Cambridge Review of International Affairs

ISSN: 0955-7571 (Print) 1474-449X (Online) Journal homepage: https://www.tandfonline.com/loi/ccam20

Overlapping regionalism and cooperative

hegemony: how China and India compete in South
and Southeast Asia

Jürgen Rüland & Arndt Michael

To cite this article: Jürgen Rüland & Arndt Michael (2019): Overlapping regionalism and
cooperative hegemony: how China and India compete in South and Southeast Asia, Cambridge
Review of International Affairs, DOI: 10.1080/09557571.2019.1568393

To link to this article: https://doi.org/10.1080/09557571.2019.1568393

Published online: 23 Apr 2019.

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Cambridge Review of International Affairs, 2019
Vol. 0, No. 0, 1–23, https://doi.org/10.1080/09557571.2019.1568393

Overlapping regionalism and cooperative hegemony:

how China and India compete in South and
Southeast Asia

J€
urgen R€uland and Arndt Michael
University of Freiburg

Abstract This article examines the phenomenon of overlapping regionalism in South

and Southeast Asia. Theoretically it rests on Thomas Pedersen’s ‘ideational-
institutionalist realism’ approach. We argue that in the two sub-regions under study
the proliferation of regional organizations has been greatly stimulated by hegemonic
and counter-hegemonic dynamics involving Asia’s largest powers, China and India. We
claim that sceptical world views highlighting vulnerability, victimization and national
survival are deeply entrenched in the mental maps of the regions’ foreign policy elites.
Regional institution building is thus informed by the tenets of realism. We trace how
and why China and India seek to establish ‘cooperative hegemonies’ by building
regional institutions for incorporating their neighbours into their sphere of influence
while keeping rival powers at bay, and also show why smaller states in the region join
these regional fora.

Introduction
Most South and Southeast Asian countries are members of several regional
fora, besides the more well-known South Asian Association for Regional
Cooperation (SAARC) and Association of Southeast Asian Nations
(ASEAN). In many cases, the mandates, functions and objectives of these
regional fora duplicate or overlap. Considering that most of them are in the
group of Least Developed Countries (LDCs) or Lower Middle Income
Countries and hence have neither the human nor the financial resources to
shoulder the sizeable governance costs associated with multi-membership,
why have these countries formed or joined so many—and often seemingly
ineffective—fora?
In this article, we argue that in the two sub-regions under study the pro-
liferation of regional organizations has been greatly stimulated by hege-
monic and counter-hegemonic dynamics involving Asia’s largest powers,
China and India. We trace how these two great powers have built regional
institutions that—according to official rhetoric—primarily seek to accelerate
the economic modernization of their neighbours but in reality establish
‘cooperative hegemonies’ (Pedersen 2002). In other words, through such
institutions, these regional powers aim to incorporate neighbouring coun-
tries into their sphere of influence while keeping at bay the presence of rival

# 2019 Department of Politics and International Studies

 €rgen Ru
2 Ju €land and Arndt Michael

powers. We also show why smaller states in Asia readily join the regional
fora established by China and India.
We address the puzzle outlined above by employing Thomas Pedersen’s
‘ideational-institutional realism’ approach (Pedersen 2002). This approach is
essentially informed by political realism, but felicitously incorporates key
arguments of institutionalist and constructivist scholarship, enabling us to
address blind spots left by alternative theoretical approaches. Guided by
this analytical framework, in a subsequent step, we link constructivist and
realist arguments by examining the ideational foundations that inform
China’s and India’s roles as ‘cooperative hegemons’ and the hedging moves
of their smaller neighbours. We therefore take a closer look at the world-
views of foreign-policymakers in Asia, which in their majority are sceptical
and guided by realist assumptions. By ‘sceptical worldviews’ we mean
notions of the world as essentially hostile and of international politics as a
persistent struggle for survival.
Subsequently, we combine institutionalist and realist arguments, which
entails investigating the formation of South and mainland Southeast
Asian regional fora, their mandates, objectives and functions. We examine
their overlapping nature and seek clues as to why they have been formed
and why states have joined them. Our main argument here is that these
new fora have primarily been used for institutional ‘soft balancing’ and
‘hedging’. If we slightly adjust Pape’s definition to the South and
Southeast Asian context, ‘soft’ balancing denotes actions that engage not
in ‘hard’ or ‘military balancing’. but rather in the use of non-military
tools such as ‘international institutions, economic statecraft and diplo-
matic arrangements’ to ‘delay, frustrate, and undermine’ assertive policies
of other great powers (Pape 2005, 10). We expect rising powers such as
China and India to rely on ‘soft balancing’ to effect changes in the
regional or global power equilibrium because so far neither of them has
had the military capacities to solve disputes among such powers by force.
By contrast, ‘hedging’ describes a middle ground between ‘hard’ or
‘military balancing’ and ‘bandwagoning’ (Kuik 2008, 161). It denotes
‘behaviour in which a country seeks to offset risks by pursuing multiple
policy options that are intended to produce mutually counteracting
effects, under the situations of uncertainty and high-stakes’ (Kuik 2008,
163). It combines ‘return maximization’ through economic cooperation
with the hegemon, and ‘risk-reducing’ actions through military modern-
ization as well as military and institutional cooperation with other large
powers (Kuik 2008, 166). We expect South and Southeast Asia’s smaller
states to engage in hedging against India and China.
The final section summarizes the findings of the study. It concludes that
regional institution building is a form of ‘soft balancing’ that indeed fits
Beijing’s and New Delhi’s agenda of establishing competing cooperative
hegemonies. The participation of smaller countries in these institutional
designs is largely identified as a strategy of ‘hedging’. Yet the study also
shows that China is better positioned than India to advance its strategic inter-
ests, as it has superior resources and ideas of political order more in conson-
ance with those of neighbouring countries.
 How China and India compete in South and Southeast Asia 3

Theoretical framework: ideational-institutional realism

‘Overlapping regionalism’ denotes an institutional arrangement in which states
have joined two or more regional fora that have identical or similar mandates
in at least one policy field.1 Although overlapping regional fora are concomi-
tant with the proliferation of regional organizations underway since the 1990s,
surprisingly, study of them is very recent in comparative regionalism research.
Insights into the conditions that motivate states to form or join regional fora
with overlapping agendas are thus still tentative. Panke and Stapel’s quantita-
tive study of 62 regional organizations is hitherto by far the most sophisticated
analysis and the only one with a global reach (Panke and Stapel 2018).
However, as far Asia is concerned, Panke and Stapel’s study omits a number
of—admittedly obscure—regional fora, which we include in this study.
While the few existing studies examining overlapping regionalism in Asia
concentrate on East Asia (Bhattacharya 2010; Yeo 2016; Beeson 2018), we
decided to focus on mainland Southeast Asia and the adjacent region of South
Asia. These are sub-regions that, too, have experienced a rapid increase of
regional organizations with overlapping agendas, albeit ones that have largely
been neglected in research on Asian regionalism.2 Theoretically, the study rests
on Pedersen’s ideational-institutionalist realism (Pedersen 2002). His approach
provides a coherent analytical framework that integrates several seemingly
competing paradigms into an overarching realist framework. This is a broader
and more integrative approach compared with studies operating with loosely
linked theoretical pluralism (Panke and Stapel 2018; Yeo 2016). It is also an
approach that exceeds the explanatory scope of the institutionalism employed
by other studies (Weiffen et al. 2013; Nolte 2014; Brosig 2016), or research that
mainly pursues empirical instead of theoretical objectives (Frost 2014; Freeman
2018). Ideational-institutional realism amalgamates what has become known as
‘institutionalist realism’ (Krebs 1999; He 2006) and ‘realist constructivism’
(Barkin 2003) or what may be better labelled ‘ideational realism’.
The realist umbrella over the approach signals that overlapping regionalism
is mainly interpreted through the lens of power. By highlighting hegemony as
a driving factor for regional institution building, ideational-institutionalist real-
ism strongly borrows from hegemonic stability theory (Pedersen 2002, 682). It
brings power and the relative gains rationale (Pedersen 2002, 696) back into
comparative regionalism, which has long been dominated by approaches with
a cooperative and functionalist bias. Pedersen’s approach thus differs from
mainstream explanations of regionalism in the Asia–Pacific. The latter has usu-
ally been portrayed as a top-down, state-generated set of rules and norms
responding to spontaneous regionalization, in essence the bottom-up emer-
gence of international production networks (Drysdale 1988; Pempel 2005; Dent
2008). It also deviates from the predictions of liberal institutionalists who
regard functional needs, the costs of increasing interdependence or domestic

