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.

China's debt traps

China's Silk Road project runs into debt jam
By Julien Girault
China's dictator Xi Jinping says trade with Belt and Road countries has exceeded $5 trillion

China's massive and expanding "Belt and Road" trade infrastructure project is running into speed bumps as some countries begin to grumble about being buried under Chinese debt.
First announced in 2013 by Xi Jinping, the initiative also known as the "new Silk Road" envisions the construction of railways, roads and ports across the globe, with Beijing providing billions of dollars in loans to many countries.
Five years on, Xi has found himself defending his treasured idea as concerns grow that China is setting up debt traps in countries which lack the means to pay back the Asian giant.
"It is not a China club," Xi said in a speech on Monday to mark the project's anniversary, describing Belt and Road as an "open and inclusive" project.
Xi said China's trade with Belt and Road countries had exceeded $5 trillion, with outward direct investment surpassing $60 billion.
But some are starting to wonder if it is worth the cost.
During a visit to Beijing in August, Malaysia's Prime Minister Mahathir Mohamad said his country would shelve three China-backed projects, including a $20 billion railway.
The party of Pakistan's new prime minister, Imran Khan, has vowed more transparency amid fears about the country's ability to repay Chinese loans related to the multi-billion-dollar China-Pakistan Economic Corridor.
China's "new Silk Road" envisions the construction of railways, roads and ports across the globe

Meanwhile the exiled leader of the opposition in the Maldives, Mohamed Nasheed, has said China's actions in the Indian Ocean archipelago amounted to a "land grab" and "colonialism", with 80 percent of its debt held by Beijing.
Sri Lanka has already paid a heavy price for being highly indebted to China.
Last year, the island nation had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the $1.4-billion project.

Ambiguous partner
"China does not have a very competent international bureaucracy in foreign aid, in expansion of soft power," Anne Stevenson-Yang, co-founder and research director at J Capital Research, told AFP.
"So not surprisingly they're not very good at it, and it brought up political issues like Malaysia that nobody anticipated," she said.
"As the RMB (yuan) becomes weaker, and China is perceived internationally as a more ambiguous partner, it's more likely that the countries will take a more jaundiced eye on these projects."
The huge endeavour brings much-needed infrastructure improvements to developing countries, while giving China destinations to unload its industrial overcapacity and facilities to stock up on raw materials.
Chinese dictator Xi Jinping (C) says the initiative is 'not a China club'

But a study by the Center for Global Development, a US think-tank, found serious concerns about the sustainability of the sovereign debt in eight countries receiving Silk Road funds.
Those were Pakistan, Djibouti, Maldives, Mongolia, Laos, Montenegro, Tajikistan and Kyrgyzstan.
The cost of a China-Laos railway project—$6.7 billion—represents almost half of the Southeast Asian country's GDP, according to the study.
In Djibouti, the IMF has warned that the Horn of Africa country faces a "high risk of debt distress" as its public debt jumped from 50 percent of GDP in 2014 to 85 percent in 2016.
Africa has long embraced Chinese investment, helping make Beijing the continent's largest trading partner for the past decade.
On Monday, a number of African leaders will gather in Beijing for a summit focused on economic ties which will include talks on the "Belt and Road" programme.

'Not a free lunch'
China bristles at criticism.
Sri Lanka has already paid a heavy price for being highly indebted to China

At a daily press briefing on Friday, foreign ministry spokeswoman Hua Chunying denied that Beijing was saddling its partners with onerous debt, saying that its loans to Sri Lanka and Pakistan were only a small part of those countries' overall foreign debt.
Stevenson-Yang said China's loans are quoted in dollar terms, "but in reality they're lending in terms of tractors, shipments of coal, engineering services and things like that, and they ask for repayment in hard currency."
Standard & Poor's said Beijing structures the infrastructure projects as long-term concessions, with a Chinese firm operating the facility for a period of 20 to 30 years while splitting the proceeds with the local counterpart or government.
The head of the International Monetary Fund, Christine Lagarde, raised concerns about potential debt problems in April and advocated greater transparency.
"It's not a free lunch, it's something where everybody chips in," she said.

China Encroaches on India’s Sphere of Influence

An autocrat in the Maldives tests New Delhi’s resolve.
By Sadanand Dhume

Maldivian police stand guard near the opposition party’s headquarters in Male after President Abdulla Yameen declared a state of emergency, Feb. 6. 

Is India still top dog in its neighborhood? 

This is the question raised by a political crisis in the Maldives, an Indian Ocean island chain known for its luxury beach resorts. 

