How are southeast asian small countries coping with the rise of china the case of vietnam

The latter consisted in actively seeking the engagement of such external major players as the US, India, Japan, Russia, and the EU, in the existing regional fora, namely the Association

Phuc Thi Tran

Escola de Economia e Gestão

HOW ARE SOUTHEAST ASIAN SMALL COUNTRIES COPING WITH THE RISE OF CHINA?

THE CASE OF VIETNAM

Master in International Relations

Supervisor:

Professor Alena Vysotskaya Guedes Vieira

Co-supervisor:

Professor Laura C Ferreira-Pereira

Phuc Thi Tran

Universidade do Minho

Escola de Economia e Gestão

HOW ARE SOUTHEAST ASIAN SMALL COUNTRIES COPING WITH THE RISE OF CHINA?

THE CASE OF VIETNAM

Universidade do Minho, _/ _/

Assinatura:

ACKNOWLEDGMENT

I would like to express my sincere gratitude to all those who gave me the possibility to complete this thesis First and foremost, I am deeply indebted to my supervisor Professor Alena Vysotskaya Guedes Vieira, from School of Economics and Management, University of Minho and co-supervisor Professor Laura Cristina Ferreira-Pereira, from School of Social and Political Sciences of the Technical University of Lisbon (ISCSP-UTL) for their supervision and guidance They help me broaden my view and knowledge They both correct and stimulate suggestions for improvement and encouragement that helped me in all the time of research for and writing of this thesis Without their expertise, understanding, and patience, I would not have finished this thesis

Secondly, I also must acknowledge Loc Doan, Research Associate at the Global Policy Institute, Aston University in London for his suggestions for and provision of the front materials evaluated in this study Especially, I would like to give my special thanks to my parents, brother and sisters whose patient love and their stimulating support They have encouraged me to go ahead with my thesis and enabled me to complete this work

In conclusion, I recognize that this study would not have been possible without the assistance of the Erasmus Mundus scholarship programme that gives me invaluable opportunities to experience daily and study life in Europe

ABSTRACT

Over the past two decades, Southeast Asia (SEA) region has witnessed considerable security threats such

as armed rivalries of both inter-and intra-state kinds as well as non-traditional threats including terrorism Even though none of them has led to a large-scale destabilization of the whole region, SEA is nevertheless facing perennially the threat of military conflict The actors of such potential military conflict would be the ones currently engaged into the territorial disputes over the South China Sea (SCS): China on the one hand and states of the Association of Southeast Asian Nations (ASEAN) on the other hand The contested territories, such as the Paracel and Spratly Islands, including the vast surrounding water areas where sea lanes of communication (SLOCs) pass, have become an object of not only territorial, but also economic and strategic competition The SCS disputes might thus upset the current status quo that emerged in the aftermath of the Cold War

China, the rising power in Asia, should be regarded both as a benign power as well as security threat for peace and stability in the region Chinese soft power assumes a growingly important role in Chinese foreign policy, in connection with the aspiration to promote a benign image of the China rise However, the study argues that China’s overarching strategy towards SEA has been a careful mix of soft and hard postures It notes that a growing asymmetry of naval power to the advantage of China is causing concern both among SEA states and external major players with interests in the region

Against this backdrop, the present dissertation explores how SEA states have sought to mitigate the increasingly unequal power distribution in the SCS, while focusing on Vietnam as its case study SEA states tend to cope with China not by deploying balancing strategies - either by aligning with the US, or reinforcing ASEAN exclusively, but rather hedging strategies: SEA states do not want to choose between either China

or US While adopting an analytical approach founded on a dialogue with the existing academic literature, this study presents empirical evidence which corroborates the hedging dynamics in the region At the same time, the contribution goes a step further by arguing that the SEA states have adopted a particular type of hedging The latter consisted in actively seeking the engagement of such external major players as the US, India, Japan, Russia, and the EU, in the existing regional fora, namely the Association of Southeast Asian Nations (ASEAN), ASEAN Regional Forum (ARF) and East Asia Summit

Key words: China, ASEAN, Vietnam, US, Japan, India, EU and Russia

SUMÁRIO

Nas últimas duas décadas, a região do Sudeste Asiático foi testemunha de consideráveis ameaças securitárias, como conflitos armados, tanto intra- como inter-estaduais incluindo o terrorismo Apesar de nenhuma destas ameaças ter produzido uma profunda desestabilização da região, o Sudeste Asiático está permanentemente confrontado com a ameaça do conflito militar As atores deste conflito potencial serão

os mesmos das disputas territoriais no Mar da China Meridional (MCM): China por um lado e a ASEAN (Associação de Nações do Sudeste Asiático) por outro Os territórios contestados, como as ilhas de Spratly

e Paracel, inclusivamente as vastas águas adjacentes onde passam vias de comunicação estratégicas, tornaram-se não só objeto da competição territorial e estratégica, mas também económica As disputas do MCM podem, deste modo, alterar o existente status quo que se tinha estabelecido desde o fim da Guerra Fria

A China, potência emergente da Ásia, tem que ser compreendida como poder benigno e ameaça securitária para a região O ‘soft power’ da China assume uma crescente importância na política externa chinesa, no contexto da aspiração de projetar uma visão benigna da ascensão da China No entanto, esta contribuição argumenta que a estratégia dominante da China representa uma mistura cuidadosa entre posturas no sentido de ‘soft power’ e ‘hard power’ Nota-se também uma assimetria crescente do poder naval que favorece China, o que suscita preocupação entre os países da região bem como dos atores externos com interesses no Sudeste Asiático

Neste contexto, a contribuição explora como os países da região tem procurado mitigar a distribuição assimétrica de poder na região, enquanto se foca no estudo de caso do Vietname Os países do MCM tendem a lidar com a ascensão da China, não através da adoção de ‘balancing’, enquanto se alinham com

os EUA ou reforçam exclusivamente a ASEAN, mas através de estratégias de ‘hedging’: os estados do Sudeste Asiático não querem escolher entre a China e os EUA Enquanto se adota uma abordagem que se baseia num diálogo com a literatura académica existente, a contribuição apresenta evidência empírica que comprova as dinâmicas de ‘hedging’ na região Ao mesmo tempo, o estudo vai um passo mais à frente ao afirmar que os estados do Sudeste Asiático tem adotado um tipo especial de hedging, que consiste na procura ativa de envolvimento dos atores externos como os EUA, Índia, Japão, Rússia, e a UE, nos fóruns regionais existentes, nomeadamente ASEAN, Fórum Regional ASEAN, e a Cimeira da Ásia Oriental

Palavras-chave: China, ASEAN, Vietname, EUA, Japão, Índia, UE e Rússia

TABLE OF CONTENTS

ACKNOWLEDGMENT iii

ABSTRACT v

SUMÁRIO vii

TABLE OF CONTENTS ix

LIST OF FIGURES xi

LIST OF TABLES xiii

LIST OF APPENDICES xv

LIST OF ABBREVIATIONS xvii

CHAPTER 1: INTRODUCTION 1

1.1 Rational and Background 1

1.2 State of the Art 3

1.3 Research Question 8

1.4 Hypothesis 11

1.5 Aim of the Study 12

1.6 Methodology and Data 13

1.7 The Structure of Research 14

1.8 Scope and Limit 14

CHAPTER 2: THEORETICAL FRAMEWORK - THE CONCEPTS OF POWER, BALANCING AND HEDGING 17

2.1 Power 17

2.1.1 Defining Power 17

2.1.2 Dimensions of Power 17

2.1.3 Hard Power and Soft Power 18

2.2 Concepts of Balancing and Hedging 21

2.2.1 Balancing 22

2.2.2 Hedging 23

CHAPTER 3: THE RISE OF CHINA AND IMPLICATIONS FOR THE REGION 27

3.1 The Rise of China: History and Achievements 27

3.2 Major Implications for the Region: A Benign Image or A Threat 29

3.2.1 Chinese Soft Power in the Region 32

3.2.2 Chinese Hard Power in the Region 42

3.3 Conclusion 49

CHAPTER 4: CHARACTERIZATION OF REGIONAL DYNAMICS IN SEA 51

4.1 Overview of SEA Region: Economic and Security Dimensions 51

4.1.1 Economic Potential and Prosperity 51

4.1.2 Maritime Geo-political Importance 51

4.2 Characterization of Regional Dynamics in SEA 53

4.2.1 The US 53

4.2.2 India 61

4.2.3 Japan 66

4.2.4 Russian Federation (Russia) 74

4.2.5 The European Union 81

4.3 Conclusion 91

CHAPTER 5: COPING WITH THE RISE OF CHINA – THE CASE OF VIETNAM 95

5.1 Geo-politic Importance of the SCS to Stability and Development of Vietnam 95

5.2 Vietnam’s Dilemmas within ASEAN and regarding the Alignment with the US 98

5.3 Vietnam’s Coping with the Rise of China: a Case of SCS Disputes 103

5.3.1 More Engagement in Vietnam’s Relationships with China 105

5.3.2 Engagement with Other Players in Dialogue Partnership Frameworks and Other Multilateral Mechanism 106

5.4 Conclusion 115

CHAPTER 6: CONCLUSION 117

BIBLIOGRAPHY 127

I Secondary Data Sources 127

II Primary Data Sources 139

III Online Newspapers 143

APPENDIX 1: THE HAINAN ISLAND MAP 149

APPENDIX 2: YULIN NAVAL BASE IN HAINAN ISLAND 151

LIST OF FIGURES

Figure 1: China’s infrastructure projects within the GMS initiatives of the Asian Development Bank in SEA