1
For a similar definition, see Panke and Stapel (2018, 2).
2
For exceptions, see Solis et al. (2009), Michael (2013) and most recently Freeman (2018).
 €rgen Ru
4 Ju €land and Arndt Michael

interest groups (Solingen 2008) as drivers of what has become known as ‘new
regionalism’.3
While this does not mean that power is entirely absent in previous work
on overlapping regionalism (see, inter alia, Weiffen et al. 2013; Yeo 2016;
Panke and Stapel 2018), the political history, level of tensions, threat percep-
tions, military capacities and worldviews of foreign policy elites do not count
much in these studies. Yet an ideational perspective reveals that Asian rulers
and elites, socialized in the region’s unabated political turbulence, in their
majority hold sceptical worldviews that reflect the volatile nature of regional
politics. This translates into political behaviour that is largely guided by the
tenets of political realism and thus by views of regionalism more through a
perspective of power, security and geopolitics than a liberal-cosmopol-
itan prism.
Ideational-institutional realism is superior to mainstream variants of realism
in at least two respects. For one, it does not attribute political behaviour driven
by concerns about regional power distribution to exogenous preference build-
ing. Instead, power-sensitive behaviour is the result of a process endogenous
to the region guided by adverse historical experiences that, deeply entrenched
in the collective memory, may produce powerful ideational path dependencies.
Endogenous preference building makes the approach sensitive to cultural
peculiarities that rationalist approaches, in which human behaviour is per-
ceived as constant over time and space, tend to ignore. The ideational compo-
nent in Pedersen’s approach thus adds a reflexive element to realism. It
enables us to capture key elements of the strategic culture in the sub-regions
under study, which turns out to be a crucial explanatory factor. The world-
views of political elites are part and parcel of this strategic culture and thus
the cognitive fundament for their foreign policy decisions. By bringing power
back in, the reflexive dimension of ideational-institutional realism also takes
seriously Wendt’s dictum that ‘anarchy is what states make of it’ (Wendt
1992), as it deviates from the liberal ontology and teleological tendencies of
mainstream constructivist studies.4
Second, ideational-institutionalist realism is—unlike classical realism and
neo-realism—able to make sense of institutions. Institutions are not merely epi-
phenomena of international relations (Mearsheimer 1994–1995) or simply are-
nas for great power rivalries. By drawing from institutionalist realism,
Pedersen’s approach tacitly acknowledges that with the United States (US) as a
global hegemon, which cannot be challenged militarily, institutions have
become significant vehicles for nation states to shape power equations (Pape
2005). The tenets of realism are thus applied to institutions, epitomized in
practices such as ‘soft balancing’ and ‘hedging’. Yet, with the ideational dimen-
sion discussed above, Pedersen’s approach exceeds the explanatory scope of
institutionalist realism, which does not take into account cognitive factors in
explaining institutional politics.
Ideational-institutionalist realism thus allows us to interpret overlapping
regionalism in mainland Southeast Asia and the Indian Ocean Rim region as a

3
For a critical overview of the older literature on Asian institution building, see
Ravenhill (2010).
4
For a critique, see Johnston (1996), Barkin (2003) and Rother (2004).
 How China and India compete in South and Southeast Asia 5

mutually influencing competition between two rising powers, China and

India, both of which seek to establish a ‘cooperative hegemony’ in the
region. ‘Cooperative hegemony’ is a grand strategy employed by declining
but also rising great powers, which compensates for relative weaknesses in
military or economic capacities through institutional policies (Pedersen 2002,
684). Regional institutionalization as a mode of hegemonic ‘soft rule’ entails
several advantages. First, side payments and material incentives induce sub-
ordinate states to bandwagon with the hegemon’s regional project. At the
same time, the provision of goods to smaller states increases the hegemon’s
international prestige and legitimacy, both currencies boosting its ‘voice
opportunities’ (Grieco 1996) in global fora. Second, these regional institu-
tions may strengthen the hegemon’s ability to influence domestic policies of
member states in a subtle yet coordinated way (Pedersen 2002, 685). Newly
formed regional institutions may thus become the channels for the diffusion
of the hegemon’s ideas, norms and policies to neighbouring states (Pedersen
2002, 685). Under favourable conditions this may facilitate the emergence of
a regional identity that is directed against external powers or rivals within
the same region (Pedersen 2002, 685). Third and finally, regional institution
building may provide rising hegemons with access to scarce natural resour-
ces (Pedersen 2002, 686).
Methodologically, the study employs process tracing in order to uncover
the causal mechanisms that support our argument (George and Bennett 2005).
The regions selected can be considered ‘typical cases’ (Gerring 2008, 91) in the
sense that they are representative of many other regions in the Global South
where—as highlighted by Ayoob’s ‘subaltern realism’—elite thinking is more
prevalent in terms of power than in cooperative terms (Ayoob 2002). The art-
icle rests on fieldwork by the authors, including interviews with members of
the foreign policy and security community in both sub-regions, extensive
newspaper analysis, autobiographies of foreign policy stakeholders, websites
and blogs.

Ideationalist realism: ideas that matter

In this section, we apply the reflexive logic inherent in the cognitive dimension
of ideational-institutionalist realism as outlined above. In the process, we adopt
a ‘first image’ (Waltz 1959) view of international relations. We attach great sig-
nificance to the worldviews of foreign policy elites, which we claim to be
deeply entrenched in the region’s collective memory. In many documented
statements of the foreign policy and security community, we encountered a
highly sceptical view towards the external world. This sceptical worldview
strongly reflects elites’ interpretation of their countries’ turbulent histories.5 In
a longue duree perspective, this thinking is informed and persistently repro-
duced by the waxing and waning of pre-colonial kingdoms and empires, the
traumatic experiences of colonialism and imperialism,6 two world wars, the
Cold War, regional wars such as those between India and Pakistan or the
Indochina wars, arms races, neo-colonial domination and the highly

