Love, Money, and Emotions: The Social Relationships of Transnational Domestic Workers in Singapore

Monday, 4 June 2012 at 3.00 pm in ISEAS Seminar Room II.

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Symposium on Southeast Asian Underwater Archaeology

Thursday, 31 May 2012 at 1.30 pm in ISEAS Seminar Room II.

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by Pavin Chachavalpongpun, South China Morning Post 15 May 2012

Pavin Chachavalpongpun says nation is polarised over harsh penalties for ‘insults’ to the monarchy

Known in Thailand as “Uncle SMS”, Amphon “Akong” Tangnoppakul died last week in detention, less than six months after being sentenced to 20 years in jail for violating the lèse-majesté law. Akong was accused of sending four text messages to a secretary of former prime minister Abhisit Vejjajiva, messages that were deemed to be extremely insulting to the queen.

Lèse-majesté, or the crime of injury to royalty, is defined by Article 112 of the Thai Criminal Code, which states that defamatory or threatening comments about the king, queen and regent are punishable by three to 15 years in prison. Each text message cost Akong five years’ imprisonment.

This was the harshest punishment so far in a country where the benevolence of the king and his love for Thais is supposedly boundless. As Akong maintained his innocence, royalist judges decided to hand down a maximum sentence and refused to grant bail despite his poor health.

Akong complained of pain in his stomach a few days before his death and it has been reported that he probably died of liver cancer. Immediately after his death, anti-Article 112 groups voiced their anger mostly through social media networks, and called for a protest outside a Thai court to seek justice for the dead man and urgent reform of the draconian law.

The death of Akong came at a critical time in Thai politics in which reverence for the monarchy is declining. Since the military coup of 2006, the royalists have exploited the royal institution to alienate their opponents. But in so doing, the monarchy has become even more politicised. Worse, the royalist elite have chosen to silence critics of the monarchy with the lèse-majesté law. There were almost 500 cases involving the law in 2010 – the highest among countries with such a law.

Critics say the law can be easily manipulated, and a group of young law professors at the esteemed Thammasat University has proposed guidelines to reform the law. But these professors have been intimidated by royalists, and one was attacked.

The situation reveals an ugly truth: Thailand is dangerously polarised and the monarchy – a key actor in the political domain – has continued to deepen that polarisation.

A number of royalists have celebrated the death of Akong, saying he deserved to die because of his disrespect for the royal family.

Meanwhile, the anti-Article 112 groups plan to organise a new round of rallies on the streets of Bangkok if the government of Yingluck Shinawatra fails to amend the lèse-majesté law. Violent clashes between the two sides of the divide seem inevitable.

Pavin Chachavalpongpun is associate professor at Kyoto University’s Centre for Southeast Asian Studies, and Associate Fellow at Singapore’s Institute of Southeast Asian Studies

The Myanmar Forum 2012

Friday, 8 June 2012 at 9.00am in Mandarin Ballroom II & III (Main Tower, Level 6), Mandarin Orchard Singapore, 333 Orchard Road, Singapore 238867.

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by Sanchita Basu Das, East Asia Forum, 13 May 2012

ASEAN concluded its 20th Summit on 4 April 2012. The discussion shifted away from building an ASEAN Community, to debates over territorial disputes in the South China Sea between China, Taiwan and four ASEAN member states (the Philippines, Malaysia, Brunei and Vietnam).

There was significant debate on whether China should be invited to take part in the drafting of the code of conduct, envisioned as a legally binding document to prevent small incidents in the South China Sea from escalating into bigger conflicts.

In 1992, a year after China commenced consultation with ASEAN, the latter issued a declaration of principles on the South China Sea in which ‘all parties concerned’ were urged to exercise restraint in order to create ‘a positive climate for the eventual resolution of all disputes’. Ten years later, in 2002, China signed the Declaration on the Conduct of Parties in the South China Sea with ASEAN. Since then, ASEAN and China have been working on a ‘Regional Code of Conduct in the South China Sea’, but no agreement has been reached so far.

A number of factors informs how ASEAN, as a region, views the problem of the South China Sea.

