Domestic Challenges and International Policy of Vietnam and China in the South China Sea Dispute
Aaron Phillip Waddell
A thesis in fulfilment of the requirements for the degree of
Master of Philosophy
School of Humanities and Social Sciences (HASS)
01 October 2020
Thesis/Dissertation Sheet Australia's Global University
Surname/Family Name Waddell Given Name/s Aaron Phillip Abbreviation for degree as give in the University calendar MPhil Faculty UNSW Canberra School School of Humanities and Social Sciences (HASS) Domestic Challenges and International Policy of Vietnam and China in the Thesis Title South China Sea Dispute
Abstract 350 words maximum: (PLEASE TYPE) Robert Putnam has famously noted in his two-level game theory that a counby's domestic and international spheres are interacted and a country's foreign policy could be driven by domestic politics. My dissertation addresses the question of what the implications of Vietnam's and China's
current domestic challenges are for their foreign policy in theSouth China Sea (SCS). The SCS dispute is contemporary, including competing territorial sovereignty claims andVietnam and China are the two largest claimants. I articulate the countries' domestic challenges in three domains namely economic growth, regime legitimacy, controlling territ01y and sovereignty and analyse how these
issues impact on the countries' SCS policy. I propose that Beijing's policy to keep the SCS situation under control and to contain any intensifying provocations of certain neighbouring countries, including Vietnamis a result of China's effortsin managing current domestic challenges. I argue that theCommunist Party of Vietnam's (CPV) maritime strategy is to sustain economic growth to address their current domestic issues. This created a dilemma for Vietnam as theycould only implement the maritime strategy without any coercion in the SCS, and consequently, there were limitations in the CPV's formation of SCS policies against China. My dissertation expands the range of study of China's and Vietnam'sSCS policies by applying theintegration between domestic and international domains to explain the drivers of the countries' SCS policies. I conclude with a discussion of on-going challenges facing both China and Vietnam in developing effective SCS 'strategy and recommend furtherresearch on multilateral management regime in theSCS and Vietnam'smilitary modernisation for deterring China.
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Abstract
Robert Putnam has famously noted in his two-level game theory that a country’s domestic and international spheres are interacted and a country’s foreign policy could be driven by domestic politics. My dissertation addresses the question of what the implications of Vietnam’s and China’s current domestic challenges are for their foreign policy in the South China Sea (SCS). The SCS dispute is contemporary, including competing territorial sovereignty claims and Vietnam and China are the two largest claimants. I articulate the countries’ domestic challenges in three domains namely economic growth, regime legitimacy, controlling territory and sovereignty and analyse how these issues impact on the countries’ SCS policy. I propose that Beijing’s policy to keep the SCS situation under control and to contain any intensifying provocations of certain neighbouring countries, including Vietnam is a result of China’s efforts in managing current domestic challenges. I argue that the Communist Party of Vietnam’s (CPV) maritime strategy is to sustain economic growth to address their current domestic issues. This created a dilemma for Vietnam as they could only implement the maritime strategy without any coercion in the SCS, and consequently, there were limitations in the CPV’s formation of SCS policies against China. My dissertation expands the range of study of China’s and Vietnam’s SCS policies by applying the integration between domestic and international domains to explain the drivers of the countries’ SCS policies. I conclude with a discussion of on-going challenges facing both China and Vietnam in developing effective SCS strategy and recommend further research on multilateral management regime in the SCS and Vietnam’s military modernisation for deterring China.
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For my father Ronald Phillip Waddell, He taught me to be kind, brave and wise. I hope you know that I’m so proud of you and that it makes me proud of me.
