By Mohammad Humayun Kabir and Amamah Ahmad





In order to understand the complexity of China’s strategic situation, one needs to take into account its remarkable economic growth over the last decades. In just over a single decade, China’s foreign trade went from $289 billion dollars to an astounding $2.560 trillion in 2005 (Eshel 2011).However, one main commodity that Beijing lacks is oil. Today, the country is the second largest global oil consumer.









In order to sustain its economic growth, China’s strategic priorities are to find reliable oil supplies and secure unencumbered SLOCs. These expanding economic and strategic interests may cause the PLAN to operate out of area in order to safeguard investments and SLOCs. This explains China’s focus on military facilities along the SLOCs from China to the Persian Gulf (Eshel 2011). Below table gives us a better idea of China’s presence in the littoral nations.





As other powers shift their focus, Beijing is also focusing on its “Look South” approach. In 2013, President Xi Jinping suggested two initiatives, the Continental Silk Route and the Maritime Silk Route. The initiatives would extend China’s influence in two belts: The Bangladesh–China–India– Myanmar Forum for Regional Cooperation (BCIM), which would also connect China’s Yunnan province to the Bay of Bengal (BOB) and the China-Pakistan Silk Road Economic Belt, which is a railway project that would connect China’s Kashgar to the Gwadar port in Pakistan (Jia 2014). These initiatives would fulfill the purpose of greater connectivity in the region for Beijing.





The qualitative analysis of China’s outward investment strategy reveals three kinds of big projects:





(1) Those that very clearly serve an economic purpose;





(2) Those that do not serve an economic purpose and are more likely to buy influence with the host country’s government; and





(3) Those that serve economic and geopolitical interests.





The Chinese banks that finance these projects and the Chinese firms that work on them are almost uniformly state-owned enterprises, and the workers and materials used in these projects are often exclusively Chinese. Thus, economic and geopolitical considerations seem to motivate China’s investment in projects.









Chart Attribute: China’s Share of Exports from Bangladesh, Nepal, and Sri Lanka, 2003-2011. China’s Increased Trade and Investment in South Asia (Spoiler Alert: It’s The Economy) Prepared for the U.S. Government Office of South Asia Policy , 2013





In addition to Beijing’s quest for energy and connectivity, this orientation has been also triggered by China’s uneasiness of the US “ Re-balancing ” strategy. In response, China has continued its naval build-up which has seen an exorbitant 500% rise since 2000 (Jha 2014). Re-balancing





Consequently, current Chinese maritime policies are intended as a warning, especially to the US, not to intervene in Chinese affairs, especially in the South China Sea (SCS). Parallels can be made here to the US Monroe doctrine, declared in 1823 to deter European powers from meddling in seas the US considered as its natural sphere of influence (Yoon 2014).





Chart Attribute: Error Terms for Trade Flows between Focus Countries and China / Source: China’s Increased Trade and Investment in South Asia (Spoiler Alert: It’s The Economy) Prepared for the U.S. Government Office of South Asia Policy , 2013





Interestingly, China is playing two different games in two different seas. In the SCS, where China is a littoral nation, there is a strategic competition with the US and rival Asian nations – China is allegedly defying the international law of the sea by continuing to patrol and police near ASEAN countries (CNAS 2009). This tense geo-strategic area is China’s foreign policy priority, as conflicts here are mainly related to its territorial sovereignty.





Very recently, president Xi Jinping officially declared China’s intention to strengthen its frontier defences on land and sea. He also called for the country to boost its military into a force that can “win battles” (Daily Star 2014). As a result, the People’s Republic of China has adopted a strategic approach that includes land, maritime, economic and energy security components (Rajan 2014). The naval build-up has added a new dimension to the PLAN’s capabilities– going from that of conducting coastal defence activities to the potential of high sea defence.





For a long time, China had given primacy to land security. In the 1980s when China began opening up, new economic linkages were complemented by greater dependence on sea lanes for export and import of goods and oil respectively (Bedford 2009). Additionally, with the fall of the Soviet Union, China could stop focusing on its land border and turn its attention toward the sea.





Securing SLOCs has become one of its main objectives and a way to address the "Malacca Dilemma" and reduce its reliance on the Malacca strait through which about 80% of its energy import is transported. This makes Beijing’s energy security vulnerable because of the US’ objective to control the Strait and because of pirate attacks. China is therefore exploring other options, which would allow it to bypass the Strait, by transporting resources through roads and sea from the BoB (Stratrisk 2013).The Chinese-built gas pipeline from Kyaukpyu in Myanmar to Kunming, which became operational in 2013, with a parallel crude oil pipeline, is one such project (Samaranayake 2014).





"Sri Lanka" Factor:





The Hambantota Deep seaport has received a great deal of attention in the media, and a number of Indian security analysts have voiced concern over the port’s close proximity to India (Bajaj 2010). However, economic and geopolitical concerns are not always mutually exclusive. The Hambantota Deep Seaport may be an example of China acting with its economic and geopolitical goals in unison.









