Cheng-Chwee, Kuik.

The Essence of Hedging: Malaysia and Singapore's Response to

a Rising China.
EXECUTIVE SUMMARY (p159)
1. Hedging as a middle position between balancing and bandwagoning
2. Small-state strategy towards a rising power
3. Popular assertion: SEA countries not balancing or bandwagoning, but hedging against
a re-emerging China Kuik assesses this assertion
4. Kuik's three objectives:
5. 1 - Identify the key defining attributes and functions of hedging as a strategy that is
distinguishable from pure forms of balancing and bandwagoning
6. 2 - Operationalize the term within the context of SEA-China relations (coverage:
Malaysia and Singapore's response to China in the post-Cold War era)
7. 3 Explain why Singapore and Malaysia have chosen to hedge in the way they do.
8. Kuik's central argument: The substance of the two smaller states' policies are
not determined by their concerns over the growth of China's relative power per
se; rather, it is a function of regime legitimation through which the ruling elite
seek to capitalize on the dynamics of the rising power for the ultimate goal of
justifying their own political authority at home.
INTRODUCTION (p160-163)
Traditional view: States are likely to either balance against or bandwagon with an
increasingly strong/potentially threatening Great Power
Balancing: Driven to preserve their own security, states (esp. smaller ones), tend to
perceive a rising power as a growing threat that must be counter-checked by alliance
(external balancing) and armament (internal balancing).
More likely when the rising power has geographical proximity, offensive capability, and
offensive intention.
Bandwagoning: States choose to crouch under, rather than contain against, a fast
emerging power.
Acceptance of a subordinate role to the dominant power in exchange for profit.
More likely when they view the power as a primary source of strength that can be
exploited to promote their own interests.
However, empirically speaking, East Asian states do not seem to be purely balancing
or bandwagoning behind a rising China
Not pure balancing... Most states maintain some form of military ties with the
US/West, but this does not necessarily constitute a balancing strategy these military
ties predate the rise of China
No clear indication that the stimulation and acceleration of these states' military
modernization programs have been driven by the growth of China's relative power
Why? Because pure balancing is strategically unnecessary:
China poses a potential but not actual threat.
Pure balancing in an anti-BJ alliance would be politically provocative and counterproductive, pushing China in a hostile direction (self-fulfilling prophecy)

 Loss of trade opportunities that can be reaped from China's growing market
Not pure bandwagoning... While most states maintain and develop economic and
diplomatic ties with China, this is primarily motivated by a pragmatic incentive to gain
economic and diplomatic profit
If they were truly bandwagoning, they would exhibit readiness to accept China's power
ascendancy, in terms of political and military alignment but none of the regional
states have a security alliance with China
Why? Because it is politically undesirable and strategically risky
It limits the smaller states' freedom of action
Even if economically appealing
Thus, many ASEAN countries have chosen not to adopt strategies of pure
balancing or pure bandwagoning, but instead, the middle position of hedging.
Hedging exhibited in small-state reactions to power ascendancy, and in big power
strategies too.
Kuik's case studies: Malaysia and Singapore's response to the rise of China in the
post-Cold War era (1990-2005)
Hedging as an alternative analytical tool to explain why smaller states have responded
to a rising power in the way they have
Kuik's argument the Regime Legitimation (RL) Framework: A small state's
strategy towards a rising power is driven not so much by the growth of the Great
Power's relative capabilities per se; rather, it is motivated more by an internal process
of regime legitimation in which the ruling elite evaluate and then utilize the
opportunities and challenges of the rising power for their ultimate goal of consolidating
their authority to govern at home.
Three Core Assumptions:
(1) FP choices made by ruling elites, concerned primarily with their own political
survival. Policy actions geared towards mitigating security, economic, political risks
that may affect their governance capacity.
(2) Representation of risks which risks will be identified and prioritized as foreign
policy is neither given nor fixed, but is constantly shaped by the way in which elites
seek to justify their domination by acting in accordance with the very foundations of
their authority at a given time.
(3) Such foundations do not merely refer to elite compliance with liberal-democratic
norms, but also their ability to preserve security and internal cohesion, to deliver
economic growth, to uphold sovereignty and to promote a rationalized ideal that is
peculiar to a particular country (e.g. the imperative of coping with vulnerability, the
necessity of maintaining ethnic balance).
It is within the context of such legitimation that elites assess the ramification of a rising
power and make policy choices.
Premises of the Neo-realist tradition:
1. States are unitary and functionally-alike actors who seek their own security in an
anarchic system.
2. States tend to rely on military force to pursue their goals.

