Standoff in South China Sea: US and People’s Republic test the waters

Posted on July 14, 2012

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For more than two years now, China’s naval strategy in the South China Sea has been expansive rather than defensive. The powerhouse has brushed aside the territorial claims of smaller nations like Vietnam and the Philippines. This week the United States voiced its concerns. Could this be the start of a standoff that has been predicted for some time?

Members of the Chinese Navy’s honor guard wait for U.S. Secretary of Defense Robert Gates to review military troops at Bayi Building in Beijing January 10, 2011. REUTERS/Larry Downing

In late 2010, picking up on the arguments contained in a seminal piece that had just been published in Foreign Policy magazine, this news website made a bold yet fairly intuitive prediction about how relations between the world’s two most powerful nations would play out in the medium term.

In essence, although not in terms so blunt, we suggested that China and the United States were at some point in the near future destined to collide—if not spectacularly, then at least significantly.

Our central thesis, based on Elizabeth C Economy’s article “The Game Changer,” had everything to do with the fact that Deng Xiaoping’s dictum “Hide brightness, cherish obscurity” had recently become a policy of the past. China’s new foreign policy, we noted, was rooted in the growing awareness of Hu Jintao’s generation of leaders that maintaining economic growth and political stability at home meant “actively managing” events beyond the country’s borders.

In July 2012, with the benefit of hindsight, these observations seem almost quaint. China’s “go out” strategy is no longer a revelation, it is a reality so self-evident as to be slightly banal. The appearance in the world’s capitals of tens of thousands of Chinese journalists (so as to shape information instead of passively receiving it), the intensification of trade and development agendas (so as to grow export markets and further secure much-needed natural resources), the far more expansive strategy of the army and the navy (so as to safeguard supply lines for said resources)—all of the above have stood as testament to the new status quo.

Still, as we noted more than 18 months ago, nobody, least of all the aptly named Ms Economy, expected America to stand back and watch. Though the Americans were not then (as they aren’t now) blinkered enough to believe in their “sole superpower” status, and though co-operation between the US and China was in 2010 (as it is now) prodigious on a range of fronts, it appeared that the military front would be where competition between the two giants would be most keenly felt.

In fact, in April 2010, Chinese Rear Admiral Zhang Huachen had already announced that a radically transformed policy would henceforth be driving decision-making within the country’s navy. “We are going from coastal defence to far-sea defence,” Zhang stated. “With the expansion of the country’s economic interests, the navy wants to better protect the country’s transportation routes and the safety of our major sea lanes.”

What that amounted to, as the Global Times pointed out, were changes to the strategic pattern in East Asia and the west Pacific Ocean that had lasted for the previous five decades.

Which read as true enough, although in her own analysis of the situation, Economy was a lot less coy. “In March (2010), even before Rear Admiral Zhang’s pronouncement, Chinese officials appeared to assert for the first time that the South China Sea—whose resources have long been claimed by a number of other countries, including Malaysia, the Philippines, and Vietnam—is a ‘core national interest’, a term previously reserved only for Taiwan and Tibet.”

And so it seems that a diplomatic standoff has finally come to pass. On Thursday 12 July, in the face of resistance from the Chinese government, the Barack Obama administration urged Beijing to accept a code of conduct for resolving territorial disputes in the South China Sea, which hosts a third of the world’s cargo traffic, has some of the most fertile fishing grounds on Earth, and is believed to contain immense oil and gas reserves.

The place where the United States is attempting to address its concerns is the “regional forum” of the Association of Southeast Asian Nations, a body whose membership includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Yet this 10-member grouping, which is relatively powerless in geopolitical terms, has in effect been subsumed by the term “regional”. The annual conference, which takes place this week, includes (over and above the Southeast Asian countries) China, India, Japan, the Koreas, Australia, Russia, the EU and the US itself.

So the “Asean Regional Forum” is not exactly an organisation whose name aligns with its membership, but there you have it—China is no doubt feeling that the West is once again putting its nose where it doesn’t belong.

Then again, nowadays Beijing claims most of the South China Sea as its own, irrespective of the counter-claims of several smaller nations, most notably the Philippines and Vietnam. When China states, as it has this week, that the forum’s annual conference is not the “appropriate” place to discuss differences over territorial waters, what it is in effect saying is that it doesn’t fully respect or recognise the organisation’s authority.

Given that tensions have risen significantly in the South China Sea since Admiral Zhang’s 2010 announcement, with incidents involving everything from fishing boats and oil exploration craft to law-enforcement units and armed patrol vessels, this is hardly surprising. And the surveillance activities of the US navy off the Chinese coast have hardly helped matters. But the Asean Regional Forum was founded specifically so that countries could air security concerns—its tagline is “Promoting peace and security through dialogue and co-operation in the Asia Pacific”—so if not here, where?

