China-ASEAN Monitor Weekly
Politics and Security
China’s Xi Jinping takes commander in chief military title
China’s President Xi Jinping is now commander in chief of the military’s Joint Operations Command Centre, in his latest move to exert greater control over the armed forces. Mr Xi is already General Secretary of the Communist Party, and chair of the Central Military Commission, which manages the People’s Liberation Army. Correspondents say that, given Mr Xi’s consolidation of power in China, the move will be interpreted by some as a propaganda message that he is now in absolute control. But he was already in military command and to most Chinese ears the phrase is unlikely to conjure up the same resonances as it does in English translation.
New Philippine president might be softer on China
The South China Sea territorial dispute has led the outgoing Philippine administration of President Benigno Aquino to step up military co-operation with the US and Japan but there is speculation that the new Philippine president elected on 9 May could be more conciliatory. The presidential candidates Rodrigo Duterte, Grace Poe, and Jejomar Binay have not ruled out reviving diplomacy with Beijing, a strategy the outgoing government evidently gave up on.
Trade and Investment
China investors target Southeast Asia
After a record-breaking first quarter of 2016 for Chinese outbound mergers and acquisitions focused on the US and Europe, more mainland-based companies are poised to follow Alibaba in targeting assets in the fast-growing ASEAN region. Alibaba group last week agreed to take a US$1 billion controlling stake in Singapore-based online shopping start-up Lazada, marking Alibaba’s biggest cross-border deal. Some 47% of large Chinese corporations surveyed identified ASEAN as their top destination for investment over the next three years.
Bank of China opens branch in Brunei
Bank of China has been granted approval to open a branch in Brunei — the first time that a Chinese financial institution has established a presence in the oil-rich sultanate. News of the bank deal follows a steady flow of Chinese investment into Brunei, including a US$6 billion project to construct an oil refinery and petrochemical production facility. Bank of China linked described Brunei as “one of the important countries along the Belt and Road route, politically stable and strategically located with well-developed infrastructure”.
China investments to lift Malaysia’s outlook
Malaysia’s economic and business outlook from official projections and private sector surveys looks meek, but this may be lifted by the massive inflow of Chinese funds and investments. Chinese Premier Li Keqiang promised to help embattled Malaysia overcome its economic problems during his official visit to Kuala Lumpur last November. Since then, state-owned China General Nuclear Power Corp purchased 1MDB’s energy assets in Edra Global Energy Bhd, China Railway Construction Corporation purchased a substantial equity stake in Bandar Malaysia and then last month, China Railway Engineering Corporation announced its plan to set up its multi-billion regional headquarters in Bandar Malaysia, which will host the main terminal for the planned KL-Singapore High Speed Rail. China’s government has also started buying more Malaysian Government Securities (MGS) and this inflow of new money could possibly rise 8.5% of Malaysia’s total outstanding MGS in early April.
The Chinese Economy
First-quarter growth slows a bit in China, as expected
As expected, China’s growth rate slowed to 6.7% in the first quarter of the year but a notable pickup in debt-driven industrial activity last month probably cushioned the slowdown. The quarterly rate was the slowest since the depths of the financial crisis in 2009 but in line with the government’s target this year for a 6.5-7% growth. China is increasingly a two-speed economy. Traditional industries like steel, mining and manufacturing are mired in a brutal downturn but there is growth in consumer demand leading to a thriving services sector, e-commerce and high-tech companies.