 3. State behavior is driven chiefly by systemic distribution of capabilities across units,

rather than state-level character.
If neo-realist premises hold true, the change in the distribution of power (with an
increase in China's relative capabilities) would cause the small states to become
apprehensive, and strengthen their alliances and defence capabilities for
balancing China, as a necessary move to preserve their security.
If regime legitimation (RL) premises hold true, growth in China's relative
strengths may not necessarily have an inherent effect on state reactions
Whether or not the structural change will cause trepidation in the smaller states will
depend on whether the states' ruling elite will perceive the power as a boon or a bane
for their legitimation efforts
If...
(i) role of Great Power is perceived to be positive to elite legitimation state would
accept the power's growing ascendancy
(ii) role of Great Power is perceived to be a challenge to elite legitimation state will
counter-check it
(iii) role of Great Power is unclear/mixed state will depend on the ordering of the
elite's legitimation bases of the day (e.g. if elite's current legitimation relies more on
prosperity-maximization than security-seeking, then the state is expected to highlight
economic, political benefits that can be tapped from the Great Power, while
downplaying security concerns)
DEFINING HEDGING (p163 - 165) What is hedging? What are the antecedent conditions of
hedging?
Hedging is a behavior in which a country seeks to offset risks by pursuing
multiple policy options that are intended to produce mutually counteracting
effects, under the situation of high-uncertainties and high-stakes.
Typology of risks in international politics Social, Economic, Political; both intentional
(state/non-state actors) and structural (economic conditions, political decay, changes in
power distribution)
Small states more vulnerable to risks, because (i) the state's internal limitation tends to
invite external exploitation, and (ii) they lack resources to absorb structural shocks and
mitigate risks.
Double-edged role of Great Powers
Great Powers' play a crucial role in small-state risk management: Great Powers can
choose to...
(i) throw its weight behind the state's elite and provide them with the needed resources
to mitigate certain risks (e.g. military threat, economic hardship)
(ii) harm the small state might as right to impose its will on actors in its sphere of
influence; invasion for resources or political domination
Thus, small states need to position themselves vis--vis the Great Powers to maximize
benefits, and cushion against undesirable dangers.
Balance, bandwagon, or something else? Accept, accommodate, or reject Great
Power?

 Balancing: if the state perceives the Great Power as posing an imminent security
threat; strategic assets mobilized for security-seeking ends
Bandwagoning: if the state perceives the great power not as a threat but as a principal
source of aid; profit-seeking behavior prevails
Uncertain regional order
More often, esp in post-Cold War Asia-Pacific: Versatile, multifaceted, uncertain risks
Bipolarity (stable!) US as preponderant power (less stable) reduction of
superpower military presence in SEA, uncertainty
Uncertainty: To what extent...
Will the US scale down force structure in SEA?
Will China, Japan, India compete to fill in the power vacuum?
Will ASEAN remain relevant in the new regional environment?
Uncertainty, double-edged role of great powers
Double-edged role of Great Powers + Uncertain regional order = smaller states cannot
afford to develop too close, or too distant a relationship with any major power.
Too close = lose independence, invite uncalled-for interference undermine elites'
legitimacy back home, drag state into Great Power conflict possibly backing the
wrong side
Too distant = cost the elite the opportunity of winning the sort of benefits that can be
utilized to boost their domestic political standing, arouse distrust/hostility from the
great power unfavorable position if the great power gains pre-eminence
Small states have a tendency to hedge avoid taking sides, or speculating about
the future of Great Power Relations because of uncertainty (impossible to
ascertain when and how it the power structure will fluctuate) and the high stakes
(security and survival) involved.
Three necessary conditions for the actualization of hedging tendencies in state
behavior:
(i) absence of an immediate threat (that might otherwise compel a state to ally with a
power for protection)
(ii) the absence of any ideological fault-lines (that might rigidly divide states into
opposing camps)
(iii) the absence of an all-out Great Power rivalry (that might force smaller states to
choose sides)