My Dad
In your memory 18 September 1950 to 25 December 2019
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Table of Contents
Acknowledgments ...... 7 Chapter I: Introduction ...... 9 1.1 Literature Review ...... 14 1.2 Research Topic and Key Questions ...... 9 1.3 Central Argument ...... 28 1.4 Two-level Game Theory ...... 30 1.5 Contribution to Literature ...... 34 1.6 Methodology ...... 36 1.7 Outline of the thesis ...... 37 Chapter II: Vietnam’s and China’s Policies toward to the South China Sea ...... 38 2.1 Current tension over the SCS ...... 38 2.2 Vietnam’s and China’s Claims and Actions over the SCS ...... 40 2.2.1 Vietnam’s Claims and Actions over the SCS ...... 40 2.2.2 China’s Claims and Actions over the SCS ...... 47 2.2.3 Geostrategic co-operation in the SCS ...... 54 2.3 Vietnam’s and China’s South China Sea Policies ...... 57 2.3.1 Vietnam’s SCS Policies ...... 57 2.3.2 China’s SCS Policies ...... 60 2.4 Conclusion ...... 66 Chapter III: China’s Domestic Challenges and implications for Beijing’s Foreign Policy for the SCS ...... 68 3.1 China’s Current Domestic Challenges ...... 68 3.1.1 Challenges in fostering sustainable and equitable economic growth ...... 69 3.1.2 Challenges in maintaining regime legitimacy ...... 72 3.1.3 On-going attention on securing the population from conflict and territorial control ...... 73 3.1.4 China’s Primary Domestic Interest Groups ...... 75 3.2 Implications for Chinese SCS Policy ...... 78 3.3 Conclusion ...... 89 Chapter IV: Vietnam’s Domestic Environment and Limited Foreign Policy Options ... 93 4.1 Vietnam’s Current Domestic Challenges ...... 93 4.1.1 Challenges in fostering sustainable and equitable economic growth ...... 94
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4.1.2 Challenges in maintaining regime legitimacy ...... 97 4.1.3 Challenges in securing the population from conflict and territorial control .. 99 4.1.4 Vietnam’s Primary Domestic Interest Groups ...... 101 4.2. Vietnam Policy Options in the SCS ...... 104 4.3 Conclusion ...... 118 Chapter V: Conclusion ...... 120 1. Vietnam’s and China’s current domestic challenges and implications for their SCS Policies ...... 120 2. Recommendation for Future Research ...... 124 Bibliography ...... 127
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List of Figures
Figure 1: Vietnam’s Land Reclamation in the Southwest Cay, CSIS/AMTI/DigitalGlobe Image ...... 43 Figure 2: Vietnam’s Land Reclamation in the Spratly Island, CSIS/AMTI/DigitalGlobe Image ...... 44 Figure 3: Dispute Islands and China’s Nine Dash Line Claim ...... 49 Figure 4: A new SinoMaps Press map showing China’s ten-dash line in the South China Sea ...... 50 Figure 5: Chinese progress in building an island at Gaven Reefs in the Spratly Islands52 Figure 6: China’s trend of GDP growth percentage and total GDP 1980 to 2017 ...... 69 Figure 7: Vietnam’s trend of GDP growth percentage and total GDP, 1985 to 2017 ...... 95
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Acknowledgments
This thesis becomes a reality with the kind support and assistance from many individuals and I would like to extend my sincere thanks to all of them. I wish to thank Dr Jian Zhang and Dr Gavin Mount for their academic advice and assistance in order to finish this research. I also wish to deeply thank Bernadette McDermott for her expert and patient administrative assistance.
I would also like to thank the School of Humanities and Social Sciences (HASS), University of New South Wales Canberra and the many other academic and administrative staff I have spoken with for their guidance and supervision as well as for providing necessary information regarding this research.
Personally, I would like to express my deepest gratitude towards my family for the patience and encouragement which has helped me in the completion of this thesis. My beloved and supportive wife, Dr Anh Pham Waddell, always by my side when I need her most and has been my most loyal encourager. My children Harrison, Alexander, Krystal and William; who I set the standard for them to follow as I pursue this undertaking.
Lastly, but not to be diminished, my heartfelt thanks goes to my parents Ronald and Janice Waddell as well as my parents in law Trac Pham and Dao Le for believing in my ability to succeed and excel in the challenging path that I chose to take. Your love and belief in what I am doing will never be forgotten.
