Panel 60: China in Asia: Belt and Road and More

Chair: Joshua Eisenman, University of Notre Dame

Panelists

Daniel Loebell, Northwestern University, “BITs, BRI, or Both: How India’s Contiguous Allies Use Triangulation to Redefine the Investor-State Legal Regime”

Nepal and Bangladesh, India’s contiguous allies participating in China’s Belt and Road Initiative (BRI), are redefining the norms of the investor-state legal regime. This regime encourages states to sign bilateral investment treaties (BITs) and resolve their disputes with foreign investors through international arbitration. Unlike India and some other jurisdictions around the world, these two states have abstained from open resistance to the investor-state regime and have instead emphasized two divergent approaches that implicitly contradict the hard (binding) law enshrined in BITs: While Bangladesh is participating in the BRI and maintaining a BIT with China, Nepal still lacks a BIT despite its formal participation in the BRI and the government’s significant interest in attracting foreign direct investment. In this paper, I explain these two states’ investor-state diplomacy with India and China in the context of the BRI. For Bangladesh, I argue, specifically, that despite its extant BIT, its BRI engagement combines with its India-China diplomatic triangulation to encourage a hybrid hard-soft law approach that allows the country to negotiate between these two rival states more effectively. As for Nepal, its government’s lack of movement on proposing a BIT with China stems from neither its internal bureaucratic mechanisms nor the Indian government preventing these attempts, but instead its adoption of a soft law approach with all of its neighbors. I explore, moreover, how Nepal’s approach has increasingly diffused to Bangladesh via each state’s engagement with India and China.

Yinlin Wan, Waseda University, “Tough Choices for Host Countries in the Cracks: The Successes and Failures of China-Japan Infrastructure Aid Projects in Southeast Asia”

While scholars have delved into China and Japan’s foreign aid programs in Southeast Asia, the decision-making process of host countries remains underexplored. This study probes whether Southeast Asian nations opt for Chinese or Japanese aid for infrastructure projects and analyzes factors influencing aid program suspension. Foreign aid serves dual purposes: promoting local development and acting as a diplomatic tool, creating a potential contradiction. China’s aid, executed by state-owned enterprises (SOEs), is perceived to have a higher chance of landing and benefiting the community due to their ability to implement government decisions. However, SOEs face domestic scrutiny for political motives, strengthening the diplomatic attribute of aid. In contrast, Japan’s aid, primarily from private companies, carries mercantilist attributes, reducing host countries’ expectations of its success. In Southeast Asia, central governments decide on aid programs, influenced by leaders’ ruling cycles, which affect their success. Using Thailand, Indonesia, and Malaysia as case studies, this paper argues that the election cycle explains this phenomenon. Leaders are more likely to choose Chinese aid for long-term tenures, as it bolsters their power, making the political cost acceptable. Conversely, if facing imminent elections or short terms, opting for Japanese aid mitigates political challenges, making it a wiser choice. Exploring this question helps to understand the political choices made by Southeast Asian countries in the competition between China and Japan for infrastructure as well as underscore the role of foreign aid in strengthening ties among Asian countries.