Chinese Peril

China is becoming an election issue in Asia. And that's bad news for Beijing
By James Griffiths

Hong Kong -- Two years ago, Indonesian President Joko Widodo -- also known as Jokowi -- stood shoulder to shoulder with Xi Jinping for a group photo to celebrate the Chinese leader's Belt and Road project.
Yet now, as Jokowi seeks re-election, he appears to be distancing himself from Beijing and downplaying the importance of Chinese-funded projects in Indonesia.
It's a pattern emerging across southeast Asia and beyond, and one that will be of great concern for Beijing as Chinese investment and ties become an awkward -- if not downright toxic -- election issue.
The growing skepticism over Xi's signature Belt and Road Initiative (BRI) risks exacerbating existing tensions many countries in the region have with Beijing over territorial disputes, as both China and the US continue to jockey for power amid a drawn-out trade war.

Vladimir Putin, Chinese dictator Xi Jinping, Indonesia's President Joko Widodo and other delegation heads pose for a group photo as they attend the Belt and Road Forum for International Cooperation at the Yanqi Lake venue on May 15, 2017, on the outskirts of Beijing, China.

Better deal
"It is not true if people think President Jokowi has special preference for China-funded projects," his spokesman Ace Hasan Syadzily said last week.
If Widodo's camp sounds defensive, it's because his ties to Beijing have become a key attack line for rival Prabowo Subianto.

After Jokowi undercut Prabowo's criticisms of him being not Muslim enough by selecting an Islamist cleric as his running mate, the retired general has gone hard after Chinese investments in Indonesia once touted by the President.

In January, Prabowo -- echoing US President Donald Trump -- vowed to get a "better deal" from Beijing, and called for Jakarta to review its trade policies with China.
Anwita Basu, an analyst at the Economist Intelligence Unit, said that "over the course of the campaign period, anti-China rhetoric has been on the rise."
"The Chinese community in Indonesia -- who have mainly been business owners and traders -- have long faced resentment and discrimination for controlling large amounts of wealth," she told CNN by email. 

"These issues are touted and popularized during election periods and this year, (Prabowo) has used them as a means to question Jokowi's loyalty to his own nation."
China is Indonesia's biggest trading partner by far, according to the World Bank. 

In the first two months of this year, trade between the two countries was worth more than $10.4 billion.
Under Jokowi, Indonesia has joined both the China-led Asian Infrastructure Investment Bank as well as Xi's BRI. 

The initiative has come under increasing criticism in recent months, amid claims it saddles poorer countries with unsustainable debts and projects that benefit Beijing more than host nations.
Beijing has funded major infrastructure projects in Indonesia, most notably a $6 billion high-speed railway linking Jakarta with the city of Bandung, the capital of West Java.
That project is due to be completed next year. 

But it has come under criticism for budget overruns, poor planning and construction delays. 

Even supporters of greater Chinese investment in Indonesia have turned on it -- Tom Lembong, the country's investment chief, told Bloomberg it "represents everything that's wrong with Belt and Road."
"It's opaque and non-transparent -- even us cabinet members are having trouble getting data and information," Lembong said.

Running on anti-China
While the Indonesian election still seems Jokowi's to lose, and a Prabowo presidency appears to be a long shot, recent history shows Beijing can little afford to be complacent.
Chinese investment and influence played a role in Malaysia's elections last year.
And while it was not the driving factor in Mahathir Mohamad's upset victory in May, the 93-year-old has followed through on promises to be tougher on Beijing since becoming President.
Nor were such concerns limited to the Malaysian election.
During a poll in the Maldives last year, incumbent and eventual loser Abdulla Yameen was repeatedly attacked over his close ties to Beijing.
In January 2018, former President Mohamed Nasheed accused Yameen of allowing China to stage a "land grab" in the country. 
After his Maldivian Democratic Party took power, it pledged to end "China's colonialism" and renegotiate loans with Beijing.
Other countries, such as Myanmar, have scaled back BRI projects amid concerns over debt and sustainability.
Beyond Asia, Kenyan President Uhuru Kenyatta faced claims that a key port in Mombasa was at risk of being seized by Beijing over unpaid debts.
The public relations storm was sparked by an actual move by China to take over Sri Lanka's Hambantota port, after the country could not pay back the billions of dollars it owed Beijing.

