Thayer Consultancy Background Brief:

ABN # 65 648 097 123

China-Southeast Asia Relations
Carlyle A. Thayer
January 17, 2021

We are preparing a report about China-Southeast Asia relations and request your
assessment of the following issues:
Q1.What are the goals of State Councillor and Foreign Minister Wang Yi’s trip to
Southeast Asia? How would you evaluate the results?
ANSWER: State Councillor and Foreign Minister Wang Yi’s recent six-day official visit
to Myanmar, Indonesia, Brunei, and the Philippines was his second trip to Southeast
Asia in three months. In October last year he visited Cambodia, Malaysia, Laos,
Thailand and transited Singapore.
It should be recalled that two months before Wang Yi’s first regional swing, Politburo
member Yang Jiechi visited Singapore. He was followed in September by State
Councillor and Defence Minister Wei Fenghe who visited four ASEAN states.
China is clearly pushing back against the United States and Secretary of State Mike
Pompeo’s call for a crusade against the Communist Party of China regime. During
Wang Yi’s October 2020 visit he pledged China’s cooperation in the fight against the
coronavirus and support for ASEAN and its centrality in Southeast Asia.
There were three main goals behind Wang Yi’s visit this month – to provide COVID-19
vaccine and coronavirus cooperation, to revive momentum in stalled Belt and Road
Initiative (BRI) projects, and to address regional security and South China Sea issues.
His secondary goal was to confer with Myanmar as the ASEAN country coordinator for
dialogue with China and Brunei as ASEAN Chair for 2021.
COVID-19
Wang Yi successfully advanced cooperation in combatting the coronavirus by offering
Chinese vaccine and other assistance. For example, during his stop in Myanmar he
promised to provide anti-pandemic medical materials and 300,000 doses of COVID-19
vaccine.
The day before Wang Yi arrived in Jakarta, Indonesia announced it had given
emergency approval for Sinovac’s COVID-19 vaccine. While Wang Yi was in Jakarta, it
was announced that Sinovac had dispatched 15 million doses of semi-finished COVID-
19 vaccines, following two earlier shipments totalling 3 million doses. The semi-
finished vaccines will be packaged and distributed by Bio Farma, an Indonesian state-
owned pharmaceutical company. Wang Yi promised to assist Indonesia’s efforts to
 2

become more self-reliant in producing drugs, medical equipment and production of

the anti-coronavirus vaccine.
During his stop in Brunei, Wang Yi pledged to cooperate in fighting against COVID-19.
Sultan Haji Hassanal Bolkiah expressed hope for cooperation with China in the field of
vaccines.
Prior to Wang Yi’s visit to Manila, the Philippines had contracted to receive 25 million
doses of the vaccine. During his visit, the Philippines sought to acquire a grant for more
vaccines. Wang Yi and Foreign Affairs Secretary Teodoro Locsin agreed to cooperate
on anti-virus vaccines and regional economic recovery from COVID-19.
BRI
Wangi Yi made modest progress in reviving BRI initiatives. Wang Yi was the first high-
level foreign official to visit Myanmar following the November elections which saw
Aung Sang Suu Kyi’s National League for Democracy return to office. A day before
Wang Yi arrived, China and Myanmar signed a Memorandum of Understanding to
conduct a feasibility study of a railway linking Muse, Mandalay and Kyaukphyu. During
Wang Yi’s visit, he pressed Myanmar’s leaders to resume work on the China-Myanmar
Border Economic Cooperation Zone and Corridor and the Kyaukphyu Special Economic
Zone, both Chinese priorities to link its western provinces with the Indian Ocean via
Myanmar. Wang Yi also raised border security, China’s role in brokering peace with
armed ethnic groups, and potential assistance in the repatriation of Rohingya
refugees.
During his visit to Indonesia, Wang Yi witnessed the signing of a MOU to conduct a
pre-feasibility study for the Lambakan Dam Project. Foreign Minister Retno Marsudi,
called on China to invest $400 million in the dam project, urged China to eliminate
trade barriers to Indonesian exports, and raised other bilateral issues. Wang Yi
promised to coordinate China’s BRI with Indonesia’s Global Maritime Fulcrum.
In Brunei, Wang Yi and the Sultan focused their discussion on speeding up the Hengyui
Industries Sdn Bhd oil refinery and petrochemical project and the Brunei-Guangxi
Economic Corridor. Wang Yi promised to create “fast tracks” for visitors and discuss
“green lanes” for agriculture and fishery products from Brunei. Both leaders agreed to
align China’s Long-Range Objectives Through the Year 2035 with Brunei’s national
vision, Wawasan 2035. Wang Yi and Haji Erywan, Second Minister of Foreign Affairs,
co-chaired the 2nd meeting of the Brunei-China Intergovernmental Joint Steering
Committee.
During Wang Yi’s stopover in Manila, the Philippines released details of an Overview
of the Grant Agreement on Economic and Technical Cooperation to be funded by a
Chinese grant of 500 million Yuan to be used to finance feasibility studies,
infrastructure facilities and other projects. A commercial contract valued at $940
million, was signed for the construction of a railway connecting Subic bay with Clark
air force base.
Regional Security/South China Sea
Wang Yi met his third objective urging a step up in negotiations to conclude a Code of
Conduct in the South China Sea. Wang Yi criticized the United States for destabilizing
 3