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Glossary
ASEAN. Association of Southeast Asian Nations
ARF. ASEAN Regional Forum
CCP. Chinese Communist Party
CPV. Communist Party of Vietnam
CSCAP. Council on Security Cooperation in the Asia Pacific
EU. European Union
GDP. Gross Domestic Product
HD981. Haiyang Shiyou 981
MOFA. Ministry of Foreign Affairs
NM. Nautical Miles
PLA. People’s Liberation Army
PLA (AF). People’s Liberation Army Air Force
PLA (N). People’s Liberation Army Navy
SCS. South China Sea
WTO. World Trade Organisation
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Chapter I: Introduction
1.1 Research Topic and Key Questions
The South China Sea (SCS) dispute is a complex web of inter-competing claims of territorial sovereignty over islands and small sea features as well as numerous foreign policies of different claimants, including the two largest claimants; Vietnam and China. Each one of these SCS policies is owner country specific and as such each policy overlaps and is formulated unilaterally thus feeding into the tension narratives. With respect to Vietnam, territorial integrity has been an unwavering core value in Vietnam’s turbulent history of territorial struggles with many nations, but most notably with China. Nevertheless, the Communist Party of Vietnam (CPV) has had a bilateral relationship with the Chinese Communist Party (CCP) for the last 70 years1 and as such the two countries have been working on improving their diplomatic and economic ties since 1991.2 Thus by the turn of 2018 Vietnam had surpassed Malaysia to now be China’s biggest trade partner from within the Association of Southeast Asian Nations (ASEAN).3 In the months up to June 2018, the total trade revenue between Vietnam and China was estimated at US$66 billion with an average monthly trading benchmark breaking historical records by exceeding US$10 billion.4
However, the ongoing territorial dispute over the sovereignty of the Paracel and Spratly Islands remained a critical issue in the bilateral relationship. Over the past several decades, China has been actively escalating its SCS territorial claims and now its claims are defined by the Chinese defined nine-dash line. The legacy of the ‘nine-dash line’, was a revision of the similarly-named “eleven-dash line”
1 Ramses Amer, ‘Sino-Vietnamese Relations and Southeast Asian Security’, Contemporary Southeast Asia, Volume 14, Number 4, March 1993, page 314-331 2 Brantly Womack, China and Vietnam: Politics of Asymmetry, (Cambridge University Press, 2006), 26–28. 3 Nhan Dan Online, Remarks made by Commercial Counsellor of the Chinese Embassy in Vietnam, Hu Suojin, during a press briefing held by the Chinese Embassy, 26 July 26, 2018, accessed 22 January 2019, http://en.nhandan.org.vn/business/item/6428702-vietnam-becomes- china%E2%80%99s-largest-trade-partner-in-asean-chinese-diplomat.html. 4 Ibid. 9 that came from a map created by Chiang Kai-shek’s Chinese Nationalist Government of China (Formosa/Taiwan) in 1947; and later adopted by the Communist Zhou Enlai Government of (China) in 1949. The present CCP under Xi Jinping views this map as the historical evidence that supports the CCP SCS claims.5 The nine-dash line covers most of the SCS and overlaps Vietnam’s Exclusive Economic Zone (EEZ) and according to Carl Thayer, the Chinese claim was delegitimised by the Hague-based arbitral tribunal landmark ruling in July 2016.6 Vietnam’s foreign ministry welcomed the ruling as according to them, it “strongly supports” dispute resolution in the SCS through “peaceful measures, including diplomatic and legal procedures.”7
Nevertheless, Yanmei Xie suggests the CCP does not plan to cease claiming historical territorial privileges from the area outlined by the Nine-Dash Line that would also include the rights to sea life exploitation and hydrocarbon resource exploration and exploitation.8 Indeed, China has been pursuing oil development activities and as such there have been incidents involving Vietnamese fishermen which has sparked more tensions between Vietnam and China. For instance, in May 2014, China deployed the Haiyang Shiyou 981 (HD981), a seabed drill platform that is capable of deep sea drilling to an area near the Paracel Islands, in a region within Vietnam’s internationally recognised EEZ and continental shelf.9 This provocative act certainly tested Vietnam’s tolerance as, from its
5 Tuong Nguyen, “Uncertainty and insecurity generated by claimants in South China Sea – OpEd”, Eurasia Review, August 22, 2012, accessed 8 September 2018 http://www.eurasiareview.com/22082012-uncertainty-and-insecurity-generated-by-claimants- in-south-china-sea-oped/. 6 Carl Thayer, ‘Dead in the Water: The South China Sea Arbitral Award, One Year Later’, The Diplomat, 28 June 2017, accessed 7 July 2020, https://thediplomat.com/2017/06/dead-in-the- water-the-south-china-sea-arbitral-award-one-year-later/ 7 Shawn W. Crispin, “Will Vietnam File a South China Sea Case Against China?”, The Diplomat, August 30, 2016, accessed 8 September 2018, https://thediplomat.com/2016/08/will-vietnam- file-a-south-china-sea-case-against-china/ 8 Yanmei Xie, International Crisis Group, quoted by Shawn W. Crispin in “Will Vietnam File a South China Sea Case Against China?”, The Diplomat, August 3, 2016, accessed 8 September 2018, https://thediplomat.com/2016/08/will-vietnam-file-a-south-china-sea-case-against-china/. 9 Richard Q. Turcsányi, Chinese Assertive Actions in the South China Sea, (Springer International Publishing, 2018), 31-60. 10 perspectives; Vietnam’s sovereign rights under international law had been breached.10
In addition, China has also been rapidly expanding the land reclamation activity and military installation creation on the Paracel and the Spratly islands. For instance, Fiery Cross Reef has been built to become what can only be described as a combined naval/air military facility that is vastly larger than any other establishment in the Spratly Islands.11 In 2016, China seemingly permanently positioned short- range anti-air missiles and anti-aircraft cannon as well as area surveillance radars to a number of key islands in the Paracel, aiming to defend against incoming foreign missiles and aircraft.12 Later in 2018, China seemingly also positioned long-range anti-ship cruise and air-defence missiles to a number of areas in the Spratly Islands, this provided these islands with a defensive posture and also an offensive reach for the first time.13 This continuous militarisation of the Spratly Islands has given the area an offensive power projection capability which significantly expands China’s existing anti-access, area-denial (A2/AD) naval strategy.