34

Figure 2: China’s claims in the SCS 46

Figure 3: The SLOCs through the SCS (transit the Strait of Malacca) 52

Figure 4: China’s ‘String of Pearls’ in Indian Ocean .64

Figure 5: China’s claims on the first and the second island chain 71

LIST OF TABLES

Table 1: ASEAN Trade with China from 1996 - 2008 38 Table 2: Visitors Arrival to ASEAN, China vis-à-vis Total from 1996 - 2008 41

LIST OF APPENDICES

APPENDIX 1: THE HAINAN ISLAND MAP 149 APPENDIX 2: YULIN NAVAL BASE IN HAINAN ISLAND 151

LIST OF ABBREVIATIONS

EAC East Asian Community

NSC New Security Concept

TREATI Trans-Regional EU-ASEAN Trade Initiative

UNCLOS the United Nations Commission on Limits to Continental Shelves

Chapter 1 – Introduction

CHAPTER 1

INTRODUCTION

1.1 Rational and Background

In recent decades, China’s rise through the transforming steps has surprised and overwhelmed the world China1 is regarded as a lion which “is waking up to shake the world", as Napoleon B predicted in the early 19th century.2 More recently, in the 1970s, his prediction has been taken up to the once best-seller book entitled “Quand la Chine s’éveillera” (when China wakes up) by Alain Peyrefite, a French politician

Today, China is one of the five permanent members of the Security Council United Nations (SCUN), a proactive participant in most fora and major international organizations such as World Trade Organization (WTO), Forum of Asia-Pacific Economic Cooperation (APEC), Asia Cooperation Forum-Europe (ASEM), etc Chinese leadership has conducted strategic diplomacy of a great power, paying particular attention to participating in resolving regional and international problems China is one of the countries with great influence in international relations

From the early days of 21st century on, China has started to shake the world with its intensive presence worldwide, especially in regions of strategic importance such as Africa, Latin America, and Southeast Asia (SEA) Through its diplomacy, economic inducements, investment and aid, China could both guarantee its internal security and reinforce its global aspiration of a great power Deng Xiaoping’s accession to power in 1978 based on the ‘four modernization areas’ including (a) modernizing industry, (b) agriculture, (c) science and technology, and (d) national defense marked a change in policy to develop the country’s economy through market reforms rather than class struggle As a result, China has benefitted from a spectacular growth of the economy with the annual average of approximately 10% during 34 years from 1978 to the first three quarters of 2011 The “China dream”3 of Chinese people, i.e to become a leading world power, is more alive than ever China has also continuously increased its defense budget Chinese military experts expect the People’s Liberation Army (PLA) to have the ability to develop its forces “beyond China’s coastal periphery within 10 to 20 years.”4 Moreover, as a country with a thousand year history, Chinese culture has a powerful international projection, using for

1 The term of “China” in short refers to that of “People of Republic of China” and they are interchanging in this study

2 Nixon, R (1988) Victory without War New York: Simon & Schuster, 242

3 “ China’s big goal in the 21st century is to become world number one, the top power ,” Liu, a professor at the elite National Defense University, writes in his newly published Chinese-language book, “The China Dream.”

4 Ott, M.C (2006) Southeast Asia Security Challenges: America's Response? Strategic Forum 222, 5

this purpose hundreds of Confucius Institutes worldwide Following almost 22 years of isolation in terms

of action on the international arena, Beijing now perceives itself and is viewed by others in the SEA region and beyond as a rising power demanding its rightful seat among the regional leaders, potentially becoming the next strategic competitor to the US

At first sight, Beijing’s increasing influence in the SEA region seems a natural process Geographically, Beijing shares land borders with three SEA states–Myanmar/Burma, Laos and Vietnam In terms of maritime borders, China shares them with nine of ten member states of Association of Southeast Asian Nations (ASEAN), except Myanmar/Burma Thus, geographic proximity makes SEA a prime zone for China to exert its influence Historically, through the tribute system, imperial China exerted its influence

on the ancient SEA kingdoms and principalities for centuries What is more, during the early communist rule, Mao Zedong supported various communist parties and insurgencies in the class-based revolutionary struggle in SEA region, by both directly providing aid and military support, and indirectly, providing political assistance SEA region has been therefore seen ‘China’s backyard’, similarly to Latin America and South America being seen as the ‘backyard’ of the US.5

Nowadays, China is operating upon a two-tier approach towards the region, which combines both the

‘pull’ and ‘push’ elements This mixed approach has made the regional states and actors beyond develop growing concern that China’s rise will not be peaceful but dangerous for the region Firstly, SEA countries found themselves competing with China for resources, foreign direct investment and Western markets Secondly, the aforementioned concern has been reinforced by a growingly aggressive posture

of China in the 1990s Beijing’s occupation of Mischief Reef, in the Spratlys in 1995, and its testing of a missile in reaction to Taiwan’s push toward independence in 19966 made many SEA countries worry about the question: Would China become an aggressive hegemonic power in the region?

At the same time, the Beijing government has also adopted policies in the sense of ‘pulling’ the regional countries closer to its orbit Through varied measures, such as diplomacy, economic inducements, investment and aid, China has gradually increased its powerful influence in vast SEA region, especially

1.2 State of the Art

The rise of China has attracted attention of scholars of International Relations, which resulted in a dominant tendency in the existing literature to explore the implication of the China’s rise, while accounting for both of its benign and aggressive dimensions In studying how China has used to increase its growing influence in the region, scholars like, Nye J S., Economy, E.C., Lum, T., Morrison, W.M., Vaughn, B., Goh, E., Castro, C R (a Filipino scholar, who specifically studies the Philippines’ foreign policy), Kurlantzick, J relate them to Chinese soft power projection in the region.7 Accordingly, Lum et al, Banlaoi, R.C and Economy mainly focus on studying Chinese power application in the region

as an evidence of the country’s soft power strategy to exert its growing influence in the region in more general terms.8 Meanwhile, another research stream focuses on exploring China’s traditional hard power To provide manifestations of the rise of China, some agencies like US’s Council on Foreign

7 Kurlantzick, J (2007) Charm Offensive: How China’s Soft Power Is Transforming The World” New Haven: Yale University Press; Nye, J S Jr (2007) Squandering the US Soft Power Edge International Educator ; Lum, T., Morrison, W.M., & Vaugh, B (2008) China’s “Soft Power” in Southeast Asia Washington DC: Congressional Research Service Report for Congress; Economy, E.C (2005) China’s Rise in Southeast Asia: Implications for Japan and the United States Japan Focus Also see, Economy, E.C (2006) China’s Rise in Southeast Asia: implications for the United States Journal of Contemporary China, 14(44) Routledge: Taylor & Francis Group

8 Lum, T., Morrison, W.M., & Vaugh, B (2008) China’s “Soft Power” in Southeast Asia Op cit.; Economy, E.C (2006) China’s Rise in Southeast Asia: implications for the United States Op cit.; Also see, Banlaoi, R.C (2010) Southeast Asian Regionalism and China’s Soft Power Strategy in a global Age Jebat: Malaysian Journal of History, Politics and Strategic Studies , Vol 37, 60(55 – 67)

Relation’s Task Force Report and the Stockholm International Peace Research Institute and individual scholars like Joshy, M P & Thompson, D mostly limit themselves to analyzing China’s rapid economic growth rate and military modernization.9

According to the majority of scholars studying Chinese soft power, China’s rise challenges the US’s soft power in the region In particular, the scholars argue that the Chinese soft power could supplant that of the US as it is more appealing to the regional countries.10 Similarly, it is also argued that the Chinese soft power could affect the ways and means by which Washington uses its own soft power to protect its interests and its strategic goals.11 Other scholars, however, question the unity within China regarding both its determination to promote its soft power and the exact content of such strategy.12 Meanwhile, some others like Chanborey, C., & Gill, B and Hang, Y counter the presumption of the soft power application by pointing out the limits to the Chinese soft power application