5
On the importance of historical experiences for strategic culture, see also Malik (2011, 10).
6
On the legacies of colonialism and imperialism for China and India, see Miller (2013).
 €rgen Ru
6 Ju €land and Arndt Michael

asymmetric decision-making structures of the post-1945 global institutional

architecture.7 Former Singaporean foreign minister George Yeo accordingly
concluded that those ‘who ignore the lessons of history are condemned to
become victims a second time’ (Latif and Lee 2015, 91). This is by no means an
essentialist argument ignoring the existence in Asia of a more ‘idealist’ and
benign tradition. Cooperative and harmonious worldviews are, for instance,
central in the thought of Mauryan Emperor Ashoka, Buddhism and Gandhi in
India (Misra 2016), as well as Mencius, Xunzi and Confucius in China (Yan
2011, 42), and were more recently expressed by Indonesian President
Yudhoyono’s ‘zero enemies, one million friends’ formula.8 We merely argue
that sceptical ontologies are dominant among the region’s policymakers. This
must also be attributed to the fact that the political realism that is derived
from the historical experiences recounted above rests—contrary to George
Tanham’s (1992, 130) claims for India—on powerful indigenous political and
strategic thought (Saran 2017, 2). Contemporary politicians may no longer
know the ancient texts in detail, giving rise to what Liebig (2013, 276) calls
‘latent’ knowledge, but the strategic quintessence of these ideational legacies is
acutely alive in their minds (Saran 2017, 2).
The highly dynamic and unstable political constellations of the region’s pre-
colonial states gave rise to political guidebooks for rulers to sustain their power.
In simplified terms, Kautilya’s nearly 2300-year-old Arthasastra describes a concen-
tric state structure (‘mandalas’) in which the circle of states around an empire or
kingdom are the enemies, and the neighbours of the enemies the allies (Zaman
2006). A key lesson contemporary rulers draw from this concept of ‘geometric
politics’ (Zimmer 1976) is that the immediate neighbour matters most for state
security. India and its culturally Indianized Southeast Asian neighbours, whose
pre-colonial courts were familiar with the Arthasastra (Kasetsiri 1976, 133; Wolters
1999; Acharya 2013, 9), thus take great pains to prevent neighbouring states from
becoming hostile and rival powers and exerting influence on them. The
Indonesian army’s security concept of ‘concentric circles’ (Anwar 1992) unequivo-
cally epitomizes these lessons up to the present day. However, what has been
inculcated in the region’s strategic culture to an even greater extent is the message
the Arthasastra adopted from ancient Indian epics such as the Mahabharata and the
Ramayama: in worldly affairs evil is ubiquitous and evil can only be overcome
through armed struggle and superior power.9 How ancient wisdoms of the
Mahabharata and the Ramayana continue to permeate the strategic thinking of
Indian government officials even beyond security issues has been brilliantly dem-
onstrated by Narlikar and Narlikar (2014) for the field of trade negotiations.
Moreover, in India, as well as in many countries of Southeast Asia, the
Mahabharata and the Ramayana are part of the school curriculum (Jaffrelot 2003,
36). Their episodes have been represented in art genres ranging from fine arts

7
See also India’s former foreign secretary, Prime Minister’s Special Envoy for Indo-American
civil nuclear issues and Special Envoy and Chief Negotiator on Climate Change, Chairman of the
National Security Advisory Board under the National Security Council Shyam Saran (2017, 30).
8
Yet Yudhoyono’s worldview is more ambivalent than this formula suggests. See his
equation of international politics with ‘turbulent seas’. The Jakarta Post, 2 January 2007.
9
The significance of the Ramayana and the Mahabharata in Indian strategic thinking was
highlighted by Indian Ambassador (Retd) Pinak Ranjan Chakravarty in a lecture at the Defence
Services Staff College (DSSC), Wellington, Tamil Nadu, 23 June 2014, <http://idsa.in/history>,
accessed 27 March 2017.
 How China and India compete in South and Southeast Asia 7

and temple reliefs to the popular Javanese wayang shadow games and even
comics, thus are also known to the general public (Nguitragool and R€ uland
2015, 42).
As an indigenous politico-cultural resource, the relevance and lasting
influence of Kautilyan thought on India’s strategic culture and contempor-
ary politics is widely acknowledged (Zaman 2006; Michael 2013; Liebig
2013; Saran 2017), prompting Mohan Malik to comment that ‘there is a
degree of continuity in pre-modern strategic cultures of China and India
into the modern age’ (Malik 2011, 10). While India’s foreign policy under
Jawaharlal Nehru immediately after independence was often characterized
as idealistic, the lost war against China in 1962 ended this phase (Brewster
2014a, 21). Nehru himself made ample reference to Kautilya in his influen-
tial books and speeches (Liebig 2013, 104–106), exhibiting profound know-
ledge of the latter’s ideas and teachings. While Nehru’s successors
continued reverting to the lessons of the Arthasastra, the end of the Cold
War markedly accelerated this process. The geopolitical shifts and the
resultant uncertainty revitalized the virtues of political pragmatism in
India’s foreign policy community (Misra 2016, 334). In an interview in 2006,
C. Uday Bashkar, former director-general of the renowned Institute for
Defence Studies and Analyses (IDSA) in New Delhi, succinctly described
Kautilya’s legacy as ‘the DNA of India’s foreign policy’.10 Indeed, a closer
look at the media and speeches of Indian policymakers and diplomats con-
firms that Kautilyan thought pervades Indian political discourse.
In Indonesia and Thailand, the political class seeks analogies and orien-
tation for contemporary policy issues in their country’s glorious past—the
culturally Indianized Majapahit and Ayudhaya empires—and thus unwit-
tingly reproduces the political ideas of the Arthasastra as the then prevailing
embodiment of Hindu–Brahmanic statecraft. This thinking in geopolitical
categories is today cloaked in modern garb by the elevated role Western
geopolitical thinkers such as Mackinder, Ratzel and Haushofer, as well as
strategists such as Clausewitz, have attained in the curricula of the region’s
military academies (Anggoro 2005; Kulshrestha 2013). In India, the unfold-
ing race for control of the Indian Ocean has led to a rediscovery of the writ-
ings of KM Panikkar and through him the thoughts of Alfred Thayer
Mahan, the famous nineteenth-century American strategist of sea power
(Scott 2008, 2). Mahan and British heartland-theorist Halford Mackinder are
also carefully studied in China (Scott 2008, 9; 2015, 468; Brewster 2014a, 20;
Rimmer 2018, 478).11
In China and Southeast Asia’s Sinicized states ancient political guidebooks
also enjoy great popularity and teach political elites similar lessons to those of
the Arthasastra (Christensen 1996, 37; Malik 2011, 20). The stratagems of Sun

10
Authors’ interview, 24 November 2006. The IDSA, India’s leading security studies think
tank and an advisory body to the Indian government, is currently conducting research into
‘indigenous historical knowledge’, focusing on the influence of Kautilya on ‘traditions of strategic
thought, defence and security’: <http://idsa.in/history>, accessed 2 November 2016.
11
See also South China Morning Post, 4 January 2013; The Diplomat, 7 February 2015; Shyam
Saran, ‘Is a China-centric world inevitable?’, <https://thewire.in/diplomacy/china-centric-world-
inevitable>, accessed 24 May 2018. For Indonesia, see diplomat Siswo Pramono, The Jakarta Post,
10 December 2003.
 €rgen Ru
8 Ju €land and Arndt Michael