Losing its sheen
As China prepares for a key Belt and Road summit later this month, there are signs Beijing is looking to overhaul the initiative in an attempt to address some of its most pressing issues and defuse criticisms from foreign partners.
While she felt the backlash against China in countries such as Indonesia and Malaysia was outweighed by others like the Philippines moving closer to Beijing, EIU analyst Basu predicted "many countries will remain cautious over the lack of transparency in the terms of funding offered" for BRI deals.
The backlash against BRI, which appears to have caught Chinese leaders off guard, has highlighted that beyond investment, Beijing has little to offer its neighbors -- many of which are either neutral or opposed to it on key foreign policy issues.
"China's increasingly assertive policy in the South China Sea since 2009 has reinforced concerns about whether the country's rise will continue to be peaceful, especially in light of Beijing's perceived role in undermining Asean unity," Jakarta-based political analyst Dewi Fortuna Anwar wrote last month.
Both Indonesia and Malaysia have territorial disputes with China, and in December Jokowi oversaw the opening of a military base on the Natuna Islands at the southern tip of the South China Sea. Malaysia too has expressed concern over Beijing's sprawling claims in the disputed waters.
Governments in the two Muslim-majority countries are also facing increasing pressure to stand up to China over its treatment of the Uyghur minority, hundreds of thousands of whom have been sent to "re-education" camps amid a wider crackdown on Islam.
As it attempts to balance an increasingly hostile US -- and ward off the ill effects of a temporarily paused trade war with Washington -- China is finding that its traditional methods of winning friends in Asia is losing its sheen.
And the closer it gets to superpower status, the more its influence and power can be used against it.

Global Fraud

How Asia Fell Out of Love With China’s Belt and Road Initiative
Countries are discovering that the promise of Xi Jinping’s signature infrastructure program is too good to be true.

By Iain Marlow and Dandan Li

An aerial view of the new runway built by China's Beijing Urban Construction Group at the Velana International Airport in Hulhule Island, Maldives.

In late August, President Abdulla Yameen of the Maldives hailed the opening of a Chinese-built bridge connecting two islands in the archipelago as “the gateway into tomorrow and the opportunities beyond.”
One month later, Yameen was voted out and the new government of the palm-fringed nation off the coast of India began to uncover the mountain of debt with which he’d saddled the country. 

A pro-China strongman who jailed opponents and judges, Yameen borrowed heavily from Beijing to build a new runway for the main airport, housing developments and a hospital, as well as the 2.1 kilometer (1.3 mile)-long “China-Maldives Friendship Bridge.”
On a recent trip to New Delhi, Maldives officials opened up about their frustration over the scale of the debt to China—the equivalent of almost 20 percent of GDP—and the inexplicable preference given to Chinese financing under the Belt and Road Initiative (BRI). 

In just one example, the previous government rejected a $54 million hospital bid in favor of an “inflated” Chinese offer of $140 million.
“We have been burned,” said Economic Development Minister Fayyaz Ismail.
The tourist paradise of the Maldives isn’t the only Asian nation to discover that the promise of Chinese dictator Xi Jinping’s signature infrastructure program was too good to be true.
After an unprecedented run of funding large-scale investments in projects from railways to highways in poorer countries across Asia, governments are adopting a far more cautious approach to China’s grand plans for what it regards as its backyard. 

From Malaysia to Sri Lanka, simmering voter anger over deals perceived as unfair or corrupt are prompting close examination, investigation and even suspension of projects until recently taken for granted.
“The first phase of the Belt and Road is effectively over,” said Andrew Small, a senior fellow with the German Marshall Fund’s Asia program. 

“A new model has not yet emerged, but it is clear that the old one, almost entirely focused on speed and scale, is no longer sustainable.”
Chinese authorities have noted the examples of misconduct and are reassessing and tweaking their global infrastructure plans, said a senior Chinese official who asked not to be named discussing strategy. 

They are well aware that poorly executed projects can hurt China’s reputation and are alert to the potential for resentment to spread, the official said.
Asia is in desperate need of infrastructure upgrades and no country other than China has the appetite—or the ready resources—to meet the demand for large-scale investments. 

Yet the criticism in Asia comes at a sensitive time of growing international skepticism of China’s global intentions. 

While much of the focus is on President Donald Trump’s standoff with Xi over trade, technology and market access, governments across Europe, in Australia and in Japan are tightening up their vetting of Chinese investments, particularly in critical infrastructure such as key ports and network systems.
China has commissioned internal reports that have highlighted the backlash, with the aim of continuing Xi’s outward push at a time when the economy is struggling. 

Authorities have stepped up scrutiny of BRI projects and investment and are deliberating possible regulations, the official said, adding that China is ready to take measures to clamp down on misconduct.
That translates into “more willingness to renegotiate terms, more focus on project quality, more efforts to cooperate with third-country partners such as Japan, and greater sensitivity to political and macro-economic risk,” said the German Marshall Fund’s Small.