Unlike the US, China lacks the cultural, institutional as well as non-governmental levers, while suffering from a number of social and political problems (like corruption, inequality, human rights and the rule of law) All these factors undermine China’s image as a regional and global player.13 Scholars like Castro suggest in their turn that Chinese soft power goes beyond China’s own control because it upsets Beijing’s realistic calculation Taking the case of the Philippines, Castro demonstrated that the countries

in the region find it more urgent to reinforce their security and economic relations with the US and Japan to balance China’s growing political and economic influence in SEA, rather than being pulled away from the regional countries’ most important ally, i.e the US.14

From the security angle, the territorial disputes over the SCS which are threatening the stability and prosperity of states in SEA are still their major concern In line of clearly dominant tendency in literature, this study aims at exploring the SEA states’ responses to the rise of China and its growing influence in the region via both soft power and hard power The study hence focuses on ten ASEAN

9 Joshy, M P (2010) Emerging Powers and Cooperative Security in Asia RSIS Working Paper, 221 ; Thompson, D (2010) Think Again: China’s Military Foreign Policy (March/April); Stockholm International Peace Research Institute (2007) SIPRI Yearbook 2007: Armaments, Disarmament and International Security Oxford: Oxford University Press

10 Nye, J S Jr (2007) Squandering the US Soft Power Edge Op cit Also see, Pan, E (2008) China’s Soft Power Initiative Council on Foreign Relations

11 Lum, T., Morrison, W.M., & Vaugh, B (2008) China’s “Soft Power” in Southeast Asia Op cit.; Also see, Pan, E (2008) China’s Soft Power Initiative Op cit

12 Suzuki, S (2009) Chinese Soft Power, Insecurity Studies, Myopia and Fantasy Third World Quarterly, 30(4), 779-793 (15)

13 Chanborey, C (2009) China’s Soft Power in Southeast Asia The Cambodian Journal of International Affairs, 2(1) Also see, Grill, B & Huang, Y (2006) Sources and Limits of Chinese Soft Power Survival, 48(2)

14 Castro, C R (2007) The Limits to Twenty-First Century Chinese Soft-power Statecraft in Southeast Asia Issues and Studies, 43(4), 77-116

Chapter 1 – Introduction

member states, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines Singapore, Thailand, and Vietnam The argument is based on the fact that the “China dream” (i.e transformation of the country into the world’s leading power) makes the SEA countries face problematic challenges, as their room of maneuver vis-à-vis China reduces drastically In this regard, before going into the analysis itself, it is deemed necessary to briefly present the nature of SEA region, and the history establishment of ASEAN

The historically old-aged ASEAN countries were founded mainly on wet rice civilization, while only some

of them lived nomadic and shifting cultivation These ASEAN countries had been heavily influenced from civilizations of China, India, Islam, and later of Western Europe Similar to China’s experience in the empire wars of the Northwest China, the ancient countries in SEA lived through periods marked by a rapid increase in the number of countries, at times amounting to over twenty states, as a result of the continuous processes of unification and separation

In addition, the SEA countries developed strong intra-regional exchanges, which until the 16th century were marked by exchanges led by merchants on boats, which experiencing a significant colonial expansion afterwards This history of the regional cooperation was complemented by active policies of China and India vis-à-vis the SEA

Most of the regional countries won independence from Western colonialism after World War II The prevailing legacy of this historical development is a cautious attitude that SEA countries have adopted towards cooperation with external great powers seeking to reinforce their influence in the region Some paradigmatic events confirming this trend include the US-Philippines relations before and after the US withdrawal from Subic Bay in 1992, Vietnam-US relations before and after 1975, and Cambodia-China relations before and after the Khmer Rouge

The ASEAN was established on 8 August, 1967 It was therefore born in years of fierce wars in Vietnam, which were led to avert the communist expansion over the Indochina Since then, the motives and objectives behind the activity of the ASEAN have evolved significantly: ASEAN is nowadays actively contributing to the peaceful evolution of the international community However, it has always maintained a permanent concern about the strategic directions of great powers

ASEAN’s strategy to maintain the regional autonomy includes two major approaches Firstly, ASEAN states have promoted the concept of regional autonomy to constrain any power from exercising hegemony over SEA Acting in line with this concept, the original five ASEAN members welcomed ten out of eleven SEA states (except for East Timor) to become new ASEAN members In addition, ASEAN

has promoted crucial initiatives in the SEA including the Declaration of a Zone of Peace, Freedom and Neutrality (1971), the ASEAN Treaty of Amity and Cooperation (1976) and the Southeast Asia Nuclear-Weapons Free Zone Treaty (1995) In recent years, while advancing the concept of regional autonomy, ASEAN has ratified the ASEAN Charter and set the goal of building an ASEAN Community by 2015.15

Moreover, ASEAN has managed to assert its centrality in the regional security architecture in relations with external powers For instance, as the ASEAN Regional Forum (ARF) was established in 1994, the ASEAN insisted that it be in ‘the driver’s seat’ as the sole forum’s chair

Traditionally, ASEAN welcomes the contribution of major powers to the regional security and development while expecting them to respect SEA states’ independence and autonomy: the SEA countries do not want any major power to interfere in the internal ASEAN affairs ASEAN’s efforts to establish Political Security Community, Confidence Building Measures (CBMs) in ARF, and to promote the ‘ASEAN Way’ since the establishment of the organization in 1967 attest to ASEAN’s determination

to avoid taking sides In addition, ASEAN has also promoted ASEAN+3 format, which brings together ASEAN countries and three Northeast Asian states, namely China, Japan and South Korea ASEAN has also supported the creation of the East Asian community, where the US does not participate, guided by the conviction that such format would be important to “guarantee peace, stability and progress” in the East Asian region.16

China’s increasing influence in SEA brings about opportunities for development for the regional countries, while at the same time creating security challenges for them These challenges are mostly related to the territorial disputes between China and ASEAN member states in South China Sea (SCS)/East Sea: China’s aggressive behavior and actions indicate that it is not trying to find win-win solution to the existing disagreements with the SEA states

Apart from the territorial disputes, SEA governments are increasingly worried about the risk of expansion from and excessive influence of the ‘Giant of the North’ with regard to their economies China is currently one of the biggest economic partners of most ASEAN member states, and therefore holds an important position in the economy of each state In addition, China has become one of the

15 The ASEAN Heads of States/Governments adopted the Declaration of ASEAN Concord II (Bali Concord II) in 2003, which establishes an ASEAN Community by 2015 The ASEAN Community consists of three pillars, namely the ASEAN Political- Security Community (APSC), the ASEAN Economic Community (AEC) and the ASEAN Socio-Cultural Community (ASCC) See

“Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015,” http://www.asean.org/19260.htm

16 Wanandi, J (2005) Engaging the US in an Emerging East Asia Community In Asia Pacific Agenda Project (APAP) Forum , Washington, D.C., 24 – 25 October; Sukma, R (2007) ASEAN and Major Powers in the New Emerging Regional Order Op cit

Chapter 1 – Introduction

largest investors in the region in recent years.17 Through its investment, economic aid, and development aid, China reinforced ASEAN member states’ dependence on it, which is additionally aggravated by the rapid globalization process Expanding economic relations enables Beijing authorities to be very flexible

in implementation of political measures to strengthen its influence in the region Examples of aid and financial assistance to Myanmar government and bribery of the Philippines government officials indicate that finding out the solutions of how to deal with a steadily growing China is not going to be an easy task Moreover, China’s actions, measures and policies adopted to enhance its influence in the region would affect the process of regional integration, and especially the consolidation of intra-ASEAN unity

The present scientific contribution makes the related question i.e.: “How are Southeast Asian small

states coping with the rise of China?” a point of departure for its analysis

The majority of scholars and experts in SEA states, such as Roy, D., Goh, Castro, and Medeiros, E.S have opted to study by mainly using realist or neo-realist analytical frameworks This allowed the scholars to explore strategies adopted by most ASEAN states to cope with the rise of China, and they often identified balancing against Chinese hard and soft power as the main tendency of the SEA states.18

According to these contributions, the US has represented a pivotal factor in the regional security dynamics, providing the regional security guarantee (i.e balancing) Accordingly, case studies taken to examine SEA states’ responses to China’s rise included the investigation of the original ASEAN states such as Singapore,19 Thailand,20 Indonesia,21 the Philippines,22 and Malaysia.23

17 According to the newest ASEAN Foreign Direct Investment statistics Database, as of 15 February, 2012, SEA’s largest sources of FDI from 2008-2010 (net inflow) were the EU ($33,167.5 bn), Japan, ($16,278.3bn), the US ($16,182.4bn), and China ($8,893.0m), See, ASIAN Secretariat (2012) ASEAN Foreign Direct Investment Database, (15 February)