Unless New Delhi swiftly restores democracy, it risks looking ineffectual in the face of Chinese inroads into India’s traditional zone of influence.
The crisis began earlier this month, when President Abdulla Yameen’s government declared a state of emergency and arrested two Supreme Court judges as well as a long-serving former president who is Mr. Yameen’s half-brother. 

The arrests followed a Supreme Court ruling that declared the terrorism conviction of exiled former President Mohamed Nasheed unconstitutional and ordered the release of eight other jailed opposition lawmakers.
Major democracies reacted to Mr. Yameen’s actions with dismay. 

The State Department said the U.S. was “troubled and disappointed” by the declaration of emergency. India’s Foreign Ministry announced that New Delhi was “disturbed.” 

The United Kingdom, from which the Maldives gained independence in 1965, said it was “gravely concerned.”
By contrast, China urged the international community to “play a constructive role on the basis of respecting the sovereignty of the Maldives.” 

Translation: Mr. Yameen should be allowed to snuff out constitutional checks without fear of foreign intervention. 

The People’s Liberation Army reinforced this message last week by posting on social media photos of training exercises in the Indian Ocean.
The Maldives has a population of 400,000 people, about as many as Staten Island, N.Y., or the south Mumbai neighborhood of Byculla. 

The country has come to symbolize a broader tussle between the world’s two most populous nations, China and India. 

For India it represents a stark challenge: Beijing’s growing influence in countries where New Delhi has traditionally loomed large.
In Nepal, K.P. Oli, a veteran communist leader with links to China, took over as prime minister last week. 

In Bangladesh, China has rolled out $24 billion in loans, mostly for infrastructure projects, dwarfing India’s more modest forays into checkbook diplomacy.
In the tiny Himalayan kingdom of Bhutan, arguably India’s closest ally, Beijing is lobbying to establish full diplomatic relations. 

Last year Indian and Chinese troops were involved in a 10-week standoff on territory claimed by both Bhutan and China, and regarded by India as strategically vital. 

It ended when the Chinese agreed to halt construction of a road to which India objected, and both countries pulled back troops.
Nowhere in the region is China’s dramatically enlarged presence more visible than in Sri Lanka, the teardrop-shaped island that dangles off the southern tip of India. 

In Colombo, hulking cranes rise above a $1.4 billion port expansion and new commercial and residential development built by a Chinese firm on reclaimed land. 

Company officials say the development could turn Colombo into a commercial hub midway between the thriving entrepôts of Singapore and Dubai.
A 45-minute helicopter ride south of Colombo—over dense forests, manicured tea plantations, herds of wild elephants, and $2,000-a-night resorts—is China’s most controversial project in the region. 

In the sleepy town of Hambantota, China has built an airport with an 11,500-foot runway capable of landing an Airbus A380, as well as a modern seaport able to dock oil tankers. 

Both are largely unused.
Unable to pay back the money it borrowed to build the port, last year Sri Lanka handed it to China on a 99-year-lease. 

Both the Colombo Port project and Hambantota are part of China’s ambitious One Belt, One Road initiative.
In an interview in Colombo earlier this month, Sri Lankan Prime Minister Ranil Wickremesinghe flatly stated that his country will not allow the Chinese to use the port for military purposes. 

But U.S. and Indian officials say that is a possibility.
This regional backdrop raises the stakes for India in the Maldives. 

Should Mr. Yameen continue to flout the Supreme Court order, it will send a signal across the region and beyond that even the smallest nations can, with China’s backing, thumb their noses at New Delhi without consequence.
In a phone interview from Colombo, former Maldivian President Nasheed says he’s concerned that expensive Chinese infrastructure projects amount to a potential “land grab” that is “hollowing out” his country’s sovereignty. 

He also worries that under Mr. Yameen the Maldives has allowed Islamic State to make inroads into the Muslim-majority country.
Mr. Nasheed stops short of explicitly calling for an Indian military intervention to restore democracy. (Thirty years ago, India sent troops to ward off mercenaries who attempted to depose the then-president.) 

Nonetheless, when asked what New Delhi should do to ensure Mr. Yameen respects the Supreme Court decision that sparked the current crisis, he leaves ajar the door to intervention: “How they impress this upon him, I’m sure countries have the imagination and the tools to do that.”

The former president may have to pick his words carefully, but for India the choice is clear. 

If it wants to retain credibility as South Asia’s leading power, it cannot allow the Maldives to turn into an authoritarian Chinese vassal. 

This means keeping all options on the table, including using military force if necessary.

Han Peril: China ensnares vulnerable states in a debt trap

Cheap credits are used to secure influence and grab control of strategic assets
By Brahma Chellaney
A ship departs a port in Zhanjiang, China, in July for Africa's Djibouti to dispatch members of the People's Liberation Army to man a military base there.

