and Chris Buckley, “China and Iran to Conduct Joint Naval Exercises , 2014. in the Persian Gulf,” New York Times , September 21 —0 — +1 RR2273A_CC2015.indb 163 8/14/18 11:11 AM

202 164 At the Dawn of Belt and Road largest number of Chinese port visits from 2000 to 2014, with 45 ports visits. Notably, 44 of the 45 took place from 2009 to 2014, and all of these were associated with the participation of PLAN task forces in anti-piracy operations in the Gulf of Aden, which began in Decem - 08. Countries the PLAN has visited include Bahrain, Egypt, 20 ber Israel, Oman, Kuwait, Qatar, Saudi Arabia, Yemen, and UAE. The most frequented ports in the region are Salalah, Oman (21); Aden, Yemen (eight); and Jeddah, Saudi Arabia (seven). Salalah is the PLAN’s single most frequented port in the Developing World. The main pur - - pose of many of these visits is for replenishment and overhaul activi ties, but others are essentially goodwill visits that take place on the way to the region or on the way back to China, and in many instances the port visits conducted by PLAN anti-piracy task forces support China’s 37 For example, China’s ambassador to UAE broader diplomatic agenda. 20 portrayed a March 10 port call by the PLAN frigate Ma’anshan and the supply ship Qiandaohu to Port Zayed, Abu Dhabi, as reflecting 38 In addition, the PLAN the strength of China’s ties to the country. 20 14; the guided missile made its first port visit to Iran in September destroyer docked in Bandar Abbas in anticipation of the Changchun first combined naval exercises between China and Iran. UN Peacekeeping Operations China’s initial foray into UNPKOs came in 1990, when it sent a small number of observers to take part in the UN Truce Supervision Orga - , 2015, 31 nization (UNTSO) mission in the Middle East. As of March China was involved in two UNPKOs in the Middle East. Specifi - cally, China has four experts on the mission taking part in UNTSO and 216 troops participating in the United Nations Interim Force in 39 Lebanon (UNIFIL). 37 For a comprehensive review and assessment of this subject, see Erickson and Strange, 2 015. 38 China’s ambassador to UAE, Gao Yusheng, said the visit was “because of the strength of political ties between our two countries, and the development that has been witnessed by the Emirates in recent years.” See Mahmoud Haboush, “Middle Kingdom Visits Middle East as -1— Chinese Navy Docks at Port Zayed,” The National , March 25 , 2010. 39 0— United Nations, UN Mission’s Summary Detailed by Country , March 31, 2015. +1— RR2273A_CC2015.indb 164 8/14/18 11:11 AM

203 China in the Middle East 165 Military Operations Other than War Chinese military operations other than war activities are another 40 important part of Chinese military engagement in the Middle East. Perhaps the most notable Chinese MOOTW activity in the Middle East in recent years was the PLA Navy’s participation in the evacuation of Chinese and foreign citizens from Yemen. The evacuation began in 15 with China’s withdrawal of about 570 PRC citizens from 20 March 41 Yemen, along with eight foreigners from Romania, India, and Egypt. Although this was a much smaller number of citizens than the Chi - nese evacuation from Libya in 2011, Chinese Ambassador to Yemen Tian Qi called the evacuation “a significant practice of major power diplomacy with Chinese characteristics.” Important, the PLAN played a central role in the Yemen evacuation. China used two PLA Navy esc ort fleet participating in frigates and a supply ship from the 19th Gulf of Aden anti-piracy patrols to conduct the evacuation operations. The Ministry of Foreign Affairs still takes the lead in overseas evacua - tions, but the PLAN involvement in Yemen evacuation shows that the 42 The PLA probably embraces this role because it PLA’s role is growing. demonstrates its importance to protecting China’s increasingly global interests. It also displays the growth of Chinese power and influence in a relatively nonthreatening way and provides further justification for improvements in military capability. As editor Yu Jincui wrote in - op-ed, “The capability of a country to protect its citi Global Times a zens abroad is an embodiment of its national strength and influence... China in the future should make continuous efforts to reinforce its 40 The PLAN’s involvement in anti-piracy operations in the Gulf of Aden (off the coast of Somalia) is covered in a later section about Chinese MOOTW in Africa. 41 Jane Perlez and Yufan Huang, “Yemen Evacuation Shows Chinese Navy’s Growing Role,” New York Times , March 31 , 2015; James T. Areddy, “China Evacuates Citizens from Yemen,” Wall Street Journal , March 015; Zhang Yunbi, “Over 500 Chinese Nationals Evacuated 30, 2 from Yemen,” China Daily 015; “Evacuation of Chinese Nationals from Yemen 30, 2 , March Completed,” , April 22, 2015; “Zhongguo Haijun Jianting Biandui Fu Yemen CGTN America Cheli Zhongguo Gongmin” [“Chinese Naval Detachment Sails to Yemen to Evacuate Chinese Nationals”], Ministry of National Defense of the People’s Republic of China, March 30, 2 015. 42 This is a role the PLA evidently welcomes. According to China’s Minister of National — -1 Defense, “Military officers must be the guardians of the people’s security, and military ships —0 must be like Noah’s Ark for our compatriots.” — +1 RR2273A_CC2015.indb 165 8/14/18 11:11 AM

204 166 At the Dawn of Belt and Road - naval strength to meet the soaring demands of protecting the expan 43 sion of its overseas interests.” Following China’s evacuation of its own citizens from Yemen in late March, Beijing employed the PLAN to conduct an unprecedented evacuation of foreigners from Yemen on April 2, 2 015. The PLAN evacuated about 225 foreign nationals from Type 054 f rigate Linyi Aden to Djibouti. Chinese official statements indicate that the evacu - ees came from ten countries, including Pakistan (176 citizens), Ethio - pia (29), Singapore (five), Italy (three), Germany (three), Poland (four), Ireland (one), Britain (two), Canada (one), and Yemen (one). Chinese officials stated this was the first time the PLA Navy had evacuated non-Chinese in a humanitarian mission, and that its involvement in the operation reflected principles of “internationalism and humani - tarianism.” According to Chinese commentators, by helping evacuate foreign nationals, China boosted its image regionally and globally and 44 showcased the PLA as a force that can help other countries. Conclusion During the Cold War, China viewed the Middle East primarily as a key region of contestation between the superpowers and competition with Taiwan, and China was simply seeking to become relevant in the - region. In the twenty-first century, China is now a key player with sig nificant interests in the Middle East. As of 2015, Beijing’s top regional 45 Indeed, recent public priorities were fostering peace and stability. opinion surveys indicate majorities or pluralities in five states believe 43 Global Times , Yu Jincui, “Overseas Evacuation Attests to Nation’s Responsibility,” 31 , 2015; Zhang Yunbi, 2015. March 44 Moreover, as Shen Dingli of Fudan University observed, China would have risked look - ing bad if it didn’t help, especially given the availability of PLAN vessels in the Gulf of Aden, - where they were conducting anti-piracy operations. See Ankit Panda, “China Evacuates For eign Nationals from Yemen,” The Diplomat , April 6, 2 015, and Megha Rajagopalan and Ben Blanchard, “China Evacuates Foreign Nationals from Yemen in Unprecedented Move,” Reuters , April 3, 2 015. -1— 45 See, for example, Scobell and Nader, 2016. 0— +1— RR2273A_CC2015.indb 166 8/14/18 11:11 AM

205 China in the Middle East 167 that China has already surpassed—or will soon surpass—the United States as the dominant power in the region and world (Table 7.1). In the Middle East, the PRC has skillfully managed to remain a friend to all and enemy of no one. China is seen in generally positive terms, especially with regard to Chinese economic impact on countries in the region. A majority of those surveyed in Egypt, Israel, and Jordan, for example, view China’s involvement in the Middle East as economi - cally beneficial to their country. - Many of the partnerships are broad and comprehensive but super ficial in terms of level of commitment. However, at least four of these partnerships have proved quite robust, comprehensive, and enduring, and most have a military or security component; these include Egypt (since the 1950s), Iran (since the 1970s), Israel (since the 1980s), and, Tab le 7.1 Global Attitudes Toward China Is China’s Will or Has China Economic Replaced the Growth Good United States General View as Leading or Bad for Your Country? Superpower? of China Will Will or Has Bad Good Replaced Favorable Never Unfavorable (%) (%) (%) (%) (%) (%) 30 18 54 Tunisia 64 21 66 Palestinian 61 29 53 22 53 35 Territories Lebanon 53 44 64 27 49 45 Israel 49 50 62 21 57 36 53 Egypt 46 53 47 42 42 63 58 37 52 42 35 Jordan Middle East 52.5 51 47 60 24.5 39 median 34 Global median 49 32 53 27 49 — -1 SOURCE: Pew Research Center, Global Indicators Database, July 2014. —0 — +1 RR2273A_CC2015.indb 167 8/14/18 11:11 AM

206 168 At the Dawn of Belt and Road more recently, Saudi Arabia (since the 1980s). All of these have involved cooperation in the security realm, often conducted in secret, involving arms sales, and, at least at one point in time, the potential sharing of 46 sensitive technology. Implications for the United States For at least two decades, an emerging concern in Beijing has been how to maintain some semblance of stability in the Middle East. Beijing’s thinking has transformed from not caring about conflict or turmoil in the region to a clear preference for peace and order. In an earlier time, upheaval in the Middle East was not seen as negative because it served to sap the strength of the United States and Soviet Union and divert the attention of Washington and Moscow away from Beijing and Asia. During the Cold War, leaders such as Mao Zedong and Deng Xiaop - ing viewed the Middle East as a distant zone of contestation for influ - ence with the two superpowers and rivalry with Taiwan. But by the - 2000s, China had a strong preference for a tranquil region, and Chi nese analysts expressed a clear desire for the United States to “uphold 47 stability in the Middle East.” China and the United States appear to hold overlapping but not identical views on the region. Beijing does not seek to subvert or replace the U.S. role as the key external security guarantor for the region. China opposes the overthrow of Middle Eastern regimes and refuses to sanction external intervention to stabilize turmoil in countries such as Syria. Beijing feels burned by the UN Security Council vote in support of the imposition of a no-fly zone over Libya in 2011 because this led to the overthrow of Gadhafi. While China tends to line up with Russia in terms of positions on Middle East issues, there are real differences. Beijing, for example, is far more reluctant than Moscow to intervene militarily to protect its interests. Russia’s military base in Syria and the insertion of additional forces into that country in late 2015 to bolster Assad contrast starkly with China’s more hands-off military stance. 46 On cooperation between China and Iran and China and Saudi Arabia, see Scobell and Nader, 2016, Chapters 3 and 4, respectively. -1— 47 Alterman and Garver, 2008, p. 18. 0— +1— RR2273A_CC2015.indb 168 8/14/18 11:11 AM

207 China in the Middle East 169 Arguably China does have a larger military footprint in the Middle East than Russia, but this presence is limited to UNPKO missions, ships in the Gulf of Aden anti-piracy flotilla and associated port visits and replenishment efforts, and Chinese arms sales in the region. While Beijing insists that it does not have military bases overseas, it does have facilities with Chinese military personnel or contractors active in the Middle East. The most notable location of a PRC military facility is in the small Red Sea state of Djibouti, which China refers to as a facility to provide logistical support but that others have subsequently described as China’s first overseas military base (see Chapter 8). China has also shown that, in modest but significant ways, it can work with the United States and like-minded countries in the Middle East on issues from counter-piracy to counter-proliferation (that is, the Iran nuclear deal). The United States should consider establishing a military-to-military dialogue with China to discuss Middle East secu - rity issues to build on these modest successes. — -1 —0 — +1 RR2273A_CC2015.indb 169 8/14/18 11:11 AM

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209 CHAPTER EIGHT China in Africa China is a long-established diplomatic partner to Africa, and Chinese interests on the continent extend beyond acquiring natural resources to encompass trade, security, diplomacy, and soft power. Located beyond China’s immediate neighborhood, African governments do not have any territorial disputes with China and largely welcome Chinese engagement. While the PRC’s relations with Africa were dominated by ideological imperatives in the early days, Beijing has focused on advancing its economic interests and winning political legitimacy in recent years. As of late 2015, Beijing had diplomatic relations with 51 of the 54 African nations and was the continent’s top trade partner. Since 2000, Chinese imports from the region have grown 20-fold. Indicative of the region’s importance to China, Africa also receives roughly half of China’s total foreign aid. Key Chinese Activities in the Region China has significant political and economic engagement with the region and views its activities there as important to supporting contin - - ued Chinese economic growth and international development. Politi cally, close relations with African countries provide China with a strong dose of international legitimacy and support for a range of international and political issues. China has ongoing high-level political and eco - - nomic engagement with African countries both bilaterally and multi laterally through the Forum on China-Africa Cooperation (FOCAC). While South Africa is China’s most important regional partner, Beijing — -1 views half a dozen other nations as also playing crucial political or eco - —0 — +1 171 RR2273A_CC2015.indb 171 8/14/18 11:11 AM

210 172 At the Dawn of Belt and Road nomic roles (Figure 8.1). Economically, Beijing has focused on gaining access to natural resources, creating markets for Chinese-manufactured goods, and developing manufacturing facilities that can take advan - tage of the continent’s low labor costs. China’s Belt and Road Initiative n- also envisions linking at least the east coast of Africa to its 21st Ce tury Maritime Silk Road, although Africa is likely to play a lesser role than regions such as Central Asia or Southeast Asia. Militarily, China Figure 8 .1 China’s Relations with Countries in Africa, 2015 Tunisia Morocco Algeria Libya Western Sahara Eritrea Mauritania Mali Niger Sudan Djibouti Chad Senegal Burkina Faso Guinea Nigeria South Ethiopia C.A.R. Sierra Leone Sudan Cameroon Somalia Liberia Benin Togo Kenya Ghana Rwanda Gabon Cote d’Ivoire D. R. Burundi Equatorial Guinea Congo Seychelles Republic of Congo Tanzania Malawi Angola Mozambique Zambia Zimbabwe Madagascar Overall relationship with China: Botswana Namibia Pivotal state Major partner Swaziland Diplomatic relations South Africa Lesotho No relations -1— NOTE: Due to small scale of map, not all countries are displayed and labeled. RAND RR2273A-8.1 0— +1— RR2273A_CC2015.indb 172 8/14/18 11:11 AM

211 China in Africa 173 is developing ties to African armed forces, participating in several UN peacekeeping missions in the region, pledging $100 mi llion to the Afri - 1 - and taking pro can Union (AU) to create an immediate response unit, active measures to ensure the safety and security of Chinese citizens and investments abroad. Overall, Chinese activities in the region are still predominantly economic, and there is little indication that the United States and China are headed for conflict or competition in Africa. Drivers of Chinese Engagement with the Region Chinese Activities in the Region Prior to 2000 In its early days, the PRC’s relations with Africa were dominated by ideological imperatives of Third World solidarity, anti-colonialism, and support for African independence movements. In accordance with the principles of 1955 Bandung Conference, China based its relations with newly independent African states on the principles of equality, mutual 2 China’s ideological engagement shifted interest, and noninterference. to a greater political pragmatism as Beijing sought allies in the interna - i- Afr tional arena, which paid off most dramatically when support from 26 can states helped ensure passage of UN General Assembly Resolution 2758, which expelled Taiwan from the organization and declared that the People’s Republic was the sole legitimate representative of China 3 As China began to pursue market economics in 1978, it at the UN. 4 Chinese companies initially had reached out economically to Africa. trouble competing with more experienced Western firms, but—aided by Chinese subsidies, loans to African governments, and high-profile 1 Jane Perlez, “China Surprises U.N. with $100 Million and Thousands of Troops for ekeeping,” New York Times , September , 2015. Peac 28 2 See Final Communiqué of the Asian-African conference of Bandung (April 24, 1955). 3 United Nations General Assembly, Resolution 2758 (XXVI), October 25, 1971. Also see ius Fransman, “Keynote Address to the Ambassadorial Forum on China–South Africa Mar Diplomatic Relations at 15 , 2013. Ye ars,” Pretoria, South Africa, September 19 4 See Larry Hanauer and Lyle J. Morris, Chinese Engagement in Africa , Santa Monica, — -1 Calif.: R AND Corporation, RR-521-OSD, 2014. Also See Li Anshan, “China and Africa: –73. Policy and Challenges,” China Security , Vol. 3, No. ummer 2007, pp. 3, S 70 —0 — +1 RR2273A_CC2015.indb 173 8/14/18 11:11 AM

212 174 At the Dawn of Belt and Road public works gifts that won local leaders’ favor—they eventually made inroads in the resource- and labor-intensive petroleum, mining, and construction sectors. By the late twentieth century, China’s economic and commercial activities came to be widely viewed as one-sided, neo-colonial, mer - - cantilist ventures that exploited the region’s resources while undermin ing local industries, burdening African governments with heavy debts and providing few long-term economic benefits for Africans. Beijing in 2000 created the Forum on China-Africa Cooperation as a regional venue for coordinating and repositioning China’s engagement with the region as a “win-win” relationship. Current Chinese Strategy and Policy Toward the Region Chinese Priorities and Policies 5 China has four overarching interests in Africa: 1. Access to natural resources, particularly oil and gas Expo 2. rt markets for Chinese manufactured goods ernational political legitimacy as a global power, including Int 3. recognition of Beijing as the sole representative of China (the “One China” policy) and acknowledgement of the principle of 6 noninterference in sovereign countries’ internal affairs 4. Sufficient political stability and security for China to safeguard it s citizens and pursue its economic and commercial interests. The four interests are intertwined in the various policy docu - ments that China has issued to define its policy objectives in Africa. 20 06 Africa Policy White Paper states that the general Its January principles and objectives of China’s African policy include support for African countries’ sovereignty, mutually beneficial economic cooper - ation, mutual support in international forums, sustainable develop - 5 See Hanauer and Morris, 2014. 6 China is a beneficiary as well as a practitioner of the principle of noninterference; Beijing ardently opposes criticism of its policies toward the restive regions of Tibet and Xinjiang as -1— unmerited interference in its domestic affairs. 0— +1— RR2273A_CC2015.indb 174 8/14/18 11:11 AM

213 China in Africa 175 7 In 2011, ment, and African support for the “One China” principle. cent of per China issued a White Paper on its global foreign aid—46 which went to Africa—in which it emphasized sustainability and the absence of political preconditions, vowing “never [to] use foreign aid as a means to interfere in recipient countries’ internal affairs or seek 8 In a revised 2014 Foreign Aid White political privileges for itself.” Paper, China asserted it had prioritized agriculture, education, health 9 and that more than half of care, and emergency humanitarian aid its foreign aid was provided to African nations between 2010 and 10 2012. In 2013, China’s Ministry of Defense issued a White Paper in which it committed military resources to participate in UNPKOs, including those in Liberia, Congo, South Sudan, and Darfur; deliver humanitarian assistance, including medical care and demining assis - tance in Africa; and safeguard the security of international sea lines 11 Also in 2013, of communication, including in the Gulf of Aden. China published an updated version of its 2010 White Paper on China-Africa economics and trade, in which it noted China’s aspira - tions to promote sustainable growth in trade, increase Chinese invest - ment, strengthen agricultural cooperation, support construction of African infrastructure, build local capacity, and build multilateral 12 More recently, China has made efforts to incorporate cooperation. Africa into its Belt and Road Initiative. Nairobi, for example, is one 13 Prominent of the designated stops along the Maritime Silk Road. 7 Xinhua News , 2006. 12 “China’s African Policy,” , January 8 China’s Foreign Aid (2011) , Information Office of the State Council of the People’s Republic of China, April 20 11. 9 “White Paper Details China’s Foreign Aid Priorities,” Xinhua News , July 10, 2 014. 10 014. “China Issues White Paper on Foreign Aid,” Xinhua News , July 10, 2 11 The Diversified Employment of China’s Armed Forces , 2013, Section V. 12 China-Africa Economic and Trade Cooperation , Information Office of the State Council of 13. 20 the People’s Republic of China, August — -1 13 , March “China Pushes ‘One Belt, One Road,’” CCTV 8, 2 015. —0 — +1 RR2273A_CC2015.indb 175 8/14/18 11:11 AM

214 176 At the Dawn of Belt and Road voices have further called for increased involvement from the rest of 14 the African continent. In general, close relations with the majority of Africa’s 54 coun - tries provide China with a strong dose of international legitimacy. Having experienced its own rapid economic growth and development, China offers itself as a model that African leaders can emulate as they attempt to lead their own nations to prosperity. Beijing is also eager to have African allies at the UN, where African votes have helped defeat 15 Beijing also anti-Chinese resolutions at UN human rights bodies. works diligently to advance its One China policy by isolating African countries that recognize Taiwan and rewarding countries that switch their allegiance to Beijing with aid and investment, leaving only three 16 countries on the continent that recognize Taiwan. China has historically preferred to engage on a government- to-government level, including when it comes to economic activities undertaken by state-owned enterprises (SOEs) and state-backed finance institutions. China tends to establish relationships and win favor with local political elites through promises of aid, trade, and investment with no strings attached, then use their influence to win contracts in 17 Political elites can nontransparent negotiations behind closed doors. - take Chinese loans and produce concrete deliverables, such as facto - ries or infrastructure, without having to make politically tough deci sions (like economic reforms or eliminating subsidies) that might be 14 These have included Justin Yifu Lin, former chief economist of the World Bank, and He Wenping, director of African studies at the Chinese Academy of Social Sciences (CASS). See He Wenping, “‘One Belt, One Road’ Can Find Place for Africa,” Global Times , January , 2015. 29 15 Joshua Eisenman, “China’s Post–Cold War Strategy in Africa: Examining Beijing’s Methods and Objectives,” in Joshua Eisenman, Eric Heginbotham, and Derek Mitchell, eds., , New York: M.E. Sharpe, 2008, pp. 35 China and the Developing World –36. Also see Richard T. Nenge, Takavafira M. Zhou, Tompson Makahamadze, “Analysing the Extent to Which China Uses the Non-Interference Policy to Promote Peace and Security in Africa,” Me in China-Africa Think Tanks Forum, “The 2nd eting of the China-Africa Think Tanks Forum,” conference report, Bisoftu, Ethiopia, October 12 –13, 2012, p. 11 1. 16 Pete Guest, “And Then There Were Three: China’s Spending Power Entices Taiwan - , 2013. Al ly,” Forbes , November 26 ese 17 Richard Aidoo and Steve Hess, “Non-Interference 2.0: China’s Evolving Foreign Policy -1— 1, 2 Towards a Changing Africa,” Journal of Current Chinese Affairs , Vol. 44, No. 015, 0— 118 –119, 12 6 . pp. +1— RR2273A_CC2015.indb 176 8/14/18 11:11 AM

215 China in Africa 177 demanded by Western donor governments or international financial institutions. Economic benefits from Chinese investment also tend to accrue principally to elites. Chinese investment in large-scale extractive ventures tends to produce profits for local businesspeople and revenues (often illicit) for government officials, whereas they tend to create few jobs for ordinary citizens. As a result of these dynamics, African elites 18 while ordi - have generally welcomed Chinese trade and investment, nary Africans perceive Chinese investment as benefitting the rich and 19 20 —but not themselves. powerful—in part through corrupt activities More broadly, according to an assessment by the Ethics Institute of South Africa, “China’s interests are seemingly vested in African leaders 21 rather than African citizens.” Private Chinese nationals, however, are increasingly pursuing eco - nomic opportunities in Africa independent of government-directed ini - 22 In many cases, nonofficial Chinese seem to undermine Bei - tiatives. 20 15, jing’s official efforts to win friends and influence people. In March for example, the decision by a Chinese restaurant owner in Nairobi to refuse service to black people after dark generated considerable anti- Chinese hostility that undermined Beijing’s official efforts to improve China’s image in Kenya through media outreach, investment, and job 23 Indeed, U.S. academics Fei-Ling Wang and Esi A. Elliot note creation. that “the lack of good coordination between the cautious and friendly Beijing and the increasingly numerous cowboy-like Chinese fortune 18 Fei-Ling Wang and Esi A. Elliot, “China in Africa: Presence, Perceptions and Prospects,” , Vol. 23, No. 014, p. 29. Journal of Contemporary China 90, 2 10 19 Ethics Institute of South Africa, “Africans’ Perceptions of Chinese Business in Africa: A Survey,” Pretoria, 2014, pp. 24 –25. 20 Richard Aidoo and Steve Hess, 2015, pp. 117, 125. 21 Commenting on the incident, Kenya’s Mail & Guardian newspaper wrote, “Official China does a good job of not offending African sensibilities, but its businessmen and women 12 don’t have the same diplomatic skills.” See Ethics Institute of South Africa, 2014, p. . 22 Gilles Mohan and May Tan-Mullins, “Chinese Migrants in Africa as New Agents of Development? An Analytical Framework,” European Journal of Development Research , Vol. 21 4, 2 58 009, p. , No. 9. — -1 23 “Beijing’s Africa Problem: ‘No Blacks’ Chinese Restaurant Shut Down in Kenya,” Mail & —0 25 Guardian , March , 2015. — +1 RR2273A_CC2015.indb 177 8/14/18 11:11 AM

216 178 At the Dawn of Belt and Road seekers in the wild west of Africa is . . . a major problem” for state-run 24 Although Bei - Chinese development and investment organizations. jing has little ability to control private Chinese citizens, the behavior and conduct of thousands of Chinese businessmen in Africa will be as important as government diplomacy and concessions in shaping Chi - 25 na’s engagement in the region. Political Engagement China has increased political engagement with all African countries that recognize Beijing. Its commitment to avoid interfering in, or even passing judgment on, sovereign nations’ behavior and policies allows it to pursue its political and economic interests across the continent with democrats and despots alike. Beijing’s willingness to pursue political ties and economic opportunities with pariah governments—whether arms sales to Zimbabwe or oil exploration in Sudan—have, without question, provided some African regimes with the resources they need to perpetu - ate their undemocratic, and often abusive, rule. Such engagement has proven at times to be a source of contention with the United States and Europe, which argue that governments that show little respect for human rights, democratization, and the rule of law should not be rewarded with 26 political support or extensive aid and investment. To elevate its engagement with Africa and make its largesse highly visible, the Ministry of Foreign Affairs established the Forum 24 Wang and Elliot, 2014, p. 1021. 25 Chris Alden, China in Africa 12 8. Note that Western com- , London: Zed Books, 2007, p. panies have not necessarily had easy relations with Africans; most often, problems have been in the context of major resource extraction companies operating under government auspices. Protests and direct action against oil companies in the Niger Delta provide one example (John Ghazvinian, , Orlando, Fla.: Harcourt, Inc., 2007). Untapped: The Scramble for Africa’s Oil 26 Critics would note that despite their rhetoric, the United States and Europe have estab - lished close political and economic relations with many undemocratic countries in Africa, providing military assistance to governments (such as Somalia, Chad, Mali, Mauritania, Ethiopia, and Djibouti) that are assessed to be highly corrupt and to deny their populations Corruption even basic political and civil rights. See, for example, Transparency International, -1— Perceptions Index 2014 , 2014; see also Freedom House, Map of Freedom 2014 , 2014. 0— +1— RR2273A_CC2015.indb 178 8/14/18 11:11 AM

217 China in Africa 179 on China-Africa Cooperation (FOCAC), a pan-African umbrella for - China’s bilateral relations with 50 individual countries. FOCAC orga nizes highly staged triennial summit meetings—held in 2000, 2003, 2006, 2009, 2012, and 2015—at which China announces new three- year regional engagement strategies, launches new regional initiatives, and unveils large bilateral trade, investment, and aid deals. Moreover, each African head of state is able to meet with the Chinese president on the margins of the summits, which enables Beijing to highlight its close relations and commitment to each African nation. FOCAC has covered a wide range of issues and provided Chinese 27 28 The FOCAC 2013–2015 Action Plan, deliverables in multiple areas. which resulted from the 2012 summit, identified five key areas of con - centration in Sino-African relations: Pol itical Affairs and Regional Peace and Security , including high- 5. - level visits; exchanges of legislative, judicial, and local govern ment officials; conflict resolution; and security cooperation Coo peration in International Affairs , including climate change, 6. food security, human rights, global trade, and participation in international financial institutions Econ omic Cooperation - , including in the areas of agriculture, pri 7. vate investment, infrastructure, trade, banking, energy, com - munications, and transportation Coop eration in the Field of Development , including human 8. resources development, technology transfer, poverty reduction, public health - Cul tural and People-to-People Exchanges and Cooperation , includ 9. - ing exchanges in education, academia, media, think tanks, jour nalism, youth, women, and sports. Although the FOCAC Action Plan expressed commitment to the promotion of “mutual” cooperation, investment, learning, trust, 27 Huang Meibo and Qi Xie, “Forum on China-Africa Cooperation: Development and , Vol. 74, 2012, p. Prospects,” African-East Asian Affairs/The China Monitor . 10 28 — -1 “The Fifth Ministerial Conference of the Forum on China-Africa Cooperation Beijing , 2012. Action Plan (2013–2015),” July 23 —0 — +1 RR2273A_CC2015.indb 179 8/14/18 11:11 AM

218 180 At the Dawn of Belt and Road understanding, and benefit, the “Chinese extravaganza of largesse 29 that takes place at FOCAC summits also and ostensible generosity” highlights the asymmetric nature of the Chinese-African relationship. China exerts significant control on the process and sets the agenda, 30 Although private companies are increas- declarations, and outcomes. ingly prominent components of China’s overall engagement with the continent, FOCAC is a critical tool for the Chinese government to 31 manage its relations with the region. Along with FOCAC, China has augmented its collaboration with the African Union as a way to give its engagement greater regional impact and legitimacy. In 2006, China declared it would work closely with the AU on peace and security issues, committing in the 2006 FOCAC Action Plan to “support the AU’s leading role in resolving African issues, and take an active part in UN peace-keeping operations 32 - In 2007, Beijing established a security consultative mech i n A f ric a .” anism, the China-AU Strategic Dialogue, which addressed security 33 China challenges in Sudan, Zimbabwe, eastern Congo, and Somalia. has since provided training, materiel, and funds for AU military opera - 34 tions and mediation efforts in Somalia, Mali, and other countries. 29 Ian Taylor, “From Santa Claus to Serious Business: Where Should FOCAC Go Next?” African-East Asian Affairs/The China Monitor , Vol. 74, 2012, p. 32 . 30 Ian Taylor, 2012, p. 31. 31 , Abingdon: Routledge, The Forum on China-Africa Cooperation (FOCAC) Ian Taylor, 2011, p. 10 3. 32 Forum on China-Africa Cooperation, “Forum on China-Africa Cooperation Beijing Action Plan (2007–2009),” November 16 , 2006, para 2.5.2. 33 See Georg Lammich, “China’s Impact on Capacity Building in the African Union,” paper presented at a workshop regarding South-South Development Cooperation Chances and Challenges for the International Aid Architecture, Heidelberg University, September –27, 26 2014, p. 12. 34 Yun Sun, “Xi Jinping’s Africa Policy: The First Year,” Brookings Institution Africa in blog, April 14 , 2014; also, Georg Lammich, 2014, pp. 12 Focus –13; see also Jia Qinglin, Chairman of the National Committee of the Chinese People’s Political Consultative Con- ference, “Towards a Better Future with Stronger China-Africa Solidarity and Cooperation,” speech to the 18th Ord inary Session of the Assembly of the African Union, Addis Ababa, -1— January 29 , 2012. 0— +1— RR2273A_CC2015.indb 180 8/14/18 11:11 AM

219 China in Africa 181 By 2009, China argued that it “support[s] the AU playing a bigger - role in regional and international affairs” beyond just peace and secu 35 In March 2015, China accredited its first full-time ambassador r it y. to th e AU, making it only the second country other than the United States to do so. The newly accredited Chinese ambassador stated, “For many years, China has mainly relied on bilateral cooperation. . . . 36 China is ready to do more with Africa.” In recent years, Chinese engagement with Africa has triggered growing grassroots hostility and locals widely perceive Chinese activities—particularly its economic investments—as benefitting China more than its Africa partners. Beijing responded by emphasizing the mutually beneficial nature of its engagement, bolstered by a proac - tive public diplomacy campaign consisting of job training, educational and cultural exchanges, funding for humanitarian relief and health care, 37 After being criticized for and a comprehensive media outreach effort. failing to provide assistance in the early days of the Ebola outbreak in 38 for example, China contributed $123 million, donated West Africa, med ical equipment and vehicles, announced plans to train 10,000 local health care workers, and deployed 1,000 medical and disease control 39 The overall intention of these broad-based programs is to personnel. build positive perceptions of China and counter what it saw as unfairly 40 negative representations of China in Western-dominated media. 35 Forum on China-Africa Cooperation, “Forum on China-Africa Cooperation Sharm El , 2009, para 2.5.2. 12 Sheikh Action Plan (2010–2012),” November 36 AFP, “China Boosts Africa Diplomacy,” March 13, 2015. 37 Interestingly, China’s people-to-people exchanges—academic scholarships, cultural exchanges, language training, job training, etc.—almost all involve Africans going to China or Chinese trainers/teachers working in Africa. Thus, although China speaks of “exchanges,” the transfer of knowledge and experience is mostly one-way. See Kenneth King, China’s Aid and Soft Power in Africa: The Case of Education and Training (Suffolk, UK: James Currey, 2013), pp. 66 , 99, 101. 38 Chris Leins, “China’s Evolving Ebola Response: Recognizing the Cost of Inaction,” Atlantic Council New Atlanticist blog, November 10, 2 014. 39 United Nations Development Programme, “The Ebola Virus Outbreak and China’s 14. 20 Response,” Issue Brief No. 6, D ecember — -1 40 Wang and Elliot, 2014, p. 1030. —0 — +1 RR2273A_CC2015.indb 181 8/14/18 11:11 AM