Tze and the advice to rulers provided by the epic of the Romance of the Three
Kingdoms (Sam Kok) are a source of inspiration for political elites up to the pre-
sent day.12 The same holds true for the ‘cultural realism’ embodied in the para
bellum concept (‘if you want peace, be prepared for war’), which Johnston
(1996) described as constitutive of the strategic culture of ancient China and
which can also be found in many other states of the region today.13 No won-
der that China is still perceived as ‘the high church of realpolitik’
(Christensen 1996).
The notion of an inherently hostile external world has given rise to two
conclusions widely shared by the security community and foreign policy-
makers in South and Southeast Asia. The first is part of an ongoing survival
discourse in which leaders see the sovereignty of their nations as persistently
at risk (Chachavalpongpun 2010, 64–65). In this view, sentiments of vulnerabil-
ity and victimization prevail (Weinstein 1976; Sebastian 2006: 14).14 The sur-
vival discourse has been eloquently summarized by former Singaporean
foreign minister Jayakumar in his political autobiography, in which—implicitly
referring to the Arthasastra—he depicts international politics as entirely anar-
chical: big fish eats small fish (Jayakumar 2011; Liebig 2014, 177). Small states
must therefore prevent the international arena from degenerating into the law
of the jungle, making the lives of small nations—citing Hobbes—‘nasty, brutish
and short’ (Jayakumar 2011, 76).15 As a corollary, foreign policy elites and the
security community are highly sensitive to imagined or real global and
regional power shifts (R€uland 2018).
The second conclusion is that the best assurance against the vagaries of a
hostile external world, as former Indian foreign secretary Shyam Saran argues,
is autonomy. By ‘autonomy’ he means the expansion of the ‘country’s strategic
space’ (Saran 2017, 27) and, as Thai diplomat-turned-scholar Pavin
Chachavalpongpun states, the creation of national resilience through the full
mobilization of the nation’s resources (Chachavalpongpun 2010, 72). Also,
regional cooperation first and foremost serves to reinvigorate national capaci-
ties and to widen strategic space. Thinking and arguing for the sake of the
national interest is thus ubiquitous in both sub-regions’ foreign policy dis-
courses. In their more offensive versions, geostrategic schemes to minimize
insecurity proclaim a ‘forward strategy’16 with the ultimate objective of becom-
ing a regional or global leader in one’s own right. Inadvertently or not, this
also bears an analogy to the geometric politics of the Arthasastra—with its
inbuilt expansionary and pre-emptive logic of protecting a ruler from attacks
by neighbours—as well as to the Buddhist idea of a cakravartin, or conqueror
of the world.

12
Thai politician Newin Chidchob, Bangkok Post, 6 March 2002.
13
See, for instance, Indonesian President Yudhoyono, Tempo Interaktif, 26 February 2009.
14
See also Laotian, Singaporean and Cambodian speeches in the general debate of the United
National General Assembly, which frequently refer to vulnerability, victimization and survival:
<http://www.un.org/depts/dhl/unms/cms.shtml>, accessed 23 January 2018.
15
For Kasem S. Kasemsri, Thailand’s foreign minister in the mid-1990s, ‘it has been in the
Thai consciousness that national survival constitutes the most important criterion for interstate
relations’ (Kasemsri 1989, 15).
16
See Batabyal (2006, 181); Chachavalpongpun (2010, 32).
 How China and India compete in South and Southeast Asia 9

Institutionalist realism: emerging hegemons and regional

institution building
This section seeks to demonstrate how China and India pursue their objective
of establishing a ‘cooperative hegemony’ on mainland Southeast Asia and in
South Asia’s Indian Ocean region. We argue that—consciously or not—the
sceptical worldviews of the region’s foreign policy elites traced in the previous
section shape institutional politics. The section thus links the ideational realism
of the previous section with institutionalist realism and its hallmark of trans-
ferring the tenets of political realism to institutions. In such a context, institu-
tion building is intimately associated with shifting power relations and
geopolitical objectives. While government rhetoric throughout the two sub-
regions legitimizes regional institution building with the need to solve cross-
border problems cooperatively, the hidden agenda is to ‘soft’ balance power
disequilibria or to engage in hedging activities. In such a scenario, concerns
over functional overlaps and for institutional nesting are relegated to a
low priority.
Chinese and Indian overtures towards regional institution building have in
common that they frame regional institution building in strongly altruistic
terms. Since the beginning of its ‘Going Out’ policy in the late 1990s, but in
particular in its recent ‘One Road, One Belt’ (OBOR) initiative, the Chinese
government has vigorously promoted a cooperative agenda that highlights
win–win, mutual benefit, prosperity for all, the provision of public goods and
non-interference into the internal affairs of partner countries.17 India, too,
stresses that regional cooperation promotes economic growth and helps to
effectively combat common problems such as terrorism, insurgencies, energy
shortages and an underdeveloped infrastructure. While at first sight this rhet-
oric strongly reflects both countries’ benign foreign policy traditions, it is well
in line with the previously discussed Indian and Chinese foreign policy tradi-
tions based on pragmatic cunning to conceal deft moves intended to increase
political influence in their neighbourhood. This logic is expressed in former
minister of state for external affairs Shashi Tharoor’s statement that ‘economics
can always open the door to politics’ (Tharoor 2012, 113). As we cannot expect
official pronouncements that explicitly link institutional politics to hegemonic
designs, in this section we methodologically rely on process tracing in order to
disclose government intentions by their political actions.
To better understand the Sino-Indian competition for regional hegemony
and the origins of the unfolding cascade of regional institution building in the
two sub-regions under investigation, one has to go back to the end of the Cold
War. In June 1989 China had violently repressed pro-democracy protesters in
Beijing’s Tiananmen Square. With the US and the European Union (EU) subse-
quently imposing sanctions on China, Beijing faced a similar fate to that of
Myanmar’s ruling military junta, which too had suppressed by force a pro-
democracy movement in the preceding year. Sharing an increasing inter-
national isolation, China and Myanmar became natural partners (Li 2011, 54).
This was paralleled by the Chinese leadership’s worries about suspected

17
‘Vision and Actions an Jointy Building Silk Road Economic Belt and 21st-Century Maritime
Silk Road’, <http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html>, accessed 21
May 2018.
 €rgen Ru
10 Ju €land and Arndt Michael

American designs to slow down China’s rise by containing or even encircling

it. The concomitant gradual, albeit tangible, improvement in US–Indian rela-
tions, which from the late 1990s onwards expanded into an increasingly close
defence cooperation (lately also including Japan and Australian in the so-called
‘Quad’), additionally nurtured such fears. The prospect that almost all of the
country’s energy imports had to pass through the Strait of Malacca was par-
ticularly concerning for the Chinese, as it could render China vulnerable to
blockades by hostile powers (Brewster 2015, 49).
Yet the ‘Malacca dilemma’ (Mohan 2012, 33; Brewster 2014a, 182) could be
eased by a land route to the Indian Ocean through Myanmar and access to
Myanmar’s ports in the Bay of Bengal. By connecting China’s landlocked prov-
inces Yunnan and Sichuan to the Indian Ocean and South Asia, the Chinese
government also hoped to spur economic growth in its less developed interior
and western provinces, thus mitigating the country’s serious regional wealth
disparities. Starting in the early 1990s, China channelled multi-billion-dollar
investments into Myanmar’s dilapidated infrastructure, became the junta’s
major arms supplier and terminated support for pro-communist insurgency
groups (Ganesan 2018). The investments ranged from port development to
road, bridge, railway, and gas and oil pipeline construction (Yahya 2005, 398;
Brewster 2014b)
China’s advance in Myanmar was paralleled by overtures to other South
Asian states including Bangladesh, the Maldives, Nepal and Sri Lanka. As
China already entertained a close ‘all-weather friendship’ with India’s arch-
enemy Pakistan (Brewster 2014, 186), its inroads into India’s ‘backyard’ reared
reciprocal fears of encirclement in New Delhi (Scott 2008, 5; Mohan 2012, 16;
Brewster 2014a, 1).18 These sentiments were exacerbated in the past decade
when Beijing, in line with its putative ‘string of pearls’ strategy19 (Mohan 2012,
127; Brewster 2014a, 187), began to establish a dual-use network of military
and commercial facilities around the Indian Ocean. New Delhi saw this as an
attempt to contain India within South Asia20 or ‘narrowing its strategic space
by penetrating India’s own neighbourhood’.21 This leads to ‘the paradox’—as
former Indian foreign secretary Krishnan Srinivasan argued—that ‘if India has
to be the leading power in South Asia … it will have to prevent any Chinese
advances into South and South-East Asia’.22 Along with port development in
Myanmar’s Kyaukphyu, China funded the upgrading of the sea ports in
Chittagong (Bangladesh), Hambantota (Sri Lanka)23 and Gwadar (Pakistan)
(Brewster 2015, 51). Beijing also succeeded in markedly stepping up defence