Hence the Chinese escalation of territorial claims and land reclamation activities has posed a direct threat to Vietnam’s sovereign rights as detailed under international law. Due to the longstanding regional tensions, some authors proposed that there ‘may be grounds for cautious optimism that progress could be made in managing SCS disputes’.14 Certainly, in 2011, Carlyle Thayer assessed
10 Tuoi Tre News, Chinese Force Launches Daylong Attacks on Vietnamese Vessels, 29 May2014, accessed 8 September 2018, http://tuoitrenews.vn. 11 Victor Robert Lee, “China’s New Military Installations in the Disputed Spratly Islands: Satellite Image Update”, March 16, 2015, accessed 8 September 2018 https://medium.com/satellite- image-analysis/china-s-new-military-installations-in-the-spratly-islands-satellite-image- update-1169bacc07f9. 12 Asia Maritime Transparency Initiative, China’s New Spratly Island Defenses, December 13, 2016, accessed 8 September 2018 , https://amti.csis.org/chinas-new-spratly-island-defenses/. 13 Steven Stashwick, “China Deploys Long-Range Anti-Ship and Anti-Air Missiles to Spratly Islands for the First Time”, The Diplomat, May 5, 2018, accessed 8 September 2018 , https://thediplomat.com/2018/05/china-deploys-long-range-anti-ship-and-anti-air-missiles- to-spratly-islands-for-first-time/. 14 Carlyle A Thayer, Recent Development in the South China Sea: Grounds for Cautious Optimism?, RSIS Working Paper No. 220, (Singapore: S. Rajatnam School of International Studies, Nanyang Technology University), December 14, 2010, 5. 11 that Vietnam had established a remarkably robust bilateral relationship with China to assure national security whilst managing the SCS tensions.15 Since the creeping changes, more developments in the numerous strategies deployed by various claimants in support of the multiple and competing claims in the SCS have occurred.16 Thus in 2018, Huong Le Thu argued that ‘Vietnam’s SCS strategy is facing increased limitations in the wake of evolving security contexts and urged Vietnam to update its SCS strategy’.17
Due to the ongoing complex SCS issues, many studies have investigated and commented on the SCS tensions and factors that may facilitate or inhibit an effective solution for the dispute.18 Some have focused on a range of country- positions the cover the regional, structural, legal, historical, and the multilateral circumstances of this Sino-Vietnamese dispute.19 Whilst others have commented on the complex nature of the dispute due to China’s rapid economic development and recent escalation of territorial claims and SCS land reclamation activities.20 On a different tangent, a third line of studies have seen the SCS in the context of a number of great power and regional players contending for influence, thus making the SCS one of the world’s most volatile water bodies of the present time.21 Thus, many possibilities and opportunities have been discussed to simmer down the potential for conflict, resolve ongoing territorial problems, and
15 Carlyle A. Thayer, The Tyranny of Geography: Vietnamese Strategies to Constrain China in the South China Sea, (Montréal, Québec, Canada: International Studies Association 52nd Annual Convention), March 16‐19, 2011. 16 Sarah Raine, ed., Regional Disorder, The South China Sea Disputes, (London: Routledge, 2017), 5. 17 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy”, Asia Maritime Transparency Initiative, December 6, 2018, accessed 8 September 2018, https://amti.csis.org/vietnam-should-update-south-china-sea-strategy/. 18 Sam Bateman and Ralf Emmers, ed., Security and International Politics in the South China Sea: toward a cooperative management regime, (Great Britain: Routledge, 2009). 19 Huang, J. and Billo, A., eds, Territorial Disputes in the South China Sea - Navigating Rough Waters, (Palgrave MacMillan, 2015). 20 Humphrey Hawksley, Asian Waters: The Struggle Over the South China Sea and the Strategy of Chinese Expansion, (Harry N. Abrams, 2018). 21 Truong T. Tran, John B. Welfield and Thuy T. Le, eds., Building a Normative Order in the South China Sea - Evolving Disputes, Expanding Options, (Edward Elgar Publishing, 2019). 12 capitalise on the SCS potential to promote regional development, environmental sustainability and security.22