"There are two ways to conquer and enslave a country," American statesman John Adams (U.S. president from 1797 to 1801) famously said. 

"One is by the sword. The other is by debt."
China has chosen the second path.  

Aggressively employing economic tools to advance its strategic interests, Beijing has extended huge loans to financially weak states and ensnared some in debt traps that greatly strengthen its leverage.
After establishing a growing presence in the South China Sea, Beijing seems increasingly determined to extend its influence in the Indian Ocean, not least in countries surrounding India, its regional strategic rival.
From Djibouti in Africa to the Indian Ocean island of Sri Lanka, China has converted big credits into political influence and even a military presence.
Now a political crisis in the Maldives has highlighted the fact that China has quietly acquired several islets in the heavily indebted Indian Ocean archipelago.
Mohamed Nasheed, the nation's first and only democratically elected president who was ousted at gunpoint, says the country cannot repay the $1.5bn-$2bn it owes China, equivalent to 80% of the total foreign debt. 

"Without firing a single shot, China has grabbed more land" in the Maldives than what Britain's "East India Company did at the height of the 19th century."
Among the unpopulated Maldivian islands China has acquired on lease are Feydhoo Finolhu, lying close to the capital Male and previously used for police training, and the 7km-long Kalhufahalufushi, with a magnificent reef. 

For Feydhoo Finolhu, it paid $4 million, which is what a luxury apartment in Hong Kong sells for; Kalhufahalufushi was even cheaper.
China is the only country to come out in support of Maldives' embattled authoritarian president, Abdulla Yameen, who came to power in 2013. 

Beijing has also issued an open threat against India, which has traditionally been the dominant foreign influence in the Maldives, since the islands were granted independence from Britain. 

Chinese state-controlled media has warned that if India militarily intervenes in the Maldives, Beijing won't "sit idly by" but will "take action to stop" it.
To be sure, China claims sound commercial grounds for acquiring its Maldivian islands. 

But across the Indian Ocean, port projects that China insisted were purely commercial have acquired military dimensions.
After lending billions of dollars to Djibouti, China last year established its first overseas military base in that tiny but strategically important state, located on the northwestern edge of the Indian Ocean. 

In Pakistan, Beijing has deployed its warships for the security of the Chinese-built Gwadar port, whilst seeking to establish a military base nearby.

Beijing's creditor diplomacy scored a major success in December when Sri Lanka formally handed over its strategically located Hambantota port to China under a 99-year lease valued at $1.12 billion. 

Earlier, after Sri Lanka's $500-million, largely Chinese-owned Colombo Port container terminal opened in 2014, Chinese submarines arrived quietly and docked there.
Further east in Myanmar, there are concerns in India and the West that Kyauk Pyu, a deep-water port to be developed and financed largely by China, could eventually also serve military purposes.
In the Maldives, Beijing has shown interest in turning an uninhabited island into a naval base by cutting through the surrounding coral reefs to create passageways for its warships. 

Or it could create an artificial island and militarize it, as it has done in the South China Sea.
Underscoring Beijing's strategic calculations, three Chinese frigates visited the Maldives about six months ago, docking in Male and at Girifushi Island and imparting special training to Maldivian troops.
Meanwhile, China's stepped-up naval presence in the Indian Ocean in recent weeks might be intended to send a message to India, including seeking to deter it from militarily intervening in the Maldives, as New Delhi did with Western backing in 1988, when Indian paratroopers foiled a coup attempt. 

The action reinforced India's claim to be the region's peacekeeper.
The current ruler, Yameen, has facilitated China's island acquisitions in his country by amending the constitution in 2015 to legalize foreign ownership of land. 

The amendment appeared tailored for China; the new rules for foreign ownership require a minimum $1 billion construction project that involves reclaiming at least 70% of the desired land from the ocean.
By also awarding Beijing major Chinese-financed infrastructure contracts, Yameen is saddling the Maldives with mounting debt that is likely to prove unserviceable.
Several countries that have fallen into debt servitude to China are India's immediate neighbors, including Bangladesh, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka. 

This holds major foreign-policy implications for India, which is seeing its influence erode in its backyard. 

By establishing a Djibouti-type naval base in the Maldives, China could open an Indian Ocean front against India in the same quiet way that it opened the trans-Himalayan threat under Mao Zedong by gobbling up Tibet, the historical buffer.
China's strategy in southern Asia and beyond is aimed at fashioning a Sinosphere of trade, communication, transportation and security links.  

By financially shackling smaller states through projects it funds and builds, it is crimping their decision-making autonomy in a way that helps bring them within its strategic orbit. 