First, since all ASEAN countries are not equally involved in the dispute, there is no single ASEAN-led approach to it. Because each ASEAN member state pursues its policy individually with China depending on its own economic interests, the ASEAN countries are arguably divided over their approach toward Chinese territorial claims in the South China Sea. As a result, ASEAN’s political and strategic position vis-à-vis China becomes relatively weak.

For some time now, China has been proposing to settle the dispute through bilateral consultation between the concerned countries. ASEAN is aware of its weaknesses and agrees that 10 countries together are a better strategic and political force against China. ASEAN member states must therefore stand united to convey a clear message to China.

Second, China understands that ASEAN countries have different approaches to China itself. After years of assurances that ASEAN countries have nothing to fear from a rising China, senior officials in Beijing have issued statements that suggest they treat countries that have territorial disputes with China, and those that do not, differently. Until now ASEAN’s policy of engaging China — and China’s accommodative approach to the South China Sea issue — has brought some temporary benefits. But it has not been very effective in managing the issue or restraining it from escalating.

During the 2010 ASEAN Regional Forum in Hanoi, the dispute between China and ASEAN came out into the open. US Secretary of State Hillary Clinton stated that the US is in favour of ‘a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion’, which ASEAN welcomed. Other non-claimant countries, including Indonesia, Australia and Japan also got involved, weakening Beijing’s claim that the dispute is only between China and a few ASEAN members.

Realising this, ASEAN — under Indonesia’s chairmanship in 2011 — reached a consensus with China to discuss the joint development of undersea resources. ASEAN and China agreed to adopt a set of ‘guidelines’ to implement the declaration of conduct, and pledged to exercise restraint. Building on this progress, ASEAN senior officials have met several times since late 2011 to discuss ‘possible elements’ of a code of conduct.

In dealing with the South China Sea issue, one should keep in mind that over one-third of the world’s seaborne trade passes through this conduit, and half of this traffic is oil and gas. Solving the dispute has important implications for the free passage of shipping and the eventual development of oil and natural gas investments in the area.

But in recent months, Beijing has signalled its strong interest in joining the deliberation process that will issue the code of conduct. At the recent ASEAN summit in Phnom Penh, the Philippines and Vietnam strongly objected to China taking part in the discussion at this juncture. Some member-states argue that ASEAN must reach an internal consensus before involving China in the drafting process.

ASEAN’s main objective in developing a set of guidelines is to encourage China to agree to resolve the dispute peacefully and ease tensions in the South China Sea. ASEAN must manage its inherent differences quietly and develop the code of conduct to correspond with international legal norms, such as the 1982 UN Convention on the Law of the Sea. Though the dispute may not be resolved completely in the short term, such an approach will ease tensions with the international community, which relies on South China Sea trade routes. This way, ASEAN will not only play an important role in regional diplomacy — it will also help manage the economic interests of non-contending countries.

Sanchita Basu Das is Lead Researcher for Economic Affairs at the ASEAN Studies Centre, Institute of Southeast Asian Studies.

by Michael Richardson, the Straits Times, 14 May 2012

China and the Philippines seem to be on the brink of a military showdown as their dispute over ownership of Scarborough Shoal in the South China Sea enters its sixth week.

In an orchestrated series of theats in China’s official media, including the mouthpiece of the Chinese armed forces, the Philippines was warned last week to “stop being a troublemaker and drop its ridiculous claim” to the Scarborough atoll and fishing grounds, which Beijing calls Huangyan Island.

The People’s Liberation Army (PLA) Daily declared on Thursday: “We want to say that anyone’s attempt to take away China’s sovereignty over Huangyan Island will not be allowed by the Chinese government, people and armed forces.”

China, the PLA Daily added, “had suffered too much humiliation as its sovereignty was encroached and territory carved up when the country was poor and weak.”

On the same day, the China Daily wrote: “No matter how willing we are to discuss the issue, the current Philippine leadership is intent on pressing us into a corner where there is no other option left but the use of arms.”