18
Malik citing the Indian Minister of State for Defence, MM Pallam Raju (Malik 2011, 48). For more
recent evidence, see also former Indian diplomat KC Singh, The Hindu, 2 December 2016, and Shrimati
Chhaya Verma in the Indian Upper House, questioning the Minister of External Affairs whether China is
laying ‘siege around India’s maritime boundaries’, Question No. 49, <http://www.mea.gov.in/rajya-
sabha.htm?dtl/28659/questionþno515þindianþparticipationþinþoneþbeltþoneþroadþprojects>,
accessed 22 February 2018.
19
The ‘string of pearls’ strategy refers to what China’s critics suspect to be a systematic
establishment of military and commercial facilities in the Indian Ocean. A term downplayed by
Chinese media; see Global Times, 3 July 2016.
20
C Uday Bhashkar, East Asia Forum, 6 February 2018.
21
Shyam Saran, ‘Is a China-centric world inevitable?’, <https://thewire.in/diplomacy/china-
centric-world-inevitable>, accessed 24 May 2018.
22
Financial Express, 5 April 2018.
23
See also Asia Times, 13 March 2007.
 How China and India compete in South and Southeast Asia 11

cooperation with all these countries, moves that were perceived as illegitimate
by India (Brewster 2014a, 29). In the process, India’s neighbours Bangladesh,
Iran, Myanmar, Pakistan and Sri Lanka have become China’s five largest arms
buyers (Malik 2011, 42; Mohan 2012, 169–171; Brewster 2015, 51). While official
statements cloaked this diplomacy in cooperative and developmental rhetoric,
occasionally unguarded comments of Chinese analysts have revealed its hid-
den agenda: establishing ‘close contacts and strong influence’ in adjacent
regions (Xing 2017, 385).
Initially, Chinese attempts to erect a cooperative hegemony in mainland
Southeast Asia were boosted by the Greater Mekong Sub-region (GMS) project.
Launched in 1992, coordinated and partly financed by the Asian Development
Bank (ADB), China participated in the scheme through its Yunnan province
and subsequently carved out for itself a leadership position (Yoshimatsu 2008,
121). The other participants were Thailand, Myanmar, Laos, Cambodia and
Vietnam. The scheme sought to reduce the huge development disparities in
Southeast Asia through the construction of North–South and East–West trans-
portation and economic corridors in the Indochinese peninsula and to develop
the sub-region’s rich hydro-power resources through extensive dam building.
The Chinese refusal to accept Indian claims of primacy—or some sort of an
Indian Monroe doctrine (Brewster 2014a, 26)—in the Indian Ocean region was
viewed by Indian foreign policy elites as an attempt ‘to keep India off-balance
in its own neighbourhood’ (Mohan 2012, 30). Former Indian defence minister
George Fernandes thus identified China as ‘the main enemy/adversary’
(Mohan and Voll 2008, 75). Such a geopolitical appraisal prompts India to a
dual response: an attempt to improve Sino-Indian relations as epitomized by a
dramatic increase in two-way trade (Malik 2011, 44) and attraction of Chinese
investments, but—even more importantly—countermoves in regional institu-
tion building under the aegis of the ‘Look East’ policy (2014 renamed ‘Act
East’ policy by Indian Prime Minister Narendra Modi). Initiated in 1992 by
Prime Minister Narasimha Rao - for former Indian foreign secretary Shyam
Saran the prototypical representative of Kautilyan thought (Saran 2017, 44) -,
the ‘Look East’ policy started as an Indian attempt to buttress its economic lib-
eralization reforms through intensified economic relations with Southeast
Asia’s high growth economies.24 Yet, as the late Indian Minister of State for
External Affairs Shri Eddapakath Ahamed added, ‘the Look East policy is not
merely an external economic policy, but a strategic shift in India’s vision’ (cited
by Scott 2007, 129, original emphasis).
An integral part of this policy was the revision of India’s bilateral relations
with Myanmar. No longer supporting the exiled Burmese democracy move-
ment (R€ uland 2001, 147), New Delhi sought to counter China’s influence in
Myanmar through a new modus vivendi with the generals in Yangon on the
basis of ‘constructive engagement’ (Batabyal 2006, 184). This included promot-
ing the so far negligible mutual trade as well as later also defence cooperation
and energy projects. In 1997 India multilateralized the cooperation with
Myanmar as it, together with Thailand, led the creation of what today is

24
For portraying Rao’s Look East policy in Kautilyan perspective, see also Indian
Ambassador Pinak Ranjan Chakravarty, <http://www.mea.gov.in/distinguished-lectures-detail.
Htm?87>, accessed 27 March 2017.
 €rgen Ru
12 Ju €land and Arndt Michael

known as the Bay of Bengal Initiative for Multi-Sectoral Technical and

Economic Cooperation (BIMST-EC). Initial membership included Bangladesh
and Sri Lanka, with Myanmar following suit. BIMST-EC acted only consequen-
tially when, in 1994, it further enlarged to include Nepal and Bhutan, countries
unrelentingly courted by China. Beijing, however, continued to be excluded.
While official pronouncements highlighted BIMST-EC’s economic rationale, the
Indian press and think tank scholars left no doubt that the regional forum’s
main objective was strategic.25 As stated by Rajiv Sikri, former secretary (east)
of the Indian Ministry of External Affairs (MEA): ‘With an inimical Pakistan to
the west and an expansionist China to our north, it is only in the east that
there is room for extending India’s strategic space across land’ (Sikri 2013,
10).26 Indian Prime Minister Manmohan Singh’s corroborated this view, albeit
in more diplomatic wording, arguing that, ‘for India, our bilateral relations
with our BIMSTEC partners are among our most important in the world’.27
India responded to Chinese inroads into its maritime perimeter by join-
ing Australia and South Africa in the formation of the Indian Ocean Rim
Association for Regional Cooperation (IOR-ARC). Established in 1997 and
renamed Indian Ocean Rim Association (IORA) in 2013, the grouping has
21 members. All of them are Indian Ocean littorals, including Southeast
Asian nations, such as Indonesia, Malaysia, Singapore and Thailand, but
excluding Pakistan.28 After India’s elevation to an ASEAN dialogue partner
(1995) and admission to the ASEAN Regional Forum (ARF) (1996), the
Asia–Europe Meeting (ASEM) (2004) and the East Asia Summit (EAS)
(2005), Indian diplomacy temporarily downgraded its engagement in the
forum.29 However, in recent years, with increasing Chinese presence in the
Indian Ocean30 and intensifying Sino-Indian competition in Africa (Michael
2014),31 New Delhi has revitalized Indian Ocean cooperation in coincidence
with other littoral countries such as Indonesia. Jakarta also has become
increasingly wary of Chinese naval and commercial activities in the region
and, in 2014, devised a PACINDO strategy linking the Pacific and Indian
Ocean perimeters without, however, downgrading relations with China—in
a typical hedging exercise.32
China’s strategic response to Indian institutional activism in mainland
Southeast Asia was the Kunming Initiative of 1999, initially a track two forum
comprising China, Bangladesh, Myanmar and India.33 It was later upgraded to