DECONSTRUCTING HEDGING SOUTHEAST ASIAN RESPONSES TOWARDS A RISING

CHINA (p165 - 171) Five components of hedging along the balancing-bandwagoning
spectrum; as a way to measure the range and variations in state strategies.
Table 1: Selected ASEAN States' Responses to the Re-emergence of China
Countries

Balancing
Strategy
(Pure form)

Hedging Strategy
Risk-Contingency Options
IndirectBalancing

Persuasive/Return-Maximizing Options

DominanceDenial

EconomicPragmatism

BindingEngagement

LimitedBandwagoning

Bandwagoning
Strategy
(Pure form)

Malaysia
Singapore
Thailand
Indonesia

Degree of Power Rejection

Neutrality Point

Degree of Power Acceptance

Key:
Full adoption
Partial adoption

(i)

Economic Pragmatism
Maximize economic gains from direct trade and investment links with a Great Power
Regardless of any political problems that may exist between them
Neutrality point on the spectrum; profit-maximizing does not indicate power
acceptance or rejection
In ASEAN: equally emphasized by all original ASEAN members, longest held policy
(since Cold War period)
Embraced economic pragmatism prior to establishing formal diplomatic relations with
PRC
SG: 1960s first ASEAN state to forge direct commercial and trade ties with PRC
M'sia: 1971, PH: 1972, Thai: 1974, Indon: July 1985
Economic-pragmatism development of socio-economic linkages, bureaucratic
coordination est. foundations for normalization when political conditions were right

(ii) Binding Engagement

Engagement: policy of seeking to establish and maintain contacts with a Great Power,
for purposes of (i) creating communication channels,
(ii) increasing voice
opportunities and (iii) influencing the power's policy choices
e.g. M'sia: Cold War, May 1974 first ASEAN state to establish formal relations with
PRC

 e.g. SG: Close, unofficial contacts with China, exchanges/leaders' visits since 1975
No binding here no regularized diplomatic platform
Binding: act of seeking to institutionalize its relations with a power by enmeshing it in
regularized diplomatic activities
Since early 1990s: institutionalized dialogue arrangements between China, ASEAN
states
e.g. (bilateral) mechanism for consultations b/w foreign ministries established M'sia:
1991; Singapore: 1995
e.g. (multilateral) engagement and binding of China in ASEAN-driven institutions
ASEAN Regional Forum (ARF) and ASEAN-China Dialogue Process
but.... caveat: ASEAN states often do not take a united stand vis--vis China, when
their interests diverge (e.g. code of conduct in SCS)
Binding Engagement socializes and integrates a Great Power into the established
order, for the goal of neutralizing the revisionist tendency of the power's behavior
SG, M'sia, Thai most enthusiastic use of binding-engagement
(iii)
Limited Bandwagoning
Bandwagoning: a state, driven by a desire to win present or future rewards, chooses
to align with a Great Power which displays a prospect for reaching pre-eminence
Pure bandwagoning (PB) vs Limited Bandwagoning (LB)
Pure Bandwagoning (PB)
Type
alignment/interaction

of Political
alignment

and

Limited Bandwagoning (LB)

military Only political partnership

(policy
coordination
on
selective
issues,
and
voluntary deference)

Zero-sum?
(i.e.
does Zero-sum
bandwagoning
with
one
power preclude proximity to
another power?)

Not zero-sum

Hierarchy-acceptance?

No careful avoidance of
loss of autonomy, overdependence

Yes

Prime drivers of bandwagoning (Randall Schweller) profit desire, belief that China's
influence is likely to increase
Malaysia and Thailand have embraced LB with China; Singapore and Indonesia have
rejected LB with China
M'sia: elites willing to defer to China's core interests (One China policy), view BJ as a
partner in certain FP goals
Singapore: NO LB because of leaders' acute sensitivity over autonomy, and wariness
about long-term ramifications of a powerful China