On Friday, the Global Times, published by the Communist Party, said that “Manila will only seek negotiation or shelve disputes after suffering great losses and grave lessons. Otherwise, talk will not lead to anything…”

Two days earlier, the Xinhua newsagencysaid that although Beijing always adhered to friendly relations with its neighbours, “territorial sovereignty is a core interest for China and there is no room for bargaining. China has made every preparation to respond if the Philippine government clings obstinately to its wrong course.”

Of course, this sabre-rattling may be designed to distract the Chinese public from the crisis gripping the ruling party following the sacking of political leader Bo Xilai and the prosecution of his wife on murder charges.

If so, it is a dangerous tactic to raise public expectations in China after immersing students in patriotic education that stresses a strong nation emerging from a century of humiliation at the hands of colonial and imperialist powers, including America, the former ruler of the Philippines.

China has been ratcheting up the pressure on the Philippines by suspending tourist visits and slowing Philippine imports. This economic squeeze may be tightened unless Manila complies with demands set out by China’s Vice Foreign Minister Fu Ying on Monday.

She urged the Philippines to withdraw its vessels from the vicinity of Scarborough Shoal, cease to harass Chinese fishing boats there, and “still less harass government vessels of China in performing their duties in accordance with China’s laws.”

Manila may be induced to back down by Chinese pressure because its weak armed forces would be overwhelmed if they tried to defend Scarborough Shoal. It would be a David versus Goliath contest.

But China is playing a dangerous game as Goliath.  The entry of its armed forces into the dispute has raised the temperature, strengthening the voices of hardline nationalists on both sides.

The use or even the threat of force by China could have unpredictable consequences by opening the door to a wider conflict, with the United States taking the side of its ally, the Philippines.

China calculates that Obama Administration would dare not do this because of the damage it would cause to US economy in a presidential election year, to stability in Asia (the main driver of global growth), and to relations with China. The US needs to work with China on many pressing issues,   from North Korea and Iran to managing the world economy.

The PLA Daily said that even though Scarborough Shoal was much closer to the Phlippines than the Chinese mainland, China’s sovereignty over the atoll was confirmed by maps, treaties and effective Chinese jurisdiction over many centuries.

Both China and the Philippines have ratified the United Nations Convention on the Law of the Sea. If China is as confident as it says it is in the historic and legal validity of its claim to sovereignty and other forms of jurisdiction over much of the South China Sea stretching deep into the maritime heart of Southeast Asia, it should submit the claim to international arbitration or court adjudication, as the Philippines has said it is prepared to do with its own claim.

This is also what Singapore, Malaysia and Indonesia did to resolve past bilateral maritime disputes among each other.

Significantly, the PLA Daily also said that that Scarborough Shoal was excluded from coverage of the 1952 US-Philippines Mutual Defence Treaty (MDT) because the Shoal was not regarded as part of Philippine national territory.

However, this may not be the case. Article IV of the MDT obliges the US and the Philippines to act to meet the common danger in accordance with their constitutional processes in the event of an armed attack “in the Pacific area” on either party.

The Philippine Foreign Secretary Albert del Rosario said in a statement on Wednesday that several official US clarifications over the years had broadened the MDT’s coverage and since 1999 the US considered “the South China Sea to be part of the Pacific Area.”

Mr del Rosario was apparently quoting from a number of previouslyconfidential  diplomatic exchanges with Washington.

Under the US Constitution, President Obama, as Commander-in-Chief, has the power to send US armed forces into action overseas. He would be obliged to notify the US Congress (where there is substantial suspicion of China) within 48 hours of such action. But he would only need the authorisation of Congress if the military engagement lasts beyond 60 days.

This is a trip wire that China would be wise to heed. Perhaps it is doing so. China’s Defence Ministry denied on Saturday that its South China Sea forces were on combat readiness in preparation for war with the Philippines over Scarborough Shoal.

-          The writer is visiting senior research fellow at the Institute of South East Asian Studies.

Political Expansion, Maritime Trade, and Religious Practitioners on the Move: Revival of Interactions between Burma and Lanka in the Late 18th and Early 19th Centuries

Tuesday, 22 May 2012 at 3.30 pm in ISEAS Seminar Room II.

