The China-Timor-Leste Strategic Partnership and Growing International Competition: Opportunities and Risks

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Photo : Fundasaun Mahein

In September 2023, a Timor-Leste Government delegation, headed by Prime Minister Xanana Gusmão, made an official trip to the People’s Republic of China. During the visit, the PM met with Chinese President Xi Jinping. Soon afterwards, on 23 September, the two governments announced that Timor-Leste and China had upgraded their bilateral ties to a “comprehensive strategic partnership”. According to the official joint statement, the partnership will focus primarily on industry, infrastructure, food security and livelihoods. The statement also noted that the partnership will involve “high-level military exchanges”, including training of personnel, joint exercises and supply of equipment and technology.

Most of the subsequent public discussion has focused on the agreement’s implications for regional security, Timor-Leste’s economic development and bilateral relations between Timor-Leste and Australia. This article widens the scope of the discussion by locating the China-TL partnership within broader geopolitical dynamics and the intensifying competition for global influence. By exploring this critical context, Fundasaun Mahein (FM) hopes to contribute to the public debate about the partnership’s implications. This includes shedding light on its significance for Timor-Leste’s foreign policy, as well as for the role of Global South countries more broadly in today’s changing political landscape.

Debates about the China-TL partnership

Although the announcement appears to have taken many observers by surprise, a closer analysis of preceding events suggests that it had been developing for some time. Indeed, the policy of enhanced engagement with China did not begin with the IX Government – in 2020, the VIII Government held discussions with Chinese representatives about expanded cooperation under the Belt and Road Initiative (BRI). Since his election in 2022, President Ramos-Horta has made many comments in international media which hinted at the possibility of a China-TL partnership, including defending China from “unjustified and unfair” criticism at the United Nations General Assembly.

Some observers have framed the China-TL partnership as the result of increased Chinese assertiveness in the region, and the attempt by Timor-Leste’s current leaders to “play the China card” in order to extract concessions from Australia. This includes forcing the latter to accept the IX Government’s vision of Sunrise development (onshore processing of Sunrise gas via the Tasi Mane project) by threatening to involve China in the project. Several Australian commentators have expressed their concern about the “threat” posed by potential of increased Chinese presence to Australian and regional security. For their part, Timor-Leste’s President and other Timorese observers have rejected this view, arguing that Timor-Leste is simply asserting its sovereignty while maintaining its policy of “friends with all” in the face of growing geopolitical rivalry.

Another perspective centred in ASEAN suggests that Southeast Asian countries are less concerned about an imminent Chinese threat posed by enhanced cooperation with Timor-Leste than they are about the threat posed to ASEAN unity and security by increased geopolitical rivalry. Indeed, ASEAN is already involved in extensive cooperation with China through its own comprehensive strategic partnership. As far as FM can see, ASEAN’s main focus will be ensuring that Timor-Leste does not become overly dependent on China, so that ASEAN can continue to play a neutral role in the context of geopolitical rivalry. According to one Indonesian viewpoint, the best way to “counter China’s influence in Timor-Leste” is to bring Timor-Leste closer to ASEAN.

Growing security competition between China and the west

Geopolitical rivalry and competition is visibly reshaping international relations: in response to growing Chinese influence, the United States has significantly stepped up its foreign engagement efforts in the Asia-Pacific and Indo-Pacific regions. A key example which links directly with the China-TL partnership is the 2021 AUKUS agreement on enhanced military cooperation between Australia, the United Kingdom and the United States. The agreement includes provision of nuclear-powered submarines to Australia, the contract for which – worth £3.95 billion – was recently awarded to BAE Systems.

The primary purpose of AUKUS is to counter Chinese influence in the region. However, by placing nuclear submarines in and around Timor-Leste’s waters in response to a perceived Chinese threat, AUKUS increased Timor-Leste’s strategic relevance, making the “China card” even more valuable to both Timorese and Chinese policy makers. Thus, by creating AUKUS to counter Chinese influence in the region, its signatories may have inadvertently strengthened China’s reach by incentivising both Timor-Leste and China to increase their cooperation.