18 Goh, E (2005) Great Powers and Southeast Asia Regional Security Strategies: Omi-Enmeshment, Balancing and Hierarchical Order RSIS Working Paper, No 84; Goh, E (2005) Meeting the China Challenge: The US in Southeast Asian Regional Strategies Policy Studies 16 East –West Center; Castro, C R (2007) The Limits to Twenty-First Century Chinese Soft-power Statecraft in Southeast Asia Op cit.; Medeiros, E.S (2005) Strategic Hedging and the Future of Asia-Pacific Stability Washington Quarterly, 29 (19), Winter 2005-2006; Roy, D (2005) Southeast Asia and China: Balancing or Bandwagoning Contemporary Southeast Asia: A Journal of International Strategic Affairs, 27(2) , 305-322

19 Goh, E (2005) Great Powers and Southeast Asia Regional Security Strategies: Omi-Enmeshment, Balancing and Hierarchical Order Op cit.; Also see, Fook, L.L (2008) Singapore: Balancing among China and other Great Powers In Er,

P L., Ganesan, N & Durkop, C (Eds.), East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung

20 Goh, E (2005) Great Powers and Southeast Asia Regional Security Strategies: Omi-Enmeshment, Balancing and Hierarchical Order Op cit.; Chachavalpongpun, P (2008) Thailand: Bending with the (Chinese) Wind? In Er, P L., Ganesan, N & Durkop, C (Eds.), East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung

21 Brown, J (2011) Jakarta’s Juggling Act: Balancing China and America in the Asia-Pacific Foreign Policy Analysis , No 5 The Centre for Independent Studies; Also see, Hadi, S (2008) Indonesia-China Relations in the Post-New Order Era In Er,

P L., Ganesan, N & Durkop, C (Eds.), East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung

22 Castro, C R (2007) The Limits to Twenty-First Century Chinese Soft-power Statecraft in Southeast Asia Op cit Also see, Castro, C R (2008) Between the Eagle and the Dragon: Issues and Dilemmas in the Philippine Foreign Policy of “Equi- balance In Er, P L., Ganesan, N & Durkop, C (Eds.), East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung

The US’s interests in the region, put forward in the US Security Strategy in the East-Asia Pacific Region

in 1995, include peace and stability, commercial access to the region, freedom of navigation, and the prevention of the rise of any hegemonic power or coalition.24 These interests hold true today The US considers it essential to maintain the regional peace and stability, which is also essential for the country’s own economic benefits (continuous commercial access) Total trade between ASEAN and the

US showed a sharp rebound in 2010, recording an increase of 24.4%, and totaling $186.1bn (compared with $149.6bn in 2009).25 Maintaining freedom of navigation from Middle East to the Pacific Ocean and controlling the respective Sea Lanes of Communication (SLOCs) has become Washington’s permanent strategic interest: it allows transporting the goods of the US through the Strait of Malacca Effective protection of the US security and economic interests ensures other US foreign policy priorities

in the region, such as the promotion of democracy, human rights, fight against international terrorism, among other issues.26 Reflecting the refocusing US attention to the region, the SEA has been designation as the “second front” of the US Global War on Terrorism.27

While Washington welcomes China’s entrance in the region as a benign player, the US could respond

by adopting harsh measures should China’s strategy become more aggressive China’s emergence as a rising regional power is viewed as a destabilizing force that can upset the regional peace and stability The Global Trends 2015 prepared under the direction of the US National Intelligence Council stress that the implications of the rise of China “pose the greatest uncertainty” in the world.28 Also, the Council on Foreign Relations states that “China poses significant economic, military, and political challenges for the

US and for the nations of SEA.”29 It is therefore an imperative for the US to maintain its position in the region; the country would lose its leverage in the region without the continued presence

1.3 Research Question

That China’s increased influence in the SEA affects the overall regional security situation, but it has an especial impact upon the security and development of Vietnam The SCS disputes between ASEAN and

23 Ganesan, N (2008) Malaysia-China Relations: Domestic and Structural Imperatives In Er, P L., Ganesan, N & Durkop,

C (Eds.), East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung

24 Office of the Secretary of Defense (1995) United States Security Strategy for the East Asia-Pacific Region Washington DC, (February)

25 ASEAN Secretariat (2010) Overview of ASEAN-US Dialogue Relations (October)

26 Report of the Independent Task Force (2001) The United States and Southeast Asia: A Policy Agenda for the New Administration New York: Council on Foreign Relations

27 Oliveros, B (2006) Southeast Asia and the Philippines: The Second Front in the US ‘War on Terror’ Bulatlat, 6 (46)

28 National Foreign Intelligence Board (2000) Global Trends 2015: A Dialogue about the Future with Nongovernment Experts Washington: National Intelligence Council, 63

29 Kerrey J R & Manning, R A (2001).The United States and Southeast Asia: A Policy Agenda for the New Administration Report of the Independent Task Force Sponsored by the Council on Foreign Relations, 17

Chapter 1 – Introduction

China have become a topical subject attracting attention of policymakers, International Relations scholars, and regional and international public The shared concern is the increasing risk of armed conflicts in Asia between China and ASEAN states, first of all the Philippines and Vietnam These two countries have been involved into intensive and escalating tensions with China over the territorial disputes in the SCS

As far as the Philippines’ response to China’s aggression on the SCS is concerned, some research has been undertaken already For example, Castro has especially emphasized the role of US as the traditional ally of the Philippines in its prominent balancing strategy against the rise of China.30 Along with the case of the Philippines, it is also important to explore the case of Vietnam’s response

Therefore, the study seeks to answer the central question “How is a small Southeast Asian

country, Vietnam, coping with the rise of China?”

Vietnam represents a case of a middle power whose geographical position gives the country a regional strategic importance As such, Vietnam can be expected to play an increasingly important role in shaping SEA’s security environment As an important strategic player in SEA and Asia-Pacific region, Vietnam is in a position to contribute more positively to regional maritime security in partnership with Asia-Pacific’s major powers Vietnam is an emerging middle-income country It is also a key player in ASEAN and in ASEAN-centric regional architecture, as well as a recent non-permanent member of the SCUN Most importantly, Vietnam is a littoral state on the SCS through which vital SLOCs pass In terms of the relationship with China, the level of dependency exhibited by Vietnam is greater when compared with other countries in the region At the same time, given the geographical proximity and social-culture similarities, China’s influence to Vietnamese economic, political security, cultural and social life are more significant than in the case of other regional states To assess Vietnam’s response,

it is necessary to analyze regional and international political environment; relations among great powers; and the strategy towards the existing regional institutions, first of all ASEAN, of which Vietnam

is one of the most active and important members It is also important to analyze how Vietnam has approached the engagement in the region of major external power, such as the US, Japan, India, Russia, and the EU Understanding the rise of China, the implications for the region, and the way how Vietnam is coping with it given the importance of SEA region in major players’ strategic calculation in terms of both competitive and cooperative features of their relationship has inspired the author of this dissertation to work on this topic

30 See note 22, pp 7, Chapter 1

Regarding the existing academic literature on the case of Vietnam, some contributions mention Vietnam’s coping with the rise of China, particularly in the context of China’s recent aggressiveness in the SCS These contributions are mainly those by Thayer, C A., an expert in Vietnam’s foreign policies,31 and recently some others such as Dosch, J., Womack, B., Manyin, M., Roy, Kang, D.C., and Vuving, A Accordingly, on the account of managing the asymmetric relations with China, the literature

on Vietnam’s foreign policy is divided in three main camps: balancing, bandwagoning, and hedging The bandwagoning camp argues that Vietnam bandwagons with China in order to appease to the stronger side and benefit from the economic cooperation; at the same time, to extract more information from China before entering any large foreign policy decisions This research stream argues that Vietnam is able to focus on economic development and mitigate hostilities between China “living next door”.32 However, in some security issues like territorial dispute over the SCS, Vietnam’s balancing against China was identified as well The improvement of capabilities through military modernization programs

in recent years, Vietnamese Government’s tactic support of demonstrations against China’s occupation and naval operations in disputed waters of the SCS in December 2007 and 5 June, 2011 were referred

to as some of the examples of such balancing posture Some scholars, however, mentioned that balancing was only part of Vietnam’s strategy, which along with Vietnam’s building up of its own national strength and resilience and military modernization33 involved other important aspects The latter included, for example, a special attention to ASEAN: Vietnam was found to pursue a strategy towards partly transforming “bilateral Sino-Vietnamese disputes into multilateral agenda involving Beijing and ASEAN as a group.”34 In addition, Vietnam has sought strengthening ties with external major players, for example through cooperating with the US, India, and the EU regarding the possible security cooperation;35 economic relations,36 as well as activating diplomatic exchanges of high-level delegations.37