25
See also Yahya (2005, 398, 405), Batabyal (2006, 181 and 183), Scott (2008, 4), Murthy (2008,
1), Rehman (2009, 131).
26
For example, for former Indian diplomat G Parthasarathy these schemes served ‘to dilute
China’s attempts to undermine India’s relations … in Southeast and East Asia’ (see New Straits
Times, 24 October 2011) and think tank scholar Padmaja Murthy stated that ‘even among those
groupings which claim to focus solely on the economic agenda, there is a definite influence of
political and other strategic factors’ (Murthy 2008, 1).
27
See ‘PM’s statement at 3rd BIMSTEC Summit’, <http://archivepmo.nic.in/
drmanmohansingh/speech-details.php?nodeid=1441>, accessed 21 May 2018.
28
However, India was unable to prevent the admission of China as a dialogue partner
of IORA.
29
The Hindu, 7 October 2003.
30
For quotations from high-ranking Indian security officials highlighting ‘the growing
Chinese footprint in the Indian Ocean’, see Scott (2015, 476).
31
See also Global Times, 28 August 2017.
32
The Diplomat, 7 September 2015; The Jakarta Post, 6 September 2016.
33
On China’s strategic goals, see Global Times, 29 November 2017.
 How China and India compete in South and Southeast Asia 13

Figure 1. Overlapping regional fora in South and Southeast Asia.

government level and renamed the Bangladesh–China–India–Myanmar (BCIM)

grouping.34 Again, infrastructure development was one of the major objectives
apart from cooperation in a broad range of mostly economic policy fields.
Although India was included in BCIM, New Delhi participated only reluc-
tantly,35 as it was concerned about potential Chinese interference in India’s
insurgency-infested northeast (Malik 2011, 56).
In a countermove, in November 2000, India launched the Mekong–Ganga
Cooperation (MGC) with Myanmar, Thailand, Cambodia, Laos and Vietnam as
additional members. Ignoring China’s interest in joining the grouping,36 the
MGC crystallized the interests of India and mainland Southeast Asian coun-
tries in curtailing China’s ‘influential and catalytic role’ in the GMS (Yahya
2005, 399).37 India also sought to balance China’s North–South infrastructure
and economic corridor projects along the Irrawaddy river with an East–West
connectivity scheme that would create for India a land bridge to the South

34
South Asia Monitor, 17 September 2016.
35
Ibid.
36
The Hindu, 25 July 2001.
37
For comments in Indian, Chinese and Thai media unequivocally linking the grouping to
the mainland Southeast Asian rivalry between New Delhi and China, see The Hindu, 12 November
2000; Global Times, 7 March 2018; and a Bangkok Post editorial cited in IPS Interpress Service, 17
November 2000.
 €rgen Ru
14 Ju €land and Arndt Michael

China Sea.38 India’s Defence Minister George Fernandes defined India’s mari-
time interests as extending ‘from the North of the Arabian Sea to the South
China Sea’ (quoted in Scott 2007, 125; Mohan 2012, 184). In classical Kautilyan
logic that ‘the enemy of my enemy is my friend’ (Rehman 2009, 129), the MGC
was closely linked to the upgrading of bilateral relations with Vietnam, now
elevated to a comprehensive strategic partnership.39 Vietnamese Prime
Minister Vo Van Kiet explicitly endorsed this policy as one helping Vietnam to
‘soft’ balance or dilute China’s power.40 Indian–Vietnamese cooperation
includes defence41 and—angrily objected to by China42—joint oil and gas
exploration in the South China Sea (Ghosh 2013), with the prospect of giving
the Indian Navy access to Vietnam’s large Can Ram Bay naval base (Scott
2008, 10; Brewster 2014a, 193; Pant 2018, 10).43
Through its presence in the South China Sea, 80 per cent of which is
claimed by China, India seeks to increase its ‘strategic leverage’ and recipro-
cate China’s forays into its own maritime defence perimeter (Batabyal 2006,
185; Chatterjee 2007, 72), the Indian Ocean, by a ‘counter-encirclement of
China’ (Brewster 2014a, 188). At the same time it supports Vietnam and the
Philippines, both of which with varying intensity contest Chinese claims.44
Indian presence in the South China Sea45 and energy cooperation with
Vietnam are spurring the internationalization of the dispute, a prospect
strongly disliked by China, which insists on negotiating bilaterally with the
other claimants. Unsurprisingly, Chinese media have accused India of
‘intervention’46 and ‘fishing in troubled waters’.47 Similarly Kautilyan was
India’s strategy to enlist Japan in its mainland Southeast Asian cooperation
schemes. Japan is another Chinese neighbour with strong motivations to curtail
China's influence. It has the technical expertise and also the financial resources
to make the Indian effort more competitive with China’s economic forays into
the region (Rimmer 2018, 475).48
The race for cooperative hegemony reached a new stage when in
September 2013 China first unveiled its US$1 trillion ‘One Belt, One Road’
(OBOR) project,49 a gigantic infrastructure and economic development scheme
involving 68 countries and linking China with the Middle East and Europe.
Obviously designed as a response to US President Obama’s Pivot to the
Asia–Pacific (Chinese policy adviser Yifu Lin quoted in Cai 2017, 5), a policy
launched in 2011 to preserve American pre-eminence in Asia, OBOR consisted

38
Hindustan Times, 11 November 2000.
39
Hanoi Times, 9 January 2017.
40
Far Eastern Economic Review, 22 September 1994, p. 17. For a similar statement, see Hanoi’s
ambassador to India, Vu Quang Diem, The Hindu, 5 January 2007.
41
Based on a defence agreement of 1994, which was upgraded in 2000 (Scott 2008, 10).
42
Times of India, 11 January 2018.
43
Eurasia Review, 17 September 2014.
44
‘India sides with Philippines in South China Sea dispute’, <https://www.dur.ac.uk/ibru/
news/boundary_news/?itemno=25874>, accessed 25 January 2018.
45
The Pioneer, 28 May 2015.
46
See Chinese scholar Liu Zongyi, Global Times, 25 January 2015.
47
New Straits Times, 24 October 2011.
48
As disapprovingly noted by Chinese observers. See Global Times, 6 January 2015.
49
Government of India, Ministry of External Affairs, Ambassador (Retd) Ashok Sajjanhar,
‘From Look East to Act East: semantics or substance?’, <http://www.mea.gov.in/distinguished-
lectures-detail.htm?213>, accessed 18 February 2017.
 How China and India compete in South and Southeast Asia 15