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by G.Sivalingam, Business Times, 27 April 2012

As head line inflation threatens to gallop up and elections have to be called by the first quarter of 2013, Bank Negara had the choice on March 9, 2012 of increasing the interest rate to restrain the growth of credit and the money supply. However, it decided on March 9, 2012 to maintain the Overnight Policy Rate (OPR) at 3% as it was confident that inflation would not exceed 3% in 2012 and inflation would not be a factor in deciding the outcome of the next elections. It took a decided risk in coming to this conclusion as food and fuel prices to a large extent determine electoral outcomes as people tend to vote with their feet. Bank Negara might not be totally correct in its assessment as food and prepared food prices have been increasing in the urban areas and the effect has been felt by consumers, hawkers and retailers. Bank Negara had decided not to increase the OPR probably because of the negative effects of  a higher interest rate on business groups. In deciding the Overnight Policy Rate, Bank Negara then had probably had to take into consideration the conflicting interests of various pressure groups.

The Monetary Policy Committee of Bank Negara, which met on March 9, 2012 has kept the Overnight Policy Rate (OPR) at 3%, at which level it has been since May 2011 and instead has relied on the statutory reserve requirements of banks, which it increased  to 4% last year to contain credit growth and the money supply for fear that an expanding money supply will fuel inflation. The Central Bank is also cautious not to increase the OPR or the interest rate because it might discourage private investments which is much needed as the ratio of total investment to GDP has not recovered to its pre 1997-1998 Asian Financial Crisis (AFC) levels. There is a need for private investments to fill in the infrastructure gaps in the country, for example, to build efficient and high speed transportation systems between  Johore and Singapore to ensure that the Iskander Development Region is a success..

The business corporations acting as an interest group have therefore an incentive to persuade the government and the Monetary Policy Committee of Bank Negara to keep the OPR low or even not to increase it any further. The pressure will be felt by the Minister of Finance as it is well known that Bank Negara Malaysia is not independent of the government as the governor of Bank Negara is appointed by the Minister of Finance. There will be pressure not to offend the large corporations as they are not only indispensable in constructing the much needed infrastructure but they are also an important source of employment and election funds.

The corporations that are involved in direct investment overseas will consider a low interest rate environment in Malaysia as a benign environment to operate “carry trade” between Malaysia and countries in the region that offer higher interest rates. They can expect the wide interest rate differentials between Malaysia and her regional neighbours to finance their interest in suspense and bad debt provisions especially if they are banks. Other corporations with direct investments abroad can just add on to their profits by engaging in the low cost but lucrative carry trade. Opportunities for carry trade exist as the benchmark interest rates in Indonesia and the Philippines are much higher at 5.75% and 4.25% respectively. Malaysia’s overseas direct investments has increased over the past few years given the local corporations’ risk aversion to invest in their own country. Malaysia’s investment environment might be considered risky given its over dependence on a few commodities for its export revenue and its dependence on short term foreign portfolio investments as sources of long term investments. The investors may fear that another external shock may create another banking and economic crisis. The recent dependence on oil money and Islamic bonds or sukuks is also risky given that oil prices are uncertain.

The Small and Medium Enterprises (SMEs) and manufacturing corporations will also find low interest rates and low cost of funds an advantage and so would not pressure for interest rate hikes. However, many SMEs will gripe that they do not have access to loans because they are not in the favoured group or groups. The large MNCs will probably not want to borrow from local sources because either they are flushed with liquidity or they make financing and borrowing decisions through their parent company in their respective home countries.

The investing class that borrow from banks to buy shares traded in Bursa Malaysia (Kuala Lumpur Stock Exchange) will also pressure for low interest rates because of the inverse relationship between stock prices and interest rates. The lower interest rates will reduce the cost of investing and high stock prices will benefit listed companies interested in rights issues as a source of additional or new funds. High stock prices will also mean a higher opening price for Initial Public Offers (IPOs) and so a low interest rate environment will be beneficial to companies waiting to be listed on Bursa Malaysia. Merchant Banks that make money out of underwriting IPOs will also campaign for a low interest rate environment as they have more opportunities to benefit from lucrative underwriting fees and under-pricing IPOs. They will under price IPOs as much as possible to reduce the risk of not selling enough and also to make a large gain when the opening price is relatively much higher. Even commercial banks that make a living out of underwriting IPOs will clamour for a low interest rate environment.