220 182 At the Dawn of Belt and Road Diplomatic Relations and Presence China, as of late 2015, had diplomatic relations with 51 of the 54 coun - tries in Africa. The three exceptions were Burkina Faso, Sao Tome and Principe, and Swaziland, which had diplomatic relations with Taiwan instead. China operates embassies in 49 of the remaining African coun - tries. It also has seven consulates in five of these countries, with three in South Africa alone. China has signed a range of political partnership agreements with several African states. The most important of these are with Algeria and South Africa, both of which China has designated as comprehensive strategic partners. Following them are Equatorial Guinea, Ethiopia, the Republic of the Congo, Tanzania, and Kenya, which are compre- hensive cooperative partners. Finally, China has strategic partnerships with the African Union as an organization, Angola, and Nigeria. These political agreements help identify some, but not all, of China’s most important partners in the region. Pivotal State and Major Partners In terms of individual countries, China’s most significant relation - ships are with South Africa, its pivotal partner on the continent, and Tanzania. South Africa is one of the five BRICS countries and is a cofounder of the New Development Bank. The country’s attractive- ness as a partner stems in part from its economy, the second largest in sub-Saharan Africa. Moreover, because of its strong financial sector, rule of law, and infrastructure, it is a destination of choice for Chinese businesses and serves as a gateway to the rest of the continent. Beyond economics, South Africa is a regional leader and active in a number of regional organizations, including the African Union and the South - ern African Development Community, making it widely considered 41 Tanzania, on the other hand, has become an a “continental leader.” increasingly important Chinese partner in military affairs. Both Tan - zania and South Africa received the most visits from members of the 41 The quotes in this paragraph can be found in Sven Grimm, Yejoo Kim, and Ross Anthony, with Robert Attwell and Xin Xiao, South African Relations with China and Taiwan: Economic Realism and the “One-China” Doctrine , Stellenbosch, South Africa: Stellenbosch University -1— Centre for Chinese Studies, February –16, 16, respectively. 20 14, pp. 15 0— +1— RR2273A_CC2015.indb 182 8/14/18 11:11 AM

221 China in Africa 183 Central Military Commission in recent years. Two of China’s three joint military exercises in Africa were held with Tanzania. Other important relationships in the region include those with Algeria, Angola, Equatorial Guinea, Ethiopia, Kenya, Nigeria, and the Republic of the Congo. Both Angola and Algeria, for example, are major oil-producing states, and because of this, China has sought to build ties with them both. Angola’s trade with China matches the total - of trade with its next ten biggest partners combined and is overwhelm 20 15, Angola ingly based on oil. That said, during his state visit in June President Jose Eduardo Dos Santos sought to expand the relationship 42 to include new areas such as trade, transport, electricity, and finance. A series of equally high-level meetings have taken place between Chi - 20 15, Yang Jiechi, state nese and Algerian leaders this year. In February councilor responsible for foreign affairs, traveled to Algeria and met - with both President Abdelaziz Bouteflika and Prime Minister Abdel 43 Later in the year, Abdelkader Bensalah, president of malek Sellal. the upper house of the Algerian Parliament, and Prime Minister Sellal 44 made separate trips to China to push for deeper economic ties. Other countries are appealing because of their economic strength. Ethiopia, specifically, is one of the five fastest growing economies in the 45 It is, moreover, a regional power in East world, according to the IMF. Africa and has been involved in fighting Al-Shabaab in neighboring 46 Consequently, China has sought closer ties with Ethiopia, such Somalia. 47 20 as by signing 16 deals during Premier Li Keqiang’s visit in May 14. 42 “Angola President Seeks More Non-Oil Deals in His Visit to China,” 12 , , June Bloomberg 2 015. 43 , February “China, Algeria to Jointly Push for Progress in Partnership,” 8, 2 015. China Daily 44 “Xi Jinping Meets with Prime Minister Abdelmalek Sellal of Algeria,” Ministry of For - eign Affairs of the People’s Republic of China, April 29, 2015; “Li Keqiang Meets with President of the Council of the Nation Abdelkader Bensalah of Algeria,” Ministry of Foreign Affairs of the People’s Republic of China, September 4, 2 015. 45 “Ethiopia Economic Outlook,” African Development Bank Group, 2015. 46 “Obama Praises Ethiopia over Fight Against al-Shabab,” BBC News , July 27 , 2015. 47 — -1 Aaron Maasho, “China Signs Deals with Ethiopia as Premier Starts Africa Tour,” Reuters , 014. May 4, 2 —0 — +1 RR2273A_CC2015.indb 183 8/14/18 11:11 AM

222 184 At the Dawn of Belt and Road Countries, however, also have shortcomings that reduce their appeal as partners to China, even in spite of possessing major strengths. Nigeria, for example, is a member of OPEC and a major oil-producing state. Recent recalculations of its GDP also revealed that it accounts for - cent of the entire continent’s GDP, making it in over roughly 26 per all terms the largest economy in Africa. However, it also suffers from poor infrastructure, corruption—especially troublesome within the state-owned Nigerian National Petroleum Corporation—and internal instability because of the ongoing Boko Haram insurgency. Finally, Djibouti is an important major partner with growing military links to China. In 2014, for instance, the two countries signed a security and defense strategic partnership agreement giving port access to PLAN ships. As of 2015, the two countries agreed to establish what China refers to as a facility to provide logistical support but that others have subsequently described as China’s first overseas military base. High-Level Exchanges China continues to regularly engage in high-level exchanges and visits to the region. From 2003 to 2014, Chinese leaders made 91 high-level visits to 53 countries in Africa. Of these, 32 were at the level of head of state or government, with 20 having taken place from 2003 to 2008 and 12 having taken place from 2009 to 2014. Moreover, there has been an increasing frequency of visits to Ethiopia, Morocco, South 48 Africa, Sudan, and Tanzania in particular. Cultural Influence China has engaged in significant public diplomacy in Africa to counter negative public perceptions of China and increase the region’s affin - ity toward China. One of the principal (and most costly) elements of 48 In contrast to China’s emphasis on high-level diplomacy, few senior U.S. officials have vis - ited the continent. U.S. presidents have visited only 14 sub-Saharan African countries—plus four North African countries (Morocco, Tunisia, Algeria, and Egypt)—since Franklin D. oosevelt made the first presidential trip to the region in 1943. See Andrew Katz, “All the R -1— , 2015. Presidents’ Trips to Africa, Mapped,” Washington Post , July 27 0— +1— RR2273A_CC2015.indb 184 8/14/18 11:11 AM

223 China in Africa 185 China’s public diplomacy strategy has been to expand outreach by its 49 state media. 2009 with a Beijing launched its media expansion in January 50 Starting in 2009, Xinhua opened additional bi 6 $6. llion investment. news bureaus throughout the continent, and by 2012 the English- China Daily language launched an African edition and state-run China Central Television, which changed at the end of 2016 to China Global Television Network, opened a broadcast studio—its first outside 51 Aside from producing news with a Chinese angle, China—in Kenya. China has also promoted Chinese pop culture for broadcast in Africa. It has dubbed Chinese TV soap operas into Swahili, for example, to pro - 52 mote a more positive image of Chinese culture and family life. Under the auspices of FOCAC, China has also increased the number of scholarships and job training programs that bring Africans 53 For example, from 2010 to 2011, the number of Chinese to China. 54 Meanwhile, government scholarships increased from 5,710 to 6,316. 20 at the July 12 FOCAC ministerial meeting, Hu Jintao promised that the Chinese government would increase the number of scholar - 55 Similarly, China increased ships to 18,000 in the next three years. the number of vocational training programs for Africans. At the end of 2012, for example, “China had trained more than 53,700 Africans 49 Liu Guangyuan, “Deepen China-Africa Media Cooperation and Enrich the China-Africa Community of Shared Destinies,” speech at the seminar on China-Africa Media Coopera - , 2013. 19 20 tion on 18 November 13, Chinese Embassy in Kenya, November 50 2009. “Beijing in 45b Yuan Global Media Drive,” South China Morning Post , January 13, 51 See Hanauer and Morris, 2014, pp. 74–75. 52 21 “Chinese Soft Power in Africa,” Economist Intelligence Unit , August , 2014. 53 69. King, 2013, p. 54 Forum on China-Africa Cooperation, “Forum on China-Africa Cooperation (FOCAC),” July , 2012. 18 55 More than 35,000 Africans were studying in China in 2013, most of whom received Chi - . China Economist Intelligence Unit nese government-funded scholarships, according to the has provided academic scholarships to all 50 African countries with which it has diplomatic relations, though it is not clear if there is a pattern to the way in which China distributes — -1 these grants. See Forum on China-Africa Cooperation, “FOCAC ABC,” April 9, 2 013, and “Chinese Soft Power in Africa,” Economist Intelligence Unit 21 , August , 2014. —0 — +1 RR2273A_CC2015.indb 185 8/14/18 11:11 AM

224 186 At the Dawn of Belt and Road 56 in China and sent more than 350,000 technical personnel to Africa.” A study of short-term training courses provided by China’s Ministry of Commerce to government officials from developing countries con - cluded that an estimated 86,000 African officials will have attended 57 such classes between 2000 and 2015. China has also greatly expanded the number of “people-to-people” exchanges involving academics, students, government officials, think tank analysts, journalists, and others. The 2009 FOCAC meeting estab - lished an exchange of scholars, the China-Africa Joint Research and 58 The China- 20 10. Exchange Programme, which first met in March 20 Africa Think Tank Forum, for example, first met in October 11 “to generate policy recommendations for the sustainable development of 59 particularly in the areas of peace and security, Sino-African relations,” 60 finance and investment, and people-to-people and cultural exchanges. Confucius Institutes also support China’s public diplomacy toward the region. China currently possesses 34 Confucius Institutes throughout 26 countries in Africa. The most are located in South Africa, which has four. Kenya is next with three institutes, followed by Nigeria, Morocco and Tanzania, which possess two each. As with other regions, there are no definite estimates of the number of Chinese citizens in Africa. However, the number in sub-Saharan 61 Africa is thought to have peaked at about one million in 2013. 56 , 2015. China Daily , January 16 Hou Liqiang, “Drive to Improve Vocational Education,” 57 Although a high percentage of participants have difficulty applying the training because of a lack of resources in their home countries, these training courses for African officials “have become one of China’s most successful public diplomacy efforts.” See Henry Tugend - hat, “Chinese Training Courses for African Officials: A ‘Win-Win’ Engagement?” SAIS China-African Research Initiative Policy Brief No 3, December 20 14. 58 “China and Africa Joint Research and Exchange Program Formally Launched,” FOCAC website, March , 2010; see also “Chinese Premier Wen Jiabao Announces Eight New Mea - 31 sures to Enhance Cooperation with Africa,” Xinhua News , November 9, 2 009. 59 China-Africa Think Tanks Forum, “The 2nd Meeting of the China-Africa Think Tanks –13, 2012, p. um,” conference report, Bisoftu, Ethiopia, October For 12 5. 60 Forum on China-Africa Cooperation, “Declaration of the 1st Meeting of the China- Afr ica Think Tank Forum,” November , 2011. 23 -1— 61 Tom Hancock, “Chinese Return from Africa as Migrant Population Peaks,” Financial 0— Times , August 28 , 2017. +1— RR2273A_CC2015.indb 186 8/14/18 11:11 AM

225 China in Africa 187 Some Chinese public diplomacy activities seem aimed at convincing non-African countries that China can be a responsible actor in the region. China has taken some modest steps to crack down on ivory smuggling, for example—an issue that tends to resonate more with Western publics and policymakers than with Africans. Seeking to demonstrate that it is working to reduce demand for ivory, in 2013, users of Chinese mobile phones began receiving SMS messages on landing in Kenya warning 62 In Janu - them not to buy ivory, rhino horn, or other wildlife products. 63 ary 20 14, China crushed six tons of confiscated ivory in Dongguan, 201 and in April - 4, China passed a law prohibiting the purchase or con 64 sumption of more than 400 imperiled or endangered species. Economic Engagement China’s economic engagement has focused on gaining access to natu - ral resources, creating markets for Chinese-manufactured goods, and developing manufacturing facilities that can take advantage of the continent’s low labor costs. China’s principal interest in Africa is to ensure access to the raw materials it needs to fuel its own economy— principally oil, gas, metals, and minerals. It has, thus, invested heavily in countries that are richly endowed with such resources, and its trade with the continent is overwhelmingly concentrated in raw materials. From 2003 to 2010, more than half of China’s investment in Africa was concentrated in the oil sector, almost all of it coming from well- resourced SOEs. China’s imports from Africa consist overwhelmingly - per cent of its imports from the con of natural resources; in 2011, 64 tinent consisted of petroleum, 16 per cent consisted of iron and other 65 metals, and 6 per cent consisted of copper. 62 “Say No to Ivory and Rhino Horn Chinese Cell Phone Users Told,” WildAid, Septem- ber 013. 30, 2 63 National Brian Clark Howard, “China Crushes Six Tons of Confiscated Elephant Ivory,” 014. , January Geographic 7, 2 64 Zoe Lin, “Off the Menu: China Moves to Protect Endangered Species,” CNN.com, May 014. 5, 2 — -1 65 Lauren Gamache, Alexander Hammer, and Lin Jones, “China’s Trade and Investment —0 Relationship with Africa,” USITC Executive Briefings on Trade, April 20 13. — +1 RR2273A_CC2015.indb 187 8/14/18 11:11 AM

226 188 At the Dawn of Belt and Road China also looks to Africa as a growing market for Chinese-made products. Although Africa is the destination for only 3.7 per cent of China’s exports ($81.7 bi llion in 2013), this figure has risen more than 19-fold since 2000, more than China’s worldwide exports but less than growth in exports to Central and South Asia, and on par with exports to Latin America. Some Chinese products—machinery and transpor - per cent of Chinese tation equipment, for example, which comprised 38 exports to Africa in 2011—are components of other Chinese economic 66 activities in the region. Finally, as the cost of labor in China increases, Chinese compa - nies have increasingly opened manufacturing facilities in Africa (as 67 Chi - well as other countries), where manufacturing costs may be less. nese firms now manufacture everything from electronics to vehicles to shoes in African countries, in some cases from Special Economic Zones that host nations have established to attract such Chinese invest - 68 Some of this investment has taken place to take advantage of ment. trade preferences offered by Europe and the United States, such as the U.S. African Growth and Opportunity Act. Over time, however, many Africans have come to resent China’s economic engagement for failing to create large numbers of skilled jobs, failing to train African workers or transfer manufacturing technolo - gies, creating abusive and polluting work environments, and under - cutting domestic industries. Separately, Chinese emigrants to Africa increasingly consist of private entrepreneurs and businessmen who are not subject to Beijing’s control (and who sometimes seek their eco - nomic opportunity through illegal or illicit activities). These Chinese - expatriates have often clashed with locals in ways that undermine Chi 66 Source for data: IMF Direction of Trade Statistics and UN Comtrade. See Hanauer and Morris, 2014, p. 31 . 67 Xiaoqing Pi, “China Wages Seen Jumping in 2014 Amid Shift to Services,” Bloomberg , rcent annual January 6, 2 014; China’s 12th Five-Year Plan (2011–2015) calls for a 13 pe increase in the minimum wage and requires employers make social welfare contributions (housing, health insurance, pensions, etc.) that will increase labor costs by more than 35 pe r- cent. See Ernst and Young, “China’s Productivity Imperative,” 2012, p. 14 . 68 See, for example, Peter Wonacott, “China Inc. Moves Factory Floor to Africa,” Wall Street -1— 014. Journal , May 14 , 2014; see also “The Awakening Giant,” The Economist , February 8, 2 0— +1— RR2273A_CC2015.indb 188 8/14/18 11:11 AM

227 China in Africa 189 - na’s overall message of win-win bilateral economic and cultural coop eration. The secondary effects of China’s trade and investment have, thus, contributed to an anti-Chinese backlash that has driven China to modify its approach to the continent. Trade China’s total goods trade with Africa grew 20-fold over the period 2000 to 2013, more than growth with any other region other than llion Central Asia and Latin America. Imports have grown from $5 bi in 2000 to $111 cent of imports from llion in 2013. Roughly 80 bi per - Africa are fuel and raw materials (Figure 8.2). This has remained rela tively constant, except for fluctuations driven by commodity prices. The only other commodity group of any size is manufactured goods. Figure 8.2 Composition of Imports from Africa 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2004 2013 2011 2000 2010 2002 2006 2003 Year Crude materials Beverages and tobacco Food Chemicals Animal and vegetable oils Mineral fuels Miscellaneous Manufactured goods Machinery and transport manufactured Other — -1 SOURCE: UN Comtrade Database. RR2273A-8.2 RAND —0 — +1 RR2273A_CC2015.indb 189 8/14/18 11:11 AM

228 190 At the Dawn of Belt and Road Exports have grown from $4 billion in 2000 to $82 billion in 3. They are characterized by different categories of manufactured 201 items, including chemicals, manufactured goods, machinery and transport equipment (the largest group), and miscellaneous manufac - cent of the total tures (Figure 8.3). Exports of food were almost 10 per cent. at the beginning of the period, but have declined to about 3 per China runs a trade deficit with Africa (Figure 8.4). Much of that deficit is driven by South Africa and Angola. South African exports cent of total African exports across all catego represent at least 20 per - ries. Since the breakup of Sudan, when trade with Sudan collapsed, Angola has filled the supply in fuel exports, further increasing its trade surplus with China. China is in surplus with Nigeria, driven primarily by Nigerian imports of machinery and chemicals. Figure 8.3 Composition of Exports to Africa 100 90 80 70 60 50 Percent 40 30 20 10 0 2003 2000 2002 2010 2006 2012 2009 2001 2005 2004 2013 2008 2011 2007 Year Crude materials Food Beverages and tobacco Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Manufactured goods Machinery and transport manufactured Other -1— SOURCE: UN Comtrade Database. RR2273A-8.3 RAND 0— +1— RR2273A_CC2015.indb 190 8/14/18 11:11 AM

229 China in Africa 191 Figure 8.4 Level of Exports to and Imports from Africa 90 80 Exports to Africa 70 Imports from Africa 60 50 40 U.S. $ billions 30 20 10 0 2011 2001 2012 2013 2009 2000 2010 2003 2002 2004 2008 2007 2006 2005 Year SOURCE: UN Comtrade Database. RR2273A- RAND 8.4 Foreign Direct Investment, Lending, and Aid As with its trade, China’s stock of FDI in Africa has risen dramatically, mi bi from $477 llion in 2003 to $21.3 llion in 2012. Of this, the top bi llion in 2012, and then recipients include South Africa, at almost $5 Zambia, Nigeria, Algeria, Angola, and Sudan, all between $1 bi llion bi and $2 llion (Figure 8.5). Together, these countries have attracted per cent of all Chinese FDI in Africa. almost 60 China does not emphasize “poverty mitigation” in its aid; instead, it claims to emphasize mutual cooperation among fellow developing 69 countries (as opposed to a hierarchical donor-recipient relationship). In 1964, Premier Zhou Enlai outlined eight principles of China’s aid to foreign countries, the first of which is: “The Chinese Government always bases itself on the principle of equality and mutual benefit in providing aid to other countries. It never regards such aid as a kind of — -1 69 5–6, 8. King, 2013, pp. —0 — +1 RR2273A_CC2015.indb 191 8/14/18 11:11 AM

230 192 At the Dawn of Belt and Road Figure 8.5 China’s FDI Stock in Africa by Top Receiving Countries 6 Algeria 5 Sudan Angola 4 Nigeria South Africa 3 Zambia 2 U.S. $ billions 1 0 2011 2003 2012 2010 2009 2008 2004 2007 2006 2005 Year SOURCE: UNCTAD. NOTE: Figure shows only those countries with greater than $1 billion in Chinese outward FDI stock in 2012. RR2273A- RAND 8.5 70 Decades later, China’s 2011 unilateral alms but as something mutual.” White Paper on foreign aid noted that “Mutual benefit and common - good or common development have been the explicit rationale for Chi 71 Aside from that claimed ye ars.” na’s cooperation with Africa over 60 - difference, much Chinese aid come in forms that would not necessar - ily be considered aid by Western governments. Forms include conces sional loans, resource-backed loans, and tied aid, along with more traditional forms of aid. China’s second foreign aid White Paper, produced in 2014, reported that in the three years of 2010 through 2012 since the last bi report, China had provided Africa $14.4 llion in official development per per cent of all aid from China and a 6.1 assistance, almost 52 cent 70 “Premier Zhou Enlai’s Three Tours of Asian and African Countries,” Ministry of Foreign Affairs of the People’s Republic of China, undated. -1— 71 64. King, 2013, p. 0— +1— RR2273A_CC2015.indb 192 8/14/18 11:11 AM

231 China in Africa 193 billion increase from the previous period. The annual average of $4.8 bi llion in concessional loans, $1.74 bi l- per ye ar was divided into $2.68 72 The paper llion in interest-free loans. bi lion in grants, and $0.39 noted additional aid in the form of $430 mi llion annually provided through the UN and multilateral and regional development banks, mi llion annual of debt relief of interest-free loans. and $76.3 lion to bil At the 2015 FOCAC meeting, President Xi pledged $60 support development in Africa. Of this, $5 llion was to be in interest- bi free loans and $35 llion was to be in preferential financing, export bi credits, and other forms of concessional loans. It is not clear what form 73 Even with preferential rates, this the other $20 bi llion was to take. bi $40 llion will need to be paid back by the governments or firms that borrow it. Much of China’s domestic growth has been driven by the con - struction, engineering, and machinery sectors that are well suited to compete for similar infrastructure projects in Africa. Often, these proj - ects are funded with concessional loans from China’s policy banks. In bi llion in construction contracts 2012, China received roughly $40 from Africa. Africa is the second largest foreign market for Chinese construction projects and represents roughly a third of all construc - 74 - billion rail and road net Examples include a $9 tion projects abroad. wor k contract with the Democratic Republic of Congo (more than 75 billion contract to build an a $12 that country’s national budget); 76 and a $700 million airport for -mile long rail line in Nigeria; 850 77 ye rtoum, to be repaid over 15 Kha ars. 72 2012 USAID assistance to Africa was $8.1 billion, a figure that does not include other for ms the United States grants. 73 Rene Vollgraaff, Amogelang Mbatha, and Mike Cohen, “Xi Unveils $60 Billion Funding 015. dge at South Africa Summit,” Ple 4, 2 BloombergBusiness , December 74 China-Africa Economic and Trade Cooperation , 2013. 75 2014. Nirit Ben-Ari, “On Bumpy Roads and Rails,” Africa Renewal, April 76 Konye Obaji Ori, “China Signs Deal with AU to Connect Africa’s Big Cities,” The Africa Report 28 , January , 2015. 77 — -1 Mikolaj Radlicki, “From Sudan to Senegal, Africa’s Head-Turning New Airports . . . with , March a Helping Hand from Chinese Friends,” Mail & Guardian Africa 015. 6, 2 —0 — +1 RR2273A_CC2015.indb 193 8/14/18 11:11 AM

232 194 At the Dawn of Belt and Road China has also provided traditional development aid in such areas as health care and the environment. For example, China sent more than 1,000 health care workers to West Africa during the Ebola crisis, 78 And during built Ebola treatment centers, and provided assistance. his May 20 14 visit to Africa, Premier Li Keqiang pledged $10 mi l- lion to promote conservation, including funds to help Kenya combat 79 poaching. Agreements and Other Issues Africa lags in bilateral investment treaties with China, given the number of countries in the continent. Seventeen have BITs in force, although an additional 15 have signed BITs that have not yet entered into force. Except for the BIT with Ghana, which entered into force in 1990, all the effective BITs entered into force in 1997 or later, and 11 of them entered into force in 2000 or later. China has few tax treaties with Africa, with only eight income or income and capital tax treaties. Africa is becoming increasingly linked to China’s Belt and Road 80 While the Silk Road Economic Belt runs from China Initiative. Ce through Asia and the Middle East to Europe, the 21st ntury Mari - time Silk Road does touch the east coast of Africa. The Silk Road may include an East African railway in Kenya from Nairobi to Mombasa, 81 Early diagrams of the maritime route a port on the Indian Ocean. also suggest a transit through Bab el-Mandeb Strait, a key maritime chokepoint that borders Djibouti and Eritrea on the African continent. China has conducted multiple port calls to Djibouti and views estab - lishing a naval supply facility or base there as a logical extension of increasing Chinese maritime interests. 78 “China to Cooperate with Africa on Industrialization, Sanitation, Security: FM,” China Daily , March 8, 2 015. 79 Fredrick Nzwilim, “China Pledges $10 Million in Support of Wildlife Conservation in ic a,” A fr blog, May National Geographic Voices , 2014. 13 80 Yun Sun, “Inserting Africa into China’s One Belt, One Road Strategy: A New Opportu- 2, 2 nity for Jobs and Infrastructure?” Brookings Institution, March 015. 81 Wang Shengwei, “HK Must Embrace the ‘One Belt, One Road’ Initiative,” China Daily , -1— August 12 , 2015. 0— +1— RR2273A_CC2015.indb 194 8/14/18 11:11 AM

233 China in Africa 195 No African countries signed up as founding members of the Asian - Infrastructure Investment Bank. However, South Africa is a full par ticipant in another China-inspired development bank, the New Devel - opment Bank, also known as the BRICS bank, with Brazil, India, and Russia. The five BRICS countries completed the establishment of the 82 15. 20 New Development Bank in July Not all Chinese commercial activities are carried out by SOEs or major companies with favored state access. Although reliable statistics are unavailable, private Chinese companies—primarily construction firms and small- to medium-sized enterprises—comprise an increas- 83 Many such firms, ing share of Chinese commercial activity in Africa. lacking the resources to engage in costly natural resource extraction, 84 Indi - have pursued opportunities in construction and manufacturing. vidual Chinese nationals are also increasingly migrating to Africa on 85 Many of these migrants their own in search of economic opportunity. have set up small shops that compete with local entrepreneurs. Many of these shops remain segregated from local communities, and tensions with locals have erupted into violence or otherwise created negative 86 impressions of Chinese. Indeed, while some public opinion polls have shown that Africans 87 other believe China is contributing to their nations’ development, polls have shown that Chinese investment is viewed negatively or has little or no influence on public opinion of China, in part because it 82 21 BBC News , 2015. “BRICS Countries Launch New Development Bank,” , July 83 See Gu Jing, “China’s Private Enterprises in Africa and the Implications for African 4, 2 European Journal of Development Research , Vol. 21, No. 015, p. Development,” 57 4. 84 See Mohan and Tan-Mullins, 2009. Also see Jian-Ye Wang, “What Drives China’s Grow - ing Role in Africa?” IMF Working Paper WP/07/211, October 2007; also see Gu Jing, 2015, p. 573. 85 For an excellent description of individual Chinese migrants’ search for economic oppor - tunities in Africa, see Howard French, China’s Second Continent: How a Million Migrants are Building a New Empire in Africa , New York: Knopf, 2014. 86 597–598. Mohan and Tan-Mullins, 2009, pp. 87 — -1 Pew Global Attitudes Project, “America’s Global Image Remains More Positive than Chi - na’s,” Washington, D.C.: Pew Research Center, July 18 , 2013. —0 — +1 RR2273A_CC2015.indb 195 8/14/18 11:11 AM

234 196 At the Dawn of Belt and Road 88 To the extent that is too unrelated to ordinary citizens’ daily lives. Africans are aware of Chinese investment, they generally see these projects as having failed to meet promises of new jobs and greater 89 African publics are often aware of highly visible Chinese- prosperity. backed infrastructure and construction projects. Many such projects have been widely criticized, however, for poor quality work that dete- riorates quickly and for employing large numbers of Chinese laborers rather than locals. As a result, they often damage rather than improve 90 While Chinese trade has a greater influence on public China’s image. opinion, higher trade with China has tended to result in more nega - tive views of the country, as many Africans view Chinese products as poor quality and believe they unfairly compete with locally made 91 products. There appears to be widespread grassroots opposition in Africa 92 - China has been widely criticized across the con to China’s activities. tinent—by civil society groups, journalists, and some government officials—for a wide range of practices. Among them are abusive 88 Capturing the dichotomy, a 2014 opinion poll conducted by the Ethics Institute of South Africa found the following: “Considering the question whether China has a positive impact on the development of their respective countries, 38% agree and 11% strongly agree. But when asked if Africans have personally benefited from Chinese business, most disagree (24%) or strongly disagree (29%).” See Ethics Institute of South Africa, 2014, pp. 16 –17. 89 See Aleksandra Gadzala and Marek Hanusch, “African Perspectives on China-Africa: Gauging Popular Perceptions and Their Economic and Political Determinants,” Afrobarom - 61 7, January . eter Working Paper , No. 11 20 10, p. 7. Also see Hanauer and Morris, 2014, p. 90 Claims of rapidly collapsing Chinese-built infrastructure may very well be exaggerated. (See Deborah Brautigam, “The Chinese in Africa: The Economist Gets Some Things Right, China in Africa: The Real Story , May Some Wrong,” blog post, 20, 2 011.) Moreover, Afri - can governments may be partly to blame for poor quality construction work, either because they set low standards, rushed completing for political purposes, or siphoned off resources meant for public works. (David H. Shinn, correspondence with authors, September 2, 2 013.) - Nevertheless, the perception that Chinese work is substandard is widely held and has under mined China’s efforts to portray its investments as beneficial for African nations rather than moneymaking opportunities for Chinese companies. 91 Brautigam, 2011. See also Afrobarometer , which found in a 2010 public opinion poll that “African support of the Chinese declines as the percentage of Chinese imports increases,” Gadzala and Hanusch, 2010, p. . 15 -1— 92 Wang and Elliot, 2014, p. 1030. 0— +1— RR2273A_CC2015.indb 196 8/14/18 11:11 AM

235 China in Africa 197 94 93 labor practices; pollution and violation of environmen - low wages; 95 96 and importation of Chinese laborers, which corruption; tal laws; 97 Even the tendency of minimizes the number of local jobs created. - Chinese SOE workers to live apart from local communities in sepa 98 and gen - rate compounds has inspired views that Chinese are aloof 99 In some erated rumors that Chinese laborers are actually prisoners. cases, anti-Chinese sentiment has led to violence at factories, mines, 100 A 2014 South African survey and Chinese residential compounds. 93 See, for example, Human Right Watch’s comprehensive report on low wages, long hours, hazardous conditions, retaliation against whistleblowers, and other health, safety, and labor practices in Chinese copper mines in Zambia. “‘You’ll Be Fired If You Refuse’: Labor Abuses in Zambia’s Chinese State-Owned Copper Mines,” Human Rights Watch , 2 011. 94 The New Yorker - Alexis Okeowo, “China, Zambia, and a Clash in a Coal Mine,” , Octo 9, 2 ber 013. 95 Despite the fact that China purchases 7 percent of Chad’s oil and has invested heavily in the c ountry’s vital oil sector, the Chadian Environment Ministry fined the local subsidiary of the China National Petroleum Corporation $1.2B in March 20 14 for “repeated violations” of environmental rules. See “Chad Imposes US$1.2bn Fine on Chinese Oil Firm,” Economist Intelligence Unit , April 7, 2 014. 96 2015, a report by Kenya’s anti-corruption watchdog implicated a cabinet minis In March - ter a nd a senator in a scheme to award a $500M pipeline contract to Sinopec in exchange for a $15M payoff. See Edith Honan, “Kenya Corruption Watchdog Makes Allegations Against 175 Officials,” Reuters , April 1, 2 015. 97 The previous president of Zambia, Michael Sata, ran for election on an anti-Chinese plat - form, deriding China for stealing, rather than creating, local jobs and promising to kick out Chinese “infesters” if elected. In March 20 15, in large part because of resentment of Chinese workers, Tanzania’s parliament passed a law (the Non-Citizens Employment Regulation Bill) that requires businesses to assert that no local could do a job before it can hire a foreigner and also requires firms to develop plans for locals to eventually take over the jobs. See “Tanzania’s MPs Approve Anti-Foreigner Law,” BBC News , March , 2015; see also Masato Masato, “Tan 19 - , 2015. zania: Labour Ministry to Regulate Foreigner’s Employment,” Daily News , March 19 98 Terence McNamee, “Africa in Their Words: A Study of Chinese Traders in South Africa, Lesotho, Botswana, Zambia and Angola,” Brenthurst Foundation, discussion paper 2012/03, April 201 2. 99 Deborah Brautigam, “Is China Sending Prisoners to Work Overseas?” blog post, China in Africa: The Real Story , August 13 , 2010. 100 - Alexis Okeowo, “China, Zambia, and a Clash in a Coal Mine”; see also Yaroslav Trofi — -1 mov, “In Africa, China’s Expansion Begins to Stir Resentment,” Wall Street Journal , Febru - ary 2, 2 007. —0 — +1 RR2273A_CC2015.indb 197 8/14/18 11:11 AM

236 198 At the Dawn of Belt and Road found that large majorities of Africans believe Chinese companies are not socially responsible and that they do not engage with local 101 communities. Military and Security Engagement China has been increasing its military and security engagement with the region. In recent years, there have been more PRC arms sales to the region, more senior military leadership visits to the region, and more PLAN port visits. China also participated in three joint exercises with African forces and has engaged in significant peacekeeping operations as well as military operations other than war in the region. Most important, China has become more invested in helping provide regional security. While China had long maintained a hands- 102 regional instability has off approach to security matters in Africa, 103 Beijing has threatened Chinese investments and citizens in Africa. responded by building up host nation capacity, making greater use of private Chinese security firms, and even using government assets and resources to evacuate Chinese citizens from conflict zones. This has culminated in the announcement of China’s first overseas military out - 101 Ethics Institute of South Africa, 2014, p. 22. 102 - China views that the Western concept of promoting security as a means to advance eco nomic development is merely a way to interfere in the sovereign affairs of African nations. Instead, China argued that African countries should first strive to advance their econo - mies as a way of promoting security and stability. See Wang Xuejun, “Developmental Peace: Understanding China’s Policy Towards Africa in Peace and Security,” Institute for Africa Studies, Zhejiang Normal University, September 12 , 2014. 103 A problem Beijing faces is that Chinese companies often do not evaluate potential insta - bility and political risk when deciding whether to invest abroad. When they do, according to a World Bank study, they see Africa as a highly risky investment environment. In a 2005 survey of 150 Chinese firms investing abroad, 94 pe rcent of the firms surveyed viewed Africa as the riskiest and least attractive region in which to do business. Operations to extract natu- ral resources in Africa are typically in remote areas, where state power projection is often limited and security risks are often escalated. See Peter Ford, “Why Chinese Workers Are Getting Kidnapped Abroad,” Christian Science Monitor , February 1, 2 012; Harry G. Broad- man, Africa’s Silk Road: China and India’s New Economic Frontier , Washington, D.C.: The -1— World Bank, 2007, p. . 99 0— +1— RR2273A_CC2015.indb 198 8/14/18 11:11 AM