31 Thayer, C A (2010) Vietnam and Rising China The Structural Dynamics of Mature Asymmetry In Singh, D (Ed.) Southeast Asian Affairs 2010 Singapore: Institute of Southeast Asian Studies, 392-409; Thayer, C A (2008) Vietnam’s Defence Policy and its Impact on Foreign Relations In EuroViet 6 , Hamburg, German, 6-8 June; Thayer, C A (2011) Vietnam’s Relations with China and the United States In International Studies Faculty, University of Social Sciences and Humanitarian – Hanoi National University (Ed.) Vai tro cua Vietnam trong khu vuc Chau A- Thai Binh Duong, [The role of Vietnam to the Asia-Pacific Region] Hanoi: The Gioi Publisher; Also see: Thayer, C A (2011) The Tyranny of Geography: Vietnamese Strategies to Constrain China in the South China Sea In International Studies Association 52 nd Annual Convention, Montréal, Québec, Canada, 16-19 March

32 Kang, D.C (2003) Getting Asia Wrong: The Need for New Analytical Frameworks International Security, 27(4), 57-85; Also see, Vuving, A (2006) Strategy and Evolution of Vietnam’s China Policy: A Changing Mixture of Pathways Asian Survey, 46(6), 805-824

33 Goh, E (2005) Meeting the China Challenge: The US in Southeast Asian Regional Strategies Op cit

34 Dosch, J (2006) Vietnam’s ASEAN Membership Revisited: Golden Opportunity or Golden Cage? Contemporary Southeast Asia: A Journal of International and Strategic Affairs, 28 (2), 242(234-258); Womack B (2006) China and Vietnam: The Politics of Asymmetry New York: Cambridge University Press; Also see, Thayer, C A (2010) Vietnam and Rising China The Structural Dynamics of Mature Asymmetry Op cit

35 Roy, D (2005) Southeast Asia and China: Balancing or Bandwagoning Op cit

Chapter 1 – Introduction

In addition, Vietnam was found to actively pursue close ties with other members of ASEAN such as Malaysia and the Philippines, which both have unsolved territorial disputes with China in the SCS, but also Myanmar/Burma, with the aim to increase Hanoi’s leverage in its dealings with Beijing.38

1.4 Hypothesis

In this connection, against the background of the rise of China and its increasing influence in the region,

it is crucial to address the SEA states’ (including Vietnam’s) response by analyzing the options of (a) aligning with the US (´balancing´); (b) reinforcing ASEAN as an organization (´balancing’) without relying on external major players, notably, India, Japan, Russia, and the EU; (c) actively engaging those external major players in the existing regional notably ARF and EAS (‘hedging’)

In the aftermath of the Cold War, international politics has changed towards more interdependence There have been more and more emerging powers, for example India as a newly emerging power and a potential major power; Japan as a revitalized power since the World War II; Russia as a reemerging power; and the EU as new global security actor after the Cold War The engagement of these external major players is attractive to SEA states in the context of the aspiration to protect their interests The common goal of both is obtaining more autonomy in international relations In addition, the EU considers it necessary to be strongly involved in the region in promoting collective security, regional integration, preventing conflicts, along with safeguarding its own security.39 Russia, in its turn, has multi-vectored interests including geopolitical, political, and economic ones Russia’s involvement in SEA is determined by the objective of enhancing the country’s international image and its reputation in social, economic, political aspects;40 and to deal with many threats to its security such as external isolation, which Russia especially feels in Europe and in Asia,41 as well as persistent conflicts between Russia and the West.42 Meanwhile, India can be best described as an “emerging power”,43 and hence is obviously

36 Manyin, M (2006) US – Vietnam Relations: Background and Issues for Congress US Congressional Research Office

37 Thayer, C A (2010) Vietnam and Rising China The Structural Dynamics of Mature Asymmetry Op cit

38 Loc, D X (2011) Vietnam Broadens Ties to hedge Against an Assertive China Briefing World Politics Review

39 Godement, F (2007) The Security role that Europe should be playing in conflict-prone Asia International Europe’s World

40 In the aftermath of Cold War, the position of Russia – both domestically and internationally – was extremely weak for more than a decade after the dissolution of the Soviet Union However, starting from the Vladimir Putin’s second presidential term, Russia is now reemerging as one of the powerful players in international relations given its remarkable economic recovery

41 On the one hand, it regards NATO expansion by drawing Ukraine and Georgia into its military alliance up to its

“heartlands” and borders as creating a dividing line in Europe from which it would be excluded On the other hand, in economic sphere, Russia feels itself to be the object of a policy that would exclude it from international participation in the institutions of the global economy and leave it in a semi-colonial position as an exporter of raw materials to more developed states In the Far East it sees itself being excluded from major trends like international supervision of North Korea’s nuclear program and from institutions like the APEC See, Blank, S J (1995) Russian Security Polity in the Asia-Pacific Region: Two Views In Russian Defense and Security Policy London: King’s College

42 A number of other factors that have led to the current state of relations between Russia and the West include (1) a permanently active factor as the persisting legacy of the past which is associated with the lingering phobias in relation to

seeking an “independent” and “influential” role in the management of international relations in Asia.”44 India, which has been once mainly concerned about South Asian geopolitics, is now in the process of projecting its new image, as a major power and international actor.45 Japan, since Junichiro Koizumi’s premiership, has sought to play more of a “functional role” in its alliance with the US beyond traditional geographical confines.46 Based on careful calculation of its national interests, Japan has begun to reassess its position and security role within the new emerging strategic constellation in East Asia.47 In particular, Japan decided to preserve peace and stability in East Asia and to respond to international pressure Japan’s aspiration to play a role of a “normal” country48 has involved military support of US-led coalitions and United Nations Peacekeeping Operations In this respect, Japan’s military direction in the post-Cold War period has been not the quantitative reduction in the size of the Japan Self Defense Force (JSDF), but rather the qualitative improvement in its power projection capabilities for deployment outside Japan.49 With regard to China, Japan’s close alignment with the US is coupled with a strategy based on two pillars: to prevent the worst (saiaku) while trying to construct the best (saizen).50

1.5 Aim of the Study

Therefore, the study aims to put the analysis of the rise of China and its implications for the region under one umbrella The study will explore how China has risen in terms of economic and military power; as well analyze objectives and means identified by China to deploy its increasing national power

EU, such behavior of the West and its institutions was judged as bad faith, (4) Russia’s acquirement of moral and physical resources that allowed it to approve itself in areas of activity where it had and still has competitive advantages, and (5) Russia’s disillusion with the impossibility of defending national interests on the basis of universal international rules or those operating in the framework of specific organizations (UN, OSCE) See, Naumkin, V (2008) Rising Russia: Consequences For The Asia-Pacific Region Malaysia: Center For Strategic And Political Studies Moscow, Russia

43 Sahni, V (2004) From Security in Asia to Asian Security International Studies, 41(3), 245-261

44 Joshy, M P (2010) Emerging Powers and Cooperative Security in Asia Op cit

45 Mohan, R (2006) India’s New Foreign Policy Strategy Reform Forum and the Carnegie Endowment for International Peace, Beijing, 26 May

46 Hughes, C W (2005) Japan’s Military Modernization: In Search of a ‘Normal’ Security Role In Tellis, A.J & Wills, M (2005) S trategic Asia – 2005 – 2006: Military Modernization in an Era of Uncertainty Washington D.C.: The National Bureau of Asian Research, 106)

47 Joshy, M P (2010) Emerging Powers and Cooperative Security in Asia Op cit

48 Sukma, R (2007) ASEAN and Major Powers in the New Emerging Regional Order In Tsunekawa, J Regional Order in East Asia: ASEAN and Japan Perspectives Tokyo: National Institute for Defense Studies

49 Hughes, C W (2008) Chapter Two: Japan’s Military Doctrine, Expenditure and Power Projection The Adelphi Papers, 48(403), 35-52.; Note: Japan’s detailed military expenditure is also explored clearly in this document

50 Akihiko Tanaka’s testimony before the House of Representative Budget Committee of the Japanese Diet, 23 February

2005, quoted in Samuels, R.J (2006) Japan’s Goldilocks Strategy The Washington Quarterly, 29(4) (Autumn, 2005-2006),

121

hedging which is oriented towards the US, Russia, EU, India and Japan?