Located on strategic Asian and European sea lanes, it can serve as a refueling station for commercial as well as military vessels. Moreover, the ability to dock, repair, and refuel strengthens China’s logistical capabilities to ship oil from Iran, Saudi Arabia, and Sudan, thereby increasing China’s energy security. The port also further facilitates trade with a country that is increasing its imports from China, and it is in China’s economic interest to have further commercial access not just to Sri Lanka, but to other surrounding countries as well. Finally, the Sri Lankan president has stated publicly that the port is intended for commercial purposes only and will remain so (Kostecka 2010).

Other projects, such as the Mahinda Rajapaksa Cricket Stadium and the Lotus Pond Theatre seem more designed to curry favor with the Sri Lankan government. These projects offer little economic utility to China and mirror projects that China has funded in other countries as part of its diplomacy-through-aid strategy. For example, China also built cricket stadiums for Dominica, Grenada, and St. Lucia following their switch in diplomatic recognition from Taiwan to the mainland (Lum 2008). China gifted the Lotus Pond Theater to Sri Lanka.









The theater offers no economic returns, although Chinese workers constructed the theater using Chinese materials (Sunday Times 2011). Instead of purchasing an economic opportunity, these projects are better explained as being used to purchase positive relations with Sri Lanka.





"Bangladesh" Factor:





The Chittagong port directly borders Northeast India and, like the Hambantota Deep Seaport in Sri Lanka, has raised suspicions in India that China is trying to encircle India and increase its ability to project military power into the region. (Bajaj 2010). Like the Hambantota Deep Seaport, these suspicions can neither be confirmed nor rejected. China has markedly increased its trade with Bangladesh and has a vested economic interest in gaining further commercial access to Bangladeshi markets. Additionally, Bangladesh’s president has publically stated that the port is intended solely for commercial purposes (Kostecka 2010).









Image Attribute: Bangabandhu International Conference Center, Dhaka, Bangladesh





The eight so-called “friendship bridges” China has built throughout Bangladesh do not seem to offer much economic utility to China. China funded these bridges to celebrate improved diplomatic relations with Bangladesh; Chinese state media say their construction is “to express the Chinese people’s friendship to the Bangladeshi people.” (People’s Daily 2012). Likewise, the Bangabandhu International Conference Center (also known as the “Bangladesh-China Friendship Conference Center”) does not seem to provide many economic returns to China. Therefore, “dollar diplomacy” likely explains this project better than sound economic investment.





"Myanmar" Factor:









Map Attribute: Sino-Myanmar Energy Pipeline Map





Myanmar’s Nay Pyi Taw holds great strategic importance for China due to its energy endowments. The pipelines through Myanmar have the potential to help China reduce its heavy dependence on the Strait of Malacca for the transportation of energy. This, of course, has strategic implications against the backdrop of the United States’ rebalancing in Asia and the on-going maritime disputes in the SCS. The successful building of the pipelines through Myanmar could reduce China’s dependence on the Strait of Malacca by 30% (Melkulangara 2013).





Conclusion:





Finally, be it energy needs or strategic motivations, China’s commercial and infrastructure investment in the region have been astonishing. It has offered the BoB nations billions of dollars in loans for the construction of ports and roads and for other infrastructure projects, ensuring its influence in and around the Bay (Samaranayake 2014).





For instance, Beijing has been deeply involved in countries like Sri Lanka, where it has contributed approximately $4 billion in loans, grants and aid since the end of the civil war in 2009 and is responsible for almost 70% of the country’s infrastructure projects (Columbage 2014). Currently, China and Bangladesh are also in talks over the $9.03 billion worth of financial support that the latter requested from Beijing (mostly for infrastructure development projects over a period of five years) (Kabir 2014). On the regional scale, in November 2014, China offered $20 billion in preferential and special loans to develop infrastructure and increase cooperation with its South East Asian neighbours (Shannon 2014). All these examples reflect the Asian Giant’s stronghold over the sub regions.





As China seeks and materialize the port access agreements with littoral countries of the Bay of Bengal, India is also extending its sphere of influence east and west on land and at sea, there is a possibility that it will ‘bump heads’ with China which is protecting its interests and is expanding its reach in the region.





About The Authors:





Mohammad Humayun Kabir is Senior Research Director at the Bangladesh Enterprise Institute in Dhaka, Bangladesh, and head of its Foreign Policy and Security Studies Division. He studied International Law in Kiev State University, Ukraine, and International Relations at Oxford University, UK.





Amamah Ahmad is a Research Associate at the Bangladesh Enterprise Institute in Dhaka, Bangladesh. She graduated with a Bachelor of Arts in Social Science and a Master of Arts in Political Science from the University of Lausanne in Switzerland. She has research interests in Geopolitics, International Security and Transboundary issues.





Publication Details





Citation Information: Croatian International Relations Review. Volume 21, Issue 72, Pages 199–238, ISSN (Online) 1848-5782, DOI: 10.1515/cirr-2015-0007, March 2015.





© 2015. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0)