A bulldozer working on the Chinese-financed Gwadar Port in Pakistan.

The shift in sentiment among Asian governments is already tangible, and has burst into the open in recent months. 

In Pakistan, China’s all-weather ally for decades, militants angered by Chinese investment in a remote area bombed and attacked the Chinese consulate in Karachi last month, killing seven people.
In Sri Lanka, there is growing anger over China’s vast economic influence as a threat to the country’s sovereignty, while a Myanmar government adviser criticized as “absurd” the $7.5 billion price tag for its Chinese-backed port, which was agreed to under the previous military government.
In Malaysia, Mahathir Mohamad was elected prime minister in May after questioning Chinese investments on the campaign trail. 

In office, he slammed a “new version of colonialism,” as his government moved to suspend a $20 billion Chinese railway project, and later cancelled three China-backed pipeline projects worth $3 billion.

Malaysian Prime Minister Mahathir Mohamad.

Indian officials have long objected to the Belt and Road program because it funds $60 billion worth of infrastructure in Pakistan, including in parts of disputed Kashmir, which India claims as its own.
And though New Delhi lacks the cash to compete against Beijing, Indian diplomats insist countries have been lured into debt traps and view the recent criticism as legitimizing their long-standing position. 

Indeed, a report this year by the Washington-based Center for Global Development identified eight nations at risk of debt distress from Chinese financing, among them Pakistan, the Maldives, Laos, Mongolia and Djibouti, where China has its only overseas military base.
Vietnam’s clashes with Beijing in the South China Sea meanwhile mean security fears there risk overshadowing investment projects.
Increasingly, bashing China makes sound electoral sense in parts of Asia. 

Indonesia, where the campaign for an April ballot could bring heightened scrutiny of Chinese projects, is an example of how China’s investments are often pulled into emerging market elections, according to Kelsey Broderick, an Asia associate at the Eurasia Group.
“Candidates around the world have used public concerns over Chinese debt as part of their successful challenges to incumbent candidates who have embraced BRI with open arms,” said Broderick. 

He cited Jair Bolsonaro’s successful run for the Brazilian presidency on an anti-China platform, and said Kenya, Zambia and Thailand could face similar debates.
Part of the concern comes from perceptions that, apart from contributing to unsustainable debt levels, China’s loans serve Beijing’s strategic goals in the Indian Ocean region key to global shipping routes at a time when China is building islands in the South China Sea.

The construction site for a section of the China-Laos Railway built by the China Railway Group, near Luang Prabang, Laos.

In the Maldives, former strongman Yameen’s increasingly overt pro-China policies included ramming a free trade agreement with China through parliament and denying work visas for professionals from China’s rival India. 

The strong-arm tactics ultimately backfired: New Maldivian Finance Minister Ibrahim Ameer has asked for $200 million of Indian loans and pledged to pursue an “India-first” foreign policy, a sharp rebuke to Beijing.
The Trump administration meanwhile has honed its message against the Belt and Road. 

Vice President Mike Pence told leaders at the recent Association of Southeast Asian Nations summit in Singapore that the U.S. doesn’t “offer a constricting belt or a one-way road.”
The U.S. has set up an agency to lend as much as $60 billion for infrastructure, and last month backed a plan to build a $1.7 billion electricity grid in Papua New Guinea as part of a push to provide countries with alternative lending schemes. 

Still, that number pales in comparison to the Belt and Road, which Morgan Stanley says may total $1.3 trillion by 2027.
Asia clearly needs more infrastructure: The Asian Development Bank forecasts the region needs $26 trillion worth of highways, railroads and other infrastructure over the next decade or so. 

In the absence of viable alternatives, China is likely to remain the first port of call. 

In any case, many countries in Asia and Africa still prefer Chinese loans that come with “no governance or accountability commitments,” said Broderick.
In the five years since Xi launched Belt and Road, “China has been on a learning curve,” said Pang Zhongying, an international relations professor from Macau University of Science and Technology. “It’s the right thing to do for China to reassess its BRI projects and put more emphasis on risk control.”

Chinese Peril

Australia Wants the U.S. to Stay in Asia as a Check to Chinese Power
By Keshia Hannam

Australia called for a stronger alliance with the U.S. to push back against the spread of Chinese power in Asia and the Pacific.
In the country’s first big update of foreign policy objectives in a decade, the government of Prime Minister Malcolm Turnbull struck a much darker note about Australia’s future relations with China, the country whose demand for raw materials has fueled a 25-year Australian boom. 