(iv)
Dominance-Denial (DD)
Dominance-Denial: aimed at preventing and denying the emergence of a predominant
power that may exert undue interference on smaller states
How is it achieved? Individually or collectively, through:
(a) Involving other powers in regional affairs
(b) Developing their own resilience and strengthening their collective diplomatic clout
NOT pure balancing (PB):
PB = balance of military power; DD = balance of political power
PB = pursued with a specific country in mind; DD = may not be targeted
DD adopted by all founding ASEAN members common desire to maintain a
balanced relationship with Great Powers
DD similar to binding-engagement (BE), yet different:
BE = persuasion = let's preserve the status quo together, because you too have a
stake in it
DD = confrontational = don't dictate us in a hegemonic way, or we will have no choice
but to move closer to other powers
ASEAN inadequate to effectively use BE on China need for other powers (e.g.
through ARF, EAS) to be present to restrain and keep China on engagement course
need for DD
(v) Indirect-Balancing (IB)
Indirect-Balancing: state takes military efforts to cope with diffuse uncertainties by
forging defence cooperation and by upgrading its own military
not pure-balancing PB has specific threat, IB not
not soft-balancing (SB)
(maintaining informal military alignment for balancing
purposes)
ASEAN's approach is IB and not SB because the issue of informal vs formal military
cooperation between ASEAN states and Western powers largely attributable to factors
other than rise of China less relevant in reflecting the states' China policies
The distinction of DB and IB may usefully reflect a state's threat perception vis--vis BJ
If China viewed as unambiguous threat state takes military prep specifically targeted
at China shift from IB to DB
BUT, currently no indication that ASEAN states see China as the clear-and-present
threat
Not developing defence capabilities in parallel to the pace of China's military
modernization
Therefore ASEAN states are using indirect-balancing
Hedging as a two-pronged approach:
Mutually counteracting policies Return-maximizing and risk-contingency
RETURN-MAXIMIZING:
economic-pragmatism,
binding-engagement,
limitedbandwagoning allows hedger to reap as much economic, diplomatic, FP profits as
possible from the Great Power when all is well
RISK-CONTINGENCY: dominance-denial, indirect-balancing aims at reducing the
hedger's loss if things go awry
Hedging works for the best and prepares for the worst

 Aimed at offsetting possible risks that may arise from uncertainty in regional order, so
that long term interests will be insured, no matter how power structure evolves
All original ASEAN members adopt a hedging strategy vis--vis Beijing (though there
are subtle differences)
OPERATIONALIZING HEDGING (p172 - 179) Empirical look Malaysia and Singapore's
China policies
Malaysia's China Policy
1. End of Cold War, Shift in M'sian elite perceptions of China:
2. Hostile, mutual suspicion (China as a major threat) cordial partnership (China as
key economic, FP partner)
3. M'sia's FP policies: deepening economic-pragmatism, slow pursuit of bindingengagement and limited-bandwagoning
4. Obstacles CPM (pre-1989), BJ's Overseas Chinese policy, Spratlys/SCS
5. Drivers/Removal of Constraints Dissolution of CPM (1989), growing salience of econ
performance as source of legitimacy for BN, Mahathir's FP aspirations
(i) Malaysia's Economic-Pragmatism with China
M'sian leaders high-level visits to China: large business delegations, joint-venture
projects
e.g. Mahathir 7 visits to China as PM
e.g. Since 2001, China as M'sia's 4th largest trading partner: Bilateral trade increased
more than eight-fold over past decade, growing at a faster rate than that with US and
Japan; likely to reduce risk of export volatility for M'sia
(ii) Malaysia's Binding-Engagement of China
M'sia has aimed to increase dialogue opportunities with China
e.g. bilateral - April 1991, establishment of consultative mechanism between foreign
ministries
e.g. multilateral/regional Use of ASEAN to bind China M'sia invited China as a
guest, for the first time, to the 24 th ASEAN Ministerial Meeting in July 1991 laid
foundation for China's subsequent participation in multilateral processes in SEA
e.g. 2 multilateral/regional: China joined ARF (1994), ASEAN-China Senior Officials
Meeting (SOM) Consultation (1995), ASEAN Post-Ministerial Conference (1996)
Malaysia has used these institutions to engage and bind China at a time of rising
uncertainty, and as a platform for management of SCS dispute
Spratlys issue:
M'sia asserted claim in 1979, wary of Chinese intentions after China's 1992
promulgation of law on the territorial sea, and 1995 Philippine-China standoff over
Mischief Reef
But, esp in mid 1990s, Mahathir's administration did not want the dispute to impede his
goal of promoting closer political and economic ties
1995: Consensus to handle dispute bilaterally
M'sia was not aiming to accommodate China, but to cash in on its like-minded views
with China for promoting its own interests on the Spratlys (defending territorial claims,
exploit maritime resources)