237 China in Africa 199 post, in Djibouti, which China refers to as “a facility to provide logisti - cal support to Chinese fleets performing escort duties in the Gulf of 104 - but that others have sub Aden and the waters off the Somali coast” 105 sequently described as China’s first overseas military base. The following sections first discuss Chinese efforts to strengthen regional security and then detail PRC arms sales, military diplomacy, military exercises and training, PLAN port visits, peacekeeping activi - ties, and military operations other than war. PRC Efforts to Strengthen Regional Security As Chinese companies ventured further into ungoverned and unsta - ble areas of the continent, Chinese investments and citizens became increasingly threatened by political violence, terrorism, and social unrest that host nations proved unable (and sometimes unwilling) to control. Beijing realized it would have to take a more active involve- ment in local political and military disputes. In a marked change from its noninterference principle, Beijing became actively involved in diplo - matic efforts to resolve conflict between Sudan and South Sudan—the per cent of China’s oil imports and the location source of roughly 5 106 In addi - of significant amounts of Chinese-built oil infrastructure. tion, Beijing contributed peacekeepers—including, for the first time, infantry troops—to UN peacekeeping operations in Darfur, South 104 Hong Lei, “Foreign Ministry Spokesperson Hong Lei’s Regular Press Conference on , January 21 , 2016,” Ministry of Foreign Affairs of the People’s Republic of China, January 21 2016. 105 Jane Perlez and Chris Buckley, “China Retools its Military with a First Overseas Outpost New York Times , November 26 , 2015; Ben Blanchard, “China Sends Troops to in Djibouti,” Open First Overseas Military Base in Djibouti,” Reuters , July 11 , 2017. 106 These security risks can cause critical disruptions to Chinese economic and business interests. The China National Petroleum Corporation (CNPC) has invested more than $7 bi llion in South Sudan’s oil infrastructure, which has been threatened by instability there. 20 Fighting in December - 13 caused Chinese oil production in South Sudan—which repre pe rcent of China’s total oil imports in the first ten months of the year—to plummet sented 1 by 20 rcent. See Haggai Matsiko, “Is It time for a China-Africa Command?” pe The Indepen - — -1 dent (Uganda), November 16 , 2014; Yuwen Wu, “China’s Oil Fears over South Sudan Fight - 014. ing,” BBC News , January 8, 2 —0 — +1 RR2273A_CC2015.indb 199 8/14/18 11:11 AM

238 200 At the Dawn of Belt and Road Sudan, Mali, Cote d’Ivoire, Liberia, Democratic Republic of Congo, 107 and Western Sahara. China has ramped up its engagement in security matters only in the past few years. The first FOCAC conference pledged support for nuclear weapon-free zones and greater attention to small arms smug - 108 The second FOCAC action plan called for coordination on a gling. range of nontraditional security issues, including terrorism, drug traf - 109 The FOCAC ficking, transnational crime, and other challenges. action plan for 2012–2015 promised Chinese support to African Union conflict resolution initiatives, UN peacekeeping operations, counter- - piracy patrols, and political mediation by China’s Special Representa 110 In March 2013, Foreign Minister Wang Yi tive for African Affairs. sai d security would be one of the three focus areas of China’s coopera - 111 tion with Africa. Chinese firms often rely on host nation police and security forces to protect their facilities, but these forces are often poorly equipped and 112 Moreover, it is politically risky for an African government trained. to provide better (or even just more visible) security for Chinese firms 113 while locals complain about inadequate or abusive security forces. China is developing new ways of protecting its economic assets and citizens in Africa. - Chinese companies are also increasingly taking their own mea sures to provide security for their workers in Africa. Private Chinese 107 See United Nations, “Current Peacekeeping Operations,” webpage, undated. 108 The First Ministerial Conference of the Forum on China-Africa Cooperation, “Beijing Declaration of the Forum on China-Africa Cooperation,” October 12 , 2000. 109 The Second Ministerial Conference of the Forum on China-Africa Cooperation, “Addis Ababa Action Plan,” September 25 , 2009. 110 The Fifth Ministerial Conference of the Forum on China-Africa Cooperation, “Beijing Action Plan (2013–2015),” July , 2012, section 2.6. 23 111 “China to Cooperate with Africa on Industrialization, Sanitation, Security,” 2015. 112 Ford, 2012. 113 Shaio H. Zerba, “China’s Libya Evacuation Operation: A New Diplomatic Imperative— -1— 10. Overseas Citizen Protection,” Journal of Contemporary China , Vol. 23, No. 90, 2 014, p. 11 0— +1— RR2273A_CC2015.indb 200 8/14/18 11:11 AM

239 China in Africa 201 114 —are begin - security companies—only legalized in China in 2010 ning to enter the African market to provide security to Chinese firms. The director of one such security firm, Beijing Huayuan Weishi Secu- rity Service Co., traveled to Tanzania with Vice President Li Yuanchao 14 to assess business potential in Tanzania, where it 20 in December plans to have 800 guards, with sales of about $90 llion within three mi 115 While private security contractors may mitigate security short - years. comings for Chinese firms, it is also possible that poorly trained guards operating in Africa with minimal oversight could exacerbate local ten - sions with Chinese expatriates. PRC Arms Sales Chinese arms sales are an important component of Chinese military engagement in Africa. According to the SIPRI Arms Transfers Data - base, from 2010 through 2014, China sold arms to at least 18 coun - tries in Africa, including Algeria, Cameroon, Chad, Congo, Ethiopia, - Gabon, Ghana, Kenya, Namibia, Nigeria, Sudan, Tanzania, and Zam 116 SIPRI reports indicate that Chinese arms sales in Africa have bia. increased in recent years, and China has sold more arms in Africa than has the United States in most years since 2000. One notable deal was China’s recent agreement to sell three Chinese-made surface ships to Algeria. China launched the first of three frigates built for Algeria by China State Shipbuilding Corpora - 15. In 20 14, and it is scheduled for delivery in May 20 tion in August addition, China is reportedly negotiating a contract for the sale of three 117 Nigeria has also purchased significant more of the ships to Algeria. amounts of Chinese military materiel for both coastal patrols and oper - 114 Karthie Lee, “Chinese Private Security Firms Go Overseas: ‘Crossing the River by Feel - 014. ing the Stones,’” Frontier Services Group Analysis, September 8, 2 115 , China Daily Africa Yang Yao, “Chinese Security Company Makes Foray into Africa,” October 31 , 2014. 116 Pieter D. Wezeman and Siemon T. Wezeman, “Trends in International Arms Transfers, 15. 20 2014,” SIPRI Fact Sheet, March 117 — -1 Kerry Herschelmann, “First Algerian C28A Corvette Launched in China,” IHS Jane’s , August Defence Weekly 014. 20, 2 —0 — +1 RR2273A_CC2015.indb 201 8/14/18 11:11 AM

240 202 At the Dawn of Belt and Road ations to counter Boko Haram, including two P-18N offshore patrol vessels, armored personnel carriers, antitank missiles, and, reportedly, 118 China has provided armed CH-3 unmanned aerial vehicles (UAVs). some military materiel as grants to selected African countries as well, sometimes as deliverables associated with high-level visits. While on a 20 15, for example, Chinese Minister of visit to Windhoek in March l- mi Defense Chang Wanquan announced Beijing would provide $58 119 Similarly, between 2004 and lion worth of equipment to Namibia. llion in military equipment mi 2014, China provided Liberia with $10 120 and training. Some African countries have acquired Chinese arms to support peacekeeping capabilities; Zambia, for example, used Chinese-made 121 and Ghana’s $160 million arms armored personnel carriers in Sudan, 122 In agr eement with China included peacekeeping-related training. other cases, however, Chinese arms have clearly fueled internal and regional conflicts. Chinese arms were used by both sides of conflicts in the Democratic Republic of Congo, Sierra Leone, and Sudan as well as 123 in the border wars between Ethiopia and Eritrea. PLA Military Diplomacy Chinese military diplomacy is another important aspect of Chinese military engagement in Africa. Africa is the region with the third high - est number of visits by CMC members since 2003, with nine, though 118 See, for example, Jeffrey Lin and P. W. Singer, “Did an Armed Chinese-Made Drone Just Crash in Nigeria?” Popular Science , January 28 , 2015; see also “Nigeria Acquiring New and Second-Hand Military Hardware,” , March Cameroon Concord 015. 30, 2 119 , 2015. , March 31 “China Donates Military Equipment to Namibia,” Star Africa 120 Terrence Sesay, “China Donates $4m Worth of Equipment to Liberian Military,” Africa Review , February 27 , 2014. 121 Bates Gill and Chin-Hao Huang, China’s Expanding Role in Peacekeeping: Prospects and 09. Policy Implications , SIPRI, Policy Paper 25, November 20 122 - Bernice Bessey, “Ghana: Gov’t to Re-Equip Armed Forces,” Ghanaian Chronicle , Sep tember 10 , 2008. 123 Kuruvilla Mathews, “China and UN Peacekeeping Operations in Africa,” in China- Mee ting of the China-Africa Think Tanks Africa Think Tanks Forum (CATTF), “The 2nd -1— –13, 2012, pp. Forum,” conference report, Bisoftu, Ethiopia, October 12 95 –96. 0— +1— RR2273A_CC2015.indb 202 8/14/18 11:11 AM

241 China in Africa 203 it is well behind Southeast Asia and South and Central Asia, the two most frequent destinations, with 27 and 20 such trips, respectively. Senior Chinese military officers visited a number of countries in Africa during the period reviewed as part of this study, with Tanzania and South Africa appearing to be countries of particular interest to China. The frequency of such visits also appears to be increasing. Combined Exercises and Training PLA troops have participated in just three joint exercises with African armed forces. China’s first joint exercise in Africa, “Peace Angel-2009,” 124 China also was a humanitarian medical rescue mission with Gabon. held a 2011 counter-piracy training with Tanzania. In 2014, this was expanded in “Transcend-2014,” a month-long exercise conducted at Kigamboni Naval Base involving the PLAN South Sea Fleet and the 125 Transcend-2014 focused on marine tac - Tanzanian Marine Corps. tics, anti-piracy, and counterterrorism; the specific scenario required the marines to rescue civilians held hostage on a small island after a 126 China has also provided training to African mili - terrorist hijacking. taries, although often the training is related to weapons and materiel 127 that China has provided. PLAN Port Visits From 2000 to 2014, the PLA Navy conducted 35 total port visits to Africa. Since 2009 alone, the PLAN has made 33 port visits to the region, 28 of which have been associated with PLAN anti-piracy task Peace Ark forces. The PLAN’s hospital ship made four port visits in 124 Xinhua News , June 21 “‘Peace Angel 2009’ Kicks Off,” , 2009. 125 Forum on China-Africa Cooperation, “The First Joint Training Exercise Between the Two Armed Forces of Tanzania and China to Be Conducted,” October 23 , 2014; Forum on China-Africa Cooperation, “Ambassador Lu Observed Transcend 2014 Joint Training Exer - cise of Marine Corps Between China and Tanzania,” November 15 , 2014. 126 15, 2014. Forum on China-Africa Cooperation, November 127 As part of U.S. security cooperation efforts, the U.S. military often provides English — -1 language study centers to partner militaries so their personnel can acquire the language skills necessary to attend training courses in the United States. —0 — +1 RR2273A_CC2015.indb 203 8/14/18 11:11 AM

242 204 At the Dawn of Belt and Road 129 130 128 Tanzania, Kenya, Africa in 2010, stopping in Djibouti, and the 131 Over 400 Chinese soldiers, officers, and medical work - Seychelles. ers aboard the ship provided free medical services to local residents. The port most frequented by these task forces is Djibouti, a key port of ti mes between 2009 and supply in the region that has been visited 19 2014, making it the PLAN’s second most frequented port overall (after 132 Salalah, Oman). China’s increasingly frequent calls on African ports raised the question of whether Beijing would seek to institutionalize its port access, either by establishing a permanent naval base of its own or by formalizing logistics agreements to service naval vessels. If the PLAN is - to engage in non-PKO operations abroad, it would benefit from secur ing reliable access to fuel, supplies, and other forms of logistical sup - 133 A Chinese naval presence would also help project Chinese mili - port. tary power and protect Chinese commercial shipping transiting the 134 Indian Ocean, the Red Sea, and the Suez Canal. - Related to this, the Seychelles reportedly invited China in Decem 20 ber 11 to set up a military base, and China considered setting up some type of facility, although characterizing it as a potential supply 135 Chinese defense officials asserted at stop rather than a military base. the time that PLAN ships had previously taken on supplies in Djibouti, 128 , 2010. “China’s Hospital Ship Peace Ark Leaves Djibouti,” Xinhua News , September 29 129 “Navy Hospital Ship ‘Peace Ark’ Arrives in Kenya,” 14 , 2010. , October China Daily 130 China Daily , October 010. “China’s Peace Ark Arrives in Tanzania,” 20, 2 131 “China’s ‘Peace Ark’ Mission Proves Success in Seychelles,” Xinhua News , October 30, 201 0. 132 Note that an alternate and potentially more complete count of port calls appears in Erickson and Strange, 2015 . 133 Zerba, 2014, p. 1107. 134 Simon Allison, “Djibouti Welcomes China to the Playground of the Superpowers,” , May Daily Maverick 14 , 2015. 135 Zerba, 2014, p. 1107. See also Chris Buckley with additional reporting by Michael , Mar tina, “Update 2—China Considers Seychelles Port Offer, Denies Base Plan,” Reuters -1— December 13 , 2011. 0— +1— RR2273A_CC2015.indb 204 8/14/18 11:11 AM

243 China in Africa 205 136 In February 2014, Djibouti signed a security and Yemen, and Oman. def th China that granted port ense strategic partnership agreement wi access to PLAN ships in exchange for Chinese assistance to Djibouti’s 137 Fifteen months later, in May 2015, Djiboutian navy and air force. Pre - sident Ismail Omar Guelleh announced that his country was nego tiating with Beijing regarding the establishment of a Chinese military 138 That November, the establishment of a Chinese facility was base. announced. Although China referred to it as a logistical support facil - 139 ity, others have subsequently referred to it as a military base. China formally opened the base on August 1, 2017, with Deputy nese Naval Commander Tian Zhong and Djibouti’s Defense Min - Chi 140 Analysis of satellite imagery ister Ali Hassan Bahdon attending. showed the base to be fortified with three layers of security and to have about 250,000 square feet of underground space, allowing not only 141 Subsequently, Chinese for storage but also for unobserved activity. troops at the base have conducted at least one live-fire exercise with the stated purpose of testing their capacity to handle a variety of tasks and 142 weapons in extreme heat and humidity. Although the strategic advantages of a naval facility in Djibouti are clear, some observers assert that Beijing’s effort to establish a mil - itary facility in Djibouti is a direct challenge to the United States, which has leased Djibouti’s 500-acre Camp Lemonnier as a base for 136 China Daily Li Xiaokun and Li Lianxing, “Navy Looks at Offer from Seychelles,” , December 13 , 2011. 137 “Djibouti and China Sign a Security and Defense Agreement,” AllAfrica.com , Febru - ary 27 , 2014; see also, John Lee, “China Comes to Djibouti,” Foreign Affairs , April 23 , 2015. 138 AFP, “Djibouti President: China Negotiating Horn of Africa Military Base,” Defense , May News 015. 10, 2 139 Perlez and Buckley, 2015. 140 “China Formally Opens First Overseas Military Base in Djibouti,” Reuters , August 1, 2 017. 141 Joshua Berlinger, “Satellite Photos Reveal Underground Construction at Chinese Mili - tary Base,” CNN, August 1, 2 017. 142 — -1 Minnie Chan, “Live-Fire Show of Force by Troops from China’s First Overseas Military , 2017. Base,” South China Morning Post , September 25 —0 — +1 RR2273A_CC2015.indb 205 8/14/18 11:11 AM

244 206 At the Dawn of Belt and Road 143 and signed a new its regional counterterrorism operations since 2002 14 4 20-year lease for the base in 2014. UN Peacekeeping Operations Chinese participation in UN Peacekeeping Operations is a central aspect of Chinese military engagement and conflict resolution in Africa. Chinese officials have promised to work to resolve conflicts in Africa, support African organizations, and participate in UN peace- 145 As of March 31, 2015, China was keeping operations in the region. 146 inv olved in seven UNPKOs in Africa. China’s participation in such operations in Africa has featured several notable firsts. This includes the first time a PLA officer led UN PKO and the first time China sent guard forces to participate a in a UNPKO, even though their role appears limited to providing security for the other Chinese personnel. China also achieved another milestone by deploying a larger number of security forces to Mali to participate in the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA). Their responsibili - ties went beyond protecting other Chinese troops to include guard - ing MINUSMA headquarters and the living areas of the UNPKO personnel. China has also sent an entire infantry battalion to par - 147 China’s ticipate in the UN peacekeeping mission in South Sudan. peacekeeping activities in Africa in recent years thus represent a key step beyond China’s traditional practice of providing only noncombat forces to participate in UNPKOs. 143 Craig Whitlock, “Remote U.S. Base at Core of Secret Operations,” , Washington Post October 25 , 2012; Frank Gardner, “US Military Steps Up Operations in the Horn of Africa,” , February BBC News 014. 7, 2 14 4 Eric Schmitt, “U.S. Signs New Lease to Keep Strategic Military Installation in the Horn of Africa,” New York Times , May 5, 2 014. 145 Wang Wei, “China and Africa Envision New Security Cooperation,” , China.org.cn July 9, 2 010. 146 UN Missions Summary, detailed by country, March 31, 2015. 147 “Xinhua Insight: Chinese Peacekeeping Troops Show Responsibility, Professionalism,” -1— , 2015. Chinese Military Online , April 19 0— +1— RR2273A_CC2015.indb 206 8/14/18 11:11 AM

245 China in Africa 207 China’s participation in African stability operations benefits it in a number of important ways. These operations win China regional trust 148 and China uses them to advance its own and international stature, strategic interests. For example, when China’s support of the Sudanese regime led international human rights groups to label Beijing’s Olympic Games as the “Darfur Olympics” and the “Genocide Olympics,” China pressured Sudan to accept the deployment of a UN peacekeeping opera - 149 This allowed Beijing to mitigate criticism of its Olympic Games tion. and distance itself from the violence against civilians in Darfur. PKOs can also contribute directly to Chinese economic interests by maintain - 15 0 ing stability in regions where Chinese companies operate. Military Operations Other than War PLA participation in military operations other than war activities rep - resents still another element of Chinese military engagement with countries in Africa. Prominent examples have included Chinese PLAN participation in anti-piracy patrols in the Gulf of Aden, PLA participa - tion in Ebola treatment operations, and PLAN and PLAAF involve- ment in noncombatant evacuation operations. China’s navy has been participating in anti-piracy patrols in the 20 - 08. Their participation in 22 succes Gulf of Aden since December sive task forces, and counting, has not only helped deal with piracy but also allowed China to boost its image internationally and given the PLAN an opportunity to improve its ability to operate far from China’s shores. In addition, participation in anti-piracy patrols has positioned the PLAN to be able to participate in other missions, most notably China’s evacuations from Libya in 2011 and Yemen in 2015. 20 14, China announced that it would dispatch hun - In October dreds of military medical personnel to West Africa to treat patients and help in the fight against Ebola. PLA involvement in relief opera - tions in West Africa was unprecedented in that it marked the first time China had sent military medical units overseas to set up a hospital and 148 Gill and Huang, 2009, p. 13. 149 Gill and Huang, 2009. — -1 15 0 Gill and Huang, 2009. —0 — +1 RR2273A_CC2015.indb 207 8/14/18 11:11 AM

246 208 At the Dawn of Belt and Road 151 PLA personnel participate in a humanitarian assistance mission. sent to Liberia and Sierra Leone not only treated hundreds of patients 152 but also provided training to numerous local health care workers. The protection of Chinese nationals abroad has taken on greater importance. There are at least hundreds of thousands of PRC citizens— 153 In perhaps as many as one million—living and working in Africa. March 20 11, China managed a noncombatant evacuation operation from Libya, which Chinese officials describe as the “largest and most complicated overseas evacuation ever conducted by the Chinese gov - 15 4 China evacuated more than mi llion, ernment.” At a cost of $152 36,000 Chinese citizens and 2,100 foreign nationals from Libya in 155 To coordinate the evacuation, the PRC established roughly ten days. 15 6 The operation was particu - a special task force led by a vice premier. larly notable for its limited, but unprecedented, PLAN and PLAAF 157 participation. Conclusion China and the United States have similar interests in Africa. Both the United States and China seek security and stability in the region and 151 Megha Rajagopalan, “China to Send Elite Army Unit to Help Fight Ebola in Liberia,” , 2014. Reuters , October 21 152 See, for example, “PLA Sends Two More Medical Teams to Fight Against Ebola in West China Military Online , January 14 , 2015; and Tang Yingzi and Wang Xiaodong, A fric a,” “China Army Medics Join Ebola Battle,” China Daily , November , 2014. 15 153 French, 2014, p. 5. 15 4 Zerba, 2014, p. 1112. 155 Zerba, 2014. 15 6 Mathieu Duchâtel and Bates Gill, “Overseas Citizen Protection: A Growing Challenge for China,” SIPRI, February 12 , 2012. 157 China relied on 74 chartered aircraft, more than a dozen ships, and 100 buses to evacu- ate its citizens. However, in a first for China, the PLA AF sent four IL-76 large transport aircraft to Libya to participate in evacuation, and the PLAN Jiangkai II-class frigate Xuzhou , which had been conducting anti-piracy operations off Somalia, provided “support and pro - -1— tection.” See Zerba, 2014, p. 01, and Duchâtel and Gill, 2012. 11 0— +1— RR2273A_CC2015.indb 208 8/14/18 11:11 AM

247 China in Africa 209 - the maintenance of political influence, although Washington and Bei jing take different approaches to some of these interests. The United States has worked to promote good governance, provided aid that is focused on human development, and pursues investment led by pri - vate sector entities, whereas China has stressed political independence from outside interference while providing state-backed investment and tied aid focused on infrastructure and natural resource extraction. To some degree, Washington and Beijing are working at cross-purposes. In providing aid without preconditions, for example, Beijing encour - ages inefficiencies that Washington tries to mitigate through its gover- nance initiatives; similarly, by insisting that African countries conduct - feasibility studies and environmental impact assessments before build ing new infrastructure, Washington is hindering China’s ability to do business. Commercially, both seek access to natural resources and seek the creation of export markets for manufactured goods. Both hope to improve African economic development through aid, investment, and trade, but Beijing and Washington take different approaches. Chinese - and American companies generally operate in different spheres; Chi nese firms tend to pursue opportunities in capital-intensive industries using low-skilled labor, such as construction, mining, and manufactur - ing, while U.S. firms are involved in service industries and high-tech 158 sectors such as banking and information technology. Critics of China’s emphasis on political noninterference in its - investment activities “characterize Chinese involvement on the con tinent as narrowly mercantilist at best and devoid of moral content at 159 China has typically argued that economic development is the worst.” 160 but with its own investments increasingly threatened basis for peace, 158 Government Accountability Office, 2013, pp. 54, 67. 159 Chris Alden and Daniel Large, “On Becoming a Norms Maker: Chinese Foreign Policy, China Quarterly 15, Norms Evolution and the Challenges of Security in Africa,” 20 , March p. . 130 160 Chinese Mission to UN Offices in Geneva, “Statement by Ambassador Wang Yinfan, Se ssion of the General Permanent Representative of China to the United Nations, at the 56th — -1 Assembly on the Issue of ‘the Causes of Conf lict and the Promotion of Durable Peace and Sustainable Development in Africa,’” December 3, 2 001. —0 — +1 RR2273A_CC2015.indb 209 8/14/18 11:11 AM

248 210 At the Dawn of Belt and Road by instability and anti-Chinese violence, China is increasingly seek - - ing a way to promote peace and stability to promote economic devel opment. Chinese involvement in African peace, security, and post- conflict reconstruction has been increasingly prominent focus areas at 161 China is also adjusting its approach FOCAC meetings since 2006. to foreign policy to move beyond strict noninterference to play a more 162 Some experts believe that China substantive role in African security. may well take similar approaches in other regions of the world. “Africa has become a terrain for demonstrating China’s foreign policy activ - ism and its willingness to strike a foreign policy formula integrating its economic interests, regional concerns and provisions for international 163 public goods” that it may apply elsewhere. A decision by China to pursue a more activist foreign policy in Africa (and perhaps in other parts of the world) could have mixed results for the United States. On one hand, China’s willingness to help - resolve conflicts, contribute to peacekeeping missions, and encour age partner nations to moderate their own destructive policies could - improve political and security conditions in countries where U.S. influ ence may be minimal. Beijing’s successful efforts to convince Sudan to accept a UN peacekeeping mission in Darfur is one notable example of China’s constructive activism. Moreover, China’s rapidly growing investment in African infrastructure could yield economic benefits for African nations—provided they are managed well and are economi - cally efficient, rather than just placing recipient countries in a debt hole—while also facilitating business opportunities for U.S. and other foreign companies. On the other hand, if China seeks a greater mili - tary presence on the continent, uses the access created by its economic engagement to push for the United States’ exclusion from the region, or otherwise seeks to treat the region as a zero-sum battle for influence, China’s growing influence in the region could be to the United States’ detriment. 161 131. Alden and Large, 2015, p. 162 Alden and Large, 2015, p. 123. -1— 163 128. Alden and Large, 2015, p. 0— +1— RR2273A_CC2015.indb 210 8/14/18 11:11 AM

249 China in Africa 211 It is not clear, at least at this point, if Chinese involvement in the region has translated into greater regional (or country-specific) sup - port for broader Chinese policy initiatives. With the exception of a small number of African states, such as Zimbabwe, the pariah status of which means it has few other friends in the international community, it is not clear whether Chinese trade, investment, or aid have enhanced Beijing’s influence over regional politics or translated into a greater willingness to vote with China at the UN. To date, Beijing has seemed more interested in using its political clout and vast economic resources to secure additional business opportunities, particularly in the extrac - tive industries and the relatively low-tech construction sector, both of which are dominated by SOEs. Although Chinese economic pursuits may undermine U.S. efforts to promote good governance on the continent, for the most part the United States and China do not seem headed for conflict or com - petition in Africa. Indeed, in the political sphere, African countries appear eager to maintain close relations with both the United States and China. African governments participated at the highest levels - (typically head of state) in the 2014 White House Africa summit with - out apparent concern, for example, that their doing so would jeopar dize their relationship with China or their participation in the 2015 FOCAC summit. In the realm of foreign assistance, the United States focuses its assistance efforts on human development to a much greater degree than China, and in the commercial sphere, U.S. and Chinese firms generally do not compete in Africa (with the exception of the hydrocarbons sector). The Chinese government provides much more state backing to private investment in Africa than do U.S. equiva - - lent entities like the Export-Import Bank, the Trade and Develop ment Agency (TDA), and the Overseas Private Investment Corpora - tion (OPIC). Finally, U.S. companies are often less willing to invest in countries with high political risk, poor infrastructure, and small 164 domestic or regional markets. China has a different approach to security matters in Africa than the United States does, however. While both seek to protect their — -1 164 99–101. Hanauer and Morris, 2014, pp. —0 — +1 RR2273A_CC2015.indb 211 8/14/18 11:11 AM

250 212 At the Dawn of Belt and Road nationals from violence, the United States is interested in mitigating and containing threats so they do not reach the U.S. homeland, while China is principally interested in eliminating threats to its economic activities in the region. The United States, thus, takes a more proactive approach to security matters, deploying U.S. military assets to engage in training and operations and providing extensive bilateral security cooperation designed to address shared threats, such as terrorism and violent extremism. In contrast, China focuses its military engagement on internationally endorsed multinational peacekeeping missions, arms sales tailored to African countries’ own threat perceptions, and limited - military deployments aimed at protecting Chinese commercial opera tions in the region. Implications for the United States While Washington’s and Beijing’s divergent strategies for pursuing their respective interests in Africa means that the two world powers are not likely to come into conflict, it also means that few opportunities 165 The United States and for mutually beneficial collaboration exist. China consult periodically on African affairs through the U.S.-China Sub-Dialogue on Africa, which meets at the assistant secretary level. Although launched in 2005 to discuss regional issues and promote U.S.-Chinese cooperation in the region, the initiative has produced no collaborative programs. Health care and economic development are often sufficiently 166 Nevertheless, even politically innocuous to permit collaboration. when their interests have coincided, strategic mistrust between Wash - 167 Even ington and Beijing has led them to pursue parallel initiatives. though both countries provided assistance to manage the spread of the Ebola virus in West Africa in 2014, for example, U.S. and Chinese 165 Yun Sun, “The Limits of U.S.-China Cooperation in Africa,” Brookings Institution, 6, 2 015. April 166 See Travis M. Miller, “Is There Room for U.S.-China Cooperation on the Ebola Crisis? 15 , 2014. (Parts 1 through 3),” The Carter Center, U.S. China Perception Monitor blog, October -1— 167 Yun Sun, 2015. 0— +1— RR2273A_CC2015.indb 212 8/14/18 11:11 AM

251 China in Africa 213 168 In a similar vein, responders engaged in only minimal deconfliction. humanitarian assistance and disaster relief may provide opportunities for U.S.-Chinese collaboration. However, the U.S. and Chinese armed forces play significant roles in official disaster response efforts, and it may be difficult to manage coordination between military forces that are accustomed to viewing each other as likely adversaries. As Chinese citizens increasingly go overseas to pursue economic opportunities, they are likely to require assistance when conflicts erupt or disasters strike. The U.S. government has extensive experience con - ducting noncombatant evacuation operations. Cooperation on such operations could be promoted as a joint humanitarian effort, since the beneficiaries would be civilians caught in conflict or disaster zones, but distrust between the U.S. and Chinese militaries could make such collaboration difficult without a very senior-level commitment to work together. 168 U.S. government official, “China and the US in Africa—Can Security Policy Pro - mote Practical Cooperation?” Roundtable discussion, Johns Hopkins University School of 25 , 2015. Advanced International Studies, Washington, D.C., March — -1 —0 — +1 RR2273A_CC2015.indb 213 8/14/18 11:11 AM

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253 CHAPTER NINE China in Latin America and the Caribbean Latin America and the Caribbean (hereafter Latin America) is the least important developing region for China. The region is geographically cent of total Chinese goods trade with per distant and made up only 6 the world in 2013. Countries in the region neither have any territorial disputes with China nor view the country as a security threat. Many of them do view China as a good market and a source of capital for infrastructure and other projects, but some are also concerned about Chinese investment and competition. The region is currently not part of China’s Belt and Road Initia - tive. There are voices in China arguing that Latin America should be 1 There is also ntury Maritime Silk Road. Ce included in China’s 21st speculation that China is deepening relations and engaging in signifi - cant infrastructure investments to facilitate the region’s potential inclu - 2 Beijing, however, is sion despite not characterizing its actions as such. 1 There are some in China urging the country to expand its maritime silk road to Latin America. See Tang Jun, “Ying Jiang ’21 Shiji Haishang Sichou Zhi Lu’ Yanshen Zhi Lamei Diqu” [“The ‘21st Ce ntury Maritime Silk Road’ Should Be Extended to the Latin American Region”], The Contemporary World , February 6, 2 015. 2 Nathan Beauchamp-Mustafaga, “The New Silk Road and Latin America: Will They Ever Jamestown China Brief Meet?” , Vol. 15, No. 5, M arch 6, 2 015; “Zhongguo Lamei Luntan Rang Meiguo Zhuakuang” [“China-Latin America Forum Drives America Mad”], Creaders. net , January 10, 2 015. — -1 —0 — +1 215 RR2273A_CC2015.indb 215 8/14/18 11:11 AM

254 216 At the Dawn of Belt and Road cautious of U.S. sensitivities of being too active politically and militar - ily in the Americas. Overall, China is increasing its involvement in the region and will likely become a more important player in the years to come. Relations will also likely become more complex as Chinese influence extends beyond the economic sphere. However, some of this will depend on China’s growth path, its future demand for commodities, other demands on its capital, and the success or failure of its Latin American partners. There is interest and potential for deepening the relationship, but there are also concerns that Latin America is less receptive to Chi - nese activities than Africa and economic frictions could strain China’s relations with the region. Key Chinese Activities in the Region China is not actively seeking to balance the United States in Latin America. Economics and trade have been the main focus of Beijing’s engagement with the region. China is exporting manufactured goods - to the region and investing in infrastructure, agriculture, telecommu nications, and tourism. The region is also a source of energy (petro - leum), raw materials (iron, copper, and nonferrous ores), and food (soy) for China. In recent years, geopolitical considerations have played a greater role in Chinese engagement. China sees Latin America as an impor - tant region for China to strengthen its relations with developing coun - tries and to work toward a more multipolar international system. This includes obtaining regional support in the UN for policies China favors as well as involving countries in Chinese multilateral initiatives. China is most intertwined with Venezuela. But Brazil serves as more of a partner in multilateral initiatives; it is the only Latin American founding member of the China-led AIIB, and it is a core member of the New Development Bank, or BRICS bank. Beijing also seeks to strengthen ties with countries in the region to decrease Taiwan - ese influence. Beijing views three countries in particular—Venezu - ela, Brazil, and Argentina—as its most important regional partners (Figure 9.1). -1— 0— +1— RR2273A_CC2015.indb 216 8/14/18 11:11 AM

255 China in Latin America and the Caribbean 217 Figure 9.1 China’s Relations with Countries in Latin America and the Caribbean, 2015 Mexico Bahamas Haiti Belize Cuba Dominican Republic Honduras Jamaica Guatemala Nicaragua El Salvador Venezuela Costa Rica Guyana Suriname Panama French Guiana Colombia Ecuador Peru Brazil Bolivia Paraguay Uruguay Argentina Chile Overall relationship with China: Pivotal state Major partner Diplomatic relations No relations NOTE: Due to small scale of map, not all countries are displayed and labeled. RR2273A-9.1 RAND — -1 —0 — +1 RR2273A_CC2015.indb 217 8/14/18 11:11 AM