of a Eurasian land corridor and a new maritime Silk Road. Observers regard
OBOR as a manifestation of Sun Tze’s famous dictum that ‘the supreme art of
war is to subdue the enemy without fighting’.50 A significant component of
OBOR is the development of economic corridors strengthening China’s con-
nectivity with South and Southeast Asia. While in the expectation of huge
material incentives virtually all of India’s neighbours joined the OBOR initia-
tive, India remained aloof and decided not to participate in the OBOR summit
organized by Beijing in May 2017.51 For India, attending would have been
paramount to ‘surrendering its claim over the region’.52 Indians see in
OBOR—irrespective of Chinese denials—not only a scheme boosting ‘regional
connectivity but also ideological hegemony, with countries such as Cambodia
and Laos increasingly getting drawn into its sphere of influence’, as one
unnamed expert told the Times of India.53
One of the corridors promoted by China was the inauguration of the
BCIM Economic Corridor (BCIM-EC), a follow-up to BCIM, in 2015, which
seeks to enhance physical connectivity and economic interdependence
through a manufacturing corridor extending from Kunming to Calcutta
(Brewster 2015, 53). Faced with unabated Indian reservations, China unilat-
erally surged ahead by accelerating triangular cooperation with Bangladesh
and Myanmar.54
While—as admitted by Chinese scholars in a rare deviation from the usu-
ally altruistic rhetoric surrounding OBOR—the BCIM-EC targeted access to the
Indian Ocean,55 the Lancang-Mekong Cooperation (LMC), initiated in the same
year, was the second tentacle reaching out to China’s South and Southeast
Asian neighbourhood. The LMC countered the Indian-led MGC, an American
scheme, the Lower Mekong Initiative (LMI) launched in 2009 and the New
Tokyo Strategy 2015 for Mekong-Japan Cooperation, which the Chinese
regarded as ‘interference’ (Xing 2017, 388).56 Institutionally, the LMC over-
lapped with the Mekong River Commission (founded in 1957), the GMS, the
MGC, the LMI, Japan’s Mekong strategy and a number of fora launched by
smaller mainland Southeast Asian countries. Still, more than in any of the ear-
lier initiatives on mainland Southeast Asia, in the LMC, China was entirely in
the driver’s seat. The LMC was a Chinese initiative, the first summit was held
in China in February 2016 and, while the forum’s chair rotates, China reserved
for itself the position of permanent co-chair.57 The LMC also dwarfed all other
Mekong initiatives in terms of funding, with China providing 10 billion yuan
of concessional loans, US$5 billion of export credit, US$5 billion for capacity
cooperation through more than 20 infrastructure and industry projects and an
LMC Special Fund of US$300 million.58 With the lavish funding of cooperation
projects, China also seeks to silence criticism about its eight mega-dams and its

50
Pakistan Observer, 4 October 2017.
51
Global Times, 1 June 2017.
52
India Today, 14 May 2017; for a similar statement, see Long Xingchun, Director of the
Center for Indian Studies at China West Normal University, Hindustan Times, 14 May 2017.
53
Times of India, 4 May 2017.
54
Global Times, 28 November 2017; 29 November 2017.
55
ibid.
56
Thethirdpole.net, 1 February 2016.
57
The Phnom Penh Post, 11 January 2018.
58
China Daily, 11 January 2018.
 €rgen Ru
16 Ju €land and Arndt Michael

plans to construct 20 other dams along the Mekong river,59 which

adversely affect the ecosystem and the biodiversity of the downstream coun-
tries.60 The LMC is thus an attempt ‘to recentre regional planning towards
China’ (Middleton and Allouche 2016, 111).
It is much in line with the region’s distrustful and cunning foreign policy
cultures traced in the preceding section that the dynamics of regional institu-
tion building driven by the Chinese–Indian rivalry motivated smaller countries
in mainland Southeast Asia to establish their own regional fora conspicuously
excluding China and India. Under Prime Minister Thaksin Shinawatra,
Thailand created the Ayeyawady–Chao Phraya–Mekong Economic
Cooperation Strategy (ACMECS) in 2003.61 ACMECS sought to revive the Thai
dream of predominance in Suvarnabhumi (Buszynski 1998, 292;
Chachavalpongpun 2010, 117; Busbarat 2012, 133)—literally ‘land of gold’ and
the pre-colonial name for (mainland) Southeast Asia (Saran 2017, 20).
Moreover, despite otherwise amicable relations, it tacitly sought to neutralize
growing Chinese and—since the Asian Financial Crisis—Vietnamese political
and economic influence in neighbouring countries such as Cambodia and
Laos—viewed by Thailand as its historical zone of influence (Yoshimatsu
2010).62 However, while welcoming Thai economic engagement, these smaller
countries resented what they increasingly perceived as Thai natural resource
imperialism (Buszynski 1998; Chachavalpongpun 2010, 122). They eventually
formed the Cambodia, Laos, Myanmar, Vietnam (CLMV) Summit which pre-
ceded ACMECS summits and served to hedge against Chinese, Indian and
Thai hegemonic ambitions and to raise bargaining power vis-a-vis ASEAN
(Yoshimatsu 2008, 124).63 For Vietnam both fora also served as platforms to
forge an ASEAN consensus in light of China’s increasing assertiveness in the
South China Sea and divisive tendencies among mainland Southeast Asian
countries.64 Figure 1 showcases the membership overlap between eight of the
abovementioned fora.

Conclusion
This article has sought to explain overlapping regionalism through the theoret-
ical lens of Pedersen’s ideational-institutional realism (Pedersen 2002). This
analytical angle moulds cognitive and institutionalist arguments into an over-
arching realist framework. The ideational dimension of ideational-institutional
realism suggests that, informed by age-old strategic cultures of cunning prag-
matism, notions of realpolitik and geopolitical concerns are paramount in the
worldview of Asia’s foreign policy elites. Evidence for this finding abounds as
exemplified by the utterances of contemporary political decision-makers and
diplomats. With such a frame of mind it is highly unlikely that Asian foreign
policy elites will embark on regional cooperation from a liberal-cosmopolitan

59
Globe and Mail, 12 January 2018.
60
The Diplomat, 31 October 2017.
61
Members, apart from Thailand, are Myanmar, Laos, Cambodia and Vietnam.
62
It was thus no coincidence that Vietnam was not among ACMECS’s founding members.
Vietnam joined in 2004. People’s Daily, 22 November 2010.
63
Authors’ interview, 31 March 2017.
64
Eurasia Review, 21 June 2015.
 How China and India compete in South and Southeast Asia 17