Low interest rates may result in disintermediation because savers may move their funds from bank deposits to other assets. However, the probability of this occurring is low as there are not too many risk free investments, with the exception of government bonds and Treasury Bills which may be out of the reach of ordinary savers as they require lumpy investments. It has been found that savers will still keep their money in savings deposits even if the real interest rate is negative as was in September 2011. There was no mass movement or outflow of funds from the banks in September 2011. Savers may benefit from high interest rates but they do not have the clout to pressure the government as most NGOs and consumer and civil rights groups have shied away from financial and interest rate matters. Most view financial decisions as being apolitical decisions when in fact it can be argued that they are the outcome of a power struggle among pressure groups whose interests have been well articulated and aggregated in the corridors of power.

Banks love low interest rates especially if it means that they can pay depositors low interest rates and continue to charge borrowers high interest rates. In this way they can enlarge the difference between borrowing and lending rates as most of them make their living out of the interest margin. This was what happened in 1986 when Bank Negara had to intervene and persuade the commercial banks not to exploit the low interest rate environment by increasing their interest rate margins. The Central Bank requested the commercial banks to lower their lending rate and rather concentrate on other means to increase their profits. These other means include increasing their efficiency through technological investments and innovations.

The writer is Visiting Senior Research Fellow, Institute of Southeast Asian Studies, Singapore.

by G.Sivalingam, Malaysian Business, 1 May 2012

Although the ten countries of Southeast Asia are members of the Association of Southeast Asian Nations (ASEAN)  their economic structures and growth trajectory are vastly different. Some of them, for example, Singapore are more industrialized than countries such as Laos, Myanmar and Cambodia, which are dependent on natural resources as the engine of growth. In between are countries like Indonesia, Malaysia, Philippines, Thailand (IMPT Countries) which are dependent on low value added, labor intensive  manufactured exports. Catching up with the IMPT countries is Vietnam, which since liberalizing and opening up its economy in the early 1990s has become a centre for labor intensive exports and a potent competitor of FDI away from the IMPT countries. Then there is oil rich Brunei that is dependent on oil exports but unlike Malaysia and Indonesia, which are also rich in oil resources, Brunei does not have an industrial base and neither is it a source of agricultural exports..

Given the different economic structures of the ASEAN countries, they have been differently affected by the 2008  Global Financial Crisis, the Eurozone crisis, the Japanese tsunami and the current global recession. Hence we see some ASEAN countries growing at more than 6% and others registering a growth rate of 0.1%. This by itself is indicative of the diverse nature of the economies that make up ASEAN.

The fastest growing nations in 2011, were surprisingly Laos (7.8%); Cambodia (6.8%) and Indonesia (6.5%). They all grew by more than 6%. Laos which registered the highest growth rate, grew at 7.8% because of exports of copper and silver and hydropower. Cambodia grew because of exports of garments and footwear and milled rice exports. Indonesia grew because of the increase in the net exports of iron and basic steel. The natural resource base of these countries were sources of growth except in the case of Cambodia whose exports of  manufactured garment and footwear also contributed to increase growth. Looking at the growth record of Laos, Cambodia and Indonesia in 2011, one is tempted to conclude that natural resource based exports helped to counter the decline in demand from America and Europe as a result of the global recession. However, in the case of Cambodia it appears that the demand for some manufactured goods (garments and footwear) were still strong despite the global recession. The demand for garments and electronics was still strong given that they are basic necessities compared to electrical and electronics goods.