Thus, in addition to analyzing balancing and strategic hedging policy options available to the SEA states with regard to the US and/ or ASEAN, the study explores Vietnam’s hedging oriented towards external powers such as Russia and EU in the post-cold War context, because it has not been systematically analyzed in the existing literature (in contrast to India and Japan) At the same time, the study attempts

to make a contribution to the burgeoning academic literature on hedging strategy, focusing specifically

on the case of ASEAN’s response to China’s new international posture As it will be shown below, the study presents empirical evidence which corroborates the hedging dynamics since it shows that the SEA states have welcomed the engagement of such external major players as the US, India, Japan, Russia, and the EU in the existing regional fora

1.6 Methodology and Data

While the dissertation looks into the ASEAN states’ stance toward the rise of China, it focuses on an individual state, Vietnam, as it principle case-study It analyses the options of balancing against China

by either aligning with the US, or reinforcing ASEAN, as well as hedging oriented towards external powers, such as US, Japan, India, EU, and Russia, while paying special attention to the role of the regional fora (ASEAN, ARF, EAS)

The analysis relies on the qualitative research method, while selecting the case study approach As far the data sources for this dissertation are regarded, they come from the three main directions The purpose of mixing various sources has been to obtain insightful information about the strategic importance of the region in great power’s calculation, and to present a more complete picture of ASEAN countries’/Vietnam’s response to China’s rise

The first source is the secondary data, obtained via reviewing existing written literature on regional politics This includes published books, academic journals, scientific reports, newspapers and other online documents related to China, the US, India, Japan, Russia, and the EU, as well as their bilateral and multilateral relations The secondary literature also concerns contributions on ASEAN and Vietnam and their relations with external major players The second source of information is the primary data,

51 The term of “SEA” states refers to ten ASEAN member states They are interchanging in this study

i.e speeches and statements of state leaders of related players, in addition to the information found on embassies websites ASEAN’s official documents, such as ASEAN’s agreements and statistics on ASEAN Official website Statistical information on economic achievements, military expenditures, trade between external major players including China and the region, development aid, developmental infrastructure project investments, military exchanges and dialogues, and military force upgrade including arm and navy forces came from various both state-owned and independent institutions and were actively incorporated into the dissertation, as well

Due to certain difficulties in promoting contacts and exchanges with Vietnamese leaders and policymakers in Vietnam regarding the country’s foreign policy, the study relies on the third source of data that comes from exchange of several emails conducted with Mr Doan Xuan Loc, a Vietnamese research associate of the Asia Program at the Global Policy Institute, in the UK The continuous dialogue with this regional expert has been essential: Loc has provided the author with documents and other information by regarding EU in SEA to Asia, along with ASEAN’s response to China’s assertiveness in more general terms

1.7 The Structure of Research

The study is structured as follows: apart from introduction in the Chapter 1 and conclusion in the Chapter 6, the Chapter 2 will formulate the theoretical framework of concepts of power, balancing and hedging The Chapter 3 will be devoted to the analysis of the rise of China and its implications for region The author will present the history and explore Chinese soft and hard power application to increase its growing influence in the region Chapter 4 will explore characterization of regional dynamics

in SEA, paying particular attention to the interests of external important players in the region in the nature of their relationships, as these interests determine Vietnam’s flexibility in terms of handling the rise of China and its growing influence in the region Chapter 5 will present the strategy Vietnam in coping with the rise of China based on the analyzed outcomes in the two previous Chapters 3 and 4 Chapter 5 will analyze Vietnam’s dilemma in dealing with China’s recent aggression in relation with the SCS disputes and explore elements that determine the country’s proper option as to whether balancing

or hedging in response to the rise of China

1.8 Scope and Limit

Regarding the timeline, for the aim of the study, the author is going to focus on analyzing SEA countries’ responsive options towards the rise of China since the end of the Cold War to date The end of the Cold War results in remarkable change in international political environment: there has been a considerable

Chapter 1 – Introduction

increase in international cooperation, given national and regional stakes for economic development and global motives of major players.52 In exploring SEA sates’ response to the rise of China, the study limits itself to examining the one individual member state, i.e the case of Vietnam

52 Clark, I (2001) The Post-Cold War Order: The Spoils of Peace Oxford: Oxford University Press, 197–199

CHAPTER 2

THEORETICAL FRAMEWORK - THE CONCEPTS OF POWER, BALANCING AND HEDGING

This Chapter includes two main sections The first section will explore the concept of power, and its basic categories: “hard” power and “soft” power The purpose is to establish concepts to explore Chinese soft and hard power as a tool to increase its growing influence in SEA The second section will focus on the two main concepts of ‘balancing’ and ‘hedging’ These concepts are essential to analyze the way a small state like Vietnam attempts to cope with the rise of China

2.1 Power

2.1.1 Defining Power

Before going into exploring the concept of “soft” power and “hard” power, it is necessary to establish the definition of power The definition of power is one of the most controversial, and yet, fundamental topics in International Relations “Power is like the weather Everyone depends on it and talks about it, but few understand it.”53 To some scholars, the military capability presents the essence of power: the number of guns or planes a country owns and its ability to effectively exert the weaponry Other scholars consider ability to affect and control the international market as embodiment of power The power is defined as “having the capabilities to affect the behavior of others to make those things happen, or to get the outcomes one wants.”54 Thus, power is regarded as a resource, which makes the concept “more concrete, measurable, and predictable.”55

2.1.2 Dimensions of Power

Defining a state’s power referring to necessary conditions to accomplish dominating the use of violence within a defined territory, Weber, M stresses two dimensions: coercion and capital.56 Sharing this view, Schwartz, H.M points out, states could maximize consolidation of coercion and capital so as to make a strong state; hence, a combination of “lawyers, gun, and money” was essential.57 Thus, while lawyers, guns, and money have been used as tools by a state to execute control over its own territory, at the same time, the state has subdued others for more territory consolidation with the same instrument

53 Nye, J.S Jr (2004) Soft Power: The Means to Success in World Politics New York: Public Affairs, x

54 Ibid, 2

55 Ibid, 3

56 Cited in Tilly, C (1992) Coercion, Capital, and European States Cambridge: Blackwell, 17

57 Schwartsz, H.M (2000) The Rise of the Modern State from Street Gangs to Mafias” in Schwartsz, H.M (2 nd Ed.) States versus Markets: The Emergence of a Global Economy New York: St Martin’s, 10

Chapter 2 – The Concepts of Power, Balancing, and Hedging

Only a balanced combination of the three elements created an international image of a strong state The larger the military, population, and capital a state owns, the more powerful it is seen

The last decades have reinforced the importance of non-military resources that generate power Sources of power are not static as stressed by Nye, J.: “in assessing international power today, factors such as technology, education, and economic growth are becoming more important; whereas, geography, population, and raw materials are becoming less important.”58 Rosecrance, R further elaborates this point indicating that before “it was cheaper to seize another state’s territory by force than to develop the sophisticated economic and trading apparatus needed to derive benefit from commercial exchange with it.”59

The application of power is realized through specific mechanism, namely coercion, inducement, and attraction.60 Coercion implies threats, or “sticks” to produce a desired behaviour of others.61 A threat of military action to force others to behave in a desirable manner is an example Meanwhile, inducement implies economic reinforcement /payments or “carrots” to produce a desired behaviour.62 As such, an economically more powerful country can move a less developed country to act in manner profitable to the former, especially if the latter’s economy is failing and is in need of capital or resources Finally, using neither “threats” nor “carrots” is an essence of attraction mechanism Behavior of others is affected as a result of their emulation, given these other countries’ desire to follow another country’s values and prosperity Instead of “sticks” and “carrots”, an indirect method of influence is used to lead

to the preferred results

2.1.3 Hard Power and Soft Power

Basically, power can be categorized into hard power and soft power Both have the same goal: to affect the behaviour of others.63 Hard power is associated with military and economic strength Hard power may both rely on “sticks” and “carrots” The “sticks” refer to as military instrument while “carrots” refer to economic instrument The nature of the behaviour and the tangibility of the resources make them different.64 Nye portrays this difference in a spectrum of two ends Command power is on one end while co-optive power is on the other Command power implies the ability to change what others do.65

58 Nye, J S Jr (1990) Bound to Lead: The Changing Nature of American Power New York: Basic Books, Inc., 29

59 Rosecrance, R N (1986) The Rise of the Trading States New York: Basic Books, 16

Meanwhile, co-optive power relates to the ability to shape what others want.66 It relies on the ability of a state to manipulate the agenda of political choices in one’s expectation and the attractiveness of one’s culture.67 Soft power is typically relevant to the co-optive end of the spectrum, while hard power is usually related with the command end.68

Nye, however, also stresses that the relationship between hard and soft power is not perfect This is because sometimes respective instruments typically viewed as hard power may become a form of attractiveness, and vice versa: a nation’s command power may attract other states or be used to create institutions that will allow a state to set the agenda.69 As such, economic phenomena like multinational corporations and a country’s economic success are also important sources of co-optive power