However, there has not been any systematic research on the domestic environment of Vietnam and China and how the underlying domestic issues would impact on each country’s strategy toward the SCS dispute. This gap in literature needs to be addressed since Putnam has argued via the development of two-level game theory that underlying domestic challenges within a nation have clear implications for a state’s foreign policy stance and associated international negotiations.23 In this context, the present study aims to investigate the implications of the Vietnamese and Chinese underlying current domestic issues on their formation of strategies toward the SCS dispute. The thesis seeks to contribute an elaborate exercise in verifying the two-level games hypotheses as applied to the SCS territorial dispute negotiations between Vietnam and China. The thesis will do so by tracing the domestic sources of both countries behaviour on territorial disputes and SCS policy.
The central research question that this dissertation seeks to address is “what are the implications of Vietnam’s and China’s current domestic challenges for their foreign policy in the SCS? “. By answering the central research question, this thesis would highlight the conditions existing within a state, and between the state and the international system, which might hamper or accelerate state-to- state negotiations on the SCS territorial dispute. The central research question is supported by two sub-research questions which are:
1. What are China’s current domestic challenges and how these challenges affect Beijing’s foreign policy for the SCS at present?
2. What are Vietnam’s current domestic challenges and how these challenges affect Hanoi’s foreign policy for the SCS at present?
22 Ibid. 23 Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games”, International Organization, Vol. 42, No. 3, (1988): 427-460. 13
In relation to domestic challenges, the thesis will assess three key areas which have been widely used by scholars and international organisations when they discuss state responsibilities. They are the abilities to (1) foster sustainable and equitable economic growth, (2) develop and maintain regime legitimacy; and (3) secure the population from violent conflicts and control territory.24
Broadly, the sub-research questions inform the structure of the thesis. A theoretical framework of analysis in order to address the research questions will be presented in Chapter Two. The first sub-research question is considered in Chapter Three, the second sub-research question will be addressed in Chapter Four. Chapter Five concludes the thesis by summarising key findings in each chapter, some limitations and a suggestion for future research. A section titled ‘Outline of the Thesis’ presented at this chapter’s close will provide a short description of each individual chapter.
1.2 Literature Review
The SCS, bordered by China, Vietnam, the Philippines, Malaysia, Taiwan, Brunei and Indonesia is a major maritime path for a large proportion of global merchant ship traffic. Thus the SCS is a key strategic and economic sub-region as well as the home of many highly multifaceted territorial differences and arguably the main reason for some other regional tensions as well as some other global security and international relations issues. Certainly whilst not covered by this thesis, it is necessary to understand that global connectivity and the sustainment of historical alliances and friendships as well as the building of new alliances are all part of the commentary that feeds into regional disputes. The SCS is just one of these many global disputes.