Indonesia’s economic growth is not only remarkable because it is the largest economy in the region but also because it achieved the highest growth rate the country has achieved in the past 15 years  since the Asian Financial Crisis in 1997,  when the economy had to be subject to IMF bailouts and conditionality. Its spectacular growth was driven by private consumption, investments and net exports. Fixed investments grew by 8.8% and was driven by the large inflow of foreign direct investments and private investments aided by bank loans growth. This helped to increase the ratio of investments to GDP to over 32%, which is much higher than Malaysia’s investment to GDP ratio of 20%, which has been rather flat for many years since the 1997 Asian Financial Crisis.

Indonesia’s manufacturing sector expanded by 6.2% largely due to growing domestic demand from a large and growing domestic market and also due to external demand. Among the star performers in the manufacturing sector were: iron and basic steel, food processing, textiles and footwear and transport equipment. However, the growth in the services sector contributed more than half the growth in the GDP due probably to the large size of the economy and growing domestic economy and also because of employment growth.

In contrast Malaysia’s net exports in 2011 were negative because imports rose faster than exports and as a result most of the sources of growth from the demand side came from private and government consumption. The favorable growth in agricultural commodity prices helped increase farm incomes and this together with the availability of credit and employment growth also helped to boost domestic demand. Malaysia’s growth on the supply side came from services as the manufacturing sector’s contribution to GDP diminished largely because of falling global demand for electrical and electronics goods. The agricultural sector contributed positively to GDP growth as palm oil prices increased and output increased due to good weather conditions. Palm oil production alone accounts for about one third of the output of the agricultural sector.

Among the IMPT countries, Philippines registered the second lowest growth rate of 3.7% for 2011 ahead of Thailand’s dismal performance of 0.1%. The Thai economy did not grow much in 2011 and in fact contracted by 9% in the fourth quarter of 2011 because of the devastating floods which disrupted manufacturing activity in the fourth quarter that caused manufacturing output to be down by 21.8% in the fourth quarter. The floods that lasted from August to November was not only the worst in 50 years but disrupted not only the manufacturing industry but also agricultural, construction, transport and retailing activities for several months. The floods affected industries outside Thailand because it is the 12^th largest automobile producer in the world and accounts for about 25% of the production of hard disk drives which are demanded by other industries both inside and outside Thailand. Earlier in the year these industries were badly affected by the Japanese tsunami and earthquake.

The services sector was badly affected as the floods were a deterrent to tourist arrivals. The Thai economy could not depend on private consumption to boost aggregate demand as a decline in economic activities across industries due to the floods caused incomes to fall and hence consumer confidence got a lashing. Supply shortages and transportation difficulties also caused prices to increase and this together with higher oil prices increased the inflation rate to about 3.8% in 2011.

Public consumption and investment was also down because of a change in government, which took several months to prepare the new budget. The saving grace for Thailand was a rise in private investments, which rose by 7.2% despite the negative effects of the flood. However, public investments were negative 8.7% because of the floods, the elections and the change of government. The prospects appear good for Thailand in 2012 because of the introduction of the stimulus budget and the opportunities provided by reconstruction activities.

The Philippines economy which was not affected by floods grew by 3.7% largely due to the inflow of remittances from Filipinos working abroad. The growth was largely led by private consumption as public consumption and total investment was weak in 2011. On the supply side the major contributor to GDP growth was the services sector which grew by more than 5% in 2011. Growth in the construction sector was low and growth in the manufacturing sector was weak because of weakening external demand for electronics goods.

The prospects of attaining high growth rates in Southeast Asia in 2012 appears to depend on the recovery of Europe and high employment and growth rates in America. The expectation is that recovery in the economies dependent on manufactured exports will be slow and growth rates will not be much larger in 2012 than they have been in 2011. Growth rates might also tapper in the high growth countries such as Laos because of the larger base effects. Higher growth rates in Myanmar from the current 5.5% may also be possible because of its recent opening, reforms and liberalization. Similarly Thailand will grow at a more rapid rate because of the reconstruction and recovery after the devastating floods.

The writer is Visiting Senior Research Fellow, Institute of Southeast Asian Studies (ISEAS) in Singapore.

by Michael Richardson, the Straits Times, 7 May 2012

In the intensifying struggle among the claimants for control of the South China Sea and its oil, natural gas and fish resources, who is likely to win and how will we tell?

