border review | 1 November 2011

Zhu Feng: China’s Trouble with the Neighbors

A month ago, President of Myanmar Thein Sein pulled the plug on the contested Myitsone dam project in Northern Burma. The unexpected decision was widely applauded around the globe but left Chinese investors baffled. A few days later, 13 Chinese sailors were killed in an attack on two cargo ships on the Mekong river.

Yesterday, Zhu Feng (Deputy Director of the Center for International & Strategic Studies at Peking University) wrote a commentary for Project Syndicate, in which he takes the two events as indication of a general trend:

The Myitsone and Mekong episodes highlight China’s suddenly edgy relations with its southern neighbors. Its good-neighbor policy, it turns out, has steered China’s regional diplomacy into uncharted waters.

Indeed, China’s neighbors will not be reliably good to Chinese interests unless and until China begins to provide essential public goods –not just commerce, but also full-fledged regional governance based on the rule of law, respect for human rights, and regional economic growth. Otherwise, ruptures such as those at Myitsone and along the Mekong will recur, deepening China’s sense of isolation and panic.

The circumstances of the Mekong incident are not fully clear yet (Thai soldiers working on behalf of local businessmen?) and neither is the reasoning behind the Burmese government’s decision to suspend construction on the dam (read, for example, Nicholas Farrelly’s New Mandala post on the ongoing conflict in northern Burma and the role of the dam). Thus, I am not sure whether the two episodes sufficiently support Zhu’s conclusion. However, Zhu’s analysis of China’s strategic engagement in neighbouring countries and the risks Chinese companies are willing to take is interesting:

The dam’s Chinese investors, for their part, relied too heavily on the depth of the two countries’ bilateral ties, and so heavily discounted the project’s political risks. Their behavior also reflects the implied guarantee of official government mercantilism, as well as the complacency of China’s state-owned enterprises, which account for most Chinese overseas investment. Operating on the assumption that the government will back them – or bail them out if they fail – they can afford to be cavalier.