China, Vietnam, the Philippines, Brunei, Taiwan and Malaysia hold different territorial claims over the SCS based on various accounts of history and geography. China stated in its note verbale submitted to the United Nations in
24 Susan E. Rice and Stewart Patrick, Index of State Weakness in the Developing World, (USA, Washington DC: The Brookings Institution, 2008) p.3. 14
2009 “China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters, and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof.”25 Vietnam also claims that its territorial rights over the Spratly and Paracel islands are rested on historical declarations of sovereignty that date back to the 17th century.26 The Philippines have asserted territorial claims to Scarborough Shoal as well as a collection of 50 features in the Spratly island group, which are collectively known as the Kalayaan Island Group (KIG). The Philippine claim to sovereignty over the Scarborough Shoal and the KIG are independent of its archipelagic status both legally and historically.27
Brunei and Malaysia have claimed sovereignty over southern parts of the sea and some of Spratly Islands.28 In the case of Taiwan (or the Republic of China, ROC), the PRC claims that its nine-dash line is a successor to the eleven dash U-shaped line map issued by the ROC in 1947.29 However, since the issuance of the 1947 map, Taiwan has never claimed a historical entitlement to all the waters within the U-shaped line.30 By contrast, the PRC used the nine-dash line to claim the ownership over the SCS.31 In an effort to prevent physical conflict all claimants are universally expected to settle their disputes by peaceful means using United Nations legal mechanisms.32 The SCS dispute is extremely complicated due to the overlapping and conflicting claims of sovereignty. Amongst all SCS
25 The United Nations, Press Conference by Secretary of Commission on Limits of Continental Shelf, 13 May 2009, accessed 31 March 2020, https://www.un.org/press/en/2009/090513_Sea.doc.htm 26 Ian Storey, South China Sea Dispute, Flipside Digital Content Company Inc., 2017 27 Mark E. Rosen, Philippine Claims in the South China Sea: A Legal Analysis, A CNA Occasional Paper, August 2014, accessed 2 April 2020, https://www.cna.org/cna_files/pdf/iop-2014-U- 008435.pdf 28 SCMP Reporter, ‘Explained: South China Sea dispute’, The South China Morning Post, 16 Feb, 2019, accessed 2 April 2020, https://www.scmp.com/week-asia/article/2186449/explained- south-china-sea-dispute 29 Chi-Ting Tsai, ‘Has Taiwan Implicitly Clarified the U-Shaped line?’, The Diplomat, May 6, 2019, assessed 16 May 2020, https://amti.csis.org/taiwan-implicitly-clarified-u-shaped-line/ 30 Ibid. 31 The United Nation, Commission on Limits of Continental Shelf 32 Pham Ngoc Minh Trang, ‘South China Sea: The Disputes and Southeast Asia’s Culture of International Law’, The Diplomat, October 22, 2019, accessed 2 April 2020, https://thediplomat.com/2019/10/south-china-sea-the-disputes-and-southeast-asias-culture- of-international-law/ 15 claimants, China and Vietnam have a special bilateral relationship. For instances, Vietnam refers to China as a “comprehensive strategic cooperative partner” and this is the highest distinction Hanoi offers any major power partner.33 However, Vietnam’s approach to China is considered “cooperation and struggle” because Hanoi has consistently sought to keep bilateral ties with Beijing productive despite simultaneously pushing back in the SCS.34 Vietnam and China seem to have the largest overlap in the SCS claims because both the Spartly and the Paracel Islands are claimed by the two countries.35 Additionally, China and Vietnam are the only SCS claimants that share a land border and any tension between them could have greater impacts on the parties involved. This dissertation therefore focuses only on China and Vietnam as the case study.
This dissertation proposes to investigate the linkage between domestic challenges and the formation of the SCS policies of Vietnam and China thus it is necessary to review academic works on the SCS dispute. This section will seek to evaluate existing literature by order of time following the development of the issue. Some of the most notable studies of SCS strategic and political developments during the late 20th century include the following books: MarkValencia ‘China and the South China Sea Disputes: Conflicting Claims and Potential Solutions in the South China Sea’ (1995)36 ; Bob Catley and Makmur Keliat ‘Spratlys: The Disputes in the South China Sea’ (1997)37 and Lee Lai To ‘China and the South China Sea Dialogues’ (1999).38 Overall, these early studies provided a comprehensive history of the dispute and set the scene for future research.
33 Derek Grossman, ‘Reviewing Vietnam’s ‘Struggle’ Options in the South China Sea’, The Diplomat, May 05, 2020, accessed 16 May 2020, https://thediplomat.com/2020/05/reviewing- vietnams-struggle-options-in-the-south-china-sea/ 34 Ibid. 35 Lowy Institute, South China Sea, current as at May 16, 2020, assessed 16 May 2020, https://www.lowyinstitute.org/issues/south-china-sea 36 Mark Valencia, China and the South China Sea Disputes: Conflicting Claims and Potential Solutions in the South China Sea, (Oxford: Oxford University Press, Adelphi paper, 1995). 37 Bob Catley and MakmurKeliat, Spratlys: The Dispute in the South China Sea, (Aldershot, UK: Ashgate Publishing, 1997). 38 Lee Lai To, China and the South China Sea Dialogue, (Westport, CT: Praeger Publishers, 1999). 16
The significance of the SCS and the development of the dispute were later reviewed in 2009 by Sam Bateman and Ralf Emmers.39 Aside from a thorough analysis of the impact of the SCS disputes on regional relations and regional security, their work assessed the strategic significance of the SCS in the context of regional security environment; discussed the convergence of traditional and non-traditional security issues and identified factors which either facilitated or inhibited effective SCS cooperation.