China, the most powerful of the players in the dispute, is at various times in contention with other major claimants, including Vietnam, the Philippines and Malaysia, because of the sweeping nature of its claim to about 80 per cent of the sea extending deep into the maritime heart of Southeast Asia.

The current focus is on the Scarborough Shoal, a fishing zone used by both Philippine and Chinese boats. It is about 230 kilometres from the main Philippine island of Luzon and 874 kilometres from Hainan Island, the nearest uncontested  territory of China.

A standoff at the shoal between para-military ships of both nations is about to enter its fifth week, with each side sticking firmly to its assertions of sovereignty.

So far, there have been no reports of force being used, territory being seized or fishing boats excluded. But the risk of a clash, whether calculated or in the heat of the moment, will remain while negotiating and settlement channels are blocked.

Standing behind the Philippines is its ally, the United States. After a meeting of US and Philippine foreign and defence ministers in Washington last week (30 April), the US reaffirmed the Mutual Defence Treaty, without saying whether its forces were prepared to fight alongside those of the Philippines if they were attacked by Chinese forces in a Scarborough confrontation.

“We oppose the threat or use of force by any party to advance their claims,” said US Secretary of State HillaryClinton. “And we will remain in close contact with our ally, the Philippines.”

With relations between the US and China under intense strain over blind Chinese human rights activist Chen Guangcheng, the danger of a flare-up in the South China Sea is particularly acute.

One prominent Chinese hawk, Major General  Luo Yuan, wrote recently in the website of the state-owned Global Times that China should strengthen its claim to Scarborough Shoal “by raising the Chinese flag or establishing a military or fishing base” there.

He added: “It was the Philippines that initiated the current standoff in the South China Sea; therefore it is important that China demonstrates its determination to safeguard its national sovereignty and security.”

China appears to have launched a ‘crowding out’ policy in the Scarborough Shoal that may be extended to other parts of the South China Sea if not effectively resisted. Crowding out would involve an increasing Chinese presence in a disputed zone, leading to eventual possession.

American academic Stephen Walt, a professor of international relations at Harvard University, says that Beijing is already converting some of its growing wealth into greater military power and would try to create a more favourable security environment in its neighbourhood, just as the US had done in its own backyard.

“In the 19^th century, a rising America proclaimed the “Monroe Doctrine” and gradually drove the European great powers out of the Western Hemisphere,” he wrote in the New York Times last week. “By the same logic, a powerful China will not want the United States to have close alliances and a large military presence near its borders, and it will undoubtedly try to push US forces out of the Asia-Pacific region.”

However, the US is pushing back to defend its interests in the region by strengthening existing alliances with Australia, Japan, the Philippines and South Korea, and building security partnerships with Singapore and some other Southeast Asian countries.

In gauging whether China or the US is winning the struggle for influence and power in the South China Sea, two tests will be important.

One is the extent to which China can extend its control of fisheries and seabed energy resources in the northern sector of the sea further south; and the other is whether it can neutralise regional resistence by dividing or even further dividing the 10 member-states of ASEAN, the Association of South East Asian Nations, over the issue.

China has declared that it opposes foreign companies exploring for, or exploiting, oil or gas deposits beneath the seabed of waters it claims in the South China Sea, and has taken action to deter further development.

A split within ASEAN  is already evident, with Cambodia, the current ASEAN chair, Laos, Myanmar and even Thailand, the US’ oldest ally in Asia, all adopting neutral or pro-China positions in the face of appeals for support from the Philippines.

None of these four ASEAN countries have claims in the South China Sea and all regard China as a key trade, investment and tourism partner.

Following a recent visit by Thailand’s defence minister and all the service chiefs to China, the Bangkok Post quoted an unnamed high-ranking source in the defence ministry as saying that “under present circumstances, we have to stay closer to our relative (China) than the close friend (America) who is far away.”

-          The writer is a visiting senior research fellow at the Institute of South East Asian Studies.