China has problems in the ASEAN region. Its reputation, its
history, and its ability to deliver on its promises.
by Tan Jie Ying, edited by Francesca Ross
Chinese companies are putting huge amounts of cash into
Southeast Asia. This is despite an
overall decline in foreign direct investment (FDI) in the region
from traditional sources. This does not mean the Chinese and their
cash are always welcome. Beijing and her representatives must
consider how popular sentiments complicate their trade and
investment ties.
One good example are concerns among Chinese executives
about doing business in Indonesia. The former governor of
Jakarta is ethnic Chinese and just lost a divisive
election campaign which soured public opinion towards his
people.
“We need to understand [Indonesia’s] policy and law
relating to labour, tax and especially land…[or] there is no
business,” said Zhao
Baige, a senior Chinese diplomat. He also urged the
Indonesian leadership to offer Chinese firms assistance in public
relations and tax incentives.
The inflow of Chinese workers into Indonesia is also
heightening tensions. “Local unskilled labour cannot work because
the jobs have been filled by the Chinese,” said Said
Iqbal, leader of the Confederation of Indonesian Workers’
Union.
The same rise in hostility happened in Myanmar
after allegations that
Beijing was supporting Chinese rebels in the north of the country.
Anti-Chinese sentiments there grew so strong that the viability of
the Kyaukphyu Special Economic Zone project was once in
question.
The South China Sea issue is fuelling tensions
Animosity towards the Chinese is deep-rooted in
Southeast Asia; the product of history, business and clashes of
culture. Nationalist sentiment is currently heightened because of
the scramble for natural
resources in the South China Sea.
Beijing is unwilling
to back down on large swathes of the area. The political
sensitivity of these claims means a solution is unlikely to be
reached in the foreseeable future.
Citizens of countries across the ASEAN region have
taken to the streets to express their indignation at China’s
belligerent assertions. There were protests in the
Philippines last summer and Vietnam at
the turn of this year.
The history of Southeast Asia’s Chinese community feeds
anti-Chinese sentiments
The suspicion of the Chinese can even be seen in local
laws. Discriminatory regulations against Indonesia Chinese have
been in place since the 1950s. Foreign nationals, many of whom came
from this group, were banned from doing retail business outside
urban areas. This forced many to relocate their businesses into
built-up areas.
The Chinese population in Cambodia, meanwhile, suffered
victimisation by both the Khmer Rouge and ethnic Cambodians. There
were 425,000 Chinese
in Cambodia in the late 1960s. There were only 61,400 in
1984.
Chinese business practises are aggravating resentments
Citizens of Southeast Asia are also concerned about
China’s disdain for environmental issues. Copper mining operations
in Myanmar have been halted several
times thanks to local opposition. They are worried about the
project’s environmental
effects and low
rates of compensation for land confiscations.
“This is a murderous and land-grabbing project. Our
residents are against this project because it breached the
investigation report written by Daw Aung San Suu Kyi. We totally
disagree with restarting the project,” said Daw
Sandar, a Letpadaung resident and protester.
Other Southeast Asian countries share similar
experiences. Chinese-owned banana plantations in the Laotian
district of Ton Pheung are feeding animosity thanks to their
undesirable side
effects.
“There are big economic incentives to rent out the
land, because it represents a large amount of cash that Laotian
villagers could never get in one go from their farming
work,” explained Cecille
Friis, a human geographer at Humboldt University.
“[But there are a lot of consequences] in terms of
chemical inputs used by the Chinese investors, destruction of land
markers and destruction of traditional irrigation channels,” she
added.
Chinese tourism money is still widely welcomed
People working in the tourism sectors across the ASEAN
region want to damp down anti-Chinese sentiment. This is because
China’s large numbers of high-spending tourists are a force to be
reckoned with in the fight to prompt economic growth.
China already contributes the
second largest number of tourists to the ASEAN region. This
industry directly accounts for 5% of
the region’s total GDP and supports more than 32
million jobs.
The Cambodian Ministry of Tourism has a
five-year plan to attract two million Chinese tourists
each year by 2020. Singapore launched a
S$1 million campaign, named “Rediscover Singapore From Your Heart”,
to woo Chinese tourists back to the country. The Chinese are
welcome to visit, perhaps not to stay.
Corruption and bureaucratic red tape are greater problems for
Beijing
The rising tide of overt distaste for the Chinese is a
problem for Beijing. There is, however, a bigger issue affecting
the health of the Chinese-Southeast Asian relationship. Corruption
and bureaucratic red tape are obstructing Beijing’s ability to
deliver on its big promises to Southeast Asian countries.
Only 7% of
the planned Chinese investments planned in Indonesia came to
fruition between 2005 and 2014. Beijing has also
delivered little of
the US$26 billion in aid and assistance promised to projects in the
Philippines since Duterte came to power.
China is increasingly relying on its economic muscle to
strengthen links with Southeast Asia. It becomes weaker when these
trade and investment promises come to nothing.
It is easier to deal with corruption than bureaucratic red
tape
Corruption and bureaucratic red tape are perhaps the
easiest of China’s problem to solve. That is not because it is
simple; instead regulating Chinese firms’ business practices and
settling maritime disputes are just incredibly difficult.
More than 30 senior
Chinese officials have been arrested since Chinese President Xi’s
anti-corruption drive started. This has included high-ranking
administrators such as the former vice-chairman of the Chinese
People’s Political Consultative Conference National
Committee, Su
Rong.
Cutting down on bureaucracy is less clear-cut. Leaders
must decide which rules are worth keeping to keep the level of
regulation is balanced. Excessive rule-making kills efficiency and
competitiveness; insufficient regulation undermines coordination
between agencies.
Complicated processes are also limiting overseas
opportunities for Chinese interests. China “maintains
a more restrictive foreign investment regime than its major trading
partners,” said the American Department of State. Beijing must
start by eliminating vague or inconsistent laws about the country’s
outbound cash flows. This will improve its ability to deliver on
its promises.
Premier Li Keqiang has admitted efforts
to cut through red tape were “too slow.” This is comforting because
it shows an appetite for reform. China’s big changes need to come
from within. Only then will its image improve for those looking
on.