256 218 At the Dawn of Belt and Road Drivers of Chinese Engagement Chinese Activities in the Region Prior to 2000 Early Chinese involvement in the region can be divided into the Cold War period and post–Cold War decade. During the Cold War, Bei - jing focused on transforming the international system by supporting nonalignment of third world countries as well as local Maoist move- ments that sought to overturn the established socioeconomic system. With the exception of communist Cuba, countries in the region did not establish diplomatic relations with Beijing until the 1970s as most - had pro-Washington and anti-Communist governments run by con servative military leaders. After Sino-U.S. rapprochement in the early - 1970s, the Nixon administration discreetly encouraged Latin Ameri can countries, such as Brazil, Chile, and Mexico, to open embassies in Beijing. As Beijing embarked on economic reforms and opened up to international trade in the late 1970s, it also shelved its attempts to foment socialist revolution in favor of developing bilateral relations and links to the Developing World. By the 1990s, China switched its emphasis in Latin America from political mobilization to economic 3 engagement. Current Chinese Policy Toward the Region Chinese Priorities and Policies China has three overarching interests in Latin America: Sol idarity and cooperation with developing countries to facilitate • China’s vision of a multipolar world, including Chinese support of a greater Latin American role in international affairs and Latin American support of Chinese international initiatives • nomic trade and investment to support China’s economic Eco growth 3 “China and Latin America: A New Adrian H. Hearn and Jose Luis Leon-Manriquez , Era of an Old Exchange,” in Adrian H. Hearn and Jose Luis Leon-Manriquez, eds., China Engages Latin America: Tracing the Trajectory , Boulder, Colo.: Lynne Rienner Publishers, -1— 2001, pp. 10. 8– 0— +1— RR2273A_CC2015.indb 218 8/14/18 11:11 AM

257 China in Latin America and the Caribbean 219 International political legitimacy, including recognition of Bei - • ji ng as the sole representative of China (One China principle), acknowledgement of the principle of noninterference in sovereign countries’ internal affairs, and support of Chinese sovereignty and territorial integrity. Beijing has issued several policy documents that define its objec - tives in Latin America. China’s 2008 White Paper on Latin America was its third such regional policy paper after its papers on the Euro - 4 The paper indicates that “the move towards pean Union and Africa. multi-polarity is irreversible” and that Latin America as a region “is growing in strength and its international influence is rising.” Beijing views relations with the region from a “strategic plane” and aims for “a comprehensive and cooperative partnership featuring equality, mutual - benefit and common development.” The paper listed four goals of Chi nese policy toward the region: “promote mutual respect and mutual trust and expand common ground”; deepen cooperation, particularly economic cooperation; increase political and cultural exchanges; and uphold the One China principle. In 2011 and 2014, China issued two different White Papers on its 5 Aid to Latin America constituted 12.7 percent of all Chi - foreign aid. per oreign aid up to and including 2009 but only 8.4 - nese f cent of Chi nese foreign aid from 2010 to 2012. The major recipients of Chinese 7 6 as well as the poorest LDCs. aid were Asian and African countries Latin America was not a priority region, and only Haiti qualified as an LDC. In recent years, Chinese engagement with the region has transi - tioned from bilateral to region-wide platforms. China has been a per - manent observer in the Latin American Integration Association since 4 “Full Text: China’s Policy Paper on Latin America and the Caribbean , ” Xinhua News , November 6, 2008. 5 , 2011; China’s Foreign Aid (2014) , Information Office of the China’s Foreign Aid (2011) State Council of the People’s Republic of China, July 20 14. 6 percent of global Chinese foreign aid. Both regions received over 80 — -1 7 Chinese aid to LDC increased from 40 percent in 2009 to 52 percent in 2010–2012. —0 — +1 RR2273A_CC2015.indb 219 8/14/18 11:11 AM

258 220 At the Dawn of Belt and Road 1994 and the Organization of American States since 2004. It became a formal member in the Inter-American Development Bank in 2009. In 2014, the China-Community of Latin American and Caribbean States (CELAC) forum was established. This multilateral forum provides a vehicle for China to conduct talks with all Latin American countries at the ministerial level and resembles Chinese regional arrangements in Africa (FOCAC) and Central Asia (SCO) as well as China’s engage- ments with ASEAN in Southeast Asia. - Chinese policy in Latin America is shaped by a number of govern ment, quasi-government, and nongovernment actors. There is limited but growing Chinese expertise on Latin America within and outside the government (see Appendix A). Similarly, on the Latin American side, regional countries are still grappling with how best to engage more sys - tematically and institutionally with China. According to a 2015 Yellow Paper published by the Institute for Latin American Studies at the Chi - nese Academy of Social Science, Latin American countries are begin - ning to reassess and formulate strategies to engage with China. Brazil formulated a “China Agenda—Positive Action for Sino-Brazilian Eco - nomic and Trade Relations” in 2008 to increase exports to China and diversify economic partnerships. Similarly, Chile established a policy plan for China in 2009 and a China affairs group within its Foreign 8 In 2013, Mexico agreed to establish a Investment Committee in 2010. 9 special trade office to facilitate bilateral cooperation with China. The following three sections explore China’s political, economic, and military engagement with the region. Political Engagement China’s main political interest in the region is to increase relations to provide international support and legitimacy. China seeks closer rela - tions with countries that have either a significant regional or global role. 8 “Zhongguo Shi Lamei Waijiao ‘Taipingyang Zhanlue’ De Youxian Mubiao” [“China , Is the Primary Target of Latin America Foreign Policy’s ‘Pacific Strategy’”], People’s Daily M a y 15, 2 015. -1— 9 013. Zhu Zhe, “China, Mexico Boost Relations,” China Daily , June 5, 2 0— +1— RR2273A_CC2015.indb 220 8/14/18 11:11 AM

259 China in Latin America and the Caribbean 221 Often, China’s actions have a strong economic component alongside their political and diplomatic components. In Latin America, China has maintained and formed close rela - tions with left-leaning and socialist countries such as Cuba, Venezuela, Argentina (when it was left-leaning), and Ecuador. While China has actively reached out to the entire region, left-leaning countries have particularly embraced and welcomed stronger relations with China. Cut off from or with limited access to U.S. and Western financing, these countries have also looked to China for economic support. Bei - jing is also advancing its One China policy by providing more finan - cial rewards to countries that recognize Beijing. Of the 22 countries that still recognize Taiwan, 12 were located in Latin America as of late 2015. Although Beijing and Taipei agreed to a truce in 2008 to their competition to win diplomatic recognition, China still seeks to strengthen its position vis-à-vis Taiwan. Under President Xi’s leadership, China’s relations with the region have deepened significantly. Since coming to power in 2013 and through the end of 2015, Xi has visited the region twice and Premier Li Keqiang 3 visit took him to 201 traveled again to Latin America in 2015. Xi’s June Trinidad and Tobago, Costa Rica, and Mexico. In Trinidad and Tobago, the first Caribbean country to establish diplomatic ties with China, in 1974, he emphasized the need to enhance high-level exchanges and visits and to expand cooperation in infrastructure, energy, and mining. Xi also met with leaders from other Caribbean countries with diplomatic ties 10 - He then vis llion in loans for projects. bi to China and promised $3 ited Costa Rica, the only Central American country that has diplomatic ties with China and the country that would serve as the CELAC chair in 2014. China and Costa Rica agreed to work together to establish a 11 and China agreed to provide China-Latin America cooperation forum mi llion credit for modernization the Central American country a $900 12 mi of an oil refinery and $400 llion in financing for a strategic highway. 10 013. “China, Trinidad and Tobago Pledge to Bolster Ties,” Xinhua News , June 2, 2 11 “China, Costa Rica Agree to Enhance Ties,” China Daily , June 6, 2 013. 12 — -1 Billion,” Tico Times , “Costa Rica, China Sign Cooperation Agreements Worth Nearly $2 013. Ju ne 1, 2 —0 — +1 RR2273A_CC2015.indb 221 8/14/18 11:11 AM

260 222 At the Dawn of Belt and Road In Mexico, Xi sought to smooth previous friction between the two coun - 13 tries and enhance economic cooperation. Thirteen months later, in July 2014, Xi traveled to Latin America aga in to attend a BRICS summit and the first meeting of the China- CELAC grouping in Brazil and to also visit Argentina, Venezuela, and Cuba. In Brazil, the BRICS countries agreed to establish the New Development Bank and a Contingency Reserve Agreement that will add to—and, some argue, rival—existing financial entities like the World Bank, the Asian Development Bank, and the International Monetary Fund. During the trip, China also signed a number of agreements, total - - llion, in the areas of energy, mining, electricity, agri bi ing around $70 culture, science and technology, infrastructure, and finance. Xi also pushed for a “1+3+6” cooperation framework for future partnership, which included: One p lan: Chinese-Latin American and Caribbean Cooperation • Plan (2015–2019) ee engines of cooperation: trade, investment, and financial Thr • cooperation - ields of emphasis: energy and resources, infrastructure, agri • Six f culture, manufacturing, scientific and technological innovation, and information technologies. In early 2015, China and Latin American countries signed the China-Latin American and Caribbean Countries Cooperation Plan (2015–2019). China and Latin American states agreed to mutual respect of sovereignty and territorial integrity, greater economic coop - eration, and more constructive and closer consultation on international affairs via institutionalized, high-level contacts. The plan recognized - that China and Latin America were developing countries and emerg ing economies that were important international actors that could help promote “multilateralism and a multipolar world, and greater democ - - racy in international relations.” The sides agreed to enhance collabora -1— 13 Zhu Zhe, 2013. 0— +1— RR2273A_CC2015.indb 222 8/14/18 11:11 AM

261 China in Latin America and the Caribbean 223 tion on major global issues and “strengthen the voice of developing 14 countries in decision-making bodies of multilateral institutions.” The Cooperation Plan itself included a number of goals for the 15 coming decade and specified particular targets for its engagement: • Politically, expand exchanges and dialogue and China will invite 1, 000 political leaders of CELAC countries to visit China from 2015 –2019 llion between nomically, increase annual trade to $500 • Eco bi China and Latin America and bilateral financial cooperation to llion by 2025, with a particular emphasis on high technol - $250 bi ogy and value-added goods • - Cul turally, China will provide CELAC countries with 6,000 gov ernmental scholarships, 6,000 training opportunities, and 400 opportunities for on-the-job master degree programs in China between 2015 and 2019. 15, Premier Li Keqiang visited four countries (Brazil, 20 In May Colombia, Chile, and Peru) in Latin America to strengthen and upgrade China’s relations with the region. At a speech at the UN Economic Commission for Latin America and the Caribbean, he characterized 16 Latin America as “a rising high point in global politics and economy.” He also pushed for more industrial cooperation, including the trans - fer of Chinese industrial production capacity and equipment to the 17 Li’s visit to Brazil was the highlight of the trip: China and region. 14 “Beijing Declaration of the First Ministerial Meeting of the CELAC-China Forum,” China-CELAC Forum, January 23 , 2015. 15 “China-Latin American and Caribbean Countries Cooperation Plan (2015–2019),” China-CELAC Forum, January , 2015. 23 16 “Premier Li: Latin America Is the New Global High Point,” Information Office of the 2015; certainly, from the vantage State Council of the People’s Republic of China, May 26, point of late 2017, this laudatory statement seems either premature or overtaken by other events. 17 “Premier Li Keqiang: Upgrade Practical Cooperation Between China and Latin Amer - — -1 ica and the Caribbean Under the ‘3×3 Model,’” Ministry of Foreign Affairs of the People’s , 2015. Republic of China, May 22 —0 — +1 RR2273A_CC2015.indb 223 8/14/18 11:11 AM

262 224 At the Dawn of Belt and Road 18 and China agreed to Brazil signed a Joint Action Plan for 2015–2021 llion worth of deals with Brazil in infrastructure, energy, nearly $53 bi 19 The Joint Action Plan extended the mining, technology, and aviation. previous high levels of strategic partnership between the two countries from 2014 to 2021. It laid out the two countries’ plan to enhance bilat - eral cooperation across a dozen different fields, and Beijing and Brasilia also agreed to coordinate their positions in multilateral and interna - tional political and economic forums. Diplomatic Relations and Presence As of late 2015, 12 countries in Latin America continued to recognize Taipei instead of Beijing. With the exception of Paraguay in South America, most of these countries were in Central America and the 20 China has embassies in all the remaining 21 countries Caribbean. and consulates in six countries. China has bilateral strategic partnership agreements with Brazil (1993/2004), Venezuela (2001), Mexico (2003), Argentine (2004), Peru (2008), and Chile (2012). China further elevated its relations with Brazil (2012), Mexico (2013), Argentina (2014), and Venezuela omprehensive strategic partnership. to a c (2014) Pivotal State and Major Partners Venezuela, Brazil, and Argentina are priority countries for Chinese political, economic, and military engagement. Among these three, Brazil stands out in many ways. Brazil is the only country that President Xi and Premier Li visited on each trip, the only Latin American country that participated in AIIB, and a founder of the BRICS bank. Accord - 18 For text of the Joint Action Plan, see “Joint Action Plan Between the Government of the Federative Republic of Brazil and the Government of the People’s Republic of China, 2015–2021,” DefesaNet , March 20, 2 015. 19 , 2015. “BBC Brazil: Deals Show Waning US Inf luence,” China Daily , May 21 20 These 12 are: Belize, El Salvador, Haiti, Nicaragua, Paraguay, St. Lucia, the Dominican Republic, the Republic of Guatemala, the Republic of Honduras, the Republic of Panama, - Saint Christopher (Saint Kitts) and Nevis, and Saint Vincent and the Grenadines. See “Dip lomatic Allies,” Ministry of Foreign Affairs of the Republic of China (Taiwan), webpage, -1— undated. 0— +1— RR2273A_CC2015.indb 224 8/14/18 11:11 AM

263 China in Latin America and the Caribbean 225 ing to President Xi, the country is also “China’s first strategic partner among developing countries, and the first Latin American nation to 21 However, forge a comprehensive strategic partnership with China.” China is deeply intertwined with Venezuela on all three dimensions we analyze—political, economic, and military—creating a partnership that may be as much burden as benefit (see Chapter 10 ). High-Level Exchanges China has been increasing its high-level exchanges and visits to the region. From 2003 to 2014, Chinese political leaders paid 45 visits to different countries in Latin America; 33 of the visits occurred from 22 Chinese leaders were in Latin America for regional 2009 to 2014. tours, to attend BRICs, APEC, or G20 summits, or for regional meet- ings. They did not visit every Latin American country but, instead, paid multiple visits to approximately half of the countries. Brazil and Mexico were the most visited countries, followed by Cuba, Argentina, and Venezuela. Chinese presidents during this period (Hu Jintao and 23 Xi Jinping) visited only nine countries in Latin America. Cultural Influence China does not have a significant cultural influence in the region and - recognizes that it will not be easy for China to increase such ties. Chi - nese scholars identify Latin American countries as culturally and polit ically Western. They also view the United States as having substantial political, cultural, and economic influence in the region. Even among Asian countries, China may not be the favorite, since Japan has sig - nificant investment in the region and has had longer and more mature commercial and diplomatic ties with Latin American countries than 21 , “Chinese President Expects Stronger Ties with Brazil, L. America,” Xinhua News , 17 July 2014. 22 Chinese political leaders include the president, premier, vice president, minister of foreign affairs, and state councilor in charge of foreign affairs. 23 — -1 These countries are: Argentina, Brazil, Chile, Costa Rica, Cuba, Mexico, Peru, Trinidad and Tobago, and Venezuela. —0 — +1 RR2273A_CC2015.indb 225 8/14/18 11:11 AM

264 226 At the Dawn of Belt and Road 24 Some Chinese strategists are concerned that Beijing is placing China. too much emphasis on Latin America and viewing the region too much like Africa; Latin America is less culturally and politically receptive to 25 Chinese engagement than Africa. China currently has 32 Confucius Institutes in 14 Latin Ameri - can countries, with Brazil having eight institutes, Mexico five, Peru four, Colombia three, Chile two, and Argentina two institutes. It also 26 In 2012, China offered established a cultural center in Mexico City. 5,000 scholarships spread over a period of five years for Latin American 27 The China-Latin American and Carib - students studying in China. bean Countries Cooperation Plan (2015–2019) will further expand future cultural exchanges. As in other regions, the number of Chinese citizens in Latin America is uncertain. One source suggested the number was 100,000 28 in 2010, up from 50,000 in 1990. Economic Engagement China is increasing its economic engagement with the region. Chi - nese trade with and investment in Latin America has increased nearly 24 2014 polling by BBC News in Brazil, Argentina, Mexico, and Peru, for example, shows that only Argentina had a marginally more favorable view of China compared to Japan. Forty-three percent of Argentinians saw Japan as having a favorable inf luence and 45 pe rcent saw China as having a favorable inf luence. In the other three countries, Japan was viewed more favorably than China. See “BBC World Service Poll,” BBC , June 014; see also 3, 2 “Japan and China Compete for Latin American Clout,” , August 11 , 2014. Asia Sentinel 25 “Zhongguo Buying Gaogu Lamei De Zhanlue Yiyi” [“China Should Not Overestimate Latin America’s Strategic Value”], Financial Times (China), January 21 , 2015; “Zhongguo Haiyao Fuhuo Nanmei De Xin” [“China Still Needs to Capture South America’s Heart”], , August Think.China.cn 20, 2 014. 26 Zhu Zhe, 2013. 27 Shen Zhiliang, “Zhongla Guanxi: Guanfang Waijiao Yu Gonggong Waijia Bing Zhong” [“China-Latin America Relations: The Equal Importance of Official Diplomacy and Public PR World Diplomacy”], , Vol. 2, 2014, p. 53 . 28 , Washington, D.C.: Jacqueline Mazza, Chinese Migration to Latin America and the Caribbean -1— The Inter-American Dialogue, October 20 16, p. 9. 0— +1— RR2273A_CC2015.indb 226 8/14/18 11:11 AM

265 China in Latin America and the Caribbean 227 20-fold since the early 2000s. Latin America has been a source of food and raw materials for continued Chinese manufacturing expansion as well as a destination for China to export manufactured goods and - machinery. China seeks to strengthen trade with major regional econo mies and has been willing to provide significant financial support in 29 China has been importing soy from Brazil exchange for resources. and Argentina, and experts at the Inter-American Development Bank predict that China’s food consumption will triple by 2030, whereas 30 Currently, Latin America Latin America will have a food surplus. plays a small role in Chinese energy consumption; it supplies less than - per cent of China’s oil and an even smaller share of its coal and natu 10 31 Petroleum from Venezuela, Brazil, and Ecuador is China’s ral gas. main energy import from the region. China also imports iron ore from Brazil and its FTAs with Chile and Peru have incentivized Chinese 32 mining in both countries, particularly for copper and nonferrous ore. Despite this growth in Sino-Latin American economic activities, there were few Chinese companies with a physical presence in Latin America prior to 2009. In recent years, Chinese companies have been sending more personnel to the region and setting up and expanding 33 China has also signed free trade and their operations on the ground. currency swap agreements with a handful of countries. Since 2015, China has been trying to rebalance its trade and investment in the region away from importing commodities from the region and is 29 China has provided billions in loans to oil-rich Venezuela and Ecuador. See “China Steps 015; “Venezuela 8, 2 in to Support Venezuela, Ecuador as Oil Prices Tumble,” Fortune , January to Get $5 lion in Funding from China in Next Few Months: PDVSA Official,” Reuters , Bil , 2015. June 16 30 China Daily , September 12, “Latin America Set to Play Bigger Role for Chinese Firms,” 2 014. 31 Iacob Koch-Weser, “Chinese Energy Engagement with Latin America: A Review of 12 , 2015. Recent Findings,” Inter-American Dialogue, January 32 For more on Chinese mining in Latin America, see Iacob Koch-Weser, “Chinese Mining Activity in Latin America: A Review of Recent Findings,” Inter-American Dialogue, Sep - tember 24, 2014. 33 — -1 R. Evan Ellis, China on the Ground in Latin America: Challenges for the Chinese and Impacts on the Region , New York: Palgrave Macmillan, 2014. —0 — +1 RR2273A_CC2015.indb 227 8/14/18 11:11 AM

266 228 At the Dawn of Belt and Road encouraging Chinese companies to shift some of their industrial pro - duction capacity to Latin America. Chinese companies, however, still are learning to operate in Latin America and face a number of barriers to expanding their activities in the region. Trade China is currently Latin America’s second largest trade partner. Chi - nese trade with Latin America as a whole from 2000 to 2013 has increased 20-fold. In contrast China has low levels of trade with the Caribbean states compared to all other regions of the Developing bi llion as of 2013. World and aggregate trade is on the order of $6 Although the data suggest that there are large Chinese investments in the Caribbean, most of these investments are either passed through to another foreign location or round-tripped back to China for tax reasons. These are simply holding companies for investments in other places and not investments in the Caribbean. Most of our subsequent economic analyses, thus, focus on Central and South America. The composition of imports from Latin America has remained relatively constant with the exception of petroleum imports from Ven - cent of all imports were per ezuela (Figure 9.2). In 2000, roughly 60 food and crude materials, with the remaining mostly in manufactured goods and machinery. By 2013, food imports had fallen to just 4 per - - per ent and fuel imports had risen from just 2 cent in 2000 to 17 per c ent in 2013. Mineral products (crude materials) remained the larg - c est single commodity group. Additionally, manufactured goods and cent in 2000 to just 19 cent in 2013. per machinery fell from 30 per Although this may seem like a dramatic change in composition, it is driven mainly by an increase in fuel imports from Venezuela of just more than $4 llion in 2013. Chi - llion in 2000 to more than $12 mi bi na’s largest import sources from Latin America are Brazil, Chile, Ven - ezuela, and Mexico. Exports to Latin America are concentrated in the three types of manufactured items—manufactured goods, machinery and transport, and miscellaneous manufactures. Together with chemical products, they made up roughly 94 cent of all exports over the entire time per -1— from 2000 to 2013 (Figure 9.3). There has been a relative increase in 0— +1— RR2273A_CC2015.indb 228 8/14/18 11:11 AM

267 China in Latin America and the Caribbean 229 Figure 9.2 Composition of Imports from Latin America 100 90 80 70 60 50 Percent 40 30 20 10 0 2001 2005 2004 2013 2008 2011 2000 2007 2010 2002 2012 2009 2003 2006 Year Crude materials Food Beverages and tobacco Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Machinery and transport Manufactured goods manufactured Other SOURCE: UN Comtrade Database. RR2273A-9.2 RAND the proportion of machinery from 31 per - percent in 2000 to over 45 cen t in 2013. This has come with a drop in proportion of manufactured per goods from 60 per cent to 42 cent. China’s largest destinations for exports are Brazil, Mexico, Chile, and Panama. Chinese imports from and exports to Latin America have been relatively balanced, mainly due to the large trade surpluses in Brazil and Venezuela and significant trade deficits for Mexico and Panama (Figure 9.4). Foreign Direct Investment and Lending There has been considerable growth in Chinese investment and loans — -1 to Latin America, especially in Venezuela and Brazil and, increasingly, —0 — +1 RR2273A_CC2015.indb 229 8/14/18 11:11 AM

268 230 At the Dawn of Belt and Road Figure 9.3 Composition of Exports to Latin America 100 90 80 70 60 50 Percent 40 30 20 10 0 2008 2007 2012 2001 2005 2009 2004 2013 2011 2000 2010 2002 2006 2003 Year Crude materials Food Beverages and tobacco Chemicals Mineral fuels Animal and vegetable oils Miscellaneous Machinery and transport Manufactured goods manufactured Other SOURCE: UN Comtrade Database. RR2273A-9.3 RAND Argentina through 2015. As of the end of 2013, Chinese outward for - eign direct investment stock totaled $86 llion, nearly 19 ti mes its FDI bi in Latin America in 2003 (Figure 9.5). China is investing in energy, mining, agriculture, manufacturing, and basic infrastructure. Since 2010, there has been a significant increase in Chinese lend - ing activity to Latin America. In 2010 alone, Chinese lending to the region exceeded loans provided to the region from the World Bank, Inter-American Development Bank, and U.S. Export-Import Bank 34 According to the Inter-American Dialogue, over a third of combined. Chinese loans to the region since 2005 were for infrastructure. 34 Kevin P. Gallagher and Margaret Myers, “China-Latin America Finance Database,” -1— Washington, D.C.: Inter-American Dialogue, 2014. 0— +1— RR2273A_CC2015.indb 230 8/14/18 11:11 AM

269 China in Latin America and the Caribbean 231 Figure 9.4 Level of Exports to and Imports from Latin America 140 120 Imports from Latin America Exports to Latin America 100 80 60 U.S. $ billions 40 20 0 2009 2011 2010 2000 2001 2013 2012 2002 2008 2003 2004 2005 2007 2006 Year SOURCE: UN Comtrade Database. RAND RR2273A- 9.4 Chinese FDI and lending appear to follow similar patterns and are concentrated in several countries. China has invested the most bi l- in Venezuela. In 2013, its FDI stock in Venezuela reached $2.4 bi llion from 2005 lion. It also loaned the country approximately $56 through 2014, mainly in exchange for future oil shipments and more llion) during the bi than double the amount it provided to Brazil ($22 35 Investments in Brazil originally centered on minerals, oil same time. and gas, and food, but have subsequently evolved into infrastructure, 36 energy, and telecommunications. China’s recent economic slowdown and lower demand for raw materials, however, have negatively affected Latin America, and Chi - nese strategists recognize that its “overdependence on commodity trade 35 Inter-American Dialogue, China-Latin America Financial Database, 2015. 36 — -1 China-Brazil Business Council, “Chinese Investments in Brazil from 2007–2012: A 20 13. Review of Recent Trends,” June —0 — +1 RR2273A_CC2015.indb 231 8/14/18 11:11 AM

270 232 At the Dawn of Belt and Road Figure 9.5 Chinese FDI Stock in Latin America and the Caribbean by Receiving Country, 2013 Mexico Bahamas Haiti Cuba Belize Dominican Republic Honduras Jamaica Guatemala Nicaragua El Salvador Venezuela Costa Rica Guyana Suriname Panama French Guiana Colombia Ecuador Peru Brazil Bolivia Paraguay Uruguay Argentina Chile PRC OFDI stock ($USD), 2013 >$2 billion $1–$2 billion $200 million–$1 billion $50–$200 million <$50 million SOURCE: Chinese Ministry of Commerce, 2013 Statistical Bulletin of China’s Outward Foreign Direct Investment. -1— NOTE: PRC FDI stock in Venezuela was $2.4 billion in 2013. 0— RR2273A-9.5 RAND +1— RR2273A_CC2015.indb 232 8/14/18 11:11 AM

271 China in Latin America and the Caribbean 233 37 [with the region] could not continue and needed to be transformed.” Beijing is adjusting its investment to focus more on infrastructure and local production of value-added products. In 2014, China offered bi llion fund from the China Development Bank to CELAC a $20 llion in preferential loans from bi promote regional infrastructure, $10 Exim Bank of China, and $5 llion in China-CELAC coopera - bi 38 In May 2015, Chinese Premier Li Keqiang pushed for tion funds. rading Chinese economic engagement with the region through upg the transfer of Chinese industrial production capacity and equipment to the region, particularly in the fields of logistics, power, and infor - 39 He urged Chinese-invested companies to open local plants mation. bil lion special fund to promote indus - and promised to set up a $30 40 This fund was trial cooperation between China and Latin America. also to support infrastructure projects, including the ambitious proj - ect to connect the Atlantic Ocean to the Pacific Ocean by railroad 41 through Brazil and Peru. Agreements and Other Issues At present, China has fewer agreements with Latin America than with most other regions. It has three FTAs in the region, with Chile, Costa 42 It is exploring a fourth with Colombia, but as of Rica, and Peru. 20 October 15, negotiations had not been launched. It has nine BITs in Latin America, six of which entered into force in the mid-1990s and three of which entered into force in the 2000s and 2010s. It also has four BITs in force in the Caribbean, three of which entered into force in the 2000s. It has much less coverage with tax treaties, either for 37 Quote from former Chinese vice foreign affairs minister Li Jinzhang. See “Li Keqiang Arrives in Latin America with Promise of US$50 llion in Infrastructure Investments,” Bi South China Morning Post , May 19 , 2015. 38 Yu Lintao, “Vibrant Integration,” 22 , 2015. Beijing Review , January 39 “Premier Li Keqiang,” May 22, 2015. 40 “Premier Li Keqiang,” May 22, 2015. 41 24 , 2015. “Li Calls for Manufacturing Shift in Peru,” China Daily , May — -1 42 Asia Regional Integration Center, “Free Trade Agreements,” webpage, Asian Develop - —0 ment Bank, undated. — +1 RR2273A_CC2015.indb 233 8/14/18 11:11 AM

272 234 At the Dawn of Belt and Road income only or for income and capital: only four in Latin America and four in the Caribbean. It also has the most contentious trade relations, as measured by cases filed with the WTO. Of the 39 cases filed against China in the WTO’s dispute settlement system, Latin America has brought five: four by Mexico and one by Guatemala. This makes Latin 43 America the only developing region with WTO cases against China. China has also signed financial and high technology agreements with Latin American countries, including bilateral currency exchange agreements with Brazil and Argentina and joint satellite development 44 Since 2009, China has signed with Brazil, Venezuela, and Bolivia. bilateral currency swap agreements to support trade and investment and to promote internationalization of the RMB. In the case of Argentina, the currency swap has also been used to facilitate loans. As of mid-2015, China has signed four multiyear currency agreements: Argentina (2009), Brazil (2013), Suriname (2015), and Chile (2015). The agreements range 45 and RMB bil lion ($30 bil lion) with Brazil from highs of RMB 190 46 billion to a low of RMB 1 bi bi llion ($10.24 llion) with Argentina 70 47 - They allow the respec mi llion) in its agreement with Suriname. 60 ($1 tive countries access to Chinese credit, and companies can also trade in local currencies instead of U.S. dollars. Of these four countries, only llion in 2014, bi Argentina has activated the swap line to withdraw $2.7 and the RMB is still far from becoming the preferred currency in Latin 48 In 2015, China and Chile also agreed to establish an RMB America. clearing bank in Chile, the first of its kind in South America, that would 49 help China establish an offshore RMB clearing network in the region. 43 World Trade Organization, “Chronological List of Dispute Cases,” website, Geneva, undated. 44 Shen Zhiliang, 2014, p. 53. 45 “China and Brazil Sign $30bn Currency Swap Agreement,” BBC News , March 27 , 2013. 46 , 2009. “China and Argentina in Currency Swap,” Financial Times , March 21 47 “China, Suriname Sign Currency Swap Deal,” Global Times , March 18 , 2015. 48 Benn Steil and Dinah Walker, “Are China’s RMB Swap Lines an Empty Vessel?” Council , 2015. on Foreign Relations, May 21 49 China Construction Bank, “CCB Designated as the First RMB Clearing Bank in South -1— America,” May 26 , 2015. 0— +1— RR2273A_CC2015.indb 234 8/14/18 11:11 AM

273 China in Latin America and the Caribbean 235 Economic Barriers and Hurdles Chinese economic activities in the region have met with varying degrees of acceptance and criticism. Countries that are more politically or financially isolated or that in some manner stand in opposition to the United States, such as Argentina (until late 2015), Bolivia, Ecua - dor, and Venezuela, have welcomed Chinese investment. In other Latin American countries, stronger civil society and institutions are hold - ing Chinese companies and investors to higher standards of corporate social responsibility than China has faced in Africa. A number of poor Chinese business practices, including neglect of local labor laws, lack of environmental safeguards, lack of transparency, and questionable 50 managerial practices, have frustrated governments and populations. In practice, this means that China often faces a host of legal and commercial hurdles as it increases economic investments in the region. Brazil passed a 2010 law that restricted land purchases by foreigners partially out of concerns that China was trying to buy too much land 51 Costa in Brazil so as to have access to the natural resources there. Rica signed a free trade agreement with China in 2010 and is one of three Latin American countries to do so, but five years later and as of early 2015, the Costa Rican Legislative Assembly has yet to pass a bilateral investment protection bill. Additionally, each product for export to China has to undergo a specific quality and safety certifica - tion that takes approximately one year. This long process had led to only six Costa Rican products being approved for export since 2010. bi llion oil refinery that China agreed On the investment side, the $1.5 to finance in mid-2013 was delayed and then renegotiated in early 2015 - after Costa Rican authorities found a contractual violation on the Chi 52 nese side. 50 Jon Brandt et al., “Chinese Engagement in Latin America and the Caribbean: Implica - tions for US Foreign Policy,” American University, School of International Service, Decem- ber 20 12, p. 19 . 51 JOC “China Overtakes US as Brazil’s Top Trade Partner,” , 2014. , March 24 52 Costa Rican authorities delayed the deal when they found that a CNPC subsidiary con - ducted the project’s feasibility study. This was a conf lict of interest since CNPC was the — -1 Chinese company involved in the construction. See “Biofuels Could Be Produced at Chinese Refinery in Limon, Says Costa Rica Oil Chief,” Tico Times , January 10, 2 015. —0 — +1 RR2273A_CC2015.indb 235 8/14/18 11:11 AM

274 236 At the Dawn of Belt and Road One other barrier is actually on the Chinese side. Although financ - ing for overseas projects had been relatively easy elsewhere, especially from China’s policy banks, it has become more difficult for companies 53 to invest, and this has affected their ability to invest in Latin America. First, it has been harder to get loans for production projects as opposed to construction. Second, banks have recognized that they have a hard time assessing risk, so they have become more cautious about lending. Issues of collateral and the differential cost of RMB-based loans versus dollar loans, which are cheaper, have also affected financing. None of these barriers are insurmountable. They just mean that announcements of intention to invest may bear little relationship to actual investments, and those actual investments may not pay off in the end. Military and Security Engagement China has limited security interests in the region and has modest mili - tary engagement with Latin America. Given the geographic distance between China and the region, Beijing does not have any territorial or other disputes with countries in the region. China recognizes the prox - imity of Latin America to the United States and is sensitive to U.S. per - ceptions of its military involvement in the region and has maintained a low military profile. Within Latin America, China uses military engagement to boost goodwill, enhance understanding, and gain political leverage with regional governments. China’s military engagement with the region involves arms sales, military exchanges and combined exer - cises, and participation in UN peacekeeping missions and HADR operations. Beijing is also building ties with the local defense and security establishment to protect Chinese investments and nationals 54 in the region. 53 This paragraph draws from Zhang Yuzhe and Wang Ling, “Cheers, Fears for China’s Next Step Overseas,” Caixin Online , 2015. 22 , July 54 China-Latin America Military Engagement: Good Will, Good Business, and R. Evan Ellis, -1— 11. Strategic Position , Strategic Studies Institute, U.S. Army War College, August 20 0— +1— RR2273A_CC2015.indb 236 8/14/18 11:11 AM