 Joseph Liow: M'sia's claimed territory in SCS furthest from China kept conflict at
bay, facilitated easier bilateral cooperation, keeping status quo
(iii) Malaysia's Limited-Bandwagoning with China
Shared worldview + BJ's international clout M'sia sees China as a valuable partner
in pushing for its goal of fostering closer cooperation among East Asian economies
1990 Mahathir's East Asia Economic Group proposal (protection of regional collective
interests against Western trade protectionism) China strongly supported this
1997 China, Japan, S.Korea accepted ASEAN's invitation to join what would become
the ASEAN Plus Three (APT)
2002 BJ supported KL's attempt to set up APT Secretariat
2004 BJ supported KL's proposal to convene the inaugural EAS, both favored
limiting EAS membership to APT countries
Growing bilateral and multilateral interactions since the early 1990s M'sia and
China discover convergence of FP interests
Human rights, developing world, opposition to US-dominated international order etc
Leading to China and M'sia to support each other at international forums
Convergence of FP interests + tangible economic benefits Malaysian elites
downplay/overcome earlier apprehensions about potential security ramifications of a
powerful China
M'sian leaders rhetoric translated into policy action
Reiteration and internalization of the benign view of China
Therefore, M'sia does not adopt pure-balancing/direct-balancing against China
Instead, adopt indirect balancing, limited-bandwagoning FPDA, close defence ties
with US; preparation for contingency, not targeted at a specific threat
China threat as a self-fulfilling prophecy therefore M'sia sees China as a strategic
partner rather than a security threat
2005 Bilateral defence cooperation MOU
Tied with policy of dominance-denial keep close relations with all major powers
Important to not be viewed as subservient to China due to sovereignty sensitivities and
complex Malay-Chinese relations
M'sia likely to continue with limited-bandwagoning
Singapore's China Policy
1. Ambivalent by design: Warm in economic and diplomatic ties, distanced in political and
strategic spheres
2. Singapore's China policy mainly driven by economic imperatives under the PAP
government
3. 1960s-1980s, no diplomatic relations, but active promotion of bilateral econ ties,
exploitation of economic opportunities in China
4. SG as China's largest trading partner in ASEAN; bilateral econ cooperation in
investment and management skills transfer G2G Projects in Suzhou (1994), Tianjin
(2008), Chongqing (2015)

(i)

Singapore's binding-engagement of China

Since early 1990s, through economic incentives and regional institutions (e.g. ARF)
Bind China Give China a stake in regional peace, stability, status quo
Keeping the regional status quo important for SG as a small, innately vulnerable state.
To cope with vulnerability, three-fold approach:
(a) promote economic interdependence
(b) pursue armament and alliance
(c) cultivate a regional balance of power
Maintenance of status quo in:
(a) freedom of navigation at sea so we remain economically viable
(b) a cohesive ASEAN so we can play a disproportionate role in shaping external
affairs
(c) a stable distribution of power so our autonomy will not be compromised by the
emergence of an unrestrained hegemon
Thereby strengthening PAP's proclaimed ability to ensure sustainable
prosperity, security, and autonomy preserving their performance legitimacy
e.g. Taiwan, Spratlys SG's high dependence on maritime trade fear that armed
conflict could destabilize foreign trade and investment, and affect safety and FON in
SCS
(ii) Singapore's indirect balancing of China
Through military cooperation with US
Uncertainty over BJ's future intentions SG as a 'classic anticipatory state' (Khong)
take a 'fall-back position' for contingencies
Esp because BJ poses no direct threat to SG (no territorial dispute), SG leaders think
strategically, mid/long-term will BJ...
(a) disrupt regional stability and prosperity?
(b) constrain Singapore's policy choices?
(c) drive a wedge between Southeast Asian states that would undermine ASEAN
cohesion?
e.g. 1989, end of Cold War SG fear US withdrawal would create power vacuum in
AsiaPac competition and conflict between regional powers instability, threat to
survival therefore, SG granted American access to naval facilities
Caveat: US-Singapore strategic partnership also driven by counter-terror, not just
China
SG does not use limited-bandwagoning with China because of demographic
profile and geopolitical complexity
Singapore has a Chinese majority did not want to be seen as a Third China esp by
large Malay-Muslim majority neighbors
e.g. Singapore declared that it will be last ASEAN state to establish diplomatic ties with
BJ
Singapore cautiously attempts to downplay ethnic affinity, so neighbors do not see SG
as promoting Chinese interests in the region limits to forging of political ties with BJ
bandwagoning not employed by SG

