Economic (asymmetrical) interdependence and territorial disputes

This chapter will argue that China’s new leader, Xi Jinping, has a strategy to use his country’s economic centrality in Asia to promote its economic advantage to develop trans-border infrastructure especially in transportation, which will also benefit neighboring states, but which will also tighten China’s regional economic and security networks. The end result would be for China to become the dominant economic and strategic hub of Asia. Despite being the largest trading partner of ASEAN China lags behind as an investor and is not as economically dominant as might be expected. It is China’s greater and growing military power that gives Beijing the edge, especially as it has consolidated its position in the South Sea China through extensive land reclamation on the seven reefs it occupies, which have been transformed into military bases. It has also defied a ruling against it by the arbitration tribunal in The Hague. For good measure it has taken advantage of divisions within ASEAN to prevent unfavorable statements being issued against it. Clearly, the Chinese government has no intention of retreating from the enlarged ‘islands’, which in effect provide the means to control the sea – its commercial lifeline.