275 China in Latin America and the Caribbean 237 China has very limited military presence in the region, and its presence has been mainly in the form of short-term riot police or peace- keepers for humanitarian missions and not combat personnel. Though Chinese investment in the region is growing and there have been cases of violence against Chinese workers and investments, Beijing has not deployed military assets to Latin America to protect its economic 55 stakes. PRC Arms Sales Although Latin America is not a large market for arms sales, PRC arms yea sales to the region increased dramatically in the 15 rs through 2015. This has occurred despite the fact that many militaries in the region consider Chinese weapons to be inferior to Russian or Western arms and they are purchasing significantly more arms from Russia and the - United States. China has made no arms sales to the Caribbean or Cen tral America apart from Mexico, possibly because several countries in the Caribbean and Central America recognize the Republic of China - per on Taiwan instead of the PRC. The overwhelming majority, 88 c ent, of Chinese arms sales to the region is to Venezuela; Bolivia comes per in a distant second, making up just 8 cent of Chinese arms sales to the region. In total, PRC arms sales have been far lower than U.S arms llion worth of weapons since 2000, mi sales; while China has sold $550 bil lion worth of weapons, over seven times the the U.S. has sold $4 56 volume of China’s sales. China began selling arms to Venezuela in 2006 and has supplied mi nearly $500 llion (in Trend Indicator Values, measured in 1990 con - stant dollars) worth of weapons to the country since then. While this volume of sales is substantial, it pales in comparison to Russian arms sales to Venezuela, which also began in 2006 but have since totaled bi llion, more than eight times the volume of China’s more than $4 55 Colombia’s FARC rebel group, for example, held four Chinese oil workers hostage for ths in 2011 and 2012. See “Columbia’s FARC Release Chinese Hostages,” , 17 mon BBC News November 22 , 2012. 56 — -1 PRC arms sales data from SIPRI and measured in Trend Indicator Values based on 1990 constant dollars. —0 — +1 RR2273A_CC2015.indb 237 8/14/18 11:11 AM

276 238 At the Dawn of Belt and Road sales. Venezuela has received self-propelled artillery, transport aircraft 57 and combat aircraft (mostly K-8s) from China. In Novem - ( Y-8s), 20 ber reported that Venezuela was the 14, HIS Jane’s Defence Weekly first foreign country to purchase the VN1 wheeled amphibious infantry fighting vehicle from China, which it acquired as part of a $500 mi l- lion deal signed in 2012 and financed by Chinese loans offered in 58 exchange for Venezuelan oil shipments. Although China sells arms to the region mainly to build regional goodwill and gain political leverage, Chinese arms have also been used for other purposes. Chinese weapons have been smuggled into Latin America and fallen into the hands of local paramilitary groups, includ - ing Columbia’s Revolutionary Armed Forces of Colombia (FARC) guerilla group and Mexican drug cartels. It is unlikely that Chinese government and Chinese state-owned companies have been actively involved in such illegal operations, but they have not taken sufficient 59 2014, news In March measures to prevent such from happening. repo rts indicated that Norinco VN-4 armored vehicles and Shaanxi Y-8 transport aircraft that the Venezuelan government had purchased - from China were deployed against political protesters in major Venezu 60 elan cities. PLA Military Diplomacy Chinese Central Military Commission members have made just seven trips to Latin America since 2003, making the region the least visited by PRC military leaders among all others in the Developing World with the exception of Oceania. Five of those visits have occurred since 57 “China’s Y-8 Aircraft Poised to Land in South American Market,” People’s Daily , June 2, 2 0 11. 58 Richard D. Fisher Jr., and James Hardy, “Venezuela Signs Up for VN1, Hints at Chinese Amphibious Vehicles Buy,” IHS Jane’s Defence Weekly , November 23 , 2014. 59 R. Evan Ellis, “Chinese Organized Crime in Latin America,” , Vol. 4, No. 1, PRISM D ecember 20 12, pp. 65 –77. 60 Zachary Keck, “Venezuela Uses Chinese Weapons in Crackdown,” The Diplomat , 014. 7, 2 March -1— 0— +1— RR2273A_CC2015.indb 238 8/14/18 11:11 AM

277 China in Latin America and the Caribbean 239 2009, suggesting that the region, while still a relatively low priority compared to other regions, is becoming increasingly important to Chi - - na’s military leaders. Of these seven total trips since 2003, CMC mem bers visited nine different countries. Among the most frequently visited countries were Brazil, Colombia, Cuba, and Peru, each of which was visited twice during the period studied. Combined Exercises PLA troops have participated in four joint exercises with Latin American - armed forces over the past few years: “Peace Angel-2010,” a humanitar ian medical rescue mission between PLA and Peruvian military medical teams; “Cooperation-2011,” an urban anti-terrorism exercise between PLA Air Force and Venezuelan airborne troops; “Cooperation-2012,” an anti-terrorism exercise between PLA Army and Colombian special forces; and a brief maritime joint exercise focusing on collaborative air - defense between two PLA Navy warships and a few Chilean navy frig 61 article about “Peace Angel- A PLA Daily ates and airplanes in 2013. 2010” noted that the medical teams provided free medical service for local residents and conducted an hour-long humanitarian rescue drill during which they practiced first aid and decontamination, rapidly unpacking and setting up a field hospital, and preventing the spread 62 of disease. PLAN Port Visits In comparison to other regions in the Developing World, China has conducted the fewest port visits to countries in Latin America. Since 2000, China has visited just ten ports in the region. Notably, nine of those visits have occurred since 2009. As part of “Harmonious Mission 2011,” the PLA Navy’s Peace Ark hospital ship traveled to the Carib - bean and Central America and made four weeklong port visits from 61 , 2013; “PLAN’s Taskforce Conducts The Diversified Employment of China’s Armed Forces Maritime Joint Exercise with Chilean Navy,” , 2013. 12 China Military Online , October 62 Yang Zurong, “Sino-Peruvian Joint Humanitarian Medical Rescue Operation Starts in Lima,” , 2010. 25 PLA Daily , November — -1 —0 — +1 RR2273A_CC2015.indb 239 8/14/18 11:11 AM

278 240 At the Dawn of Belt and Road 63 64 October to November 201 1, stopping in Cuba, Jamaica, Tr i n id a d 65 66 to offer free medical treatment to local and Costa Rica and Tobago, residents. UN Peacekeeping Operations Although the PRC left the United Nations Stabilization Mission in Haiti out of its 2013 Defense White Paper’s list of the UNPKO in which the PRC had participated, China, in fact, sent 125 anti-riot police offi - 67 China cers to Haiti to support the stabilization mission there in 2004. contributed peacekeepers to this mission in spite of Haiti’s recognition of Taiwan, a fact that some PRC officials suggested was a sign of China’s “growing diplomatic sophistication” and “peace-loving and responsible 68 Eight Chinese peacekeepers were killed during the devastat - i ma ge.” 69 20 10 earthquake. ing January Military Operations Other than War Again, despite the lack of diplomatic relations between the PRC and Haiti, the PRC sent substantial humanitarian assistance to Haiti fol - 20 10 earthquake that killed roughly a quarter of lowing the January a million people. In addition to the PRC government’s contribution mi of $2.6 llion cash, a 60-member search and rescue team, and a 40-member medical care and epidemic prevention team, the Chinese 63 Zhang Yong, “China’s PLA Navy ‘Peace Ark’ Hospital Ship Arrives at Havana, Cuba,” Xinhua News 23 , 2011. , October 64 Zha Chunming, “Chinese Navy ‘Peace Ark’ Hospital Ship in Kingston, Jamaica,” Octo - ber 31 , 2011. 65 Embassy of the People’s Republic of China in the Republic of Trinidad and Tobago, “‘Peace Ark’ Hospital Ship Starts Visit in Trinidad and Tobago,” November 12 , 2011. 66 , Novem- “Chinese Navy ‘Peace Ark’ Hospital Ship Arrives in Costa Rica,” Xinhua News ber , 2011. 24 67 004. “China to Send Anti-Riot Peacekeepers to Haiti,” China Daily , June 5, 2 68 Gill and Huang, 2009, pp. 5, 14. 69 Wang Cong and Miao Xiaojun, “Bodies of Chinese Peacekeeping Police Killed in Haiti -1— , 2010. Earthquake Arrive Home,” Xinhua News , January 19 0— +1— RR2273A_CC2015.indb 240 8/14/18 11:11 AM

279 China in Latin America and the Caribbean 241 70 million in emergency aid. An official from Red Cross donated $1 the UN mission in Haiti praised Chinese aid workers as “remark - 71 The PRC also evacuated 48 of its ably efficient” and “generous.” 72 In November 2012, China civilians from Haiti via charter flights. llion RMB worth of medicine, tents, terry blankets, vided 17 pro mi water-purifying equipment, and electric generators to Cubans reeling 73 from Hurricane Sandy. Conclusion Although China has good relations with the region, Latin America is the least important developing region for China. It is geographically distant and comprises a small share of total Chinese trade. Chinese activities in the region are largely economic and political. The region is currently not part of China’s Belt and Road Initiative, although there is potential to include it. There is limited PRC military engagement with the region and most of it is with Venezuela. China is willing to increase its involvement in the region, but it is also clear-eyed about the problems associated with doing so and has not prioritized Latin America compared to other developing regions. - Beijing is sensitive to the fact that Latin America is geographically adja cent to the United States and worries that Washington would resist Chinese attempts to develop close partnerships with regional countries. China is also concerned about the potential for volatility in the region and sees little opportunity for it to make significant inroads in a region that is so politically, economically, and culturally close to the West. 70 Stephanie Ho, “China Sends Aid to Quake-Stricken Haiti,” VOA News , January 23 , 2010; “China Announces More Assistance to Haiti,” Embassy of the People’s Republic of China in the United States of America, January 21 , 2010. 71 Wu Chong, “UN: China ‘Remarkably Efficient’ in Haiti Aid,” China Daily 20, , January 0. 201 72 Duchâtel, Bräuner, and Hang, 2014, p. 46. 73 — -1 “Chinese Government Sends Relief Materials to Hurricane-Hit Cuba,” CCTV , Novem- 012. ber 20, 2 —0 — +1 RR2273A_CC2015.indb 241 8/14/18 11:11 AM

280 242 At the Dawn of Belt and Road Chinese efforts to engage more with the region is further hampered by its growing but still relatively limited number of experts on Latin America. Overall, countries in Latin America have a largely positive view of - China and its activities in the region, as shown by Pew polling on atti tudes with the notable exception of Brazil (Table 9.1). In eight of the nine countries surveyed, larger proportions of the polled population had favorable views of China than unfavorable. People had the most positive views of China in Venezuela and least in Colombia. With the - exception of Brazil and Colombia, more people also saw China’s eco Table 9.1 Latin American Views of China, 2014 Is China’s Will or Has China Economic Replaced the Growth Good United States or Bad for Your as Leading General View Country? Superpower? of China Will Will or Has Never Good Favorable Bad Replaced Unfavorable (%) (%) (%) (%) (%) (%) Venezuela 67 26 66 20 57 30 Chile 60 27 63 13 46 26 35 50 19 Nicaragua 58 13 74 27 54 23 52 20 56 Peru 54 48 25 36 26 51 El Salvador Brazil 44 44 39 41 36 52 54 Mexico 43 38 38 36 30 27 Argentina 50 40 30 41 20 37 38 32 30 45 46 Colombia 50 Latin America 49 30 51 26 33 median 34 49 Global median 49 32 53 27 -1— SOURCE: Pew Research Center, Global Indicators Database, July 2014. 0— +1— RR2273A_CC2015.indb 242 8/14/18 11:11 AM

281 China in Latin America and the Caribbean 243 nomic growth as beneficial to their country than not. They view China as contributing to local economies and reducing poverty and inequal - ity. Again with the exception of Brazil, most people believed that China has or will eventually displace the United States to become the leading superpower. There are, however, regional concerns of becoming too economically dependent on China. Implications for the United States China is not changing the regional balance of power in Latin Amer - - ica contrary to U.S. interests. China focuses mostly on pursuing eco nomic opportunities in the region, which is in line with U.S. goals for the region. As in Africa, however, China’s model of development and infrastructure financing could undermine U.S. efforts to promote good governance. — -1 —0 — +1 RR2273A_CC2015.indb 243 8/14/18 11:11 AM

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283 CHAPTER TEN Pivotal Regional Partnerships After reviewing the range of Chinese involvement in the Develop - ing World on a region-by-region basis, we now examine China’s rela - tionships with what Beijing considers the pivotal state in each region. Although China has formally established partner relations ( huoban guanxi ) with many countries around the globe, Beijing deems some capitals to be more important than others and tends to dub these stra - 1 In fact, in almost every region zhanlue huoban ). tegic partnerships ( examined in this study, China appears to have identified one particular state as being pivotal within its specific geographic region. These coun - tries are considered pivotal because they possess “heft” as measured in terms of population, economy, defense, or geostrategic location, in terms of their posture vis-à-vis China and in terms of activities in their 2 Beijing believes these states are major players in own neighborhoods. 3 their regions and key partners for China. 1 For more on partnerships, see, for example, Su Hao, “Zhongguo Waijiao De ‘Huoban Guanxi’ Kuangjia” [“The ‘Partnership’ Framework in China’s Foreign Policy”], Shijie Jishi [ World Knowledge ], Vol. 5, 2000. 2 Middle Powers and the Rise See the discussion in Bruce Gilley and Andrew O’Neil, eds., of China , Washington, D.C.: Georgetown University Press, 2014. 3 Earlier scholarship on “pivotal states” in the Developing World focused on U.S. policy. This research emphasized that such states were “important [in their] neighborhood through - extensive economic and/or political linkages,” and as a result had the “potential to work sig nificant beneficial or harmful efforts on their regions.” Robert Chase, Emily Hill, and Paul Kennedy, introduction, in Chase, Hill, and Kennedy, eds., The Pivotal States: A New Frame - — -1 work for U.S. Policy in the Developing World , New York: W. W. Norton, 1999, p. 7. —0 — +1 245 RR2273A_CC2015.indb 245 8/14/18 11:11 AM

284 246 At the Dawn of Belt and Road In this chapter, we focus on specific bilateral relationships because it is at the state-to-state level that we can perhaps best assess how suc - cessful China has been in strengthening its position within a particular region and what objectives it has in mind. For each region, we assess which country China considers the pivotal partner because of, in Chi - na’s view, the combination of its crucial significance to its particular neighborhood and China’s interests. We further define such powers and explain our selections in subsequent sections. Why does China seek to strengthen ties with particular states in the Developing World? There are many possible reasons, but the most significant appear to be geostrategic location, economic value, and sympathetic feelings toward China. The PRC works to build friend - - ships with like-minded states that are influential in their own neigh borhoods, not staunchly pro-U.S., and resource rich. Since at least the 1980s, Beijing has consistently insisted that it does not seek allies. Indeed, China regularly contends that alliances are relics of an unenlightened Cold War mind-set and continually berates the United States for maintaining alliances in the Asia-Pacific and 4 From Beijing’s perspective, alliances are targeted around the world. against a third country, and China strongly suspects that the raison d’être of U.S. alliances—at least those in the Asia-Pacific region—are to counter a rising China. In contrast to alliances, Beijing insists that China pursues partnerships with other states that are not aimed at 5 Although some of these bilateral rela - threatening any third country. tionships have significant security dimensions, Beijing insists that none 6 of these constitute military alliances. 4 For example, the PRC Defense White Paper published in 2015 observes: “U.S. carries on its ‘rebalancing’ strategy and enhances its military presence and its military alliances in this [that is, the Asia-Pacific] region.” See “I. National Security Situation” in China’s Military Strategy , 2 015. 5 According to the 2015 PRC Defense White Paper, “China’s armed forces will continue to develop military-to-military relations that are non-aligned, non-confrontational and not directed against any third party” (see “VI Military and Security Cooperation” in China’s Military Strategy , 2 015). -1— 6 See, for example, Su Hao, 2000. 0— +1— RR2273A_CC2015.indb 246 8/14/18 11:11 AM

285 Pivotal Regional Partnerships 247 Pursuing Partnerships What are the key characteristics of a meaningful partnership? If Bei - jing labels a relationship a strategic partnership, then this signals that Beijing believes that ties with the other capital are comprehensive and 7 In such circumstances, Beijing expects that the long-term in scope. other country has explicitly acknowledged the legitimacy of China’s rise, has demonstrated a willingness to coordinate common prefer - 8 ences, and has set aside any areas of disagreement. Especially important to China is the idea of having viable security partners that could help China protect its national interests. Unlike the United States, China does not have an established regional or global network of allies and partners with proven track records of security cooperation. Beijing feels quite vulnerable and almost alone in con - fronting its traditional and nontraditional security threats. Which countries can China count on in a crisis? While the United States has battle-tested allies such as Australia, the United Kingdom, and South Korea and enduring alliances with countries such as Japan and Thailand, China has only one formal alliance of long standing—with North Korea. But this relationship does not provide Beijing much reassurance or peace of mind. While China and North Korea fought as comrades-in-arms during the Korean War, since the 1961 Treaty of Friendship, Cooperation, and Mutual Assistance, the two communist states have functioned as rather aloof “allies at arm’s 9 The alliance is qualitatively different from those that the leng t h.” United States possesses and lacks even the most rudimentary charac - teristics of U.S. alliances. To the best of our knowledge, for example, the armed forces of China do not conduct field exercises or even com - mand post exercises with the armed forces of North Korea, and there 7 See Medeiros, 2009, p. 82. 8 Scott L. Kastner and Phillip C. Saunders, “Is China a Status Quo or Revisionist State? Leadership Travel as an Empirical Indicator of Foreign Policy Priorities,” International Stud - ies Quarterly , Vol. 56. No. 20 2, J une 12, pp. 16 3–177. 9 — -1 Andrew Scobell, China and North Korea: From Comrades-in-Arms to Allies at Arm’s Length , Carlisle Barracks, Pa.: U.S. Army War College Strategic Studies Institute, 2004a. —0 — +1 RR2273A_CC2015.indb 247 8/14/18 11:11 AM

286 248 At the Dawn of Belt and Road is only the most cursory of coordination between the two defense 10 establishments. But China does have a range of informal defense relationships with a variety of countries, and some of these have been quite exten - sive and enduring. In the second ring, Russia and Pakistan have had longstanding security relations with China. In the third ring, Bangla - desh and Thailand have had ongoing defense cooperation with China. Finally, in the fourth ring, Iran and Venezuela both have continuing defense cooperation with China. Noteworthy is that China’s deep - est and most enduring defense relationships are with two states in the second ring—Russia and Pakistan. Recently the PRC has officially articulated an intention: [t]o actively expand military and security cooperation, deepen military - relations with major powers, neighboring countries and other develop ing countries, and promote the establishment of a regional framework 11 for security and cooperation. Pivotal Regional Partners as Emerging Allies? China appears to be seriously rethinking its disdain for alliances. Pub - licly, Beijing continues to insist that it does not want to build alliances, establish overseas military bases, or station Chinese troops outside of its borders. It has even declined to term its new installation in Dji - bouti a base; instead, it refers to the installation as a logistical support facility, although as already noted, others have subsequently described it as China’s first overseas base. But there are good reasons to think - that these firmly held principles of no alliances may not be immu 12 Although the capabilities of the PLA have been enhanced table. during recent decades, China’s military remains constrained in terms of the distances across which it can project power and overstretched in terms of the expansive array of missions with which it has been 10 Andrew Scobell and Mark Cozad, “China’s Policy Toward North Korea: Rethink or Recharge?” Parameters . Vol. 44, No. 1, Sp ring 2014, p. 56 , 11 “II Strategic Guideline of Active Defense,” in China’s Military Strategy , 2 015. 12 See, for example, Feng Zhang, “China’s New Thinking on Alliances,” Survival , Vol. 54, -1— No. 9–148. 5, O ctober-November 20 12, pp. 23 0— +1— RR2273A_CC2015.indb 248 8/14/18 11:11 AM

287 Pivotal Regional Partnerships 249 tasked, both within China’s borders and around the country’s imme- 13 diate periphery. China’s most pressing security concerns are domestic and around its periphery—China has charged its armed forces with protecting Chinese territory, preserving national unity, and countering terrorism 14 In addition, China has expanding overseas inter - and secessionism. ests, especially economic ones, both in adjacent regions and states as 15 Of particu - well as in far-flung regions and countries across the globe. lar concern to Beijing is how these interests can be protected. China has charged its own armed forces with rising to the challenge of pro - 16 tecting these interests. In short, Chinese civilian and military leaders face a dilemma about how to defend PRC citizens and property in the Asia-Pacific area and around the globe. At sea, Beijing has reluctantly been free- riding on the U.S. Navy, but it does not fully trust Washington and is unlikely to be satisfied with this arrangement as a permanent solu - tion. On land, China is also in a bind, but the solution is far more complicated since conditions tend to be country-specific, so Beijing is far more dependent on individual states with wide-ranging capabilities and internal security situations. One of the most important factors driving countries to form 17 So what key threats does alliances is to balance against threats. China face? According to official PRC documents and the writings of numerous Chinese analysts, the country confronts an extensive array 13 See, for example, Andrew Scobell and Andrew J. Nathan, “China’s Overstretched Mili - 5–148. 13 t a r y,” The Washington Quarterly , Vol. 35, No. 4, F all 2012, pp. 14 China’s Military Strategy , 2015, “II Missions and Strategic Tasks of China’s Armed Forces.” See tasks 1, 2, and 7. 15 As an example post-dating our study, China’s highest grossing movie, at $608.6 million Wolf Warrior II as of m id-August 20 17, was , starring Wu Jing as a Chinese special forces operative action hero rescuing Chinese nationals in Africa (Gaochao Zhang, “‘Wolf Warrior 2’ Los Angeles Times , August Becomes China’s Highest-Grossing Film of All Time,” 15 , 2017; Variety Joe Leydon, “Film Review: ‘Wolf Warrior II’” , August , 2017). 11 16 , 2015, “II Missions and Strategic Tasks of China’s Armed China’s Military Strategy Forces.” One of the eight tasks is: “To safeguard the security of China’s overseas interests.” — -1 17 Stephen Walt, The Origins of Alliances , Ithaca, N.Y.: Cornell University Press, 1988. —0 — +1 RR2273A_CC2015.indb 249 8/14/18 11:11 AM

288 250 At the Dawn of Belt and Road of threats. The PRC Defense White Paper published in 2015 states: “China, as a large developing country. . . . faces multiple and complex security threats . . . as well as traditional and nontraditional security 18 In addition to the those posed by the threats [which] are interwoven.” militaries of other states, Beijing has identified a considerable range of nontraditional threats, including terrorism, transnational crime, water shortages, energy insecurity, and threats to domestic stability such as 19 religious extremists, ethnic separatists, and political dissidents. Seeking Pivotal Regional Partnerships China has argued for several decades that multipolarity is an ongoing 20 And yet, the United States has remained the trend in global politics. - sole global superpower. Beijing views Washington as an essential part ner but also a massive challenge. As noted earlier, China seeks to bal - ance against the dominant influence of the United States. One impor - tant way to do this is for China to forge relationships with other powers around the world. Beijing’s articulation of a new type of major power relations is not just intended for its relationship with the United States but also for its relations with other powers. On the global level, there are few states with significant hard or soft power willing and able to align with China. Most of the great powers are already aligned with the United States or reluctant to bandwagon with China. One of the few exceptions is Russia. However, at the regional level, China finds more possibilities and has actively sought to woo regional powers around the world. China seeks states that are key actors in their own neighborhoods rather than those of global significance. We dub these pivotal regional partners (PRPs). China is looking for partnerships with regional powers. Such powers are different from what some scholars have labeled middle pow - 21 While a middle power is a second-rank power on the global stage, ers. 18 China’s Military Strategy , 2015, “Part I: National Security Situation.” 19 China’s Military Strategy , 2015, “Part I: National Security Situation.” 20 Medeiros, 2009, pp. 27–29. 21 For discussion of middle power concept and middle powers as these relate to China, see -1— Gilley and O’Neil, 2014. 0— +1— RR2273A_CC2015.indb 250 8/14/18 11:11 AM

289 Pivotal Regional Partnerships 251 below the level of a great power, a PRP is a key power in a particular region of the world, as judged from China’s perspective. A PRP can be identified by assessing the level of attention China devotes to a coun - try diplomatically, economically, or militarily along with the degree to which a country favors alignment with China over alignment with other great powers. For example, neither Pakistan nor Thailand would be considered middle powers or key secondary players on the global stage, but both would be good candidates for influential powers in their respective regions in the Asia-Pacific. While such a state should have significant diplomatic, economic, or military clout in its own neighborhood, what is most important is the quality or value of the bilateral relationship to China. Thus, it is the content and scope of the partnership itself that matters more than the characteristics of the state. We assess a PRP in terms of the value this relationship provides to China in a particular region. In the following sections we examine China’s PRPs in six regions. In five of the regions—Central Asia, South Asia, the Middle East, Africa, and Latin America—we identified only one pivotal partnership per region. In our sixth region, Southeast Asia, there is no clear single PRP, so we explore several possible candidate states. In our seventh region, Oceania, we cannot discern a PRP. Two Tiers of Pivotal Regional Partnerships China’s strategic partnerships can be ranked largely according to where the pivotal state is located within the four rings of insecurity outlined in Chapter 2; the closer a state is to China geographically the higher the level of priority Beijing attaches to the relationship. Thus, top priority is afforded to those states within the second and third rings, countries that are closest at hand. This includes key states we identified within Southeast Asia: Indonesia, Malaysia, Thailand, and Vietnam. It also includes two of the five remaining PRPs: Russia and Pakistan. Here, Beijing has adopted a buffer strategy to maintain a stable zone with neutral or pro-China states. The goal is to deny presence or access — -1 to outside powers and counter threats to China’s domestic stability (see —0 — +1 RR2273A_CC2015.indb 251 8/14/18 11:11 AM

290 252 At the Dawn of Belt and Road Chapter 2). The top priority is to maintain good relationships with PRPs within this belt. A lesser but still important priority for China is strengthening ties with PRPs in the fourth ring. Iran might best be thought of as situated between China’s third and fourth rings of insecurity—what some PRC 22 analysts have dubbed “a strategic extension of China’s periphery.” The Middle East has become a key region—almost certainly the most important geographic area outside of the Asia-Pacific region. China seeks friends that are influential but neither beholden to nor engaged in direct hostilities with the United States. Two other PRPs found in the fourth ring are South Africa in Africa and Venezuela in Latin America. Africa and Latin America are both of growing importance to China, especially the former (see Chap - ter 8). Beijing needs good partners in each region. While there are other candidate PRPs in Africa and Latin America, China has clearly signaled its designation of a particular country in each continent. The Republic of South Africa has had the strongest economy in Africa, has - been the continent’s moral leader, and appears more engaged to coor dinating responses to problems that afflict the continent. Since at least the 1990s, Beijing has singled out Pretoria for a long-term relationship. Meanwhile, China has engaged widely with an array of Latin Ameri - can states, but one country stands out based on numerous economic and military indicators: Venezuela. For each PRP, we examine the logic and history of the relation - ship, the role of the PRP in its own region, and the contours of China- PRP cooperation. We then assess the performance of the PRP to date - and the future prospects of its partnership with China. Table 10.1 iden tifies each PRP by region and briefly notes the criteria for selection. Rings 2 and 3: The Exceptions: Southeast Asia and Oceania Southeast Asia and Oceania differ markedly from Central Asia, South Asia, the Middle East, Latin America, and Africa. While China main - tains a PRP in each of these other regions, Southeast Asia contains no single standout country, based on an assessment of politico-economic -1— 0— 22 See, for example, Li Weijian, 2004, p. 18. +1— RR2273A_CC2015.indb 252 8/14/18 11:11 AM

291 Pivotal Regional Partnerships 253 Table 10.1 Pivotal Regional Partners by Region Criteria for Selection PRP Region Rings 2 & None. Key states heast Asia 3 Sout include Indonesia Most powerful state in region Malaysia Most economically important to China Thailand Long-standing, trusted partner Communist rival closer to United States Vietnam & 2 3 Dominant power with important security, Russia ntral Asia Ce cultural, political, and economic ties 3 All-weather friend helping China with Pakistan h Asia Sout 2 & internal security, balancing against India, and diversifying trade routes Oc 3 & 2 None eania & 4 3 Mi ddle East Iran Like China, millennia-old power; energy supplier, key part of Belt and Road, oppositional to United States BRICS member, most diversified 4 Africa South Africa and sophisticated African economy, continental leader 4 Latin America Venezuela Energy rich, borrower, investment host, opposition to United States in support of and the Caribbean multipolar world SOURCE: Authors’ assessment. 23 and military factors. Meanwhile, in Oceania, the two largest states— Australia and New Zealand—are the most plausible, but they are both staunch U.S. security partners. This precludes either state having a robust PRP-like relationship. In short, there does not appear to be any 24 viable candidate state in Oceania. 23 Security relations here refer to 1) whether the country is strategically likely to align with China (for example, the country does not have an overwhelming bias toward either Japan or the United States), and 2) if there are vibrant military-military relations, how much actual capacity and regional relevance does that actor have. — -1 24 For analysis of Australia as a Middle Power, see Thomas S. Wilkins, “Australia: A Tradi - —0 9–170. 14 tional Middle Power Faces the Asian Century,” in Gilly and O’Neill, 2014, pp. — +1 RR2273A_CC2015.indb 253 8/14/18 11:11 AM

292 254 At the Dawn of Belt and Road The geostrategic landscape of Southeast Asia is complicated by the ongoing territorial disputes between China and several countries in this region. Because of this, an important condition of relations for China is a state’s stance vis-à-vis the maritime disputes in the South China Sea. Depending on the particular criterion employed, Beijing views several states as key but has no PRP. These key partners are Indo - nesia, Malaysia, and Thailand. In contrast, while Vietnam could be such a state, China’s relationship with Vietnam is highly problematic, and there is a pervasive sentiment in Beijing that it has “lost Hanoi.” Indonesia From the Chinese perspective, Indonesia is a prime regional partner, whether economically, politically, or militarily. For example, the IMF bi llion as of 2015, far ahead estimates Indonesia’s GDP to be $895.7 of the next largest economy in the region—that of Thailand, valued bi at $386.3 llion. Its growth rate, meanwhile, has been respectable at cent per year since 2013, putting it just behind Vietnam per around 5 - and ahead of Malaysia. Politically, it is the only Southeast Asian coun try that is a member of the G20, allowing it to play an increasingly visible role in global governance. At the same time, it has been able to exercise “moderate” leadership within the region through such means as hosting the headquarters and secretariat of ASEAN in Jakarta and occasionally holding the organization’s rotating presidency, which it last did in 2011. Combining economic and political factors, Indone- sia, in the eyes of China, is also a critical link in the Maritime Silk Road and often held up as an exemplar of the “Asian community.” Finally, it is true that Indonesia falls behind other, smaller neighbors in terms of certain military capabilities. Its naval capabilities, for example, - are weaker than those of Singapore, Thailand, and Vietnam. How 20 14, President Joko “Jokowi” ever, since coming to office in October Widodo has made naval modernization a priority, putting the country 25 on track to become a regional naval power. Not surprising given these facts, Indonesia has been of particular - interest to China in recent years, and during his state visit in Octo -1— 25 Vibhanshu Shekhar and Joseph Chinyong Liow, “Indonesia as a Maritime Power: Jokowi’s 0— Vision, Strategies, and Obstacles Ahead,” Brookings Institution, November 7, 2 014. +1— RR2273A_CC2015.indb 254 8/14/18 11:11 AM

293 Pivotal Regional Partnerships 255 ber 2013, Xi Jinping moved to further cement the relationship between the t wo countries by signing a comprehensive strategic partnership agreement with then president Susilo Bambang Yudhoyono. This makes Indonesia one of five entities within the region with which China has such an agreement—the others being Thailand, Vietnam, Malaysia, and ASEAN. In 2014, China also managed to get Indonesia to commit llion into the proposed AIIB. Chinese bi to investing roughly $33.6 leaders see great value in Indonesia, both in terms of salient cultural linkages—in part due to the large and influential Chinese community in Indonesia—and as a bridge to the rest of Southeast Asia. Indeed, Chinese leaders hope for, and actively seek to leverage their country’s positive relations with Indonesia into, improved bilateral relations with countries elsewhere in the region. Indonesia’s potential as a security partner further feeds into this; Chinese leaders believe that increased interactions in this area would not only have an important impact on the two countries’ bilateral relationship but could also lead to improved security partnerships with other Southeast Asian countries. Malaysia Malaysia’s importance rests with its status as the very first Southeast Asian country to normalize relations with China (in 1974). To this day, it remains a key state in Chinese strategies—both regionally and more globally, such as for the Belt and Road projects. In general, Malaysia has not actively balanced against the rise of China, and even its claims - in the South China Sea have not led to significantly high bilateral ten 26 sions, such as has been the case with Vietnam or the Philippines. This, in turn, has led Chinese leaders to view Malaysia as a moderate actor in the South China Sea; indeed, as a regional player with whom they can work and who is overall deserving of more attention. Cer - tain commentators have even suggested that the Chinese government 27 should officially reach out to Malaysia concerning their dispute. 26 Cheng-Chwee Kuik, “Making Sense of Malaysia’s China Policy: Asymmetry, Proxim- ity, and Elite’s Domestic Authority,” Chinese Journal of International Politics , Vol. 6, No. 4, 9–467. ecember D 42 20 13, pp. 27 Yang Guanghai and Yan Zhe, “Nanhai Hangxing Ziyou Wenti De Lixing Sikao” [“A — -1 Rational Consideration of the Issue of Freedom of Navigation in the South Southeast Asia”], —0 ecember 14. 5, D The New Orient 20 , No. — +1 RR2273A_CC2015.indb 255 8/14/18 11:11 AM

