Power asymmetry and threat points: negotiating China's infrastructure development in Southeast Asia

Abstract

China's ambitious global infrastructure investment plan, embodied in the Belt and Road Initiative and backed by massive financial resources, is an attempt to secure cooperation from developing countries in Asia and beyond to support its rise as a global power. Such cooperation, however, is not guaranteed. Despite the power asymmetry between China and partner countries, as well as the latter's significant infrastructure investment needs, host countries still need to be convinced of the specific benefits of China's projects, thus creating a bargaining opportunity. Significant room for negotiations emerges due to the domain characteristics of infrastructure development and China's strategic motives and industrial policy needs which often misalign with the host country's development priorities. I construct an analytical framework drawn from bargaining theory to explain when power asymmetry may fail to prevail in China's infrastructure diplomacy, which is illustrated by its high-speed rail negotiations in Southeast Asia. The relative bargaining power of a host country is influenced by its threat points, which interact with the project terms offered by China to produce final bargaining outcomes. This article offers a new perspective on the agency of weaker states in the context of China's rise.

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