behaviour and for interfering with the ASEAN-China negotiations on a Code of

Conduct. At a press conference in Jakarta, Foreign Minister Retno Marsudi stressed
that all countries should comply with international law, including the United Nations
Convention on the Law of the Sea. In Brunei, Wang Yi supported Brunei’s dual-track
approach to resolving disputes in the South China Sea called for the strengthening of
cooperation with ASEAN countries to “properly manage disputes.”
Q2. In the past, China has been accused of using “debt diplomacy” to build ties and
exert power. What are responses to the BRI by Southeast Asian countries? Has China
changed its approach in building ties with them?
ANSWER: Over the last four years, China has reneged on promises to provide $25
billion for aid projects in the Philippines. In 2018, well before the COVID-19 pandemic,
when Mohammed Mahathir returned to office in Malaysia for a second time, he
demanded that China renegotiate the East Coast railway project because it was too
expensive. China complied.
Chinese loans for BRI projects began to slow before the COVID-19 pandemic and this
trend intensified as the coronavirus spread in Southeast Asia. COVID-19 led to a
decline in Southeast Asian growth rates, making it difficult for regional states to repay
Chinese loans. China, which has global leadership ambitions, participated in the G-20’s
Debt Service Suspension initiative for debt payment relief in 2020.
Nonetheless, there is a huge demand for infrastructure funding in Southeast Asia
that cannot be met by the World Bank, International Monetary Fund and the Asia
Development Bank. As Wang Yi’s trip to Southeast Asia this year revealed, regional
states were keen to restart projects that stalled during the coronavirus pandemic.
They sought reassurances from China. In the Philippines, for example, Wang Yi had
to address long-standing Philippine complaints that promised investment fell short
of expectation and that projects were moving at a snail’s pace.
Q3. With the incoming Biden Administration, how do you see Southeast Asia’s role
on the global stage?
ANSWER: In 2020, the ten members of ASEAN collectively became China’s biggest
trading partner, overtaking the European Union for the first time. The Biden
Administration will view Southeast Asia as a vital region where it must contest Chinese
leadership and growing influence. U.S. interests lie in keeping the sea lines of
communication through the South China Sea free from Chinese interference and
supporting regional states in resisting Chinese intimidation and bullying.
The Biden Administration will work with ASEAN and ASEAN-led multilateral
institutions to bolster ASEAN’s centrality in regional affairs so it can stand up to China.
President Biden is very likely to show at up key summit meetings to lend reassurance
that the U.S. will remain committed to regional stability by balancing China’s power.
 4

Suggested citation: Carlyle A. Thayer, “China-Southeast Asia Relations,” Thayer

Consultancy Background Brief, January 17, 2021. All background briefs are posted on
Scribd.com (search for Thayer). To remove yourself from the mailing list type,
UNSUBSCRIBE in the Subject heading and hit the Reply key.

Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.