They argued that whilst the risk of conflict may have reduced, there was still no effective regime for providing key factors for a more cooperative SCS marine management due to the lack of agreed maritime jurisdiction of the sea body.40 They further argued that conflicting SCS sovereignty claims meant that the delimitation of conventional maritime boundaries was quite unlikely; thus it was important to find other means of managing the disputed areas and allowing effective resource exploitation which was not based on sole jurisdiction and unilateral title of the resources.41 However, as Arnold Wolfers previously remarked, national independence and territorial integrity represent core values that countries will not sacrifice.42 As such, Bateman and Emmer’s arguments seem to be less persuadable for Vietnam due to the Vietnamese history of territorial struggles, particularly with China, thus territorial integrity has always been a firm Vietnamese core value.
In 2011, Clive Schofield and Ian Storey reviewed serious interstate contentions over the long standing sovereignty disputes since the 1990s around the large numbers of islands, reefs and shoals that made up the SCS 1.2 million square miles of water area.43 Schofield and Story analysed China’s growing economic, political, and military influences to argue that the country ‘had edged to a more
39 Sam Bateman and Ralf Emmers, Security and International Politis in the South China Sea: toward a cooperative management regime, (2009). 40 Bateman and Emmers, Security and International Politics in the South China Sea: toward a cooperative management regime, 240. 41 Ibid, 236. 42 Arnold Wolfers, Discord and Collaboration, (Baltimore: John Hopkins Press, 1962), 147-150. 43 Clive Schofield and Ian Storey, The South China Sea Dispute: Increasing Stakes and Rising Tensions, (Washington DC: Jamestown Foundation, 2011). 17 assertive position in consolidating its jurisdictional claims, expanding its military reach, and seeking to undermine the claims of other states through coercive diplomacy’.
They warned that tensions are on the rise and territorial disputes will become more conflict prone in the coming decade.44 Although providing a solid background on the SCS dispute, Schofield and Story failed to provide an in-depth analysis of China’s SCS intentions and their analysis lacked the critical assessments on how China’s jurisdictional claims could impact on the security environment of other SCS claimants and regional security as the whole.
Also in 2011, Tran Truong Thuy addressed a shortfall in Schofield and Story’s work through an edited volume highlighting the strategic role of the SCS in the ever changing geo-political environment, it also covered significant area developments and the effects on prosperity and regional security.45 These papers discussed some legal issues on the SCS maritime and territorial disputes and the dispute settlement processes to acknowledge signs of regional instability that could further cause a deterioration to the ongoing tensions.
This book by Tran Truong Thuy argued that rather than through the threat of force, the SCS dispute can only be settled through peacefully negotiated multi invested party conferences and governmental meetings that use the international law that was established by the United Nations Convention on the Law of the Sea of 1982 (UNCLOS).46 The various contributors to the volume emphasised the role of the SCS in world trade and called for all SCS users to have the responsibility to preserve navigation safety, maritime security and freedom of navigation in the region. Thus, a safer SCS would be beneficial for all coastal communities, the development of the ASEAN and all SCS claimants.47
44 Schofield and Storey, The South China Sea Dispute: Increasing Stakes and Rising Tensions, 41. 45 Tran Truong Thuy, The South China Sea: Toward a Region of Peace, Security and Cooperation, (Hanoi, Vietnam: The Gioi Publisher, 2011). 46 Tran, The South China Sea: Toward a Region of Peace, Security and Cooperation, 11. 47 Ibid, 167-269. 18
The authors considered that recent SCS developments had changed the overall outlook and circumstances; had raised tensions and set the scene that any reckless action would raise suspicions and lead to strong protests from both claimant states and other concerned parties.48 To push forward cooperation in the SCS, the author highlighted some examples of cooperative activities such as fishery agreements and joint development zones and suggested the implementation of confidence building measures as identified in the 2002 Declaration of Conduct (DOC) as the roadmap for promoting SCS cooperation.49
Tran Truong Thuy’s 2011 book had not found any complete solution for the conflicting SCS sovereignty claims as identified by Bateman and Emmer in 2009. However, the book promoted cooperation in “manageable areas” and participation of other relevant countries and international organisations as solutions as other means of managing the disputes. Nevertheless, this work did not identify obstacles in the quest to achieve cooperation in manageable areas of the SCS.