It is even replicating some of the practices that were used against it during the European-colonial period when, in the words of the Chinese nationalist revolutionary leader Sun Yat-sen, "India was the favored wife of Britain while China was the common prostitute of all powers." 

One such practice is the long-term lease, an echo of the 99-year-lease through which 19th-century Britain secured control of the New Territories, expanding Hong Kong's landmass by 90%.
The International Monetary Fund has warned that Chinese loans, offered at rates as high as 7%, are promoting unsustainable debt burdens. 

The price that such loans exact can extend to national sovereignty and self-respect. 

The handover of Hambantota was seen in Sri Lanka as the equivalent of a heavily indebted farmer giving away his daughter to the cruel money lender.
In Pakistan, Chinese state companies have secured energy contracts on terms that include ownership of the plants and 16% guaranteed yearly returns, very high by global standards. 

The "economic corridor" that China seems intent on building across Pakistan has become a vehicle for a deep Chinese penetration of the Pakistani state, with most of the investment going into energy, agricultural and security projects often unrelated to a corridor.
Against this background, the word "predatory" is increasingly being used internationally about China's practices. 

U.S. Secretary of State Rex Tillerson has called China a "new imperialist power" whose practices are "reminiscent of European colonialism."
Mao said, "Political power grows out of the barrel of a gun." 

But with China emerging as the first major power in modern history without real allies, an additional principle is guiding its policy: buying friendship by opening a fat wallet. 

China is co-opting states into its sphere of influence by burying them in debt.

Island Paradise Becomes Latest Flashpoint in India-China Rivalry

• Maldives under state of emergency as president battles court
• China, India are jockeying for influence as regime teeters

By Iain Marlow

A power struggle in the Maldives, a tiny Indian Ocean nation known for scenic luxury resorts and crystal-clear blue water, is taking center stage in a wider battle for regional influence between India and China.
On Monday, President Abdulla Yameen declared a state of emergency after the Supreme Court ordered him to free political prisoners and opposition politicians he’s thrown in jail. 

Security forces then stormed the court and arrested two judges, as well as a former leader. 

The remaining judges later annulled the previous ruling, the Associated Press reported Wednesday.
The political drama has sparked concern in India, which said last week in an unusually strong statement that it’s “imperative” for the government to obey the Supreme Court. 

China, which signed a free trade agreement with the Maldives last year, said Tuesday the country of roughly 400,000 people has “the wisdom and capabilities to cope with the current situation independently.”
India, which views China as its main geopolitical foe in Asia, has been more assertive under Prime Minister Narendra Modi in pushing to maintain geo-strategic supremacy in the Indian Ocean, with backing from the U.S. and Japan. 

China, meanwhile, has expanded its influence by building ports in Sri Lanka, Pakistan and Djibouti, a small African nation that is also home to its first overseas military base.

China Outreach
“As India tries to establish itself as the preeminent power in the Indian Ocean region, the Maldives have become increasingly important,” said Constantino Xavier, a fellow at Carnegie India in New Delhi. 

Yameen has “definitely accelerated his outreach to China, to fend off pressure from the west and also reduce leverage from India.”
The Maldives has become politically volatile in recent years. 

Yameen, who has courted Chinese and Saudi investment since coming to power in an election in 2013, has been criticized by the State Department for jailing opposition politicians and eroding human rights protections.
Before the decision to annul the court ruling, Mohamed Nasheed, an exiled former Maldives president and opposition leader, had asked India’s armed forces to back an envoy that would help enforce the order, free political prisoners and secure the safety of judges. 

The U.S. has condemned the state of emergency.

No Good Options
The judiciary has acted as a democratic check on Yameen, who still enjoys control over the state’s security forces, according to Dhruva Jaishankar, a foreign policy fellow at Brookings India.
“Yameen has been trying over the last few years to consolidate his political presence,” Jaishankar said, adding this has involved seeking Chinese funding. 

“India has been tentatively backing pro-democracy forces, but is also trying not to push him into the arms of the Chinese and the Saudis.”
Beijing has become more economically important to the Maldives in recent years. 

China sent about 300,000 tourists to the Maldives in 2017, more than any other country. 

Beijing has begun financing infrastructure projects, and unidentified Chinese company recently took out a 50-year lease on an island near the capital Male to build a resort.
Concerns are growing that China may eventually engage in land reclamation in the Maldives similar to what Beijing has done in the South China Sea, according to David Brewster, an academic at the Australian National University.
“It would take a miracle to be able to turn Yameen away from China while also restoring some semblance of democracy,” Brewster said. 

“India has no good options.”