China’s growing influence and western responses to it bring both risks and opportunities for small countries such as Timor-Leste. The key question, then, is how can Timor-Leste take advantage of the shifts occurring at the global level while minimising the risks to our sovereignty and security? Unfortunately, there is no simple answer, as each possible path entails risks.

For example, even though Timor-Leste nominally maintains a “friends with all” policy, most of our security cooperation is with western countries, primarily Australia, Portugal and the USA. This cooperation has been and continues to be essential for the development of Timor-Leste’s police, military and intelligence services. However, just as over-reliance on a single revenue source poses a risk for business and governments, over-reliance on a single set of security partners also brings risks. Aid is commonly withheld or withdrawn as a means of pressuring governments to change policies. A sudden end to security sector support could quickly lead to critical gaps, creating a serious security risk. Diversification protects against market fluctuations – or political changes – and can also promote learning and development in new areas. Thus, from this perspective, expanded security cooperation with other partners such as China could provide significant benefits.

On the other hand, diversification of security cooperation – particularly with a rival country – would likely provoke a response from current partners. As noted, Timor-Leste needs continued support in its security sector, and ending this support suddenly would probably lead to serious problems. In general, Timor-Leste’s existing security cooperation programs have served us well. Reports also indicate that the Governments of Timor-Leste and China prefer to avoid provoking regional tensions. Thus, if continuing existing support and maintaining regional stability remain top concerns, maintaining existing security partnerships is probably Timor-Leste’s best option, even if that limits flexibility in the area of defence and security cooperation.

Build state capacity to maximise benefits of China-TL partnership

Critics of China’s involvement in Timor-Leste argue that many Chinese-implemented projects and Chinese trade have brought questionable benefits to Timor-Leste’s population and economy. While these are valid concerns, they do not apply only to Chinese cooperation: companies from various countries have won large tenders in Timor-Leste for questionable projects, including the largest awarded so far in Timor-Leste’s history. Moreover, FM sees that the most wasteful projects have been driven mostly by domestic political interests, not by foreign actors.

Similarly, some analysts allege that Chinese aid and contracts are more likely to drive local corruption and damage the environment, even if they promote economic growth and industrialisation. However, western aid and contracts have also been implicated in fostering corruption and environmental harms in developing countries. Some have expressed concern that Chinese aid is driven by ulterior motives. While this is likely true, both tied and untied foreign aid tends to disproportionately benefit donor countries, including in Timor-Leste. Thus, the notion that “aid is not free” should be applied across the board, not only to Chinese aid.

Some are concerned that increased cooperation with China under BRI could lead to Timor-Leste taking loans to finance unviable projects, which China may be willing to fund with Timor-Leste’s oil wealth serving as collateral. This is a valid concern, especially as Timor-Leste has had significant experience with the construction of large infrastructure which generate inadequate or no returns and create social and environmental harms. However, rather than blaming others for corruption and waste in Timor-Leste, FM believes that it is up to Timorese policy makers to end the culture of nepotism, corruption and graft which are such a barrier to equitable development in this country. Robust project management and procurement mechanisms are needed to prevent the political interference and corruption which lead to wasteful projects and spending. These processes must ensure adequate evaluation of the social, environmental and financial aspects of all projects, which will maximise the benefits of all projects, not only those supported through Chinese cooperation.

Another issue is that given current state capacity and economic limitations, we may struggle to manage the risks of increased international trade and take advantage of its opportunities. Without serious improvements in regulatory capacity, increased “trade” with China may simply translate to exploitation of our natural resources, with few benefits to our people and economy. For example, under current circumstances, increased fishery cooperation with China is unlikely to benefit local companies or ordinary citizens due to a lack of domestic commercial fishing capacity. At the same time, overfishing and other environmental harms will become major risks. As prior experience teaches us, Timor-Leste’s maritime authorities struggle to detect and prevent such activities. Therefore, Australian support for maritime security development continues to be essential for strengthening Timor-Leste’s ability to reduce the risks of increased fisheries activity in our seas.