“The United States has no territorial claims there and we do not take sides in disputes about territorial or maritime boundaries,” US secretary of state Hillary Clinton told foreign ministers gathered in Cambodia’s capital on Thursday. “But we do have an interest in freedom of navigation, the maintenance of peace and stability, respect for international law and unimpeded lawful commerce in the South China Sea.”

It’s clear from Clinton’s words that the United States is treading carefully here, as alluded to by Economy in her Foreign Policy article. Buzzwords such as “containment,” “engagement” and “con-gagement” have a limited shelf life as far as diplomatic relations with China are concerned. Nevertheless, merely by speaking out, the US has endeared itself to once-hostile countries in Southeast Asia.

As William Choong wrote on Thursday in the Straits Times: “In 1975, communist North Vietnam sent American troops packing after a decade-long war. Thirteen years later, more than 70 Vietnamese sailors died after an armed clash with Chinese forces over Johnson Reef in the Spratly Islands. Today, Hanoi’s war of nerves with Beijing over the South China Sea continues.”

Added Choong: “In 1992, Manila kicked the US off Subic Bay naval base. Over the next seven years, China started building structures on the disputed Mischief Reef—moves that Manila could do little about. Earlier this year, the Philippines was seen to be the loser again after its dispute with Beijing over the Scarborough Shoal.”

Washington will at least be feeling pleased with itself about this “told-you-so” victory, and the ironies of history will not be lost on the state department policy wonks. As for China, which can afford to bide its time—it is, after all, the nation that breathes easiest when the United States puts on the squeeze—it will have to decide how far it wants to push its new “playground bully” image.

Kevin Bloom

Read more:

China told to respect law in sea row

PHNOM PENH — The U.S., Japan and other regional powers pressed China at a regional security forum Thursday to address conflicting territorial claims in the South China Sea based on international law, not with threats or historical claims.

Foreign ministers of the 27-member ASEAN Regional Forum expressed hope that Beijing and the 10-member Association of Southeast Asian Nations will launch negotiations soon to reach a binding “code of conduct,” a set of rules to regulate claimant states’ activities and behavior in the South China Sea, delegates said.

“We believe the nations of the region should work collaboratively and diplomatically to resolve disputes without coercion, without intimidation, without threats and certainly without the use of force,” U.S. Secretary of State Hillary Rodham Clinton said at a news conference after the ARF meeting ended.

“No nation can fail to be concerned by the increase in tensions, the uptick in confrontational rhetoric and disagreements over resource exploitation,” Clinton said.

Citing “worrisome instances of economic coercion and the problematic use of military and government vessels” in connection with the standoff between China and the Philippines over the disputed Scarborough Shoal, she said, “So we look to ASEAN and China to make meaningful progress toward finalizing a code of conduct for the South China Sea that is based on international laws and agreements.”

Similarly, Foreign Minister Koichiro Genba “made it very clear at the ARF talks that legitimate claims in the South China Sea must be based on international law and not by historical claims,” an ASEAN diplomatic source said.

Chinese Foreign Minister Yang Jiechi rebuffed such statements, saying all activities by China in the South China Sea were the “inherent right of the country” and are all “in accordance with international law and historical evidence,” the source said.

Yang was quoted as claiming Beijing has made “tremendous efforts” in helping facilitate peace, stability and prosperity in the region despite “difficulties provoked by several states.”

Tensions have escalated between China and both the Philippines and Vietnam over the Spratly Islands and other territories in the South China Sea, which has some of the world’s busiest shipping routes and is believed to be rich in oil and gas.

In a U.S.-ASEAN foreign ministers’ meeting Wednesday, Clinton said Washington “looks to ASEAN and claimant states to provide leadership in this issue and recognize(s) the important role of the (ASEAN) chair to find consensus and advance a common ASEAN position,” according to the Philippine Department of Foreign Affairs.

Japan Times

China Seeks to Stall Vietnam Oil

CNOOC claims may discourage development.

AFP
CNOOC’s first independent deep-water oil drilling rig departs from a port in Shandong province, May 21, 2012.

China is unlikely to derive any commercial value from the oil and gas fields it has claimed near the coast of Vietnam, experts say.

Even if it could enforce its claims within Vietnam’s 200-mile (320-kilometer) offshore zone and lure foreign companies into development, China would find it hard to launch production in more distant disputed areas of the South China Sea.