Soft power, in its turn, is regarded an essentially “Western” concept though the notion of soft power dates back to as early as the 17th century, and has also been attributed to the Chinese philosopher Lao Tsu.70 Later in 1939, it is cognizant by a British realist, Carr, E.H when he differentiates international power in three categories: military, economic and the power of opinion.71 The power of opinion refers to the manner and ability of a country to condition opinion of other nations, which arguably implies powers

of attraction (or even persuasion) It is, therefore, responsible for nurturing and conditioning public opinion In modern times, from the late 1980s, soft power gained currency after Nye coined the concept in the book, namely Bound to Lead: The Changing Nature of American Power (1990) Subsequently, the concept continued to be discussed in his book in The Paradox of American Power (2001) and later work in Soft Power: The Means to Success (2004)

Since then, this concept has become one of the topical and central concepts in International Relations and strategic studies Generally, three main camps of thoughts focus on soft power Firstly, Nye defines

it as “the ability to get what you want through attraction mechanism rather than setting agenda” while noting that the sources of soft power are “the attractiveness of a country’s culture, political ideals and policy.”72 Nye notes that soft power involves the transmission of a society’s values, policies, and institutions that can be projected externally through public diplomacy and bilateral and multilateral

70 For more details, see http://en.wikipedia.org/wiki/Soft_power

71 Carr, E H (1964) The Twenty Years’ Crisis, 1919-1939: An introduction to the Study of International Relations New York: Harper & Row, 108

72 Nye, J.S Jr (2004) Soft Power: The Means to Success in World Politics Op cit

Chapter 2 – The Concepts of Power, Balancing, and Hedging

institutions.73 On the one hand, Nye separates military resources from soft power On the other hand, according to Nye’s view of soft power, economic resources should be excluded from its remit as well The exclusion of economic resources is due to the fact that they present themselves as a sort of

“carrot” or payment or as a sanction Economic resources induce rather than attract another country to

do something

Secondly, others like Kurlantzick, J and Hill, C provides a broader concept of soft power and its applications in international relations Kurlantzick presents the case of application of soft power of China in the context of Asia to expand Nye’s traditional notion of soft power by including elements of economic resources in soft power, incorporating the two under soft power Specifically, Kurlantzick argues that “in the context of Asia today, both China and its neighbours enunciate a broader idea of soft power, the idea that soft power implies all elements outside of the the military and security realm, including not only popular culture and public diplomacy but also more coercion economic and diplomatic levers like aid and investment and participation in multilateral organizations.”74 Similarly, Hill generally agrees this view and argues that soft power can be generated as an externally projectable power by foreign policy instruments which include (a) diplomacy; (b) economic diplomacy; (c) statecraft; and (d) the export of culture Hill also goes further to elaborate that “carrots are currently replacing sticks in international relations.”75 These foreign policy instruments enable states to shape the images and values of targeted states through cooptation

The difference in opinion between the two camps stems from the perspective of soft power adopted by each side In Nye’s camp, soft power is defined on the US’s perspective as a producer of soft power and emphasizes what the producer (the US) needs to do to ensure its soft power to grow and remain strong Kurlantzick’s perspective also rests upon the producer’s view of soft power but Kurlantzick redefines it to fit China as the producer of soft power The remaining camp generally disregards or still challenges the validity of the concept of soft power

Throughout this paper, due to exploring Chinese soft power, the author will use the concept of soft power with broad meaning developed by Kurlantzick and Hill to analyze Chinese soft and hard power in SEA region In addition, hard power emphasizing military power will be used to explore China’s hard power application in the region in Chapter 3

73 Ibid, 30-31

74 Kurlantzick, J (2006) China’s Charm: Implications of Chinese Soft Power Carnegie Endowment for International Peace, Policy Brief , No 47, 1 Also see, Kurlantzick, J (2007) Charm Offensive: How China’s Soft Power Is Transforming The World New Haven: Yale University Press, 6

75 Hill, C (2003) The Changing Politics of Foreign Policy New York: Palgrave Macmillan, 135

2.2 Concepts of Balancing and Hedging

The new Chinese posture as a result of its rise has exacerbated the regional security dilemma Even though the rise of China does not threaten the SEA states, it does not mean that these countries do not feel the threat from China From realist perspective, the rise of great powers is potentially destabilizing and may lead to armed conflict because it threatens the established powers.76 This theory argues that the uneven rate of growth in power capabilities among nations often leads to envy, fear, competition, tension and conflict.77 Consequently, SEA region is now confronted with a classic problem in international relations, namely, the challenge to respond and manage the rise of a new power.78

Shambaugh, D elaborates this point arguing that, “structure of power and parameters of interactions that have characterized international relations in the Asian region over the last half century are being fundamentally affected by, among other factors, China’s growing economic and military power, rising political influence, distinctive diplomatic voice, and increasing involvement in regional multilateral institutions”.79

Exploring the threat perception, Walt, S argues that beside the distribution of power (an extremely important factor), the level of threat is also affected by geographic proximity, offensive capability and aggressive intentions The power of other states can therefore be a liability or an asset, depending on where it is located, what it can do and how it is used.80 As a result, the regional states “have reservations about China’s growing influence in the region”81 to ensure the national security and interests and to protect itself from a rising China Therefore, a central question is how states respond to threats

There are two main schools of thought on how ASEAN states view China From realist perspective, operating in an anarchic international system, sates seek security and power According to realists, facing or feeling a threat from a stronger state, states have two options: (1) balancing against the stronger side (i.e allying with others against the prevailing threat), or (2) bandwagoning with the stronger side (i.e alignment with the source of danger) Balancing in international relations implies the

76 Mearsheimer, J J (2001) The Tragedy of Great Power Politics New York: W.W Norton

77 Kennedy, P (1987) The Rise and Fall of the Great Powers New York: Random House Also see, Gilpin, R (2000) War and Change in International Politics New York: Cambridge University Press

78 Medeiros, E.S (2005) Strategic Hedging and the Future of Asia-Pacific Stability Washington Quarterly, 29 (19), (Winter 2005-2006), 146

79 Shambaugh, D (2005) The Rise of China and Asia’s New Dynamics,” in Shambaugh, D (Ed.) Power Shift: China and Asia’s New Dynamics Berkeley: University of California Press, 1

80 Walt, S (1987) Origin of Alliances Ithaca: Cornell University Press; Also see, Walt, S (2010) Why Alliances Endure or Collapse in Dian, M Dilemmas of the Asymmetry The evolving dynamic of the alliance between the US and Japan ECPR Graduate Conference Dublin

81 Roy, D (2005) Southeast Asia and China: Balancing or Bandwagoning Op cit., 305

Chapter 2 – The Concepts of Power, Balancing, and Hedging

states join or seek alliances to avoid domination by a stronger power.82 Conversely, bandwagoning is defined as the tendency of states “to ally with rather than against the dominant side.”83

2.2.1 Balancing

There are two main groups discussing how SEA countries cope with the threat from China One group believes that SEA countries will bandwagon with China while the other suggests these countries balance against it The bandwagoning camp argues that these regional countries will improve relations with China and not show any sign of balancing against it In the line with this argument, Kang, D C notes that “[SEA] states has developed close and deep economic ties with China and shares cultural attachments which will lead to bandwagoning with Beijing in the future”.84 Meanwhile, Er, P L, Ganesan, N., & Durkop, C argue that ASEAN states have a reason to bandwagon in their condition as small states They follow the saying “if they can’t beat them, join them.” Small states, thus, “are obliged to jump in the Chinese bandwagon and make the best out of an emerging Pax Sinica.”85 The fact that a strong China at the apex of an Asian regional architecture, China can provide material benefits to its neighbours

In contrast, according to Walt, the greater are the threatening state’s aggregate power, geographic proximity and offensive intentions, the greater will be the tendency of others to align against it Being the balancing behavior the dominant tendency in the system, the presence of a threat leads inevitably other states to align against it: “for states that matter, balancing is the rule.”86

The representation of this opposite camp like Acharya, A and Goh, E provide evidence to support the argument that SEA countries will eventually balance against a rising China, while relying on these countries’ advances, such as (a) military modernization; (b) alignment with the US; and (c) with ASEAN

in response to Beijing’s emerging powers in the region.87 Regional states balance against China through multilateral forums, such as ASEAN by using it to “partly transform bilateral disputes into multilateral agenda involving Beijing and ASEAN as a group.88 At the same time, the states have made small gestures that show they are willing to cooperate with the US on possible security cooperation in the

82 Walt, S (1985) Alliance Formation and the Balance of World Power International Security 9(4), 5

83 Ibid,

84 Kang, D.C (2003) Getting Asia Wrong: The Need for New Analytical Frameworks International Security, 27(4), 82(57-85)

85 Er, P L., Ganesan, N & Durkop, C (2008) Introduction: China and East Asia’s Mutual Accommodation In East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung, 17

region to balance China’s influence, viewing the later as a stabilizing and balancing force in SEA region.89 This is due to the continual credibility of the US at the top of the regional hierarchy and order Goh argues that the US is still number one and is maintaining a substantial military, political, economic and cultural presence here.90