294 256 At the Dawn of Belt and Road Malaysia further plays an important role as a dealmaker within ASEAN and, as an added bonus, is not closely linked to the United States. Malaysia can also play a security role to the benefit of China. The two sides, for instance, issued a joint communiqué in May 201 4 focusing on increased military cooperation through such activities as “exchange of high-level visits and meetings, joint exercises, person - nel training, setting up a hot-line for communication between the 28 two Armed Forces, and exchange of port-call visits by both navies.” Prior to this, on October 013, Xi Jinping arrived in Malaysia for 4, 2 a state visit and concluded it by signing a cooperative strategic friend - ship agreement with Prime Minister Najib Razak. It should be noted 3, X i Jinping had signed a similar that just a day before, on October agreement with Indonesian President Yudhoyono, further highlighting Malaysia’s importance to China. In terms of recent relations, Chinese commentators find it particularly disconcerting that U.S.-Malaysian cooperation has increased in scope but are confident that Malaysia will 29 continue to remain closer to China, given their long history. Thailand In the case of Thailand, Chinese leaders are not oblivious to its long - - standing treaty alliance with the United States and so have often uti lized the rhetoric of partnership without presuming that a future key regional partnership will necessarily manifest. That does not mean, however, that China has not proactively worked to strengthen its rela - tionship with Thailand. In 2012, for example, the two countries signed a strategic partnership agreement. Certain Chinese commentators have, at the same time, made the argument that Thailand is vital to Chinese geo-economic strategic interests, with one even labeling it the 28 Joint Communiqué Between the People’s Republic of China and Malaysia in Conjunction with the 40th Anniversary of the Establishment of Diplomatic Relations , Ministry of Foreign Affairs of Malaysia, May 31 , 2014. 29 Liu Yanan, “Meima Guanxi Lishi Fazhan Zhong De Jinzhan Yu Wenti Yanjiu” [“Advances , and Inquiries into the Historical Development of U.S.-Malaysia Relations”], Theory Research -1— Vol. 27, March 20 14, pp. 34 –35. 0— +1— RR2273A_CC2015.indb 256 8/14/18 11:11 AM

295 Pivotal Regional Partnerships 257 30 strategic fulcrum of Southeast Asia. Zhou Fangzhi, a researcher at the Chinese Academy of Social Sciences’ China Network for Asia-Pacific Research, further asserted in 2014 that the importance of Thailand to China is based on three key factors: its “flexible diplomatic posi - tion,” its “highly adaptable society with comparatively fewer social ten - 31 sions,” and its “strong economy and complementarity with China.” The validity of the second point is questionable given the political instability that has prevailed in Thailand since 2006 as a result of the ongoing struggle between forces connected to former prime minister Thaksin Shinawatra and the conservative establishment comprised of the courts, the military, and the monarchy. However, on the last point, 13 referred to Thailand as 20 Chinese Premier Li Keqiang in October China’s main trading partner in ASEAN during a speech to the Thai 32 National Assembly. Leaders such as Li Keqiang have also further underscored the cultural overlap between the two countries and their equally strong military relations. Thailand was, for example, the first Southeast Asian - nation “to establish a mechanism for defense and security consulta 33 tion and to conduct joint military exercises and training with China.” Finally, there has been a growing vacuum in the traditional U.S.-Thai alliance that China has sought to exploit. The U.S. Department of 20 14 military coup that brought General State condemned the May Prayuth Chan-ocha and his National Council for Peace and Order to power, and the United States has subsequently distanced itself from the new government because of concerns over the deteriorating state of democracy and human rights in Thailand. This turn of events has prompted Chinese leaders to significantly increase their outreach to 30 - Zhou Fangzhi, “Zhongtai Guanxi: Dongmeng Hezuo Zhong Zhanlue Zhidian Zuoy South - ong” [“China-Thailand Relations: Strategic Fulcrum Role in ASEAN Cooperation”], , Vol. 3, 2014. east Asian Affairs 31 Zhou Fangzhi, 2014. 32 Li Keqiang, “May the Flower of China-Thailand Friendship Bear New Fruits,” speech , 2013. delivered to the National Assembly of Thailand, Bangkok, October 11 — -1 33 Li Keqiang, 2013. —0 — +1 RR2273A_CC2015.indb 257 8/14/18 11:11 AM

296 258 At the Dawn of Belt and Road the new Thai government at the same time that their U.S. counterparts have decreased theirs. Vietnam In contrast to the results of any perceived geopolitical competition for Thailand, Chinese commentators argue that the United States has already succeeded in “winning over” Vietnam in its rebalance to Asia. Since the United States and Vietnam first normalized relations in 1995, they have steadily drawn closer together. This process culmi - 15 with a visit by Nguyen Phu Trong, secretary general 20 nated in July of the Communist Party of Vietnam, to the United States, where he held a meeting with President Obama in the Oval Office. The meeting - was not only unprecedented but a rare honor usually reserved for visit ing heads of state and government. This event and others have firmly moved Vietnam away from having any kind of partnership with China. This is in spite of Vietnam’s economic and political potential and the fact it had previously signed a strategic partnership agreement with China in 2008. However, it should be noted that relations between the leaders of the two countries were more conciliatory at the time. Nong Duc Manh and Hu Jintao, who became the general secretaries of their respective parties within a year of each other, made greater efforts at reconciliation and established more frequent contact at the beginning of their time in office. As of 2014, however, Beijing is increasingly of the belief that Hanoi is destabilizing the region contrary to Chinese interests. For example, 015, Vietnam and the Philippines announced their 3, 2 on September 34 The Philippines, further, has a stra - signing of a strategic partnership. tegic partnership with Japan (announced June 015) and a mutual 4, 2 defense treaty with the United States (signed August 30 - , 1951), mean ing that Vietnam has now been drawn into a web of relationships that effectively aims to counter Chinese influence in Southeast Asia. It could, moreover, be argued that even before these recent develop - ments and extending all the way back to the 1979 Sino-Vietnamese War, Vietnam had consistently and independently frustrated China -1— 34 , September “Philippines and Vietnam to Be ‘Strategic Partners,’” Straits Times 4, 2 015. 0— +1— RR2273A_CC2015.indb 258 8/14/18 11:11 AM

297 Pivotal Regional Partnerships 259 and that the brief thaw at the start of this century was more of an anomaly than anything else. China’s Key Southeast Asian States Taken Together Based on these assessments, then, it is not possible to rank the key states; each is distinctive for a different reason. Indonesia, as the most powerful state within the region now and into the foreseeable future, is the most geostrategically important country in Southeast Asia. Thai - land is perhaps most important politically to China, while Malaysia is currently of great importance economically. Vietnam is important because Chinese leaders essentially view it as a lost cause. It is certainly a key regional state acting as a spoiler for Chinese policies. Overall, China sees developments within Southeast Asia as a whole as being pivotal, both for its regional strategy and for its global strategy. The new Belt and Road Initiative, the AIIB, and other efforts are more than economic in nature, as they have political implications for Chinese engagement in the Developing World. Regardless of the ongoing debate about whether Chinese actions indicate increasing for - 35 recent regional activities in Southeast Asia eign policy assertiveness, show that Beijing’s strategy is becoming more nuanced. Chinese per - spectives of Indonesia, Malaysia, and Thailand being key regional play - ers and of Vietnam being a lost cause may shift over time. Rings 2 and 3 PRPs: A China-Russia Condominium in Central Asia? Russia may not technically be a Central Asia state in our classification. Yet, by dint of its size, proximity, history, and enduring links to the six landlocked states that comprise the region—Mongolia, Kazakh - stan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—Moscow merits the title of Beijing’s PRP for Central Asia. If Russia were excluded from consideration then Kazakhstan would be the logical selection, since 35 , Michael D. Swaine, “Perceptions of an Assertive China,” China Leadership Monitor 20 No. 32 , March 10; David Shambaugh, “Coping with a Conf licted China,” The Washington Quarterly , Vol. 34, No. 1. D 27; Andrew Scobell and Scott W. Harold, ecember 20 11, pp. 7– ummer “An ‘Assertive’ China? Insights from Interviews,” Asian Security , Vol. 9, No. 2, S — -1 11 1–131; Iain Johnston, “How New and Assertive Is China’s New Assertiveness?” 2013, pp. International Security , Vol. 37, No. 4 (Sp 7– ring 2013), pp. 48. —0 — +1 RR2273A_CC2015.indb 259 8/14/18 11:11 AM

298 260 At the Dawn of Belt and Road it is by far the largest Central Asian state in terms of territory, popu - lation, and economy, and it is by far China’s most significant trading partner in the region. Yet, in terms of its population, economy, and military power, Russia dwarfs each of the aforementioned countries. Moreover, Russia’s population is double the size of the aggregate popu - mes the lations of the six other states; Russia’s economy is roughly 3.5 ti size of all six economies; Russia’s military is roughly 5.6 ti mes as large mes in terms of paramilitary in terms of active personnel and 6.4 ti personnel and it possesses 1.3 tim es as many main battle tanks and mes as many fighter aircraft as all six of the Central Asian states ti 3.9 combined. Most important, Russia holds significant influence over the region. History and Logic Being on good terms with Moscow is critical for Beijing because Russia occupies a sizeable piece of real estate along China’s northern border. The geostrategic importance of Russia to China is comparable to the significance of Canada to U.S. national security. However, unlike Washington, Beijing cannot afford to take the stability or friendship of its large northern neighbor for granted. Turmoil in Russia or tensions with Moscow have produced great consternation in Beijing, especially during the mid to late portions of the Cold War (notably as the USSR disintegrated between 1989 and 1991) and tensions earlier, during the 1960s, 1970s, and 1980s. Russia offers China proximate sources of vital military technology and know-how as well as essential energy resources. An unstable or unfriendly Russia would be enormously trou - bling for China. Role and Potential for Cooperation Of greatest relevance is Russia’s special status as a pivotal player in Central Asia. Indeed, Russia has long been the dominant power in the region, and Moscow remains key to the maintenance of stability in Central Asia. Although the six Central Asian states are no longer - formally subordinate to Moscow, Russia continues to have consider able influence through its historical ties, ethnic Russian populations in -1— most of these states, the prevalence of Russian language, and continued 0— +1— RR2273A_CC2015.indb 260 8/14/18 11:11 AM

299 Pivotal Regional Partnerships 261 military, political, and economic links. Thus, Moscow plays a key role in maintaining order and structure in Central Asia. Russia maintains a quasi-alliance structure through the CSTO. Bilaterally and multilat - erally, China and Russia cooperate in the region through mechanisms 36 such as the SCO. China and Russia also tend to share similar perspectives on the posture and policies of the United States. Both Beijing and Moscow perceive the United States as overbearing, arrogant, and even threat - ening to their respective regimes. Not only can U.S. hard power be considered threatening but so, too, can U.S. soft power. Ideas such as democracy and universal human rights can seem as dangerous to the dictatorships in China and Russia as U.S. military capabilities. Find - ing common cause in countering these ideas and Washington-backed initiatives in arenas such as the United Nations Security Council can bring Beijing and Moscow together. In terms of real substantive cooperation, coordination between Moscow and Beijing is quite limited. And yet rhetorical coordination and summitry, whether within the SCO or through BRICS heads of state meetings, can be significant for both states because symbol - ism matters enormously for both sets of leaders. Of particular note 15, 20 were the SCO and BRICS summits held in Ufa, Russia, in July - which emphasized solidarity among “emerging markets and develop 37 In Xi Jinping’s one-on-one meeting with Vladimir i ng c ou nt rie s.” Putin, the Chinese leader reportedly stressed that the two countries should continue their “high-level strategic coordination in the SCO” and indicated that Russia is included in China’s plans for a “Silk Road 38 Economic Belt.” 36 Scobell, Ratner, and Beckley, 2014, pp. 30, 35. 37 2015 at Xi Jinping, “Building See Xi Jinping’s July 9 speech at the BRICS summit in July Par tnership Together Toward a Bright Future,” speech given at the Seventh BRICS Summit, 9, 2 Ufa, July , Ministry of Foreign Affairs 015; see also, VII BRICS Summit Ufa Declaration of the People’s Republic of China, July 015. 9, 2 38 See “Xi Jinping Meets with President Vladimir Putin of Russia,” Ministry of Foreign — -1 8, 2 Affairs of the People’s Republic of China, July 015. —0 — +1 RR2273A_CC2015.indb 261 8/14/18 11:11 AM

300 262 At the Dawn of Belt and Road The two pillars of China’s strategic partnership with Russia are military relations and energy cooperation. Yet even here, there are real limits—energy cooperation had been plagued by delays and a lack of Russian enthusiasm. But this suddenly changed with tensions with Europe over the crisis in Ukraine that prompted Putin to offer China a comprehensive and attractive energy deal hastily packaged during 20 14. According to the terms of the a visit to Beijing in November deal, Gazprom would supply “as much as 30 bi llion cubic meters of gas ars . . . ye annually from developments in West Siberia to China over 30 At the same time, another Russian producer, OAO Rosneft, agreed to cent stake in a Siberian unit to state-owned China National per sell a 10 39 More important, it would also allow China to take Petroleum Corp.” Germany’s place as Russia’s biggest gas market. China-Russia cooperation on Central Asia is funneled through the SCO. But cooperation might be too strong a word since the level and degree of interaction is quite modest. Indeed, coordination is prob - ably a more accurate term. The SCO provides China with a multilateral umbrella to engage in bilateral cooperation with Central Asian states. - Moreover, there appears to be a rough division of labor between Chi nese and Russian engagement with the region; Moscow concentrates more on military activities, while Beijing is focused more on economic 40 Russian unease over growing Chinese economic power and efforts. influence in the five contiguous Central Asian states (excluding Mon - golia) is readily discernible, but the SCO framework permits Moscow to have a ringside seat and a voice in its operations. There is a significant military dimension to the relationship between Russia and China, the most visible manifestations of which 41 For instance, are arms transfers and coproduction and joint exercises. the Stockholm International Peace Research Institute in 2014 esti - mated that roughly 11 perc ent of Russia’s arms exports go to China, 39 Billion Gas Deal with Accord,” James Paton and Aibing Guo, “Russia, China Add to $400 014. omberg , November 9, 2 Blo 40 Scobell, Ratner, and Beckley, 2014, p. 35. 41 joint to refer to exercises it conducts with other coun- Note that the Chinese use the term -1— tries. Of course, this usage is very different to how the term is employed by the U.S. military. 0— +1— RR2273A_CC2015.indb 262 8/14/18 11:11 AM

301 Pivotal Regional Partnerships 263 making it Russia’s second largest client after India, which receives 42 More recently, in May 2015, China and cent of these exports. 38 per 43 Rus sia conducted their very first joint exercises in the Mediterranean. The two countries then followed up by conducting their first-ever joint 44 The 20 15. amphibious exercise landing in the Sea of Japan, in August Russian and Chinese armed forces have engaged in an ongoing series of field exercises under the auspices of the SCO. Most of these have been multilateral with other member militaries, but there have also been at least three bilateral China-Russia military field exercises in the ten years running up to 2015—the 2005, 2009, and 2013 Peace Mis- sion exercises. The combination of these interactions suggests a level of cooperation that is only matched by China’s military-to-military ties with Pakistan. While noteworthy, Chinese-Russian military coopera - tion does not compare with the level of coordination and interoperabil - ity found between the U.S. military and allied militaries. 15 identifies only 20 China’s Defense White Paper issued in May two states by name—the United States and Russia. Russia is high - lighted as a security partner of great interest to China. According to the document, Beijing is interested in sustaining and expanding its 45 “exchanges and cooperation with the Russian military.” Assessment and Prospects Since the 1990s, cooperation between Russia and China has yielded real results that have proved mutually beneficial. This has been useful to both Moscow and Beijing. The SCO allows Russia and China to manage their relations, coordinate Central Asia initiatives, and respect Moscow’s sensitivities to Beijing’s greater clout in what has historically been a Russian sphere of influence. Among the common interests are 42 Wezeman and Wezeman, 2015. 43 BBC News , Jonathan Marcus, “China-Russia Drills in Med Show Shifting Strategies,” 11 , 2015. May 44 - Sam LaGrone, “China, Russia Land 400 Marines in First Joint Pacific Amphibious Exer cise,” , 2015. USNI News , August 26 — -1 45 , 2015, “VI Military and Security Cooperation.” China’s Military Strategy —0 — +1 RR2273A_CC2015.indb 263 8/14/18 11:11 AM

302 264 At the Dawn of Belt and Road countering terrorism, extremism, and separatism as well as Western ideas of democracy and human rights. However, “thinness” and “latent tensions” underlie Sino-Russian 46 China’s relations with Russia do not have the same cooperation. breadth and scope of social and cultural interactions evident in PRC relationships with other states, such as the United States. Moreover, mutual suspicions and xenophobia are discernible just below the surface in both Russia and China. Thus, while there are prospects for a stron - ger partnership or alliance between China and Russia, the potential seems limited, barring the emergence of a daunting common threat. Moreover, there are differences in how far Beijing and Moscow are willing to raise the temperature in their relations with Washington. While both countries seek to counter the influence of the United States and its allies, Russia is prepared to be far more provocative than China in words and deeds. Beijing is far more reluctant to antagonize Wash - ington and European capitals, at least on matters that it does not deem to pertain directly to China’s own core national interests. Most impor - tant for China is stability in Central Asia and cordial relations with all states in the region and, indeed, all around its periphery. Moscow seems keen to blend the CSTO and SCO and turn them into an East - ern alliance bloc to counter NATO. China, however, has displayed no 47 interest in either of these endeavors. Rings 2 and 3 PRPs: China and Pakistan as Codependents in South Asia Although India dominates the subcontinent in almost every way and 48 clearly looms largest for China, it is not Beijing’s PRP in the region. Rather, it is Pakistan—India’s nemesis—that has for decades been China’s key partner in South Asia. In psychology, codependency is defined as a pathological relationship where two parties are overdepen - 49 dent upon each other to a degree that is unhealthy for both of them. Each party has feelings of extreme insecurity and fears being alone. 46 Medeiros, 2009, p. 105. 47 Medeiros, 2009, pp. 140–141. 48 For a thorough comparison of China and India, see Gilboy and Heginbotham, 2012. -1— 49 See, for example, Dr. Leon Seltzer’s blog post, Leon F. Seltzer, “Codependent or Simply 0— Dep endent: What’s the Big Difference?” Psychology Today , December 11 , 2014. +1— RR2273A_CC2015.indb 264 8/14/18 11:11 AM

303 Pivotal Regional Partnerships 265 This condition appears to define the relationship that China and Paki - stan have had with each other since the 1960s. Both Beijing and Islam - abad suffer from high anxiety and believe they have a dearth of reliable friends in other capitals. Accordingly, each views this partnership as 50 essential to maintaining its own national security. China considers Pakistan a pivotal state that will decisively influ - - ence the course of events in surrounding countries, notably Afghani 51 Moreover, Beijing also thinks of Islamabad as a longtime but stan. deeply troubled ally on a geostrategic fault line between South and Central Asia—in a region where China has had few friends. Neverthe- less, Pakistan has gradually declined in overall geopolitical significance as Beijing’s diplomatic relations and economic ties with other capitals in South Asia and the Middle East have expanded. In particular, India looms ever larger as a major economic partner for China (see Chap - 6) . Yet Islamabad continues to be Beijing’s PRP in South Asia pre- ter cisely because it is a counterweight to New Delhi. History and Logic China has enjoyed a warm relationship with Pakistan since the - 1960s, with the leaders of both countries often referring to the bilat 52 Yet, Beijing’s support eral relationship as an “all-weather friendship.” is more restrained than in the past. China’s interests in Pakistan are increasingly regional and aimed at restraining Islamabad. Pakistan continues to be an important partner and a major arms market for Chinese defense firms, but Islamabad’s value as China’s conduit to the Islamic world or a Chinese facilitator on the global stage has been greatly reduced. In the twenty-first century, China has robust relation - ships with a variety of countries in the Middle East and, globally, has 53 full diplomatic ties with all but 22 small countries as of 2015. 50 This appears to be the thesis of Small, 2015. 51 For discussion of Pakistan as a pivotal state in South Asia for U.S. policy, see Hasan- Askari Rizvi, “Pakistan,” in Chase, Hill, and Kennedy, 1999, pp. 64 –87. 52 2014. This section draws on the analysis in Scobell, Ratner, and Beckley, 53 Micro-states are those with populations of less than 500,000 people. For a list of coun - — -1 tries that continue to formally recognize Taipei as the Republic of China, see Nathan and —0 21 8. Scobell, 2012, p. — +1 RR2273A_CC2015.indb 265 8/14/18 11:11 AM

304 266 At the Dawn of Belt and Road During the early Cold War, China found itself surrounded by enemies. To the north and west were the Soviet Union and its client state Mongolia. To the south was India, which leaned toward the Soviet Union and was deemed hostile to China following the 1962 Sino-Indian border war. Border disputes with many of its neighbors, ethnic unrest, and fear of external invasion made China desperate for allies. In these circumstances, Pakistan became a fast friend, and the relationship proved mutually beneficial. Pakistan found an “all-weather friend” in a forbidding neighborhood, while China discovered a client to help check India, thereby helping to ameliorate the security situa - tion on its southern border, and to act as a bridge to the Islamic world Pakistan, for example, served as a key conduit and the United States. in U.S.-China rapprochement. Although Pakistan’s value to China has substantially decreased over time, Islamabad’s importance to Beijing is much more in regional terms and a negative sense than a positive sense in global terms. Beijing - is more focused on suppressing Pakistan’s potential to trigger instabil ity on China’s periphery than it is in enlisting Pakistani help in accom - 54 And while Chinese leaders con - plishing broader geopolitical aims. tinue to view Pakistan as a useful counterweight to India, they also worry that Pakistan might provoke India into a war through bellicose 55 actions or through its own domestic instability. Role and Potential for Cooperation Geopolitically, Pakistan has been the linchpin of China’s South Asia 56 This remains true, but as China’s relations with India have pol ic y. improved, and economic interactions have dramatically expanded, Islamabad has been viewed as less of an asset and more of a liabil - it y. Moreover, growing instability within Pakistan is very worrying to 54 Kardon, 2011, pp. 20 –21. 55 Thus, as Jing-Dong Yuan observes: “China’s support of Pakistan in recent years has more to do with the concern of Pakistan falling apart that with Pakistan’s value as a strategic coun - terweight to India.” See Jing-Dong Yuan, “The Dragon and the Elephant: Chinese-Indian Relations in the 21st Cen tury,” The Washington Quarterly , Vol. 30, No. 3, S ummer 2007, p. 13 9. -1— 56 This section draws on Scobell, Ratner, and Beckley, 2014. 0— +1— RR2273A_CC2015.indb 266 8/14/18 11:11 AM

305 Pivotal Regional Partnerships 267 China. Beijing is also concerned about Islamabad’s role in post-2014 57 Afghanistan. Despite the significant liabilities Beijing sees in Islamabad, China believes it has no choice but to continue the policy it adopted in the late 1990s—close cooperation with Pakistan in support of three main security interests. First, China wants to ensure internal security by sti - fling connections between Uighurs in Xinjiang and radical Islamists in Pakistan. Second, China seeks to balance against India by maintaining an enduring security relationship with Pakistan. Third, China is keen to diversify its trade routes and expand economic opportunities. Domestic Security: Containing Uighur Separatists. China’s western Xinjiang province borders northwest Pakistan and is home to nearly ten million Uighurs, a Muslim people of Turkic origin and among whom separatist sentiment has historically run high. In the 1980s, hundreds of Uighurs crossed into Pakistan, enrolled in religious schools known as madrassas, and, with Chinese government training and arms, fought the Soviets in Afghanistan. Upon returning to Xinjiang 58 Pakistan via Pakistan, some joined violent Uighur nationalist groups. has contributed to Chinese efforts to fight Uighur separatists. In 2003, Pakistani forces killed Hasan Mahsum, the founder of the Uighur East Turkestan Islamic Movement, which the Chinese government had identified as the most threatening Uighur terrorist group. China and Pakistan have also signed agreements on information sharing, joint 59 counterterrorism drills, and extradition of terrorist suspects. However, cooperation has not been seamless or trouble-free. Over ye the past 20 ars, for example, China has frequently severed trade and transportation links with Pakistan by periodically shutting down border crossings, closing the Karakoram highway, and erecting security fences along the border to insulate Xinjiang from Islamists in Paki - stan. Chinese analysts openly doubt the commitment and capabilities 57 See, for example, Scobell, 2015, pp. 325–345. 58 Cooley, 2002. 59 — -1 , See Ziad Haider, “Sino-Pakistan Relations and Xinjiang’s Uighurs,” 45 Asian Survey , Vol. 20 4, J uly/August No. 53 05, pp. 5–537. —0 — +1 RR2273A_CC2015.indb 267 8/14/18 11:11 AM

306 268 At the Dawn of Belt and Road of Pakistan’s security forces, even accusing them of warning Uighur 60 Moreover, Chinese leaders worry groups to disperse prior to raids. that Islamabad is too weak and unstable to secure Beijing’s interests in 61 Pakistan. Beijing has also become increasingly concerned about the safety of as many as 13,000 Chinese citizens working for some 60 compa - 62 The episode that raised China’s ire was the Red nies in Pakistan. Mosque incident in the summer of 2007. In June of that year, Muslim radicals seized seven Chinese massage parlor workers in Islamabad and took them hostage in a heavily fortified complex in the Pakistani capital. Strong Chinese pressure on then president Pervez Musharraf proved decisive in ending the incident. The result was a full-scale army assault on the Red Mosque compound, freeing some of the hostages 63 In at the cost of at least 100 deaths, including some of the hostages. contrast, U.S. pressure for Pakistani action against terrorists has often fort ef been ignored. The most prominent example of this was the U.S. 64 According to one expert on the to track down Osama Bin Ladin. China-Pakistan relationship, “Beijing’s secretive ties with Pakistan 65 The Red Mosque episode are closer than most formal alliances.” suggests that this is so. More recently, the relationship has been exem - plified by Pakistan’s agreement to assign a Pakistan army special secu - 60 Andrew Small, “China’s Caution on Afghanistan-Pakistan,” The Washington Quarterly , , 2010, p. . 91 Vol. 33, No. 3, J une 24 61 Small, 2010, p. 92. 62 Kardon, 2011, p. 16 ; Sergei DeSilva-Ranasinghe, “Pakistan’s Strategic and Foreign Policy Objectives,” Future Directions International, Strategic Analysis Paper, May 5, 2 011, p. 4; S 11 , yed Fazl-e-Haider, “Chinese Shun Pakistan Exodus,” Asia Times , September 2009. 63 Small, 2015, prologue. 64 The successful operation to seize the mastermind of the September 11, 2001, attacks on the U nited States was conducted by U.S. SOF without the knowledge or cooperation of Pakistani authorities. Moreover, U.S. intelligence discovered bin Laden’s whereabouts with - out any assistance from Pakistan. Bin Laden, of course, was living in a walled compound in close proximity to a Pakistani military academy. It strains credulity to believe there was no complicity on the part of elements of the Pakistani military or intelligence services. -1— 65 Small, 2015, p. 1. 0— +1— RR2273A_CC2015.indb 268 8/14/18 11:11 AM

307 Pivotal Regional Partnerships 269 rity division of 10,000 troops to protect Chinese citizens working in 66 Pakistan. Both China and Pakistan Common Concerns: Keeping India in a Box. view India as a rival (and in the case of Pakistan, as an existential threat). Although Beijing-New Delhi ties have improved, major problem areas persist—significant mutual distrust continues and border disputes 67 China sees Pakistan as an extremely useful remain unresolved. counterweight to India; New Delhi is the only capital that rivals Beijing in terms of population, geographic size, and economic and military 68 The result is considerable wariness by Beijing of New Delhi’s heft. 69 intentions and capabilities. China has, since the 1960s, pursued a “classic balance of power strat - 70 egy,” using Pakistan to confront India with a potential two-front war. China’s 2,500-mile border with India remains disputed, and although there has been no war since 1962, there are periodic border clashes. There exist some 400,000 square miles of disputed territory between China and India. In contrast, China and Pakistan have resolved their territorial dispute; in 1963, the two sides signed a border agreement that transferred 71 2,000 square miles of territory in Pakistan-held Kashmir to China. For decades, China has been Pakistan’s most important and reli - able weapons supplier (Figure 10.1). Between 1978 and 2008, for exam - bi llion in military equipment to Pakistan; ple, China sold roughly $7 cent of Pakistan’s total arms purchases per it typically accounts for 40 72 Twice, when the United States suspended arms aid in any given year. 66 Mateen Haider, “Army’s Special Security Division to Protect Chinese Workers in Paki - sta n,” Dawn , April 21 , 2015. 67 This section draws on Scobell, Ratner, and Beckley, 2014. 68 . For a systematic comparison of China and India, see Gilboy and Heginbotham, 2012 69 For a good overview of contemporary China-India relations, see Tanner, Dumbaugh, and E a s ton, 2 011 . 70 Stephen P. Cohen, 2011, p. 60. 71 6–118. 11 Fravel, 2008, pp. 72 — -1 Stockholm International Peace Research Institute (SIPRI) Arms Transfers Database, 1978–2008. —0 — +1 RR2273A_CC2015.indb 269 8/14/18 11:11 AM

308 270 At the Dawn of Belt and Road to Pakistan, in 1965 and 1990, China stepped in to meet Pakistan’s - needs. Since the 1980s, Beijing has supplied Islamabad with consider able quantities of weaponry, including several hundred jet fighters, well in battle tanks, and large quantities of surface-to- more than 1,000 ma 73 air and anti-tank missiles. During the mid-1970s, China began covertly assisting Paki - stan’s nuclear program. Beijing’s help was aimed at countering New Delhi’s nuclear program, which advanced with a nuclear test in 1974. This assistance reportedly included the design of a nuclear weapon 74 Then, during the 1980s, China also supplied and fissile material. assistance to Pakistan’s efforts to develop missiles capable of carrying nuclear warheads. In 1988, China agreed to supply and train Paki - stanis in the operation of the M-11 solid-fuel rocket, with a 185-mile 75 The missiles arrived in range and carrying a 1,100-pound warhead. 1995. In subsequent decades, China has sold Pakistan hundreds of jet fighters and signed agreements to sell frigates and submarines to 76 Pakistan. Economic Cooperation. China is Pakistan’s most important trading partner, but for Beijing, two-way trade with Islamabad is very modest. 73 SIPRI Yearbook 1989: World Arma Stockholm International Peace Research Institute, - , London: Oxford University Press, 1989, p. 259; Aabha Dixit, ments and Disarmament Strategic Analysis , Vol. 12, No. 9, “Enduring Sino-Pak Relations: The Military Dimension,” D ecember 19 89, pp. 98 1–990; Stockholm International Peace Research Institute, SIPRI Yearbook 1994 , London: Oxford University Press, 1994, pp. 53 5–536; Stockholm Interna - tional Peace Research Institute, SIPRI Yearbook 1998 , London: Oxford University Press, 1998, , London: Jane’s Informa- Jane’s Fighting Ships, 1997–1998 0; Richard Sharpe, ed., p. 35 tion Group, 1997, pp. 5–489. 48 74 324–331. Pakistan, of course, carried out its own nuclear tests in 1998 Garver, 2000, pp. s currently believed to possess a small but significant nuclear arsenal. and i 75 Garver, 2000, p. 237. 76 Jeremy Scahill, “U.S. Delivering F-16s to Pakistan This Weekend,” The Nation , June 24 , 2010; Jeremy Page, “China to Fast-Track Jets for Pakistan,” Wall Street Journal , May 20, 2 AFX News 011, p. ; “Pakistan to Buy American F-16s, Chinese FC-10 Fighter Jets,” 12 , April 13 , 2006; Usman Ansari, “China Officially Offers Pakistan J-10 Variant,” Limited , August Defense News 3, 2 011; “Pakistan Politics: Pakistan Tests a New Missile,” Economist Intelligence Unit ViewsWire , April 011; Farhan Bokhari, Leslie Hook, and James Lamont, 8, 2 -1— 20, 2 010, p. 3. “A History of Military and Commercial Ties,” Financial Times , December 0— +1— RR2273A_CC2015.indb 270 8/14/18 11:11 AM

309 Pivotal Regional Partnerships 271 Figure 10.1 China’s Share of Pakistan’s Arms Purchases, 1978–2012, Percent 80 70 60 50 40 Percent 30 20 10 0 2002 1994 1990 1982 2012 2000 2008 1992 1980 1988 2010 1978 1998 2004 1984 2006 1996 1986 Year SOURCE: SIPRI Arms Transfers Database. RR2273A- RAND 10.1 In 2014, China’s total annual goods trade with India was $70.6 billion, bi llion with Pakistan, meaning that trade with the com pared to $16.0 ent of trade with the former. latter amounts to only roughly 23 perc Yet, Pakistan figures prominently in both parts of China’s Belt and 15 visit to Islamabad, Xi Jinping 20 Road Initiative. During an April llion PRC plan to develop an ambitious China- announced a $46 bi Pakistan Economic Corridor. The oceanic dimension of the Belt and Road Initiative was already in process, with Pakistan’s Gwadar port an important terminus in China’s 21st Ce ntury Maritime Silk Road. The announcement of the CPEC also turned Pakistan into a central participant in the overland dimension as a segment of the land-based Silk Road Economic Belt. The CPEC involves upgrading the Karakoram Highway and building a natural gas pipeline over the 77 Himalayas, among many other projects. — -1 77 Scobell, Ratner, and Beckley, 2014, pp. 73–77; Ritzinger, 2105. —0 — +1 RR2273A_CC2015.indb 271 8/14/18 11:11 AM

310 272 At the Dawn of Belt and Road Assessment and Prospects As of 2015, China’s foreign policy toward Pakistan centers on a set of narrow but key interests that can be satisfied without enhancing Sino- Pakistani ties. Beijing’s interests in domestic stability and economic security can be realized as long as Islamabad maintains a modest degree of political stability within its own borders and limits its meddling in the affairs of its neighbors (specifically, Afghanistan and India). And China’s interest in checking India can be satisfied as long as Pakistan maintains some semblance of credible offensive military power. China is increasingly concerned about trends in Pakistan, instability, and the - inability of Islamabad to control extremists who infiltrate into Xinji ang. But Beijing cannot afford to pull away. China finds its relation - ship with Pakistan extremely frustrating and troublesome. But aban - donment does not seem to be an option because Beijing fears it would likely create more headaches and potentially even greater security prob - lems for China. So, Beijing has signaled its intent to tighten its embrace of Islamabad by deciding to go ahead with CPEC. Even if not all of the massive infrastructure projects are actually built, the corridor will be a 78 great boon to Pakistan. Meanwhile, Pakistan will continue to embrace China for the simple reason that Islamabad lacks any powerful and trusted friends except Beijing. Pakistan views the United States as fickle and unreli - 79 able, and ties between the two continue to be strained. Pakistan is almost certainly China’s closest and most enduring PRP in any region. No other country has maintained such a good, sustained relationship with China as Pakistan has. The relationship has spanned six decades and endured many ups and downs. Indeed, few other countries have managed to retain friendly ties with China for prolonged periods. In the post-Mao era, the members of this select group are few: North Korea, Iran, and Pakistan. This is hardly an 78 Ritzinger, 2015. 79 For insights on this complex and tumultuous relationship, see the interview with Husain Haqqani, former Pakistan ambassador to Washington: Mark Landler, “Seeing Misunder - , October standings on Both Sides of U.S-Pakistan Ties,” New York Times 23 , 2013, p. A6. Magnificent Delusions: Pakistan, the For more detail, see Haqqani’s book: Husain Haqqani, -1— , New York: Public Affairs, 2013. United States, and an Epic History of Misunderstanding 0— +1— RR2273A_CC2015.indb 272 8/14/18 11:11 AM

