China’s rise in the Indo-Pacific is marked by a striking duality, a simultaneous pursuit of deep economic integration and growing military assertiveness. This dual track strategy has become a defining feature of China’s foreign policy under President Xi Jinping. While Beijing presents itself as a champion of economic connectivity through mechanisms like the Belt and Road Initiative (BRI), Regional Comprehensive Economic Partnership (RCEP), and infrastructure diplomacy, it has also pursued a parallel trajectory of coercive military behavior, grey-zone tactics, and strategic posturing. The two tracks are not contradictory but complementary, aimed at reshaping the Indo-Pacific order in China’s favour.
Economic Statecraft: The Benevolent Facade
Economically, China has positioned itself as a key trade and investment partner for Indo-Pacific nations. Through the BRI, China has extended infrastructure funding to several Southeast Asian and South Pacific nations, promoting projects such as ports, railways, highways, and power grids. These are often projected as developmental partnerships, aiding local economies while simultaneously increasing China’s strategic leverage.
The RCEP, which came into force in 2022, has further amplified China’s influence by integrating major regional economies, including ASEAN states, Japan, South Korea, Australia, and New Zealand into a common trade framework. With the United States absent from any comparable trade arrangement, China has seized the opportunity to emerge as the central economic hub in the region. China’s growing economic linkages are particularly evident in states like Cambodia, Laos, and the Solomon Islands, which are now increasingly aligned with Beijing diplomatically and politically. The 2022 Solomon Islands–China Security Pact, allowing potential deployment of Chinese security forces, is one such by-product of economic dependency blending with strategic outreach.
Military Assertiveness: Expanding Footprint, Shrinking Trust
While China extends the olive branch of economic partnership, it simultaneously pursues a robust militarisation strategy. Nowhere is this more evident than in the Indo-Pacific theatre, where the People’s Liberation Army (PLA) has significantly expanded its presence and influence in recent years.
In February 2025, the PLA Navy conducted a major live-fire drill in the South Pacific waters near Australia, involving multiple destroyers, missile launches, and simulated amphibious operations. The exercise, viewed as a direct response to Australia’s strengthening of ties with the United States and Japan under the AUKUS pact, marked a stark escalation in military signalling. China’s Ministry of National Defense stated that the drill was aimed at “enhancing combat readiness,” but it can be viewed as a clear strategic warning to Canberra and its allies.
Simultaneously, China continues to flex its maritime muscles in the South China Sea, where Chinese maritime militias operating under the guise of fishing fleets have become a regular tool of coercion. Backed by the China Coast Guard (CCG) and PLA Navy assets, these militias are used to assert illegal territorial claims, block or intimidate regional fishermen, and harass foreign vessels operating in their Exclusive Economic Zones (EEZs).
A case in point is the Second Thomas Shoal standoff with the Philippines, where Chinese Coast Guard vessels used water cannons and ramming tactics to obstruct Philippine resupply missions to its troops stationed on the BRP Sierra Madre. These acts, while falling short of formal warfare, constitute classic examples of grey-zone warfare designed to gradually alter the regional status quo without triggering open conflict.
Moreover, China’s militarisation of artificial islands in the Spratly Islands, with the construction of airstrips, missile platforms, and radar installations, has significantly changed the security calculus of the South China Sea. It now provides China with persistent surveillance capabilities and logistical depth, further enhancing its anti-access/area denial (A2/AD) strategy.
Strategic Signalling and Dual Messaging
The essence of China’s dual track strategy lies in its strategic signalling, economic cooperation is offered with implicit expectations of political alignment, while non-compliant behavior is met with coercion. Countries that resist Chinese strategic ambitions often face economic retaliation. For instance, after calling for an independent inquiry into COVID-19’s origins, Australia saw a raft of Chinese trade sanctions targeting coal, barley, wine, and beef, all while China’s naval activity around Australian waters intensified.
Similarly, Southeast Asian states like Vietnam and Indonesia face a constant dilemma, they welcome economic engagement but remain wary of military encroachment on their maritime domains. China’s 2023 “standard map”, which laid claim to overlapping maritime zones with Malaysia, Brunei, and Indonesia, drew sharp diplomatic protests, exposing the gap between China’s economic charm offensive and its strategic territorial ambitions.
PLA’s Expanding Role in Foreign Policy
Under Xi Jinping, the PLA is no longer just a war-fighting force, it has become a tool of foreign policy projection. PLA Navy port calls, joint drills with Pakistan, Cambodia, and Russia, as well as overseas deployments to Djibouti, are proof of this evolution.
China’s doctrine of “Far Seas Protection”aims to transition the PLA Navy into a blue-water force capable of projecting power far from China’s shores. Additionally, military logistics bases and prospective dual-use infrastructure in Cambodia’s Ream Naval Base, the Solomon Islands, and Myanmar signal Beijing’s ambition to build a forward military presence under the veneer of economic assistance. These developments have prompted regional responses, including India’s outreach to ASEAN, the revival of Quad, and enhanced trilateral security frameworks like India-Australia-Japan cooperation.
Implications for the Indo-Pacific Order
China’s dual track strategy is gradually altering the balance of power in the Indo-Pacific. Economic linkages may increase trade dependency, but military posturing serves as a tool of deterrence and intimidation. While nations are keen to benefit from Chinese investments, they are equally aware of the strategic overhang that comes with it. As a result, many are now hedging by diversifying security partnerships, ramping up defence budgets, and engaging in freedom of navigation operations (FONOPs) with like-minded powers. The net result is a region caught in a geoeconomic-military paradox, tied economically to China but increasingly aligning with others for security.
Conclusion
China’s dual track strategy of economic engagement and military assertiveness in the Indo-Pacific underscores a complex but deliberate approach to regional dominance. While the promise of trade and infrastructure investments offers carrots, the threat of military coercion represents the stick. For Indo-Pacific states, navigating this strategic tightrope is increasingly difficult. Maintaining autonomy and regional balance will require collective resilience, deeper multilateral cooperation, and a constant recalibration of national security policies in response to an increasingly assertive China.
