Allies for Sale? Chinese Economic Statecraft, Military Diplomacy, and Alliance Formation in Southeast Asia

Since China’s launch of the Belt and Road Initiative in 2013, considerable attention has focused on Beijing’s use of economic inducements to secure political and military influence. But can money buy allies? Inducements can be ineffective when the target state knows that the sender profits from giving the inducement, because the sender will give the inducement even without any concession. Drawing on extensive interviews with senior officials from Association of Southeast Asian Nations (ASEAN) member states, China, and the U.S., we argue that paradoxically, competition between two powers competing for influence over the same target can assuage this dilemma. To receive both senders’ inducements, the target must placate both senders through concessions. We systematically evaluate this argument using two unique datasets on combined military exercises (CMEs) and senior leader visits between China and ASEAN countries. We find that, consistent with our argument, ASEAN countries engage in CMEs with China only when they also maintain close military cooperation with the U.S.