vantage point. While the institutionalist dimension of ideational-institutional

realism shows that institutions matter for them, it also accentuates the fact
they are held more important as devices for ‘soft’ balancing than ones for solv-
ing cross-border regional problems. Institutions are thus imbibed by the tenets
of realism.
Applying process tracing, our institutional analysis provided ample evi-
dence for our key argument that overlapping regionalism in South and
Southeast Asia is the result of ‘soft’ balancing and hedging. China and India’s
competition for ‘cooperative hegemony’ has been the driver for the emergence
of this dizzying array of regional cooperation schemes with overlapping func-
tions and mandates. Both powers fit to varying degrees the three major objec-
tives that cooperative hegemons pursue: (1) inducing neighbouring countries
to bandwagon with the hegemon; (2) diffusing the hegemon’s values, norms
and policies; and (3) gaining access to natural resources.
In our empirical analysis, we were, first, able to demonstrate that smaller
countries do indeed join the regional fora created by China and India. With
tangible material incentives and diplomatic charm offensives, both powers
induced poorer and less powerful neighbours to join their institutional initia-
tives. Moreover, as Yeh shows, pertinent projects help recipient states to
strengthen their ‘presence and sovereignty’ in peripheral areas (Yeh 2016, 282).
Overall, China is more successful in establishing a cooperative hegemony in its
South and Southeast Asian peripheries. Its abundant resources dwarf those of
India and its project implementation is more vigorous and effective.65 The con-
fidence to shape the regional milieu deriving from this superiority also
explains why China is more willing to accept India’s membership in regional
organizations formed by it than the other way around. The BCIM, the
Shanghai Cooperation Organization (SCO) and the most recent formation of
the China–South Asia Cooperation Forum (CSACF)66 are examples of that
(Freeman 2018).
Smaller countries joining the regional institutions launched by both hege-
monic aspirants primarily practice institutional hedging—‘limited bandwagon-
ing’ (Kuik 2008) - while at the same time also performing ‘soft balancing’
functions. Thailand, for instance, joined the Indian-sponsored MGC because it
regards India ‘as an emerging power in the region’ which ‘cannot be ignored’,
as reasoned by a Thai foreign ministry official.’67 Joining regional fora is also
attractive because a multilateral setting mitigates bilateral power asymmetries
(Nolte 2010, 895). Moreover, for the purpose of constraining China and India,
subordinate powers such as Thailand seek to establish lower-order cooperative
hegemonies, thereby following the same template of realpolitik as India and
China with their strategic cultures informed by Kautilya or Sun Tze (Saran
2017, 39).
Second, China, more than India, also uses cooperative hegemony for values
and policy export, though vociferously denying it. Beijing’s cooperation with
neighbouring countries is a conduit for the Chinese model of development,

65
For the slow pace of Indian infrastructure projects, see The Straits Times, 26 January 2018.
66
Observer Research Foundation, <https://www.orfonline.org/expert-speak/saarc-in-coma-
china-throws-another-challenging-regional-initiative/>, accessed 29 September 2018.
67
IPS Interpress Service, 17 November 2000.
 €rgen Ru
18 Ju €land and Arndt Michael

which offers—as Chinese President Xi Jinping noted—‘Chinese wisdom and a

Chinese approach to the problems facing mankind’.68 More specifically,
China’s Foreign Minister Wang Yi likened LMC to a ‘new model for
South–South cooperation’ (Middleton and Allouche 2016, 111). Observers sus-
pect an attempt to eventually establish a Sino-centric world order behind the
benign rhetoric (Ping 2013). Lavish material support of its neighbours creates
structural power and dependencies that China uses to mobilize backing in
issues of national concern. Cambodia’s, Laos’s and Myanmar’s support of its
South China Sea policies is only one case in point. Recipient countries such as
Cambodia also echo China’s OBOR rhetoric.69
Yet distrust of the powerful northern neighbour continues to linger, as
Beijing’s much celebrated ‘win–win’ is often quite asymmetrical. The local pop-
ulations affected by large-scale Chinese-financed infrastructure projects resent
the Chinese presence, the labour benefits of these projects are limited because
Chinese construction companies rely on Chinese work force, and projects—as
in the case of Laos and Sri Lanka—end in a debt trap and often facilitate
unwanted Chinese immigration. Moreover, many of these projects serve more
than the satisfaction of local needs the internationalization of the Chinese econ-
omy and the reduction of production overcapacities in China. Regional cooper-
ation with India (and other partners such as Japan and the US) is thus a fall-
back position against feared Chinese dominance.
Regional institutions officially designed for economic cooperation open
China and India regular access to decision-makers in neighbouring countries
and thus provide the opportunity to lobby for their interests. All regional fora
have regular meetings at the leader, foreign and economic minister and senior
official levels. The bilateral meetings that are frequently held at the fringes of
these fora create additional channels for communication.70 BIMST-EC, for
instance, helped India to convey concerns to Myanmar about Chinese attempts
to gain access to the Bay of Bengal, which prompted Myanmar to adopt a more
balanced approach (Yahya 2005, 398). Apart from local protests (Ganesan 2018),
intensified Indian communication also contributed to Myanmar’s decision to
suspend two major Chinese flagship projects: the US$3 billion Myitsone hydro-
electric project and the US$7.6 billion Kyaukphyu–Kunming railway project.71 In
a related development, Bangladesh cancelled the Chinese-assisted construction
of a deep-sea port on Sonadia Island (Ramachandran 2016)72 and, by retaining
oversight of security operations, Sri Lanka sought to allay Indian concerns that
China might use the Hambantota port for military purposes.73
Third, and finally, our analysis also suggests that the new regional fora in
tandem with intensifying bilateral relations enable China’s and India’s fast-
growing economies to slake their insatiable thirst for raw materials and natural
resources. Timber, hydropower, oil and gas were the prizes to be gained for
China and India by accelerated infrastructure development, trade and invest-
ment promotion in their immediate South and Southeast Asian

68
East Asia Forum, 11 January 2018.
69
Khmer Times, 7 December 2016.
70
Xinhua, 15 November 2010; Thai News Service, 4 July 2006; 13 March 2013.
71
New Indian Express, 20 April 2014.
72
South China Morning Post, 13 October 2016.
73
Indian Express, 5 January 2017; The Diplomat, 1 January 2018.
 How China and India compete in South and Southeast Asia 19

neighbourhood. For instance, 80 per cent of the oil and gas pumped through
from Myanmar to Yunnan is for Chinese consumption. In a similar vein, 90
per cent of the electricity of the suspended Myitsone dam was earmarked for
export to Yunnan.74 By contrast, mainland Southeast Asian countries were left
to contend with the adverse environmental and social consequences of this
extractivism.

Acknowledgement
An earlier draft of this article was presented at the conference ‘Regionalism in
the Global South and the EU in Comparative Perspective’, organized by the
Jean Monnet Centre of Excellence, EU in Global Dialogue (CEDI) at the
University of Mainz, 10–11 November 2016. The authors would like to express
their gratitude to the commentators and participants of the Mainz workshop
and the anonymous reviewers for very helpful comments. For able research
assistance we thank Raphael Steinhilber and Kai Vorberg, as well as Alec
Crutchley for proofreading.

Notes on Contributors
J€
urgen R€uland is is professor of Political Science in the Department of Political
Science at the University of Freiburg, Germany. He is the author of The
Indonesian Way. ASEAN, Europeanization and Foreign Policy Debates in a
New Democracy (Stanford: Stanford University Press 2018) and ASEAN and
its Cohesion as an Actor in International Forums – Reality, Potential and
Constraints (Cambridge: Cambridge University Press) (with Paruedee
Nguitragool 2015). Email: juergen.rueland@politik.uni-freiburg.de.
Arndt Michael is senior lecturer in the Department of Political Science at the
University of Freiburg, Germany. He is the author of India’s Foreign Policy
and Regional Multilateralism (Basingstoke: Palgrave Macmillan, 2013). His
most recent publication is ‘Cooperation is What India Makes of It - A
Normative Inquiry into the Origins and Development of Regional Cooperation
in South Asia and the Indian Ocean’, Asian Security 14(2) 2018: 119–135.
Email: arndt.michael@studgen.uni-freiburg.de.

ORCID
Arndt Michael http://orcid.org/0000-0002-6133-9230

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