And it stressed the importance of the U.S. in guaranteeing stability in the region.
“We believe that the United States’ engagement to support a rules-based order is in its own interests and in the interests of wider international stability and prosperity,” the ‘white paper’ said. 

“Without sustained U.S. support, the effectiveness and liberal character of the rules-based order will decline.”
Although the paper didn’t mention him by name, it was visibly influenced by fears that Donald Trump’s ‘America First’ doctrine would lead to a withdrawal from global responsibility by the U.S., and that Chinese power would expand to fill the vacuum.
Such fears are stoked largely by the seemingly unstoppable rise of China’s economy. 

The white paper predicts a Chinese economy valued at US$42 trillion by 2030 – almost double that of the U.S. and EU. 

The paper suggests that, like all great powers, China will eventually seek to influence the region to suit its own needs. 

That ambition has arguably been helped by Trump’s withdrawal from the Trans-Pacific Partnership, which has prompted many Asian governments to doubt the U.S.’s commitment to the region.
The white paper noted pointedly that “bringing the U.S. and China together in a region-wide free trade agreement would reduce economic tension and help maximise regional economic growth prospects.”
“Power is likely to shift more quickly in the region, and it will be difficult for Australia to achieve the levels of security and stability we seek,” it said. 

“A number of factors suggest we will face an increasingly complex and contested Indo–Pacific.”
Bloomberg reported Turnbull as telling reporters on Thursday in Canberra that: “This is the first time in our history that our dominant trading partner is not also a dominant security partner.”

Chinese Peril

How China Could Defeat America in Asia
By Grant Newsham

Perhaps owing to being dominant for so long, American leaders sometimes appear so confident of winning in wartime that they are myopic about what happens during peacetime – the so-called “phase zero” in US military terms.
Consider Asia. 

It’s not that US forces aren’t busy in the region, but rather there’s been a longstanding indifference towards China’s military buildup and its undermining of US alliances and commitment to Asia.
If the US isn’t careful, this creeping subversion could put it in the strategic equivalent of wrestling’s Full Nelson and unable to move beyond phase zero at acceptable cost.
China’s military buildup and expansion has never evoked a consistent sense of threat on the US side — just recall a US Pacific Command chief who considered global warming his biggest challenge in the Asia Pacific.
Admiral Harry Harris, the current PACOM commander, described Chinese submarines as Model-T’s while the American versions are Corvettes.
A previous commander, Admiral Dennis Blair, also downplayed China’s capabilities, noting it would take only 10-15 minutes to neutralize Beijing’s man-made islands in the South China Sea — the so-called “Great Wall of Sand.”
Glib dismissals that make for good newspaper quotes, while the noose tightens.
If more evidence is needed of American dismissiveness mixed with a dose of hubris, consider the decision to invite China to the world’s largest international maritime warfare exercise, known as RIMPAC, in Hawaii in 2014 and 2016.
The People’s Liberation Army was invited despite well-understood intelligence risks (try ‘acoustic signatures’ for starters), and apparently in the belief that exposure to US awesomeness would convince China to behave. 

An invitation to China for RIMPAC 2018 is apparently still open.
One would think American leaders would know better after recent experiences in Iraq and Afghanistan that you underestimate adversaries or overestimate yourself at your own peril.
Less recent experiences teach the same lesson. 

Condescension toward China’s military is this generation’s version of 1930’s thinking that the Japanese were incapable of producing fighter aircraft like the Zero or Long Lance torpedoes.
It was equally impossible that the Imperial Japanese Navy could ever match — much less outclass — the Royal Navy. 

Britannia had ruled the waves for a century, after all.
Improvements in China’s naval and air forces over the phase zero of the last decade are impressive and alarming. 

It also happened faster than all but a handful of American analysts predicted.
At the same time, Beijing has pulled US allies like the Philippines and Thailand into its orbit, raising doubts in other countries about US commitment.
US military forces — as powerful and professional as they are — would likely defeat the People’s Liberation Army in a straight up fight.
This also assumes moving from phase zero to phase one (war looks likely) and then into phase two (the shooting starts) is automatic. 

It isn’t.
If China’s military were to do something like, say, grab Japan’s Senkaku islands or perhaps teach Taiwan a lesson, there will be voices in the US arguing that a military response carries too high a price.
This shows that if China as a smart adversary makes the proper strategic moves in phase zero, there might not be a phase one or a phase two, because the US awakes to finds itself in a stranglehold it can’t get out of, except at too high a price.
It’s always the rule to make it so that your adversary, rather than you, can’t get out of phase zero. 

That comes from taking the adversary seriously.