Southeast Asia presents an apparently ‘easy’ case for investigating China’s rising power. Given the significant asymmetry of power, if China’s power has grown we would expect to see altered preferences and behaviour among these weaker neighbours in response to coercion, persuasion or inducement. Results so far are mixed. While China has been able to harness much of the region’s economic energy in a favourable direction, it does not always get its way in territorial and resource conflicts.

In mainland Southeast Asia, China’s participation makes feasible region-wide economic development plans for the Greater Mekong Subregion initiative of the Asian Development Bank, drawing international investment for infrastructural projects. These connect the poorer states — Cambodia, Laos and Vietnam — to the markets of China and Thailand while improving China’s access to raw material supplies and ports in the Indian Ocean and East China Sea. These schemes also spur Japanese and American interest and investment in Mekong regionalism.

More prominently, China’s initiative for an FTA with ASEAN overcame the nagging problem of galvanising an economic integration project. When it came into effect in 2010, the China-ASEAN FTA formed the world’s largest free trade area, comprising 1.9 billion consumers and US$4.3 trillion in trade.

Situations in which the pre-existing preferences of other states are unclear or undecided — such as the 1990s debate about whether rising China was a threat — present opportunities for China to influence its neighbours by persuading them that its own narrative is more accurate and certainly more profitable. This campaign, from the mid-1990s, involved an alternative narrative about China’s cooperative New Security Concept, and its ‘peaceful rise’ or ‘peaceful development’ as it strives for a ‘harmonious world.’ The message was intended to reassure neighbours that China’s resurgence would not threaten their economic or security interests because of its peaceful intentions, limited national capabilities, mutually beneficial development trajectory and pluralist international mindset.

Rhetoric was accompanied by policy action. In Southeast Asia, China negotiated land (though not maritime) border disputes with Vietnam; fully participated in ASEAN institutions; and undertook highly publicised restraint and aid during the 1997 and 2009 financial crises. China’s persuasive power encompassed economic inducement. Its China-ASEAN FTA Early Harvest Programmes with some ASEAN countries — the partial lifting of trade barriers on selected goods — is portrayed by Chinese analysts as China ‘giving more and taking less’, working towards harmony and enrichment of its neighbours.

Yet there are limits to how much policymakers in Southeast Asian states are reassured regarding the China threat. China’s power to persuade is rooted in its ability to sustain benign policy action. Apart from efforts to offset some of the adverse effects of Chinese economic competition, China’s neighbours are also watching its behaviour in more serious conflicts of interest.

The best way to gauge the conversion of power into influence is in cases where the powerful actor causes another actor to change policy on a significant issue of disagreement. In the case of China and Southeast Asia, such issues include policies on Taiwan, defence relations with the US and policies on territorial disputes. On these potential hard cases, it is difficult to find significant changes in Southeast Asian states’ policies in response to Chinese actions to date.

Of these, China has expended most effort in the disputes over atolls in the South China Sea. China and ASEAN agreed to a Declaration of Conduct in 2002, committing to peaceful negotiations. Yet the Chinese navy continued manoeuvres to assert its claims, leading to skirmishes with Vietnam and the Philippines. Two months into a Vietnamese concession to develop gas fields off the Vietnamese coast in 2007, BP suspended operations, reportedly as a result of Chinese threats to exclude it from future energy deals in China. In March this year, Chinese naval vessels tried to interrupt oil exploration by the Philippines in waters that Manila considers its own.

At a regional defence ministers’ meeting in June 2010, statements suggesting that China now regards the South China Sea as part of its ‘core national sovereignty interests’ led US Secretary of Defense Robert Gates to warn that the US ‘oppose[s] the use of force and action that hinder freedom of navigation.’ One month later, Secretary of State Hillary Clinton reiterated US ‘national interest’ in the peaceful resolution of these multilateral disputes. In September 2010, after the Japanese Coast Guard detained a Chinese fishing trawler for allegedly intruding into Japanese waters, a Sino–Japanese standoff ensued. One direct result was the further strengthening of US interest in China’s behaviour in maritime disputes. The Obama administration publicly affirmed that the US-Japan treaty umbrella extends to the Senkaku/Diaoyu Islands and reiterated the importance of peaceful dispute resolution, freedom of navigation and respect for international maritime laws in the South China Sea.

China’s behaviour in these disputes constitutes a critical test of its intentions, and its hard line backfired seriously in that it led to a closing of ranks across Southeast Asia, Japan and the US. Beijing’s actions lend weight to regional pessimists who are not persuaded of its peaceful rise, and sustained coercive action may prompt its neighbours towards the very containment policies that it wishes to avoid.

So far, there are few good cases of China making Southeast Asian states do what they otherwise did not want to do. Alongside Beijing’s successful record of persuasion and inducement, it has shown caution in exerting pressure on its neighbours with the most challenging issues. The recent backlash in the South China Sea is likely to make Beijing more cautious. China’s still limited military capacity provides an important explanation since, particularly in the maritime access and security arena, the presence of the US still serves as a significant deterrent.

Evelyn Goh is reader in international relations and ESRC mid-career development fellow (2011–13) at Royal Holloway, University of London.

An earlier version of this piece was published here by Yale Global Online. This is an abridged version of an RSIS Working Paper No. 226, titled Rising Power… To Do What? Evaluating China’s Power in Southeast Asia, a copy of which is available here.