CONCLUSION (p179 181) explanatory strengths of neo-realism and RL framework in

accounting for the variation in the two strategies
1. Malaysia and Singapore's response to a rising China cannot be adequately
explained by neo-realism
2. (i) Neo-realism does not sufficiently capture the range of state options and
functions in the face of power asymmetries
3. Neo-realist: When faced with a rising power, states likely to opt for internal and external
balancing acts to reduce threats. (p179)
4. But state options are not confined to balancing and bandwagoning; it involves mixed
strategies such as hedging (combination of military, non-military options), with
particular reliance on multilateral institutions.
5. (ii) State functions are not limited to threat-reduction; they may involve the
concurrent goals of risk-contingency and return-maximizing.
6. Neo-realism's relevance in explaining small-state responses to a rising power is largely
limited to instances when the rising power poses a (perceived) immediate security
threat. (in SG, M'sia, immediate state security not at stake, neo-realism loses much of
explanatory strength)
7. (iii) Neo-realism inadequate in explaining variation in state responses; structural
factors have no inherent consequence on state behavior.
8. Growth of China's relative power since 1990s has induced Malaysia and Thailand to
move closer to BJ, embracing limited-bandwagoning.
9. Yet, this structural force did not cause the same effect for Singapore and Indonesia.
10. These cross-national variations might instead be influenced by unit-level domestic
factors.
11. Yet, empirical reality might not accord with the expected impact of these factors too;
e.g. Singapore does not have overlapping territorial claims with BJ, geographically
further away, yet M'sia is more inclined to accommodate China
12. This can be explained by REGIME LEGITIMATION elites' differing pathways to
legitimacy explain the variation in states' responses
13. M'sia: Substance of China policy mirrors the sources of BN government's legitimacy
(elite's capacity to promote Malay dominance, econ growth, electoral performance,
national sovereignty, international standing)
14. No pure-bandwagoning not a possible option for M'sia, regime is Malay-dominated,
pure-bandwagoning with China likely to lead to imbalance in domestic political
configuration, and erosion of external sovereignty.
15. Therefore, BN employs Limited-Bandwagoning (desirable and vital for BN gov to
consolidate electoral base).
16. M'sia as multiracial politically significant econ growth elites concurrently attain the
improvement of Malay economic welfare, and enlargement of the overall econ pie for
non-Malay groups
17. To elevate M'sia's regional and international standing important source of authority
for BN
18. No pure-balancing against BJ unjustifiable and harmful to BN interests fullfledged alliance with US reduced credibility of BN's claim of pursuing independent
external policy for M'sia

19. SG: Ambivalence towards China can be explained by foundation of PAP's domestic
legitimacy the ability to cope with SG's inherited vulnerability
20. Economic closeness and diplomatically cordial relationship with China (but no political
partnership) facilitate economic vitality and regional stability help cope with SG's
inherited vulnerability bolster PAP's legitimacy
21. No bandwagoning with China bandwagoning would create suspicions from M'sia,
Indon destabilize external environment, increase SG's vulnerability, PAP elites'
attention need to turn away from more crucial domestic econ functions
22. The substance of the states' reactions to a rising power is not so much
determined by the growth of the power's relative capabilities per se; rather, it is
a function of regime legitimation through which the respective elites seek to
capitalize on the dynamics of the rising power for the goal of justifying and
enhancing their own authority at home.
23. Very few states are adopting pure-balancing, pure-bandwagoning against China!
24. Thus, hedging, as a spectrum of policy options, is more realistic in observing the
change and continuity in state strategies over time.
25. Hedging allows analysis of the possibility, direction, and conditions of a horizontal
policy shift along the spectrum, providing useful pointers for systematically studying
the patterns of states' strategic choices amid the evolving power structure.