“It’s one thing to explore far away from your own shores in disputed territory. It’s quite another thing to produce from that area,” said Edward Chow, senior fellow in the energy and national security program at the Center for Strategic and International Studies in Washington.

“To actually produce, you’re placing billions of dollars’ worth of assets out at sea very far away from you, drilling a number of production wells. How do you protect that?” Chow said.

Security and logistics have been among many questions raised since June 23 when the state-run China National Offshore Oil Corp. (CNOOC) announced it was offering nine offshore blocks that are already claimed by Vietnam as part of its exclusive economic zone under the U.N.-sanctioned Law of the Sea.

The challenge came soon after Vietnam’s National Assembly passed the country’s own maritime law on June 21, asserting sovereignty over the Paracel and Spratly islands, which China calls Xisha and Nansha, respectively.

China’s National People’s Congress called on Vietnam to correct its “erroneous” law, the official Xinhua news agency reported. The CNOOC announcement of tenders for the 160,124 square kilometers (61,824 square miles) of blocks near Vietnam followed the next day.

The area “lies entirely within Vietnam’s 200-nautical-mile exclusive economic zone and continental shelf,” said Vietnam Ministry of Foreign Affairs spokesman Luong Thanh Nghi, Bloomberg News reported. “This is absolutely not a disputed area.”

Nine-dash map

The conflict is one of many that stem from China’s insistence on its “nine-dash map” of South China Sea borders that overlaps claims of Vietnam, the Philippines, Brunei, Malaysia, and Taiwan.

The arguments have been simmering for years with flare-ups over issues including oil, fishing and naming rights, followed by diplomatic efforts to calm them down.

But the tensions may have entered a new phase on May 9 with the launch of CNOOC’s first domestically developed semi-submersible deepwater drilling rig, which has started drilling wells 320 kilometers (198 miles) southeast of Hong Kong.

The giant 5.3-billion yuan (U.S. $834.5-million) floating platform may be pushing China’s offshore oil claims beyond the theoretical stage.

China believes that one-third of its presumed oil and gas resources are in the South China Sea, and 70 percent of those are in deep water, Xinhua said in May.

It is unclear whether the platform’s current location is in disputed waters, the Financial Times said, but neighbors may wonder where CNOOC plans to put it next.

Despite the new capability, Edward Chow sees a host of practical obstacles to the CNOOC tenders in Vietnam’s offshore zone.

“There are so many practical challenges to operating in disputed waters very far away from home that makes you wonder whether the Chinese really believe they’re going to do this, or is it really about something else?” Chow said in an interview.

“I fundamentally believe it has more to do with sovereignty and foreign policy than it does with oil and gas,” he said.

From the security standpoint, China would probably be unable to keep its navy on station indefinitely to guard all the operations that support drilling and production, even if the effort did not lead to immediate conflict.

Then, there would be the problem of transport for resources that are more likely to be gas than oil.

“It would be simpler if it were oil, it would be more valuable if it were oil, but so far the region has been gas-prone,” Chow said.

Long pipelines would be needed to bring the gas onshore, meaning that only huge discoveries would be commercially viable.

But big discoveries would have their own problems because they would need billion of dollars to develop.

“Who’s going to risk that kind of capital until they know they have the concurrence of all the parties disputing the territory?” Chow asked.

Raising risks

In other regions, conflicting claims usually succeed only in freezing development until the disputes are resolved.

That may be the point. By making claims, CNOOC may be upping the stakes in the dispute by raising the risks for Vietnam’s offshore development.

“It’s a fairly transparent effort to put out markers,” said Mikkal Herberg, research director for energy security at the Seattle-based National Bureau of Asian Research.

“I think no company is going to touch those blocks, given the dispute,” Herberg said. “Typically, what happens in these cases is that the large players will shy away because they have large interests particularly in China but also perhaps in Vietnam.”

If there is any good news in this interpretation, it is that clashes would be unlikely to result from CNOOC trying to move equipment into Vietnam’s offshore zone.

The bad news is that China’s chess move may raise tensions by discouraging Vietnam’s offshore investment.

“It’s clearly going to make it more difficult for Vietnam to get companies to invest in blocks that are out there on the margin where China is making a claim,” Herberg told RFA.

Herberg said China already has some pipeline infrastructure in the South China Sea developed in the 1990s for the Yacheng 13-1 gas field.

Onshore connections include a 60-kilometer (37-mile) pipeline to Hainan Island and a 780-kilometer (485-mile) line to Hong Kong, according to BP, which turned over the operations to CNOOC in 2004.

“You could run pipes up into that infrastructure that connects to the Chinese market, but it would have to be a very large discovery to justify a long undersea pipeline, which is very expensive,” Herberg said.

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