Economic help is far more important to Brunei than the maritime disputes. That’s music to China’s ears.<\/b>
\nChinese President Xi Jinping\u2019s ongoing Asia tour had him in Brunei from November 18, immediately after leaving the APEC summit in Papua New Guinea, to November 20, when he departed for the Philippines. It was Xi\u2019s first visit to Brunei \u2013 and the first state visit by any Chinese president in 13 years.
According to Xi\u2019s host, Sultan Hassanal Bolkiah, Xi\u2019s visit\u00a0was \u201ca significant one in expanding and strengthening the historical ties underpinned by strong friendship, trust and goodwill towards one another.\u201d As one of the outcomes, China and Brunei agreed to upgrade their relationship to a strategic cooperative partnership. They also agreed to establish a joint steering committee between their two governments to allow for regular ministerial-level dialogues.
The current phase of the Brunei-China relationship is largely based on economic cooperation. During Xi\u2019s visit, Brunei pledged to continue its support for China\u2019s Belt and Road Initiative (BRI) and China promised to assist the sultanate in its drive to diversify its economy away from a dependence on oil and gas \u2013 an ever-more-urgent need, as Brunei\u2019s energy resources are expected to be tapped out in the next 20 years. More immediately, low oil prices have helped throw Brunei into a recession and the country is hoping Chinese investment can help turn the tide.
Brunei sees an opportunity to use China\u2019s BRI to bolster its own Vision 2035, an ambition plan to create a more diversified, sustainable economy. Beijing has obliged, as least in rhetoric. In their joint statement, \u201cChina reaffirmed its strong support for Brunei Darussalam\u2019s national development goals, and expressed best wishes for the successful realization of the Wawasan [Vision] 2035.\u201d
With the Sultan and his government eager to expand cooperation, bilateral trade has soared since 2016, reaching over $1.3 billion as of September 2018. That represents nearly 90 percent growth over 2017, after notching 36.5 percent year-on-year growth from 2016 to 2017.
Xi\u2019s visit this time didn\u2019t see any major new projects announced, although the two sides did ink a new memorandum of understanding (MoU) on BRI cooperation. Instead, there were more generic promises to strength cooperation on trade and investment, agriculture, and aquaculture, as well as repeated commitments to previous projects. The two most notable areas of cooperation already in the works are the Hengyi Industries Sdn Bhd refinery and petrochemical plant, and the Brunei-Guangxi Economic Corridor.
The Hengyi project was announced in March 2017; construction is expected to be completed this year, with operations starting in 2019. Hengyi Industries Sdn Bhd is jointly owned by China\u2019s Zhejiang Hengyi company and a Bruneian partner according to a 70-30 split in China\u2019s favor. Located on Pulau Muara Besar, the $3.4 billion project centers on an oil refinery expected to produce gasoline, diesel, and jet fuel, sources told\u00a0 Reuters. There are plans for a Phase II as well, which would bring the total investment to over $15 billion, according to Hengyi Industries Sdn Bhd\u2019s chief executive officer. According to the company, the plant \u201cwill ensure Brunei\u2019s self-sufficiency in refined products.\u201d
The Brunei-Guangxi Economic Corridor, as the name implies, is a broader framework that covers multiple projects. The original agreement, signed in September 2014, called for \u201cover $500 million worth of joint investments.\u201d Projects currently underway include redeveloping Brunei\u2019s Muara Port as well as constructing an agricultural park and a medical park. Zhou Yan, the former head of the program, told Chinese media that \u201chelping Brunei modernize its only deep-water port\u2026 is only the first step. The next is to diversity the nation\u2019s industries and reduce its dependence on oil revenues.\u201d
All this economic cooperation comes against the backdrop of the South China Sea disputes, in which both China and Brunei are claimants. As the smallest of the claimant states, Brunei has been low-key about advancing its claims. China sees an opportunity to use this relationship as a blueprint for \u201cproperly\u201d managing the disputes.
The joint statement issued during Xi\u2019s visit \u201cwelcomed the improving cooperation between China and ASEAN Member States in the South China Sea\u201d and \u201cencouraged further progress\u201d in the ongoing negotiations over a Code of Conduct. Brunei and China emphasized \u201cself-restraint\u201d as well as the \u201cimportance of resolving territorial and jurisdictional disputes through peaceful dialogue and consultations by sovereign states directly concerned\u201d \u2013 a nod to China\u2019s preference for bilateral negotiations without external mediation.
Xi made sure to thank Brunei for its attitude on the South China Sea disputes. According to Xinhua, Xi told the Sultan that \u201cChina appreciates the dual-track approach proposed by Brunei: disputes should be handled through friendly consultation by parties concerned and countries in the region should jointly safeguard stability in the South China Sea.\u201d
Xi is hoping to continue his run of bolstering economic cooperation with rival South China Sea claimants\u00a0as he visits the Philippines \u2014 and so far, he\u2019s off to a good start .<\/p>\n