2.2.2 Hedging

Hedging behaviors have so far overlooked Kuik, C.C defines hedging as “a purposeful act in which a state seeks to insure its long term interests by placing its policy bets on multiple countering options that are designed to offset risks embedded in the international systems.”91 It is aimed at “cultivat[ing] a middle position that forestalls or avoids having to choose one side at the obvious expense of another.”92

In this regard, states will continue to stay in the “middle” of balancing and bandwagoning This hedging research stream suggests that states walk a very fine line in its strategy toward the US, ASEAN, and China, and make adjustments depending on their national interest.93 The reason for hedging, according

to Zissis, C is that small states “cannot get too “cozy” with either Washington or Beijing because it makes other country uncomfortable.”94 The states want neither to be seen as a bulwark for China containment nor to court trade with America’s firms and the US support in security relations in SEA region The purpose of SEA’s hedging regarding China, according to Banlaoi, R C is “for pragmatic economic and political reasons: to charm China for aid, trade and investment necessary for national economic prosperity and to constructively engage China for regional stability.”95

Therefore, given this hedging strategy, states have to opt for one of the following ways Firstly, the states

“repair and deepen its relationship with China while simultaneously buttressing this by seeking a great power to counterweight Chinese ambition.”96 In particular, the states use economic relations to deepen ties with China and multilateral forums like ASEAN to engage China; at the same time seek the support

of this great power to extend and “build up its own national strength and resilience and the boosting of its potential internal balancing capability.”97 Secondly, the SEA states would continue to pursue relations with external major players such as the US, India, Japan, the EU, and Russia and ASEAN fora for

89 Roy, D (2005) Southeast Asia and China: Balancing or Bandwagoning? Op cit., 307

90 Goh, E (2008) Hierarchy and the Role of the United States in the East Asian Security Order International Relations of the Asia-Pacific, 8(3), 353-377

91 Kuik C C (2008) Rising Dragon, Crouching Tigers? Comparing the Foreign Policy Responses of Malaysia and Singapore toward a Re-emerging China, 1990-2005 BiblioAsia, 3(4), Issue 4 Singapore: National Library Board, 4

92 Goh, E (2005) Meeting the China Challenge: The US in Southeast Asian Regional Strategies, Op cit., 41

93 Dosch, J (2006) Vietnam’s ASEAN Membership Revisited: Golden Opportunity or Golden Cage? cit

94 Zissis, C (2006) The Surging Vietnamese Economy Backgrounder Council of Foreign Relations

95 Banlaoi, R.C (2010) Southeast Asian Regionalism and China’s Soft Power Strategy in a global Age Op cit

96 Manyin, M (2006) US – Vietnam Relations: Background and Issues for Congress US Congressional Research Office, 24

97 Goh, E (2005) Meeting the China Challenge: The US in Southeast Asian Regional Strategies Op cit., 41

Chapter 2 – The Concepts of Power, Balancing, and Hedging

economic growth and security In this regard, it is important to explore the feasibility and mechanism of engagement of all external major players to support the ASEAN’s position in regard with China

Thus, Joshy, M.P modifies the concept by adding an institutional component to mitigate the security dilemma in the region The concept of institution engagement for cooperative security in the sense that all the major stakeholders could be brought to a single platform, in which they can check one another,

at the same time, discuss regional and global issues which inextricably affect the whole region.98 As such, the concept developed by Joshy is going to guide the author’s research about a ‘single platform’ hedging adopted by SEA states against China The following review will explore Joshy’s concept of cooperative security In particular, Joshy defines cooperative security in Asian context as being “more similar to comprehensive security when one side tries to strengthen its security unilaterally while collective security does not work because it lacks unity among the affected countries.”99 In this regard, China is firmly placed at the centre of the Asian security mechanism.100 What is more, Joshy elaborates feasibility of the engagement mechanism for cooperative security, arguing that “with almost half a century experience working as independent states, the regional countries have graduated to the nature

of modern nation-state systems with all the structural conditions for rule governed interactions.”101

Thus, in a cooperative security mechanism, as a policy option, Joshy assumes that cooperative security promotes CBMs, defence exchanges, security dialogues and promotion of multilateral framework.”102 As

an implementation option, Joshy argues there must be ideally a two-layer mechanism of engagement and security cooperation in the cooperative security structure in Asia Firstly, the inner layer mechanism

is based on the relationship of all the four major actors – China, India, Japan, and ASEAN, but the emphasis on the crucial role of India and Japan in their security cooperation, while the mechanism of operation will be based on three devices – national resurgence, bilateralism and multilateralism On bilateralism, the security cooperation between Japan and India play an important role, while on multilateralism ASEAN’s multilateral forums will play a key role.103 Secondly, the outer layer involves other major international stakeholders such as the US, EU, and Russia They will act as a benevolent factor, focusing on the US’s crucial role as a stabilizing factor.104 Joshy believes that the presence of the outer layer could “effectively prevent a belligerent move by any particular actor without indulging in

98 Joshy, M P (2010) Emerging Powers and Cooperative Security in Asia Op cit

military posturing or by joining hands with the other.”105 The purpose of cooperative security structures, according to Joshy, can be “the means of maintaining regional peace and stability that will effectively deter the transition from security dilemma to virtual anarchy.”106 This is because “cooperative security permits deeper understanding of mutuality of security as well as broadens the definition of security beyond the traditional military concern, based on mutually assured survivability and acknowledgment of others’ legitimate security concerns.”107

In the line of this argument for hedging strategy, scholars like Medeiros, E S., Er P L, Ganesan, N., and Durkop, C suggest that taking advantage of great power rivalries and being wooed by them, the SEA states bring in all key players to check one another SEA states welcome China into an imagined community while bringing in India and Japan and welcoming the US, Russia and the EU to join multilateral fora to balance the inexorable rising China.108 Moreover, Er, Ganesan, and Durkop go further

to stress the security role of regional fora as tools in hedging strategy pursued by the regional states They suggest that SEA states have promoted mechanism for bilateral and multilateral cooperation, such

as constructing an incipient East Asian Community, strengthening ASEAN for regional order, promoting the ASEAN+3, ASEAN Regional Forum (ARF), East Asian Summit (EAS).109 Evaluating the role of ARF and EAS as Asian security mechanism in the powerful rising China context, Joshy argues, “in fact these two institutions… have contributed significantly in bringing peace and stability to the region.”110 This argument especially reassures the multilateralists who argue that the participation of China in various multilateral institutions will prevent it from growing into a revisionist state.111 Acharya A describes these hedging acts as “counter-dominance” The counter-dominance assumes that “regional order is best attained by a mix of approaches (including containment, engagement, soft balancing, regime building, etc.) as long as it enables local actors to prevent the total dominance of a region by any outside power

or powers It is especially suitable when a rising power presents both a threat as well as an opportunity, when the threat environment remains uncertain and in a state of flux, and when there are gains to be

105 Ibid, 3

106 Ibid,

107 Ibid,

108 Medeiros, E.S (2005) Strategic Hedging and the Future of Asia-Pacific Stability Op cit ; Also see, Er, P L., Ganesan, N

& Durkop, C (2008) Introduction: China and East Asia’s Mutual Accommodation Op cit

109 Er, P L., Ganesan, N & Durkop, C (2008) Introduction: China and East Asia’s Mutual Accommodation In East Asia’s Relations with a Rising China Seoul: Konrad Adenauer Stiftung Op cit

110 Joshy, M P (2010) Emerging Powers and Cooperative Security in Asia Op cit.,1

111 Frieldberg, A (1993) Ripe for Rivalry: Prospects for Peace in Multipolar Asia Op cit., 16; Also see, Goh, E (2005) Great Powers and Southeast Asia Regional Security Strategies: Omi-Enmeshment, Balancing and Hierarchical Order Op cit.

Chapter 2 – The Concepts of Power, Balancing, and Hedging

made from engaging a rising hegemon even as suspicions remain of its long-term strategic intentions.”112

The weaker countries are in favour of multilateral arrangements and regional regimes to seek common security This is because, according to Lebow, R N

“the allegedly inescapable consequences of anarchy have been largely overcome by a

complex web of institutions that govern interstate relations and provide mechanisms for

resolving disputes These institutions reflect and help sustain a consensus in favor of

consultation and compromise that mute the consequences of power imbalances among

states.”113

For the aim of the present study, I will explore the SEA states’ (including Vietnam) response (a) aligning with the US (´balancing´); (b) reinforcing ASEAN as an organization (´balancing’) without relying on external major players, notably, India, Japan, Russia, and the EU; (c) actively engaging those external major players in the existing regional notably ARF and EAS (‘hedging’) Vietnam’s coping with the rise of China in regard with territorial disputes over the SCS between Vietnam and China in Asian context with the involvement of most major players will be explored in the following Chapter 5