311 Pivotal Regional Partnerships 273 impressive list and the states on it even less so, with the possible excep - tion of Tehran. Tier 2 PRP: A Limited China-Iran Partnership in the Middle East China is a relative latecomer to the Middle East and has found it chal - lenging to win footholds in the region (see Chapter 7). One of its most enduring partners in the region is Iran. While China has had good bilateral relationships with several other states, none of these bilateral ties has approached the scope and scale of Beijing’s links with Tehran. And while China has developed a multifaceted relationship with Saudi Arabia, especially since the 1990s, the strength of this does not match the 80 strength and durability of Beijing’s strategic partnership with Tehran. History and Logic China’s relations with Iran have been good since the 1970s, weathering the overthrow of the Shah, and as with Beijing’s ties with Islamabad, there has been cooperation on missile and nuclear programs. Despite - good ties between post-Shah Iran and China, relations still do not com pare to the closeness of China’s relations with Pakistan. Nevertheless, analysts in Beijing and Shanghai have described Iran as a key partner 81 The two countries have developed for China in a tumultuous region. a level of trust built on cooperation in military and economic affairs during decades of ostracism by and financial sanctions on Tehran by Western capitals following the Islamic Revolution of 1979. Both China and Iran tend to think of themselves as millennia-old great powers and 82 heirs to splendid ancient civilizations. Role and Potential for Cooperation There is extensive across-the-board cooperation between China and Iran—economically, politically, and militarily. The economic dimen - sion has become central to the Beijing-Tehran relationship—notably in terms of energy—especially since the 1990s. But in lieu of cash, 80 Nathan and Scobell, 2012, p. 181. 81 2014. Discussions with Chinese analysts in Beijing and Shanghai, September — -1 82 See Garver, 2006. —0 — +1 RR2273A_CC2015.indb 273 8/14/18 11:11 AM

312 274 At the Dawn of Belt and Road China has paid for petroleum in kind with an array of Chinese-made consumer goods. This arrangement is satisfactory to China, but Iran would rather have the hard currency, while Iranian consumers complain 83 Since 2007, China has been Iran’s about shoddy PRC-made products. largest trading partner, and as of 2014, Iran provides China with some 84 In addition, China has invested per cent of its imported petroleum. 10 hundreds of millions of dollars in energy infrastructure, including oil refineries and chemical plants. Its investments have further extended into projects that do not directly benefit China. For example, during a 15, Xi Jinping signed an agreement 20 state visit to Islamabad in April with Pakistan Prime Minister Nawaz Sharif to build a gas pipeline that would bring natural gas from Iran to Pakistan and, theoretically, ease 85 tensions between the two states. Meanwhile, a military relationship has endured since the 1980s, when China sold Iran conventional weapons, including missiles, during the Iran-Iraq War. As part of this security and military cooperation, Beijing also provided Tehran with both ballistic missile technology and nuclear technology. China ended the latter assistance during the 1990s in response to U.S. and Western pressure, but China continued 86 These trends were also to cooperate with Iran on missile technology. evident in China’s relations with other countries, including Pakistan. Since 2008, China has been Iran’s most important supplier of conven- tional arms, surpassing Russia. In the 2000s, Beijing provided Tehran with large numbers of anti-ship and anti-air cruise missiles, and in 2010, a Chinese-built factory reportedly began producing anti-ship 87 A more recent indicator of ongoing military cruise missiles in Iran. 88 relations is a Sino-Iranian naval exercise in late 2014. 83 Scobell and Nader, 2016, pp. 37–38. 84 . Scobell and Nader , 2016, p. 44 85 Wall Street Journal 9, Saeed Shah, “China to Build Pipeline from Iran to Pakistan,” , April 2 015. 86 Medeiros, 2007 . 87 41–42. Scobell and Nader, 2016, pp. -1— 88 Scobell and Nader, 2016, p. 42. 0— +1— RR2273A_CC2015.indb 274 8/14/18 11:11 AM

313 Pivotal Regional Partnerships 275 - China has also been active in diplomatic engagement and coor dination with Iran. The two sides, for example, have consulted closely with each other on how to construct Belt and Road and also on how to connect Iran’s “Look East” policy with China’s own policy of open - 89 China was also active in the P5+1 negotiations ing up to the West. regarding Iran’s nuclear program and acted supportively of Iran over the course of negotiations that began in February 20 14 and concluded with 15. the signing of the Joint Comprehensive Plan of Action in July 20 During the final round of talks in Vienna, for instance, both China and 90 Russia backed the lifting of the arms embargo against Iran. Assessment and Prospects - Despite the enduring bilateral partnership, there appear to be real bar riers for the Beijing-Tehran partnership for several reasons. First, Iran has been a polarizing state in the Middle East. China is wary of fur - ther strengthening bilateral ties because it fears this would damage Bei - jing’s surprisingly good relationships with other capitals in the region. Iran has tended to be perceived as a hotbed of radical Islam intent - on expanding its influence and fomenting a fundamentalist Shia revo lution in the neighborhood. Moreover, Tehran has a potent military machine and is on the threshold of acquiring nuclear weapons, unless the recently negotiated nuclear deal is successfully implemented and 91 As a succeeds in halting Iran’s progress toward a nuclear weapon. result, many other states in the Middle East, including Saudi Arabia and Israel, view Iran as threatening. Second, tensions have arisen in the relationship. For example, Chinese companies have encountered many difficulties in recent years while trying to operate in Iran. Thus, while cooperation is significant and multifaceted, and will almost cer - 92 In tainly continue, the partnership is very likely to remain limited. 89 “President Hassan Rouhani of Iran Meets with Wang Yi,” Ministry of Foreign Affairs of the People’s Republic of China, February 16 , 2015. 90 Carol Morello, “Iran Talks Continue into Tuesday,” Washington Post , July 13 , 2015. 91 For analysis, see Alireza Nader, “The Days After a Deal with Iran: Continuity and Change in Iranian Foreign Policy,” Santa Monica, Calif.: R AND, Corporation, PE-124-RC, 2014. — -1 92 2016, Chapter 5. This conclusion draws on the analysis of Scobell and Nader , —0 — +1 RR2273A_CC2015.indb 275 8/14/18 11:11 AM

314 276 At the Dawn of Belt and Road short, the prospects for enhanced cooperation in the military or politi - cal spheres seem modest. Ring 4 PRPs: A China-South Africa Geo-Economic Partnership The Republic of South Africa may not immediately come to mind as a pivotal state in Africa. Other African countries, such as Nigeria, have larger populations, and other countries, such as Angola, possess substantial reserves of petroleum and natural gas. But South Africa possesses one of the most significant economies in Africa with about 93 Furthermore, cent of the continent’s GDP, just behind Nigeria. per 16 South Africa’s is the most diversified and sophisticated economy in sub-Saharan Africa. And Nigeria’s outstripping South Africa’s econ - omy is new—until 2011, the South African economy was larger and may once again emerge as larger, depending on the weight of oil rev - 94 enues in Nigeria’s nominal GDP. History and Logic Beijing and Pretoria formally established diplomatic relations in Jan - 19 uary 98, and President Nelson Mandela made the first state visit - to China by a South African head of state the following year. Presi dent Jiang Zemin reciprocated with an official trip to South Africa in 20 00. During Jiang’s visit, the two governments signed the Preto - April ria Declaration on Partnership. Bilateral ties were officially upgraded - to a strategic partnership in 2004 during the visit of PRC Vice Presi - dent Zeng Qinghong, and were eventually further upgraded to a com prehensive strategic partnership in a nine-page document signed by 20 10 in Beijing. heads of state Hu Jintao and Jacob Zuma in August The foundation of relations with postapartheid South Africa was laid with China’s longstanding rhetorical support for the anti-apartheid struggle, although Beijing did not directly support the African National - Congress because of the latter’s close ties to the Soviet Union. Never theless, China benefited from the perception that it was a longstand - 93 Grimm et al., 2014, p. 16; and IMF data. 94 GDP data are from the World Bank’s World Development Indicators. From 2000 through -1— rcent of South Africa’s nominal GDP. 2010, Nigeria’s nominal GDP averaged only 53 pe 0— +1— RR2273A_CC2015.indb 276 8/14/18 11:11 AM

315 Pivotal Regional Partnerships 277 ing friend of the Developing World and Africa in particular. Beijing built upon this reputation by twice publicly supporting Pretoria’s suc- cessful campaign to win a nonpermanent seat on the United Nations Security Council. Beijing’s sponsorship of Pretoria’s bid to become a member of the BRIC group further cemented China’s special relation - 10, Brazil, Russia, India, and ship with South Africa. In December 20 China voted to admit South Africa as a member of the bloc. President Jacob Zuma then attended his first BRICS heads of state summit, held 11. The official title of the grouping also became in Beijing in April 20 BRICS, with the fifth letter—S—becoming capitalized to represent the new fifth member of the group—South Africa. Role and Potential for Cooperation There is a significant economic component to the partnership. South Africa ranks as China’s “most significant trade partner on the continent”— China conducts about one-fifth of its two-way commerce with South Africa, and the country is one of Africa’s top ten recipients of Chinese 95 investment. South Africa may also have the largest community of expatri - ate PRC citizens on the continent. According to one leading expert, 96 Estimates of South Africa is a “prime destination” for PRC citizens. the number of PRC immigrants to Africa “since the early 1990s” range “anywhere from 300,000 to 750,000” with “perhaps a third” of this 97 Both South African and Chinese number headed to South Africa. analysts assess the number of PRC nationals living and working in the country as having grown dramatically in the twenty-first century. One South African estimate puts the number of Chinese nationals living in 98 In 2007, South Africa as of 2013 at between 350,000 and 500,000. 95 Grimm et al., 2014, pp. 16, 17. 96 Deborah Brautigam, The Dragon’s Gift , New York: Oxford University Press, 2009, p. 15 4. 97 Brautigam, 2009, p. 270. Note that more recently, as of 2017, this number has been in dec Finan - line (Tom Hancock, “Chinese Return from Africa as Migrant Population Peaks,” cial Times , August 28 , 2017). 98 Grimm et al., 2014, Diagram 2 on p. 30. It is important to note that the PRC does not — -1 kee p official statistics on the number of its citizens residing overseas. All estimates should be treated as speculative. —0 — +1 RR2273A_CC2015.indb 277 8/14/18 11:11 AM

316 278 At the Dawn of Belt and Road the PRC ambassador estimated that 100,000 Chinese lived in South 99 According to one Chinese researcher, “In recent years more Africa. and more [Chinese] entrepreneurs have come and settled here [in South 100 A f ric a].” Moreover, Chinese businesses may find South Africa a useful “springboard and convenient base” to access other African states, given 101 In 2007, for its strong financial services sector and other advantages. example, a Chinese bank purchased a 20 per cent stake in Standard Bank 102 In 1997, Hisense, a llion. of South Africa—reportedly worth $5.5 bi Chinese electronics company, purchased a Korean-owned factory in Johannesburg and began assembling televisions and DVD players. As of 2008, the factory was exporting to almost a dozen countries in sub- Saharan Africa, and Hisense started construction of a multimillion- dollar industrial park to manufacture refrigerators and washing 103 machines. According to one—albeit biased—source: “South Africa is . . . a well-recognized and important player” in a variety of arenas from the African Union to the UNSC. But South Africa’s standing is strongest on its own continent—the country has considerable moral authority and “arguably provides China’s Africa engagement with legitimacy.” - The bottom line is that South Africa is widely considered to be a “con 104 tinental leader.” South Africa constitutes a “special case” of Chinese military assis - tance to the Developing World because, rather than simply being a - consumer of Beijing’s armaments, Pretoria has also sold military equip ment to China. In the 1990s, South Africa bought “a modest quantity 99 But he appeared to include all ethnic Chinese, not just PRC citizens. Cited in Deborah 5 and p. 4. Brautigam, 2009, note 53 on p. 15 34 100 Feng Dan, “Zhongguo Yu Nanfei Guanxi Fazhan Xianzhuang Ji Wenti Duice Sikao” [“China and South Africa Relations—Current Developments and Policy-Related Consider - ations”], Theory Research , No. 11 . , 2013, p. 34 101 Grimm et al., 2014, p. 18. 102 Medeiros, 2009, p. 150. 103 191. Brautigam, 2009, p. -1— 104 The quotes in this paragraph can be found in Grimm et al., 2014, p. 15–16, 16, 0— res pectively. +1— RR2273A_CC2015.indb 278 8/14/18 11:11 AM

317 Pivotal Regional Partnerships 279 of Chinese arms” and also sold China approximately 2 million dollars 105 wor th of “nonsensitive military equipment.” Assessment and Prospects There are likely limits on how far this PRP can go. Chinese offi - cials reportedly exhibited a “willingness to deepen bilateral relations,” although they reported “relatively lukewarm” responses from South 106 Nevertheless, the Sino-South African part - African counterparts.” nership is likely to endure, cemented by the perception in Pretoria that Beijing is a reliable friend that views South Africa as the pivotal state— globally and regionally—located on a continent of increasing conse- quence to China. China’s support for South Africa’s admission to the BRICS is but one of the more recent indicators of growing importance of this Sino-African PRP. Ring 4 PRPs: A China-Venezuela Military-Energy Partnership in Latin America When thinking of a pivotal state in Latin America, Brazil is an obvi - ous choice. The most populous country in the region with its largest economy, as well as a founding member of the BRICS bloc, seems like far and away the prime candidate. Certainly, Beijing sees Brazil as a key regional player (see Chapter 9), but a closer look at Chinese indicators of economic and military attention reveals that Caracas is of special interest to Beijing. Venezuela is the second largest oil producer in Latin America (after Mexico) and the sixth most populous state in the region (after Brazil, Mexico, Columbia, Argentina, and Peru). Most important, 107 by some measures, it has the largest proved oil reserves in the world. History and Logic The relationship took off in the 2000s when the late Hugo Chavez was looking for out-of-area patrons. In a different era (during the Cold 105 David H. Shinn, “Military and Security Relations: China, Africa, and the Rest of the World,” in Robert I. Rotberg, ed., China into Africa: Trade, Aid, and Influence , Wa shing - ton, D.C.: Brookings Institution Press, 2008, p. 1. 16 — -1 106 Grimm et al., 2014, p. 16. —0 107 B P, BP Statistical Review of World Energy 2015, 64th Edition, June 2015. — +1 RR2273A_CC2015.indb 279 8/14/18 11:11 AM

318 280 At the Dawn of Belt and Road War), Venezuela would have found a close friend in the Soviet Union. But in the twenty-first century, Moscow is weaker and less generous with its largesse. Beijing is actively looking for energy resources and - opportunities for investment and cooperation. Most of the opportuni ties available are in states that, for ideological reasons or due to politi - cal instability, are unattractive or risky to corporations from developed - states. Venezuela was one such state—rich in oil but led by the enig matic socialist, populist Hugo Chavez, who came to power in 1999 and aligned his country with other left-leaning states in the region while forging close ties with communist-ruled Cuba. Chavez positioned him - self as a latter-day Bolivarian champion of Latin America and implaca - ble foe of the “imperialist” United States. China and Venezuela estab - lished a strategic partnership in 2001, and President Hu Jintao’s visit to Caracas four years later cemented this. This partnership has proved enduring, as it survived the death of Chavez in 2013 and the leadership 108 In 2014, transition in China from Hu to Xi Jinping in 2012–2013. China and Venezuela officially upgraded their relationship to a com - prehensive strategic partnership during President Xi’s visit to Caracas. Role and Potential for Cooperation Beijing has minimal diplomatic coordination with Caracas but robust economic relations and security cooperation. As of 2013, the value of l- bi PRC foreign direct investment in Venezuela was estimated at $2.4 lion, making it the largest single destination of FDI in Latin America. Moreover, between 2005 and 2014, China loaned the country approxi - - bi llion, with the collateral being mainly future oil ship mately $56 ments. This ten-year loan amount was more than the value of loans China provided its second largest debtor country in the region, Brazil, which received $22 bi llion (see Chapter 9). China has bought more petroleum from Venezuela than from any other state in Latin America, and Chinese imports of oil from Venezuela have grown from just over llion in 2013 (see Chapter 9). bi $4 mi llion in 2000 to over $12 Security-wise, Beijing and Caracas are active in a number of areas. This includes satellite launches and arms sales. Under Chavez, -1— 108 See Margaret Myers, “China’s Unlikely Partnership with Venezuela,” International Rela- 0— tions and Security Network , August 20 14. +1— RR2273A_CC2015.indb 280 8/14/18 11:11 AM

319 Pivotal Regional Partnerships 281 for example, Venezuela launched two satellites from China—one tele- - com satellite in 2008 and one remote sensing satellite in 2012. In Octo 20 14, the new administration of President Nicolás Maduro signed ber - an agreement with the state-owned China Great Wall Industry Cor poration to launch a third satellite. This followed a state visit by Xi Jinping in July of the same year, when he declared that China would 109 China has be expanding satellite technology transfer to Venezuela. sold more armaments to Venezuela than to any other state in Latin llion since 2006. While the total amount and America, almost $500 mi range of weapons systems provided are significant, Russian military sales dwarf these Chinese arms transfers. Since 2006, Moscow has sold llion in weaponry. Beijing’s goals are certainly Caracas more than $8 bi economic, as Venezuela provides a good market for Chinese arms cor - porations, but it is the lure of access to energy resources that is crucial. Indeed, oil exports, rather than using cash, pay for some of the arms sales to Venezuela (see Chapter 9). Venezuela is experiencing severe economic difficulties, and China is well aware of these problems. Beijing continues to support Caracas despite the grave risks because “there is money to be made,” and many 110 But the PRC is not prepared Chinese loans are “commodity-backed.” to write Venezuela a blank check. When Maduro flew into Beijing in - 15 seeking additional Chinese emergency aid, he was dis 20 January bi llion appointed; China simply offered to repackage an existing $20 111 As Venezuela’s economic crisis is credit for long-term investment. likely to get worse before it gets better, Caracas is likely to prove to be Beijing’s most challenging PRP. Conclusion Some developing countries are more important to China than others, and individual PRPs are clearly identifiable in five of the seven regions 109 6, 2 014. “China to Help Venezuela Launch Third Satellite,” Xinhua News , October 110 Myers, 2014. — -1 111 —0 Economist “Bello: The Dragon and the Gringo,” The . , January 15 , 2015, p. 36 — +1 RR2273A_CC2015.indb 281 8/14/18 11:11 AM

320 282 At the Dawn of Belt and Road into which we have divided the Developing World: Central Asia, South Asia, the Middle East, Africa, and Latin America. It is noteworthy that only in Southeast Asia—arguably the most important region to China in the Developing World—can no single PRP be identified. Instead, Beijing seems to perceive four candidate states, depending on whether - the primary criterion is economic, political, trustworthiness, or geo strategic risk. Economically, Malaysia appears to be China’s top choice in Southeast Asia; politically, China considers Indonesia to be the most geostrategically important state in the region; in terms of being a trusted partner of longstanding reliability, China’s clear favorite is - Thailand; in terms of volatility and erratic behavior, China sees Viet nam as most problematic—a fraternal socialist state capable of behav - ing erratically in a proximate and very sensitive geostrategic locale. For China, economics and geostrategic dimensions are key fac- tors across the board. All of the PRPs identified in this chapter are likely to be enduring partnerships, but almost all of them—with the exception of South Africa—are fraught with considerable challenges. These challenges are especially evident in China’s contemporary ties with Iran and Venezuela but are also present in its relations with Russia and Pakistan. Perhaps not surprising, the most important PRPs are the two located inside China’s second ring of insecurity. Russia and Pakistan are parked on the PRC’s northern and western boundaries, respec - tively, and neither can be towed away if they break down. But Beijing would probably not really want to do this even if moving one or both was a viable option because it views each as playing a pivotal role in key regions on China’s periphery. Indeed, maintaining the Russian and Pakistani PRPs is almost certainly viewed as essential from Beijing’s perspective. Not so much because either enables China to do a lot; rather, both are important to China because the absence of construc - tive and cordial ties with these neighbors would have major adverse effects on Beijing’s domestic security and China’s standing in Central and South Asia. With a record of decades-long mutually beneficial cooperation, China has built up a level of trust with Pakistan and Russia that it does -1— not have in its relationships with many other states. While neither rela - 0— +1— RR2273A_CC2015.indb 282 8/14/18 11:11 AM

321 Pivotal Regional Partnerships 283 tionship is ideal from Beijing’s perspective, both Moscow and Islam - abad are known quantities, and experience has shown that China can work with each to manage security problems in ways that it can do with no other states. The bilateral defense relationships are as solid as Beijing has with any other capital. Furthermore, there is potential for one or the other to rise from a partnership to an alliance should the involved par - ties at some point feel it necessary. According to one Chinese analyst, “If China decides to develop formal alliances Pakistan would be the 112 first place we would turn. It may be the only place we could turn.” The second tier of PRPs contains only one state: Iran. Beijing’s relationship with Tehran is important, enduring, but full of complexi - ties. Significantly, Iran is the PRP in the region of perhaps greatest importance to China outside of its third ring (that is, Asia-Pacific). And Iran’s importance is heightened because, geostrategically, China now appears to view the Middle East as part of its extended periph - ery because of economic and ethno-religious linkages that connect - countries like Iran with Central and South Asia. The greatest impedi ment to further enhancement of the Sino-Iranian PRP, aside from the prickliness of Tehran’s domestic politics, is Beijing’s reluctance to risk harming its cordial relations with other regional powers, notably Saudi Arabia. The third tier of PRPs is located farthest away—in China’s out - ermost fourth ring. Of the two relationships in this ring, the steadiest and least demanding is Beijing’s strategic partnership with Pretoria. The contours of this PRP are among the most difficult to appreciate because China is generally very active in countries across the Afri - can continent. Some analysts and researchers, therefore, tend to over - 113 And yet, for look China’s relationship with South Africa completely. many Chinese strategists, Pretoria remains the most important capital 114 in Africa. 112 Small, 2015, p. 181. 113 One author, for example, barely makes passing mention of South Africa in a recent book that surveys China’s involvement with Africa. See French, 2014 . — -1 114 Conversations with Chinese analysts: 2008, 2015. —0 — +1 RR2273A_CC2015.indb 283 8/14/18 11:11 AM

322 284 At the Dawn of Belt and Road The other fourth ring PRP is in Latin America; arguably, this is - the least important region in the Developing World for China. Ven ezuela is situated at the crossroads of Latin America, firmly in South America but proximate to Central America and touching the shores of the Caribbean Sea. While not an economic powerhouse on the order of Brazil or Mexico, Venezuela is a key oil producer. Moreover, it is a coun - try in which China has disproportionately invested economically and militarily. The upshot is that Beijing has an enormous stake in Caracas. While China appears reluctant to throw unlimited amounts of money at Venezuela, it also seems unprepared to walk away or even distance itself from its Latin American partner. The political and economic crises in Venezuela appear chronic, and China’s political leaders will face dif - ficult decisions in the years ahead about how to handle this PRP. Cooperation with other states has never been more important to the PRC than it is today. Growing Chinese interests overseas and ongoing competition with the United States require Beijing to be more engaged with countries across the globe and active in regions around the world. This will help protect its interests and build working rela - tionships with like-minded countries to achieve favorable outcomes in these regions and counter U.S. influence in the Developing World. -1— 0— +1— RR2273A_CC2015.indb 284 8/14/18 11:11 AM

323 CHAPTER ELEVEN Conclusion China has been more active economically, diplomatically, and mili - - tarily all across the Developing World since the 1990s. Beijing’s activ ism has only increased in subsequent decades, and this report docu - ments expanding Chinese involvement since 2000 through the early days of the Belt and Road Initiative in each of seven regions. China’s presence in Southeast Asia, South Asia, Central Asia, Oceania, the Middle East, Africa, and Latin America and the Caribbean is likely to continue to expand under PRC President Xi Jinping. All indica - tions are that Beijing remains intent on further global activism, espe- cially in the Developing World. China’s economic outreach has been reenergized by President Xi’s 2013 announcements of the launch of what has become known as the Belt and Road Initiative and sub - sequent follow-through efforts, especially the founding of the Asian Infrastructure Investment Bank. Diplomatically, high profile travel by senior leaders seems to continue apace. China remains actively engaged in sustaining bilateral partnerships around the globe, as well as participating in multilateral forums, both at the regional and global levels. In the military realm, reforms are afoot to position the People’s Liberation Army for greater reach beyond China’s borders. In terms of defense diplomacy, port visits, combined field exercises, arms sales, and peacetime operational employments, the PLA is likely to remain - engaged around the world. In recent years, these operational employ ments include participation in UNPKOs and periodic involvement in noncombatant evacuations. — -1 —0 — +1 285 RR2273A_CC2015.indb 285 8/14/18 11:11 AM

324 286 At the Dawn of Belt and Road Beijing’s growing clout across the Developing World has not resulted in direct conflict or close cooperation with the United States. However, it does underscore two fundamental challenges for Wash - ington where Beijing is concerned. The first challenge is how the United States handles the rise of China; the second challenge is how the United States persuades China to shoulder its fair share of great 1 With power responsibilities in upholding the international system. the exception of tensions in Southeast Asia, the United States and China appear to be partners in parallel—meaning that the two states work separately with no real collaboration in pursuit of similar ends. The end of this chapter explains and expands upon this concept. Regions and Rings For China, not all regions and countries are created equal. Chinese leaders perceive certain regions and countries to be more important than others. Beijing appears to be far more concerned with those regions that abut China’s borders and that are in its immediate neigh - - borhood than those further afield. Regions along its periphery, in Chi na’s second ring of security, are of greatest concern because instability there poses a direct and proximate threat to internal security— China’s first ring. Foremost among these are Southeast Asia and Cen - tral Asia, with South Asia appearing to be of rising importance. Ocea - nia is in China’s third ring, and there is growing Chinese interest in this region. Beijing recognizes that key Chinese maritime trade routes pass through Oceania and wants to strengthen relations with islands in the region to protect Chinese trade and to prevent countries in the region serving as part of a second island chain aimed at containing or threatening China. Outside of the Asia-Pacific, in the fourth ring, are the Middle East, Africa, and Latin America and the Caribbean. These three regions are of lesser importance, although the Middle East is 1 Thomas J. Christensen, The China Challenge: Shaping the Choices of a Rising Power , New 8. 28 York: W. W. Norton, 2015, p. -1— 0— +1— RR2273A_CC2015.indb 286 8/14/18 11:11 AM

325 Conclusion 287 - garnering greater attention because of its energy resources and stabil ity risks, and because in some respects it is considered to be part of a wider region intertwined with China’s first, second, and third rings of 2 sec u rit y. Political Engagement by Region China is increasing its political engagement with individual countries and leveraging existing regional institutions, such as ASEAN in South - east Asia. It is also establishing new ones to engage with entire regions, such as the SCO for Central Asia and FOCAC for Africa. In Southeast Asia, Beijing seeks to increase cooperation with its neighbors and regional influence through greater connectivity and trade, particularly through the Belt and Road effort and supporting economic initiatives that increase China’s involvement in the region. Chinese strategists view the region as crucial to the success of the 3 - Through maritime coop ntury Maritime Silk Road Initiative. Ce 21st - eration, infrastructure loans, regional trade, and cultural outreach, Bei jing hopes to bind China to its ASEAN neighbors. Nevertheless, China continues to press its territorial claims in the South China Sea even at the risk of damaging its relations with neighboring states. Oceania is of much lesser importance, but even there, China seeks to win international support, facilitate political and economic cooperation—and isolate Taiwan. As China presses its territorial claims in the East and South China Seas, Beijing seeks to reassure Oceania that China is not a regional threat. Within the region, China prioritizes Australia and New Zealand, the largest geopolitical and economic actors in the region and the only two countries in the region with which China has signed comprehensive strategic partnerships. Although Australia and New Zealand are close U.S. allies, Beijing believes that political and economic exchanges could discourage both 2 Andrew Scobell, “China’s Search for Security in the Greater Middle East,” in James Reardon- , New York: Oxford Anderson, ed., The Red Star and the Crescent: China and the Middle East University Press, 2018, pp. 13 –35. 3 “Dongnanya Zai ‘Yi Dai Yi Lu’ Jianshe Zhong Jiang Fahui Zhongyao Zuoyong,” 2015. — -1 —0 — +1 RR2273A_CC2015.indb 287 8/14/18 11:11 AM

326 288 At the Dawn of Belt and Road from engaging in measures to contain China’s growth or counter Chi - 4 na’s maritime claims. Beijing seeks to increase cooperation with its Central Asia neigh - bors and gain regional influence through greater connectivity and trade. China does not have conflicting relations with any of the Cen - tral Asian countries. Although Russia views Central Asia as its sphere - of influence, Beijing and Moscow have found opportunities to collabo rate on regional initiatives through the SCO, and Beijing sees Russia— - although geographically on the periphery of Central Asia—as its piv otal partner in the region. In South Asia, senior Chinese officials have made high-profile visits to Pakistan, Sri Lanka, and India to promote political engage- ment, trade, and investment. China’s closest partner in the region is Pakistan, which Beijing sees as the key to countering New Delhi—long China’s principal regional rival—especially as India grows stronger eco - nomically and more powerful militarily. China has little cultural influ - ence in South Asia; indeed, it seems more concerned about the flow of the region’s cultures—particularly Islam and Tibetan Buddhism—into China. Beijing’s relations with the Middle East have been growing strongly, as has the region’s importance to China. Beijing has included 5 Emblem - the region as a link to Europe in its Belt and Road planning. atic of China’s efforts to maintain good relations with all parties in ntury Maritime Silk Road includes Israel, Ce the Middle East, the 21st where China is building a new port in the Mediterranean city of Ashdod. Despite its strategic significance, China’s senior leaders have generally refrained from visiting the Middle East, apparently because the current leadership considers the Middle East a hornet’s nest to be 4 Sun Junjian, “Aodaliya Dui Meiguo ‘Chongfan Yatai’ Zhanlue De Fan Ying” [“Australia’s Response to the United States’ ‘Pivot to Asia’ Strategy ”]; “Zihuo Xieding Ling Zhong Ao Xingfen Meimei Danyou ‘Yatai Zhanlue Luo Kong’” [“Free Trade Agreement Excites China, Australia, U.S. Media Worries About ‘Asia-Pacific Strategic Failure’”], Global Times , July 19, 2 015. 5 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime -1— Silk Road , 2 015. 0— +1— RR2273A_CC2015.indb 288 8/14/18 11:11 AM

327 Conclusion 289 6 avoided. Beijing views Iran and Saudi Arabia as its most important regional partners. Relations with the 51 of Africa’s 54 countries that recognize Beijing as of 2015 provide China with a strong dose of international - legitimacy. Its commitment to avoid interfering in, or even pass ing judgment on, sovereign nations’ behavior and policies allows it to pursue its political and economic interests across the continent with democrats and despots alike. China ensures ongoing high-level engagement with African countries in a range of disciplines through FOCAC, under the auspices of which China announces regional engagement strategies, launches educational and cultural initiatives, and unveils large bilateral trade, investment, and aid deals. China has also augmented its collaboration with the African Union as a way to give its engagement—particularly on security issues—greater regional impact and legitimacy. The least important region for China is Latin America and the Caribbean, but China is engaged there as well. China’s main political interest in the region is to win international support and legitimacy and to promote greater involvement by developing countries in mul - tinational institutions. While China has actively reached out to the entire region, Brazil, Venezuela, and, at least until late 2015, Argentina have been priority countries for Chinese political, economic, and mili - tary engagement. Economic Engagement by Region China’s economic exchange with most regions involves a heavy dose of resource trade. Southeast Asia stands out as different. With that region, China has extensive production networks and two-way trade in manu - facturing inputs and finished projects. But relations in other regions go beyond resources, to investment, construction, and infrastructure development. China’s economic engagement with Southeast Asia in the past decade has been greater than with any other developing region. All ten members of ASEAN were among the 57 prospective founding members — -1 6 Liu Zhongmin, 2011. —0 — +1 RR2273A_CC2015.indb 289 8/14/18 11:11 AM

328 290 At the Dawn of Belt and Road of the China-led AIIB, widely seen as a vehicle for funding the Belt and Road Initiative. But the region is not solidly behind China in economic cooperation. Several countries are also signatories to the U.S.-led TPP trade deal, which excludes China. But in the spirit of not choosing sides, these same countries are negotiating partners in the Regional Compre- hensive Economic Partnership, an ASEAN+6 (including China) trade deal that excludes the United States. Beijing is principally interested in Oceania for its natural resources. China’s trade with Oceania is dominated by trade with Australia and New Zealand, two economically advanced countries within a develop - - ing region, from which China imports mostly crude minerals and min eral fuels and to which it exports manufactured goods and machin - ery. Beijing’s rapidly growing FDI in the region is concentrated almost entirely in Australia. Central Asia is, by virtue of geography, the first stage in President Xi’s Silk Road Economic Belt, and China has funded a range of infra - structure projects in the region. Although China dominates the region’s trade, Chinese investment—which is concentrated overwhelmingly in - the Kazakhstan hydrocarbon sector—represents a small share of over all FDI in the region. Beijing has pursued major mining, oil, and gas deals in the region, especially in Kazakhstan and Turkmenistan. As cent of Chinese imports from the region per a result, whereas only 10 cent by per consisted of oil and gas in 2000, that figure had risen to 70 2013. Somewhat like relations with Southeast Asia, but to a much lesser extent, China’s imports from South Asia include a high proportion of manufactured items, most of which originate in India. Whereas most of China’s regional trade is with India, most of its investment has gone to Pakistan. In large part, this investment has focused on building roads, railways, and an oil pipeline to connect China’s Xinjiang province to the Pakistani port of Gwadar. This transportation infrastructure— critical components of the Belt and Road Initiative—would facilitate oil and gas imports from the Gulf and allow Chinese exports to be sent overland to a deepwater port on the Arabian Sea. - China’s imports from the Middle East are dominated by min -1— eral fuels (specifically, oil and related products), which comprise more 0— +1— RR2273A_CC2015.indb 290 8/14/18 11:11 AM

