By Dionísio Babo Soares*
When President Xi Jinping received President José Ramos-Horta in the Great Hall of the People in July 2024, the symbolism was unmistakable. As on many similar occasions, the diplomatic choreography sought to present two nations of profoundly unequal weight as sovereign partners on an equal footing. The joint communiqué reaffirmed a “comprehensive strategic partnership”. At the same time, the official Chinese narrative framed the meeting within a broader horizon of development cooperation, encompassing infrastructure, agriculture, the digital economy and connectivity.
Viewed from Dili, the significance of the meeting lies not only in what was said, but in the structural context in which it was received. For small states, diplomacy rarely affords the luxury of abstraction. There is room for choice, but it is narrow; and strategic latitude depends less on the rhetoric of sovereign equality than on the ability to manage asymmetric dependencies with prudence and clarity.
The 2024 summit did not represent a rupture. Rather, it confirmed a persistent reality: Timor-Leste’s external relations, including its relationship with China, continue to be shaped by deep internal vulnerabilities. Understanding the relationship between Beijing and Dili therefore requires more than reading joint statements or deciphering protocol gestures. It requires situating it within the political and economic structure of a state still in the process of consolidation, whose external autonomy remains constrained by its internal fragility.
These vulnerabilities are not merely cyclical. Timor-Leste emerged from occupation with political legitimacy, but with nascent institutions, limited infrastructure and a narrow productive base. Petroleum wealth enabled state-building and created an unusual fiscal cushion for a country of its size. However, it also entrenched a model of dependency: a state sustained by finite revenues, with weak economic diversification and limited capacity for structural transformation.
This tension has intensified as the petroleum cushion has begun to lose its value as a strategic guarantee. The Petroleum Fund still provides some margin, but that margin is now clearly narrower than during the period of abundance. The cessation of production at Bayu-Undan and the persistence of pressures on fiscal sustainability have merely confirmed an already evident reality: Timor-Leste is not facing immediate scarcity, but it no longer enjoys a comfortable temporal buffer. Moreover, for small states, negotiating without sufficient time is almost always disadvantageous.
From this follows a simple conclusion. For Timor-Leste, external partnerships are less an exercise in abstract choice and more a response to the concrete demands of development. Investment, infrastructure, productive diversification and deeper regional integration continue to depend, in part, on the quality and terms of external engagement. This, however, does not eliminate the asymmetries between the state and its partners, nor does it eliminate their effects on the scope of available negotiating space.
It is within this framework that China’s role must be understood. The 2024 visit did not inaugurate a new relationship; it consolidated an already visible trajectory. For Dili, Beijing appears as a partner endowed with scale, resources, and implementation capacity in sectors closely associated with the development imaginary: roads, infrastructure, agriculture, connectivity, and public equipment. For a state confronted with persistent material constraints, such an offer is naturally attractive.
However, attraction should not be confused with transformation. The relationship with China offers real opportunities, but also reproduces dilemmas particular to small states. Politically visible infrastructure does not always correspond to economically rational priorities. External financing, even when framed in the language of mutually beneficial cooperation, can deepen dependencies if not anchored in technical capacity, financial discipline and strategic calculation. The problem rarely lies solely in the partner’s intentions; it often lies in the recipient state’s ability to define terms, impose criteria and sustain choices.
The Suai case remains particularly instructive in this respect. More than an isolated project, Suai has become a test of the Timorese state’s consistency: its ability to distinguish ambition from viability, political value from economic rationality, national symbolism from fiscal sustainability. The re-emergence of understandings with Chinese companies in this context does not introduce an anomaly. Rather, it shows how large-scale projects tend to resurface whenever a state faces a scarcity of alternatives and pressure to demonstrate progress.
Temporal asymmetry further aggravates this picture. China can afford to wait. It can sequence commitments, calibrate exposure, absorb delays and allow political circumstances to mature. Timor-Leste does not enjoy the same luxury. As the petroleum horizon shortens and the need for new economic drivers intensifies, the cost of delay increases. In asymmetric relationships, those who have time negotiate with composure; those who need results negotiate under pressure.
The same dynamic is evident at the broader regional level. Timor-Leste does not manage its relationship with China in a strategic vacuum. It does so within a demanding geography: Indonesia as an unavoidable neighbour, Australia as a central actor in energy and security matters, the United States as a relevant political partner, and ASEAN as a framework of belonging whose promise remains to be operationalised economically. Others read every move towards one partner. Every bilateral gesture produces regional reverberations.
From this emerges an uncomfortable but essential truth: Timor-Leste’s strategic autonomy will not be decided in Beijing, Canberra, Jakarta or Washington. It will be decided, above all, in Dili. Small states do not maximise sovereignty by multiplying balancing gestures among great powers. They maximise it by building institutions that enable them to choose better, negotiate better and implement better. Without that foundation, diversification of partners may coexist with continued dependency.
This is why the debate on China is sometimes framed in the wrong terms. The question is not whether Timor-Leste should engage with Beijing. It should, and it will continue to do so. China is far too important an actor in development financing, infrastructure construction and the region’s political economy to be treated as peripheral. The relevant question is: under what conditions does this engagement strengthen national capacity, and under what conditions does it merely shift dependency from one axis to another?
The answer depends less on the external partner than on the state’s internal structure. Where technical capacity is limited, procurement processes are weak, project evaluation is inconsistent, and planning fluctuates with political cycles, even well-intentioned partnerships can produce suboptimal outcomes. Where such capacities exist, asymmetry does not disappear, but it becomes more manageable. For small states, that difference is decisive.
For this reason, the notion of a grand reset is misleading. Great powers may alter the context in which small states operate; they rarely, by themselves, alter the foundations of their vulnerability. Ceremony is not strategy. Visibility is not transformation. Moreover, external recognition, however useful, does not substitute for internal capacity.
If Timor-Leste intends to reposition itself more favourably in its relations with external partners, the starting point must be internal. This entails strengthening the state’s technical competence to negotiate complex agreements, improving transparency in public procurement, subjecting large projects to credible economic scrutiny, and insulating long-term planning from political volatility. It also entails restoring fiscal discipline and realistically accelerating economic diversification. Without this internal work, foreign policy will remain condemned to managing urgencies rather than shaping choices.
ASEAN accession illustrates this challenge well. The political value of regional integration is evident. However, the strategic dividend of membership will depend less on the formal act of accession than on the capacity to translate that membership into trade, investment, competitiveness and effective integration into regional value chains. The same principle applies to the relationship with China: the partnership’s potential will be measured not by the scale of announcements, but by the quality of outcomes.
Ultimately, this is the decisive test for any small state. Diplomacy can expand margins; it cannot substitute for foundations. External partners can support national priorities; they cannot build them in place of the state. Timor-Leste will, legitimately, continue to seek opportunities in multiple directions. However, the quality of those opportunities will depend, fundamentally, on the solidity with which the country confronts its own vulnerabilities.
Until then, meetings such as the one in Beijing will retain an ambivalent significance. They undoubtedly represent access, recognition and possibility. However, they also serve as a reminder of a harsher reality: for small states, true balance in external relations begins long before the negotiating table. It begins with the quality of institutions, the coherence of policies and the ability to translate legal sovereignty into effective sovereignty.
This article reflects the author’s personal views and is intended for academic purposes. It does not represent the position of any institution with which the author is affiliated.