To ensure sovereignty and security, build and maintain diverse partnerships

In the past, Timor-Leste became a victim of Cold War politics, and this continues to shape political decision making today. Timor-Leste’s “friends with all” foreign policy shows that our leaders recognise the importance of managing relations with external partners in a balanced way, accepting cooperation while avoiding alignment with specific blocs. As President Ramos-Horta has noted, Australia remains Timor-Leste’s preferred security cooperation partner, while Chinese cooperation will focus on trade, infrastructure and industrial development. Becoming a full member of ASEAN will continue to be a major priority for the Government, and cooperation is ongoing with a wide variety of other partners. Timor-Leste’s recent stand for peace and human rights in Myanmar, while potentially raising alarm within ASEAN, has drawn the attention of many observers, and Timor-Leste is routinely praised for our government’s commitment to human rights and democracy.

From this perspective, the partnership with China can be considered as an important opportunity for Timor-Leste to take advantage of our international standing to advance our national interests. By emphasising shared interests – both with China but also existing partners – while simultaneously asserting our sovereignty, Timor-Leste can demonstrate how small countries can effectively manage relations and heightened pressures between powerful neighbours. Meanwhile, we can reap the benefits of cooperation programs with a range of partners.

FM therefore advocates the continuation and expansion of international cooperation programs with a diverse range of partners across various sectors. In this way, Timor-Leste’s foreign cooperation programs can complement – rather than compete with – each other. This will ensure that we continue to have good relations with all international partners while furthering our national development and security interests. Timor-Leste’s cooperation with the US and Australia remains essential for key areas such as aviation and maritime security. In addition, cooperation with partners such as the World Bank, ADB, Korea, Japan, ASEAN, the United Kingdom and the European Union in education, health, governance and socio-economic development will improve Timor-Leste’s human resources, economic competitiveness and regulatory capacity.

As FM has written previously, international cooperation, while it can bring many benefits, also comes with the risk of becoming overly reliant on external expertise and financing. To reduce dependency on international support in the security sector and other areas, FM recommends that the Government push its foreign partners to ensure that all programs are designed to achieve “Timor-ization.” This means that cooperation programs should hand over control to Timorese managers before their end, while building the relevant capacity during the program implementation. In this way, cooperation programs will bring long-term benefits to Timor-Leste by developing our capacity, rather than simply maintaining dependency.


In conclusion, while China’s rapid transformation from impoverished country to economic superpower has brought many uncertainties and risks, it has also provided space for Global South countries to access new partnerships and resources. Increased cooperation with China has the potential to bring significant material benefits to Timor-Leste; however, this is far from guaranteed given the current limitations of Timor-Leste’s economic and administrative capacity. Ensuring that Timor-Leste maximises the benefits of this partnership requires strengthening domestic capacity in key areas, including maritime security, evaluation and oversight of projects and contract negotiation and enforcement. Otherwise, Timor-Leste is at risk of increasingly unfavourable trade relations, taking on unviable projects and unsustainable debt, and compromising our national security and sovereignty.

While Timor-Leste’s “friends with all” policy appears to serve us well, FM continues to be concerned about the risk of Timor-Leste becoming implicated in great power rivalry. Although today’s international system is very different than during the Cold War, the reality of power politics is eternal, meaning that small countries, no matter how strong their international reputation, must tread carefully when juggling between rival partners. For this reason, Fundasaun Mahein largely agrees with President Ramos-Horta’s view that Timor-Leste’s foreign security cooperation should remain focused on our current partners. We therefore advocate maintaining and expanding current security and defence cooperation programs, particularly in relation to community policing, criminal investigation, access to justice, maritime security and aviation. Through effective and intelligent cooperation with diverse partners, Timor-Leste can maintain our strategic stance of neutrality, while asserting our sovereignty, developing our economy and people, and contributing to regional peace and security.

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