329 Conclusion 291 than 80 percent of the total. Saudi Arabia alone provides one-third hina’s Middle Eastern oil imports and 16 of C ent of its global oil perc imports. Iran, Iraq, and Oman are also significant sources of oil for China. China has invested significant amounts in Iran, Iraq, the UAE, - and Saudi Arabia, particularly in the hydrocarbons sector and the pet rochemical industry. As with the Middle East, China’s economic engagement in Africa has focused on gaining access to natural resources. But because of Afri - ca’s large population, there is also an effort toward creating markets for Chinese manufactured items, and developing manufacturing facilities that can take advantage of the continent’s low labor costs and, in some cases, developed-country trade preferences. Eighty percent of Chinese imports from Africa—which have grown more than 20-fold since 2000—consists of fuel and raw materials. Although most of China’s economic engagement has been undertaken by SOEs and state-backed finance institutions, private Chinese nationals are also pursuing eco - nomic opportunities in Africa independent of government-directed 7 Africa receives nearly half of China’s foreign aid, much of initiatives. which is given in the form of concessional loans, and in some cases grants, intended for construction and infrastructure development tied to the purchase of Chinese goods and services. Although Chinese trade with and investment in Latin America and the Caribbean has increased nearly 20-fold in the last decade, it is still low compared to other developing regions. Latin America has been a source of food and raw materials for Chinese manufac - turing as well as an export market for Chinese manufactured goods and machinery. China seeks to strengthen trade with major regional economies and has been willing to provide significant financial sup - 8 To reduce the share of raw materi - port in exchange for resources. als in China’s trade with the region, Beijing is increasingly focusing its investment on infrastructure, agriculture, and local production of 7 589. Mohan and Tan-Mullins, 2009, p. 8 China has provided billions of loans to oil-rich Venezuela and Ecuador. See “China Steps in to Support Venezuela, Ecuador as Oil Prices Tumble,” 2015; “Venezuela to Get $5 llion Bi — -1 in Funding from China in Next Few Months,” 2015. —0 — +1 RR2273A_CC2015.indb 291 8/14/18 11:11 AM

330 292 At the Dawn of Belt and Road value-added products. Countries that are more politically or finan - cially isolated, such as Argentina through 2015, Bolivia, Ecuador, and Venezuela, have welcomed Chinese investment, but China has faced hurdles to investment in countries with strong labor laws, environ - mental safeguards, and otherwise strong (although at times selective) commitments to the rule of law, such as Brazil and Costa Rica. Military Engagement by Region - Certain regions stand out for specific types of military activities. Cen tral Asia is the region with the most military exercises, the Middle East is the region with the most PLAN port visits, while South Asia contains the greatest market for Chinese armaments. Southeast Asia, in contrast to other regions, has military flashpoints—specifically ter - ritorial disputes in the South China Sea. - Compared to other developing regions, Chinese military lead ers have paid the most visits to Southeast Asia and have, particularly, - focused on increasing ties with the Thai military, a close U.S. part ner. Increasing maritime security cooperation, counterterrorism, and humanitarian assistance and disaster relief have driven a robust pro - gram of combined exercises, port visits, and other military activities. China’s military engagement in Oceania is small. However, its military leaders have visited the region more frequently in recent years. And in the twenty-first century, there have been joint exercises, par - ticularly with Australia and New Zealand. To avoid creating friction with Russia, which sees the former Soviet Central Asian republics as being squarely in its sphere of influ - ence, China has refrained from providing significant military aid to Central Asia. It has, however, provided equipment and training to regional border security services to advance China’s counterterrorism and anti-trafficking goals. China has engaged in a proactive program of high-level military visits, military-to-military exchanges, and com - bined exercises focused on anti-terrorism operations, suggesting that the region’s security is a high priority for China. Since 2000, China has been a key supplier of major conventional weapons to South Asia; Pakistan and Bangladesh purchased more -1— than half of China’s total arms exports from 2000 to 2014. China has 0— +1— RR2273A_CC2015.indb 292 8/14/18 11:11 AM

331 Conclusion 293 sent high-level military officials PLAN vessels on visits to Sri Lanka in an attempt to make inroads in Colombo despite India’s longstand - ing influence. Twelve of 18 combined exercises in the region were held with Pakistan, indicating the strong military alliance between the two countries. China has sold few weapons to countries in the Middle East; these prefer U.S. military materiel. The principal exception is Iran, which has purchased Chinese anti-ship and antiaircraft cruise missiles and other armaments. Although China has conducted relatively few high- level military visits or combined exercises in the region, the Middle East hosted more PLAN port visits than any other region, principally because of Chinese participation in anti-piracy patrols off the coast of Somalia. The PLAN played a significant role in evacuating more than 201 5, an operation which 500 Chinese nationals from Yemen in March China’s ambassador in Sana’a called “a significant practice of major power diplomacy.” - While China had long maintained a hands-off approach to secu rity matters in Africa, regional instability has threatened Chinese - investments in the region and citizens working in Africa. Accord ingly, Beijing has recently taken a more proactive approach to security - by building host nation capacity, making greater use of private Chi nese security firms, and even using government assets and resources to evacuate Chinese citizens from conflict zones—steps that call into question China’s commitment to noninterference when its own critical national interests are at stake. China has expanded its participation in UN and AU peacekeeping operations in the region, including those in Mali, Liberia, Congo, South Sudan, and Darfur, and PLAN ships have coordinated anti-piracy patrols in the Gulf of Aden with U.S. and EU 9 This expansion culminated recently with the announcement of navies. the establishment of a military facility in Djibouti, an installation that the Chinese do not refer to as a base but which can be considered one. China has limited security interests in Latin America and the Caribbean and has modest military engagement there. China uses — -1 9 The Diversified Employment of China’s Armed Forces , 2013. —0 — +1 RR2273A_CC2015.indb 293 8/14/18 11:11 AM

332 294 At the Dawn of Belt and Road military engagement—particularly arms sales, military exchanges, combined exercises, and humanitarian assistance—to boost goodwill, enhance understanding, and gain political leverage with regional gov - ernments. Beijing is also building ties with the local defense and secu - rity establishment to protect Chinese investments and nationals in the 10 region. Pivotal Regional Partnerships In terms of key countries, China appears to have clear favorites in each region of the Developing World, and Beijing has devoted significant attention to a handful of countries in Southeast Asia. Southeast Asia is the most complicated region for China. In recent years, China’s activi - ties in the South China Sea have provoked considerable concern among most countries of the region. Because China is also the most important trading partner and a key source of foreign direct investment for all these countries, governments of the region tend to be wary about how they respond to a more assertive China. Politically, Indonesia appears to be most important to Beijing, while economically, Malaysia seems to figure prominently for China, and militarily, Thailand is near the forefront. China senses greatest hostility from Vietnam and the Philip - pines, and it is no coincidence that these are the two countries most embroiled in maritime territorial disputes with China. But it is Hanoi that is of the greater concern because Beijing fears it is “losing” Viet - nam and that the fraternal communist state is gravitating toward the United States geostrategically. Of all the PRPs identified in this report, the most important to China are two within its second ring of security: Russia and Pakistan. Beijing has adopted a buffer strategy to maintain a stable zone with neutral or pro-China states that will deny access to outside powers and counter threats to China’s domestic stability. Russia and Pakistan both do this. In addition, Pakistan helps China balance India in South Asia, although Sino-Indian relations have warmed recently. -1— 10 Ellis, 2011 . 0— +1— RR2273A_CC2015.indb 294 8/14/18 11:11 AM

333 Conclusion 295 A high priority is attached to a single PRP within China’s third ring of security, specifically Iran in the Middle East. Although Iran is located just beyond the Asia-Pacific ring, China seeks friends in the oil-rich Middle East that are influential but neither beholden to nor engaged in direct hostilities with the United States. A lesser but still important priority for China is strengthening ties with PRPs in the fourth ring, focusing on South Africa and Venezuela. Ranking Regions by the Numbers Our detailed examinations of Chinese involvement in seven different regions using a common template permit us to compare them using the same criteria (Table 11.1). An analysis of the movement and magnitude of China’s economic, political, and military engagement can serve as indicators of Beijing’s relative priorities of Developing World regions. Each dimension is represented by two data points. To assess economic engagement, we provide the total value of two-way trade in 2000 and 2014 and the total value of China’s outward FDI in 2003 and 2012. To evaluate political engagement, we provide the number of senior leader visits (that is, PRC president, vice president, premier, minister of for - eign affairs, and state councilor for foreign affairs) from 2003 to 2014 - and the number of Confucius Institutes in 2014. To consider mili tary engagement, we ranked the volume of arms sales from 2000 to 2014 and the number of military exercises the PLA conducted between 2000 and 2014, showing the dates of the first and last field exercise. These data show that Southeast Asia is China’s top priority region in the Developing World. Economically, Southeast Asia is far and away the most important of the seven regions, with the largest trade volume llion or 31.1 cent of per bi with the Developing World in 2014—$479.8 China’s total trade—and the recipient of the largest amount of China’s outbound foreign direct investment in 2012: $28.2 llion, or 30.4 bi per - c ent of China’s total FDI in all seven regions. In terms of political attention, China sent more high-level leaders to Southeast Asia than to any other region of the Developing World (and far more than even — -1 to Africa when one compares the number of countries in each region: —0 — +1 RR2273A_CC2015.indb 295 8/14/18 11:11 AM

334 296 At the Dawn of Belt and Road Table 11.1 Chinese Economic, Political, and Military Engagement by Region East Asia Asia Asia Latin Africa South Middle Central Oceania America Southeast Economic 39.5 Trade $B 12.5 2 .1 17. 0 9.8 5.7 9.6 (2000, 2014) 210.0 52.3 290.4 479.8 259.4 14 4 .1 10 6 .1 Investment $M 57 472 376 520 477 45 587 15,089 7,0 9 4 6,467 21,370 4,215 10,490 28,238 (2003, 2012) Political 40 91 40 55 94 High level visits 45 18 (2003–2014) 8 16 32 11 34 Confucius 25 11 Institutes (2014) Military 1,635 0 7, 20 4 2,246 1,495 Arms sales $M 550 0 (2000–2014) 6 4 1 27 3 24 Field 26 (2002–14) (2009 –14) (2002–14) (2005 –14) (2014) (2010 –13) (2004 –14) exercises SOURCE: Data sources described in the text. NOTE: The countries with the highest levels of each indicator are highlighted in a darker color for each category. - ten versus 54, respectively). Between 2003 and 2014, top PRC lead mes, or 24.5 ers visited Southeast Asia countries 94 cent of all per ti high-level visits to the Developing World. No other region—except - Africa—comes close, certainly no other region in China’s own neigh borhood (see below). Southeast Asia ranks third in the number of Con - fucius Institutes—behind Africa and Latin America. On military mea - sures of attention, Southeast Asia ranks third in volume of arms sales between 2000 and 2014, with $1.635 bi llion (behind South Asia and Africa), and second in the number of field exercises conducted between -1— the PLA and regional militaries, with 26, behind only Central Asia. 0— +1— RR2273A_CC2015.indb 296 8/14/18 11:11 AM

335 Conclusion 297 Beyond the Asia-Pacific, Africa is China’s second most important region in the Developing World and Beijing’s most important region outside of the Asia-Pacific, at least according to this analysis of Chi - nese resource allocations. Note, however, that Africa also has the most countries, which would inflate some of the numbers. Africa was the second largest recipient of Chinese FDI (after Southeast Asia) in 2012, cent) Beijing bi llion—almost a quarter of the total (23.0 per with $21.4 sends to the entire Developing World. Africa ranks fourth in terms of the value of the two-way trade China conducts with all seven of llion in 2014 (behind Southeast Asia, the Middle the regions—$210 bi East, and Latin America). Africa is also home to the largest number cent of of Confucius Institutes of any single region: 34, or 24.8 per the total in the Developing World. Africa ranks second in terms of the most visited region by top-level PRC officials, well ahead of other regions, with 91 visits between 2003 and 2014, or 23.8 ent of the perc total. Africa ranks second only to South Asia in terms of the value of bi llion between 2000 and 2014. Although Chinese arms sales: $2.25 Africa ranks low in terms of the number of military exercises, if one includes other measures of military presence, such as the number of port visits between 2000 and 2014 (35), PLA operational deployments on UN peacekeeping missions in 2014 (seven), or building a naval facility in Djibouti in 2015, then this all only serves to underscore the level of importance Beijing attaches to Africa. The Middle East ranks as China’s third most important region in the Developing World and its second most important region outside of the Asia-Pacific region. By the numbers, Africa looms as more impor - tant, but if one factors in the Middle East’s role as a critical source of - China’s imports, key linkages to China’s internal security, and its geo political significance for China, then the Middle East at least rivals Africa’s importance to Beijing. Nevertheless, the Middle East ranks ahead of Africa—and second only to Southeast Asia—in terms of the value of two-way trade China conducts with regions of the Developing World. However, the Middle East ranks sixth in terms of the amount of Chinese FDI, ahead only of South Asia. The political indicators, meanwhile, almost certainly do not do justice to the level of importance — -1 Beijing attaches to the region. The relatively low numbers of high-level —0 — +1 RR2273A_CC2015.indb 297 8/14/18 11:11 AM

336 298 At the Dawn of Belt and Road political visits and Confucius Institutes in the region say more about Chinese political sensitivities and wariness where the Middle East is 11 Chinese military attention to the region is limited but concerned. llion in arms sales between 2000 and 2014, as well noteworthy: $1.5 bi as anti-piracy task forces in the Gulf of Aden since 2008, 44 port visits between 2009 and 2014—more than any other region, and small PLA detachments on UNPKOs make the PRC a small-time military player in the region. Central Asia is China’s fourth most important region in the Developing World and second most important developing region in the Asia-Pacific by the numbers. Economically, this region may not be hugely important—it ranks last in terms of the value of China’s two- way trade—but it ranks fourth in terms of the value of Chinese invest - ments in the seven regions. Politically, Central Asia is an important - focus of PRC high-level leadership visits, ranking third behind South east Asia and Africa (although the number of Confucius Institutes is quite low). Militarily, Central Asia is considered particularly important at least in terms of the number of military exercises conducted in the region between 2002 and 2014: 27. This is the highest number the PLA conducted in any region of the world. This number becomes even more important given that the region has only seven countries, sug - gesting a high level of per-country activity. Arms sales, by contrast, are negligible. South Asia is the fifth most important region in the Developing World and the third most important developing region in the Asia- Pacific. Economically, South Asia does not rate highly for China, with - a low level of trade and ranking sixth, ahead of only Central Asia. Nev ertheless, the region has a respectable volume of high-level leadership visits but ranks last in terms of the number of Confucius Institutes. It is in military metrics that South Asia truly stands out. It is number one in terms of the value of Chinese armaments sold in the Develop - ing World, and South Asia ranks third in terms of the number of mili - tary exercises China conducts. Indeed, more than half of China’s total arms sales in the Developing World between 2000 and 2014 were sold -1— 11 See Scobell and Nader, 2016. 0— +1— RR2273A_CC2015.indb 298 8/14/18 11:11 AM

337 Conclusion 299 to South Asian countries, and more than a quarter of China’s mili - tary exercises between 2002 and 2014 were conducted with South Asia states—mostly with Pakistan. While undoubtedly one of China’s least important regions, Latin - America and the Caribbean is of increasing significance to China. Eco nomically the region is of growing importance and ranks fourth in terms of two-way trade in 2014 and fifth in terms of a recipient of Chinese FDI in 2012. Politically Latin America is a significant desti - nation for high-level Chinese leaders—40—and ranks second only to Africa in terms of the number of Confucius Institutes. Moreover, the region takes on even greater political significance to China as home to a dozen states as of 2014 (Panama broke ties with Taipei in 2017) that continue to maintain ambassador-level diplomatic ties with Taiwan. This represents the largest single bloc of holdouts to recognizing the PRC and the government of China. Militarily, China’s profile in the region is extremely small as measured by arms sales and field exercises. While Oceania ranks last to China by the numbers as a region in the Asia-Pacific and low as a part of the Developing World, it is by - no means unimportant to Beijing. Indeed, Oceania is of growing eco nomic significance to China: it ranks third in terms of FDI—behind Southeast Asia and Africa—and fourth in the value of Beijing’s two- way trade. Of course, much of this economic activity is focused on one country—Australia—but China is also economically engaged across this sprawling maritime region. Oceania plays host to the fewest number of senior leader visits but is home to a respectable number of Confucius Institutes. China also directs few military resources at the region, conducting only a handful of exercises and a negligible volume of arms sales. The United States and China in the Developing World: Partners in Parallel? Across the Developing World, the United States and China are, in gen - eral, neither in direct conflict nor working in close cooperation. But there - is significant variation by region. In Southeast Asia, for example, Wash — -1 ington and Beijing are in a contentious mode over Chinese activities in —0 — +1 RR2273A_CC2015.indb 299 8/14/18 11:11 AM

338 300 At the Dawn of Belt and Road the South China Sea and China’s insistence that U.S. military vessels and aircraft must get permission prior to traversing disputed waters claimed by China. But outside of Southeast Asia (and Northeast Asia, among developed regions), the United States and China appear to be partners in parallel—meaning that the two states work separately with no real collaboration in pursuit of similar ends. As David Sham - baugh notes, the two countries “pursue their interests and policies in 12 an autonomous—rather than interactive—fashion with each other.” In some ways this is unfortunate. Although China is not yet a peer competitor of the United States, it can harm U.S. interests and the global system that has benefited most countries, including China; a challenge remains as to whether and how to encourage China to act as 13 a cooperative partner. Notably, U.S. and Chinese interests do not seem to be in direct conflict in the Developing World, with the possible exception of Southeast Asia, where China’s maritime territorial claims have resulted in tensions and confrontation. Further afield—in the fourth ring— China’s sensitivities are not as raw and its national interests less vital. Significantly, it is beyond the first, second, and third rings where a number of cooperative efforts between the United States and China have borne fruit in recent years. For example, Washington and Beijing have cooperated diplomatically over finding a solution to the civil war 14 in Sudan and slowing Iran’s pursuit of nuclear weapons. Neither China nor the United States desires to conquer or occupy - territories or build sprawling empires far from their respective home lands. While competition for markets and resources can become intense, war is unwanted and cooperation is not out of the question. For China’s activities in the Developing World, the flag tends to follow 12 Shambaugh suggests that the United States and China are “acting in parallel with each –76. 76 a nd pp. 75 other around the world.” These quotations are from Shambaugh, 2012, p. 13 . Christensen, 2015 14 For some succinct and trenchant discussion on U.S. and Chinese convergences on Sudan and Iran, see Elizabeth C. Economy and Michael Levi, By All Necessary Means: How New York: Oxford University Press, 2014, China’s Resource Quest Is Changing the World , -1— pp. 179 –186. 0— +1— RR2273A_CC2015.indb 300 8/14/18 11:11 AM

339 Conclusion 301 15 trade and investment; China’s burgeoning economy is hungry for markets and resources, and the quest for both has led Chinese entre- preneurs and investors to range the world. Lagging behind the traders and adventurers have been investors belatedly keen to improve infra - structure from seaports to pipelines (and to get paid for doing so). Yet further behind—essentially stragglers—are warships, jet fighters, and armored personnel carriers deployed in an attempt to protect people, assets, and infrastructure beyond China’s borders. There may be some minimal security coordination, such as in the Gulf of Aden anti-piracy missions or in Afghanistan. These parallel efforts tend to occur within or at the fringes of existing frameworks, institutions, and regimes. There may also be opportunities for limited cooperation in UN peacekeeping; President Xi Jinping publicly com - mitted China to a greater role in peacekeeping, including taking the 16 In any case, Beijing appears to be lead in creating a standby force. intent on increasing its military presence around the world engaged in noncombat operations, what one Chinese Middle East expert has 17 called a “soft military footprint.” The United States and China also act as partners in parallel as Beijing begins to operate in a parallel universe of institutions created by China. These entities, such as the AIIB, are Chinese creations, with China taking the leading role. The AIIB might compete with the Asian Development Bank or it might complement it instead. Another Chinese institution is the Shanghai Cooperation Organization that excludes the United States. China is not adamantly opposed to the United States joining, but it is not simply up to Beijing, because all the capitals of member states must be unanimous for a new member to be admitted. The United States is not entirely immune from this game; until 17, the TPP trade deal was not designed to exclude China 20 January forever. Rather, there would have been opportunity for China to join 15 Economy and Levi, 2014, especially Chapter 9. 16 Michael Martina and David Brunnstrom, “China’s Xi Says to Commit 8,000 Troops for 28 U.N. Peacekeeping Force,” Reuters , September , 2015. 17 Sun Degang, the deputy director of Shanghai International Studies University Middle — -1 14 . East Institute has used this term. He is cited in Ghiselli, 2015, p. —0 — +1 RR2273A_CC2015.indb 301 8/14/18 11:11 AM

340 302 At the Dawn of Belt and Road eventually after substantial reforms of its economy, reforms that would be politically difficult and require years to complete in the best of cir - cumstances. As a result, the trade deal would have excluded China for many years had the U.S. not withdrawn and had Congress then agree to U.S. participation. Encouraging China’s economic reforms in this way might ultimately have been to China’s advantage and even beneficial to global economic growth, and that is a factor that adds to the complexity of the U.S.-China relationship and demands a longer- term perspective. The need for reforms may empower reformers within China, much as China’s long effort to join the World Trade Organiza - tion empowered reformers. If the TPP were to be revived, then China’s eventual on-ramp could be exactly the type of win-win situation that Chinese leaders advocate for throughout the world. Two Caveats There are two cautions about viewing the U.S.-China relationship in the Developing World solely through the lens of partners in parallel. First, the partners in parallel formulation is used at the risk of oversim - plifying and mischaracterizing a complex reality. As noted, there are some regions where the United States and China are at loggerheads— in Southeast Asia, for example. Second, in time of conflict or escalating tensions, these parallel Chinese and American operating trajectories are likely to start converg - ing toward confrontation or diverging in the direction of estrangement. Parallelisms can and do persist in peacetime. But how might China act economically, diplomatically, and militarily in the Developing World vis-à-vis the United States in time of war or on the road to war? Both countries have strong desires to avoid answering this question first- hand, but both likely will need to consider it as China becomes more involved in the Developing World; as the Developing World continues to grow and gain greater weight in world economics and politics; and as the United States continues to face the immensely difficult problem of managing and improving the global rule-based system that it and its -1— allies established and have led since the end of World War II. 0— +1— RR2273A_CC2015.indb 302 8/14/18 11:11 AM

341 APPENDIX A Actors Involved in Shaping or Influencing Chinese Foreign Policy - In this appendix, we discuss the actors involved in shaping or influ encing Chinese policy toward two regions: Southeast Asia and Latin America and the Caribbean. Southeast Asia is by far the most impor - tant Developing World region to China. In contrast, Latin America and the Caribbean is the least important. Accordingly, reviewing the various actors involved in shaping policy toward each region can give insight into how China manages its foreign policy priorities. Nota - bly, foreign policy development and implementation are not necessar - ily seamless but, instead, include bureaucratic and political conflicts of interest and incentives that may cause Chinese entities to diverge from 1 government directives. Southeast Asia Chinese policy in Southeast Asia is shaped by a plethora of govern - ment, quasi-government, and nongovernment actors. There is sig - nificant Chinese attention to Southeast Asia within and outside the Chinese government and extensive engagement opportunities between China and its ASEAN counterparts. At the top, President Xi Jinping and Premier Li Keqiang define China’s relations with Southeast Asia. Since 2012, China has established — -1 1 Saunders, 2006. —0 — +1 303 RR2273A_CC2015.indb 303 8/14/18 11:11 AM

342 304 At the Dawn of Belt and Road a Central Maritime Rights Protection Leading Small Group (LSG) led by Xi to oversee Chinese activities in the South China Sea (as well as the East China Sea). The LSG is tasked with formulating and coordinat - ing Chinese strategy to safeguard its maritime rights and interests and managing maritime territorial disputes. It includes senior representatives from 17 government branches, including the Ministry of Foreign Affairs, 2 and the PLA Navy. There is also a the State Oceanic Administration, Central Maritime Rights Protection LSG Office that provides research and helps convene meetings for the LSG. This office is housed within the CCP’s Foreign Affairs Office, which is headed by State Councilor 3 Yang Jiechi. There is significant high-level interaction between ASEAN and - Chinese government actors that allows key Chinese government min istries to contribute to Chinese policy toward ASEAN. Since 1997, China and ASEAN have established a three-tiered dialogue and cooperation mechanism. The highest tier is the China-ASEAN lead - ers summit, which has occurred annually; the Chinese president or premier typically attends the summit. The second tier includes meet - ings between Chinese and ASEAN ministers. China has established 12 ministerial meetings that cover foreign affairs, commerce, culture, - health, information, telecommunications, quality inspection and quar antine, transport, customs, procurator, youth affairs, and counter trans - national crimes. The third tier consists of five types of working-level meetings between senior government officials: ASEAN-China Senior Officials Consultations (ACSOC), ASEAN-China Joint Cooperation Committee (ACJCC), China-ASEAN Joint Committee on Economic and Trade Cooperation, China-ASEAN Joint Committee on Scientific 2 In 2013, China consolidated its handful of separate maritime law enforcement agencies under the administration control of the State Oceanic Agency and renamed them the Chi - nese Coast Guard. These changes were implemented to help streamline and integrate the agencies to allow China to implement a more coherent maritime policy. To date, institutional reorganization is still ongoing. See Lyle Morris, “Taming the Five Dragons? China Consoli - China Brief dates Its Maritime Law Enforcement Agencies,” Vol. 13, No. , 7, M arch 28 , 2013. 3 Bonnie Glaser, “China’s Maritime Rights Protection Leading Small Group—Shrouded -1— , 2015, Asia Maritime Transparency Initiative. in Secrecy,” September 11 0— +1— RR2273A_CC2015.indb 304 8/14/18 11:11 AM

343 Actors Involved in Shaping or Influencing Chinese Foreign Policy 305 and Technological Cooperation, and China-ASEAN Business Council 4 (CABC). - A range of economic actors are also involved in shaping Chi nese policy toward the region. This includes, for example, the Chinese National Development and Reform Commission, state-owned banks such as the Development Bank of China and the Export-Import Bank of China, and state-owned enterprises such as the China National Off - 5 It also involves new economic entities created by shore Oil Company. Beijing to facilitate greater investment and financial cooperation with the region, such as the China-ASEAN Fund on Investment Coopera - 6 Chinese provin - tion and the China-ASEAN Inter-Bank Association. cial and local governments are also reaching out to ASEAN, and some 7 have signed formal cooperation agreements. On a day-to-day basis and within the Ministry of Foreign Affairs, Southeast Asia falls under the Department of Asian Affairs. The 8 department covers Northeast Asia, Southeast Asia, and South Asia. 9 and in 2012, In 2009, China appointed an ambassador to ASEAN, - China established a diplomatic mission to ASEAN in Jakarta, Indo 10 Current Chinese ambassador to ASEAN, Mr. Xu B u, meets nesia. regularly with representatives to ASEAN. 4 Qi Jianguo, “Cong Huangjin Shinian Dao Zuanshi Shinian” [“From the Golden Decade 3, Winter 2013. 11 Foreign Affairs Journal to Diamond Decade”], , No. 5 For CNOOC, see “Challenges and Opportunities of Offshore Development in South China Southeast Asia,” Engineering and Construction Department, CNOOC, October 14. 20 6 Jiang Zhida, “Reconnecting China with Southeast Asia,” Beijing Review, December 1, 2 011 . 7 For example, see “Press Release—ASEAN Secretariat Enters into Cooperation Agree - 008. ment with Guangdong Province, China ASEAN Secretariat,” ASEAN, September 5, 2 8 “Department of Asian Affairs,” Ministry of Foreign Affairs of the People’s Republic of China, webpage, undated. 9 “Zhongguo-Dongmeng Guanxi (10+1)” [“China-ASEAN Relations (10+1)”], Ministry of Foreign Affairs of the People’s Republic of China, February 17. 20 10 — -1 “Mission of the People’s Republic of China to ASEAN Formally Inaugurated,” Mission of the People’s Republic of China to ASEAN, September 28 , 2012. —0 — +1 RR2273A_CC2015.indb 305 8/14/18 11:11 AM

344 306 At the Dawn of Belt and Road Latin America and the Caribbean At the top, President Xi Jinping and Premier Li Keqiang define China’s relations with Latin America through statements and policies announced during their visits. Foreign Minister Wang Yi, Director of the National Development and Reform Commission Xu Shaoshi, Commerce Min - ister Gao Hucheng, and other Chinese leaders have been involved in 11 Chinese the first China-CELAC Forum ministerial level meeting. military leaders also visit the region to strengthen defense ties and rela - tions. Unlike its involvement in Africa or the Middle East, China has not designated any special envoys to the region. Within China’s Min - istry of Foreign Affairs, the Department of Latin American and Carib - bean Affairs is responsible for much of the day-to-day engagements with the region. Outside of the government, China has fewer Latin America experts compared to experts on other developing regions. Many lead - ing Latin America experts belong to the Institute of Latin American Studies at the Chinese Academy of Social Sciences, the country’s pre- 12 mier think tank for the region. 13 and the Economically, the China Development Bank (CDB) 14 are involved in financing Chi - Export-Import Bank of China (EXIM) 15 A number of key nese government-sponsored projects in the region. Chinese state-owned enterprises, including China National Petroleum Corporation, also operate in the region and benefit from agreements 16 In some countries, Chinese state- Beijing helps facilitate and finance. 11 “Ministry of Foreign Affairs Holds a Briefing for Chinese and Foreign Journalists on the First Ministerial Meeting of China-CELAC Forum,” Ministry of Foreign Affairs of the People’s Republic of China, January 5, 2 015. 12 Ariel C. Armony, “The China-Latin America Relationship: Convergences and Diver - p. 25. gences,” in Hearn and Leon-Manriquez, 2001, 13 L. Arias, “Costa Rica, China Sign Cooperation Agreements Worth Nearly $2 Bil lion,” Tico Times , June 2, 2 013. 14 Isabella Cota, “China Lends Costa Rica $400 million on Xi Visit,” Reuters , Jun e 3, 2 013. 15 China is also injecting significant capital into both banks to support the country’s “One -1— Belt, One Road,” initiative. See http://english.caixin.com/2015-04-21/100802136.html. 16 0— Arias, 2013. +1— RR2273A_CC2015.indb 306 8/14/18 11:11 AM

345 Actors Involved in Shaping or Influencing Chinese Foreign Policy 307 - owned enterprises are wary of directly competing for large infrastruc 17 ture projects and may be using proxies to increase Chinese investment. In Nicaragua, for example, a Chinese billionaire entrepreneur, Wang Jing, has begun initial site work on constructing a $50 bi llion canal that, like the Panama Canal, will connect the Atlantic with the Pacific 18 It is unclear the extent to which Wang is backed by the Chi - Ocean. nese government, and he seems to be experiencing financial difficulties. Given the large numbers of Chinese actors involved in Latin Amer - ica, managing a coherent and centrally directed, top-down Chinese - policy toward the region is not an easy task, and China may not nec essarily have the bureaucratic capability to do so. Since 2010, MOFA’s Department of Latin American and Caribbean Affairs—the main entity focused on the region—has experienced three different leader - ship changes, and the current Director General Zhu Qingqiao did not assume his current position until late 2014. In 2010, the department had approximately 80 staff working domestically and abroad, cover - 19 20 years old. The average staff age was less than 35 ing 33 countries. While it is likely that changes have occurred since then, the statistics suggest that China is not putting its most experienced officers into this department. The department is also likely stretched relatively thin in its duties to manage day-to-day relations and organize events, promote 21 exchanges, and engage in translation work. 17 Lucy Hornby and Andres Schipani, “China Tilts Towards Liberal Latin American Econ - omies,” , May 10, 2 015. Financial Times 18 Carrie Grace, “Wang Jing: The Man Behind the Nicaragua Canal Project,” BBC News , March 18 , 2015. 19 “Yang Wanming Jieshao Lameisi Gongzuo Ganbu Genju Xuyao Zai Guoneiwai Lun - huan” [“Yang Wanming Introduces Working Cadre of Latin America Division, Will Rotate Abroad and at Home Based on Needs”], People’s Daily Online 23 , November , 2010. 20 “Yang Wanming: Qingnian Shi Waijiao Duiwu Gugan Lameisi Pingjun Nianling Bu Dao 35 Sui” [“Yang Wanming: Youths Are the Backbone of the Diplomatic Corps, Average , People’s Daily Online Age of Latin America Division Is Less than 35”], November 23 , 2010. 21 - “Yang Wanming Jieshao Lameisi Gongzuo Ganbu Genju Xuyao Zai Guoneiwai Lun huan” [“Yang Wanming Introduces Working Cadre of Latin America Division, Will Rotate Abroad and at Home Based on Needs”]. — -1 —0 — +1 RR2273A_CC2015.indb 307 8/14/18 11:11 AM

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399 Since its establishment in 1949, the People’s Republic of China (PRC) has viewed itself as an underdeveloped country—economically backward, physically weak, and vulnerable to exploitation by more powerful states. Even as the PRC has grown stronger economically and militarily, especially since launching the reform and opening policies of Deng Xiaoping in 1978, PRC officials continue to insist China is a developing country. In the initial stages of reform and opening, China’s relations with the developed world were shaped by its desire to expand trade and attract investment. In the 1990s, China increased its attention to the Developing World, negotiating economic agreements and creating new China-centric institutions. This accelerated in the 2000s and especially after the 2008 financial crisis, when there were worldwide doubts about the developed-world, and especially the U.S., economic model. China’s attention to the Developing World has culminated in numerous institutions and in the new Belt and Road Initiative. The authors analyze China’s political and diplomatic, economic, and military engagement with the Developing World, region by region, focusing on the 21st century through the beginning of the Belt and Road Initiative, an ambitious vision that builds on China’s previous activities. The authors discuss specific countries in each region—so-called pivotal states—that are most important to China. The authors show that China has oriented its security concerns and its overall engagement in concentric circles of importance. Near neighbors merit the most attention. The authors conclude with policy implications for the United States. ARROYO CENTER $49.95 www.rand.org ISBN-10 0-8330-99914 ISBN-13 978-0-8330-9991-4 54995 9 780833 099914 RR-2273-A

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