A 2013 analysis of SCS tensions saw Robert Beckman warn that a diplomatic and military standoff between China and the Philippines over Scarborough Shoal had increased concerns that an incident may escalate and result in the use of armed intervention.50 Later in 2014, Jing Huang and Andrew Billo provided further careful considerations on the intricacies of the continuing SCS territorial dispute through the perspectives of seven involved stakeholder countries.51
Their work successfully disentangled the legal, political and historical aspects of the dispute to enable a better practical and objective understanding of its complexities as well as attempting to examine different opportunities to navigate some solutions. The authors took into account the differences in viewpoint to
48 Ibid, 339-392. 49 Ibid, 365-379. 50 Robert Beckman, “Increased tension and risk of potential conflict in the South China Sea” in ‘CSCAP Regional security outlook’ ed. Olivia Cable and Christine M. Leah, (Council for Security Cooperation in the Asia Pacific (CSCAP), 2013), 36-39. 51 Jing Huang and Andrew Billo, eds., Territorial Disputes in the South China Sea: Navigating Rough Waters, (Basingstoke: Palgrave MacMillan, 2014). 19 emphasise the potential destabilisation of Southeast Asia and East Asia and possibly the broader Asia-Pacific region should the SCS territorial dispute be left unattended. They argued ‘the focus should be on effective management of the dispute to prevent dangerous and potentially destabilising incidents at sea’.52 However, this work also did not provide further analysis on how such a management regime can be achieved in the current context of China’s growing power and overt SCS sovereignty assertions.
Bill Hayton continued to provide a clear sense of the SCS dispute in 2014 by examining the extraordinarily great stakes at risk for competing nations which included China, Vietnam, the Philippines, India, and Taiwan, with the other global contenders of Russia, America and some other smaller but vested parties such as Australia.53 Hayton successfully covered all major dimensions of the disputes with all their complexities from every angle – legal, political, historical as well as economic and strategic.
He underscored the crucial importance of the SCS as the sea path for around fifty percent of global merchant shipping and a third of the world’s gas and oil to argue that ‘whoever controls these waters controls the access between Europe, the Middle East, South Asia, and the Pacific’.54 He also presented significant complications that hindered a non-violent resolution, including the overlapping sovereignty claims of various SCS claimants such as Philippines and Malaysia.55 He admitted there were no easy alternatives to the continuing trouble in the SCS as no country wished to incite a clash but no one was disposed to reducing tensions by easing up on or surrendering territorial claims.
Hayton argued that regional cooperation or joint development was an optimal way forward but would not be practical until vested parties were willing to work together and especially until China clarifies its position in the territorial claim.56
52 Ibid, 1-14 53 Bill Hayton, The South China Sea – the Struggle for Power in Asia, (London: Yale University Press, 2014). 54 Ibid, 90-120. 55 Ibid, 263. 56 Ibid, 264. 20
Hayton’s argument certainly does not support a cooperative SCS maritime management as previously suggested by Sam Bateman and Ralf Emmers in 2009. Additionally, he thought ‘merging the SCS territorial disputes with the wider struggle between the US and China over access and security could make the situation more dangerous’. He concluded with a prediction akin to Robert Beckman’s assessment in 2013, that from time to time over the coming years, low- level non-violent confrontations would increase into times of low level forcible military or maritime policing actions, diplomatic actions and counter-actions and possibly even super-power confrontations.57
Opposing Hayton’s argument about the US involvement in the SCS disputes, James Borton in 2015 argued that China’s present actions are only driving Vietnam toward the possibility of military cooperation with the US.58 Borton’s book contains a collection of timely essays from prestigious international scholars focusing on the tense Sino-Vietnamese geopolitical standoff. The author highlighted that Vietnamese history was marked by almost one thousand years of subjugation by China thus Vietnam would feel the impact of China’s actions far more acutely than other members of ASEAN.
Therefore, due to the complexity of the disputes over oil exploration, EEZs, security interests and freedom of navigation, fisheries and unexplored SCS oil and gas reserves in addition to the deeply rooted Sino-Vietnam relationship. Such issues have only succeeded in forging a closer relationship between two former enemies: The US and the Socialist Republic of Vietnam.59 This closer friendship was consequent to the Chinese behaviour and presented many defensive challenges not only to Vietnam and other ASEAN nations but also for the US. Furthermore, the international community would not accept the prospect that one nation had the right to nationalise a sea body for solely national strategic purposes.60
57 Bill Hayton, The South China Sea – the Struggle for Power in Asia, 269. 58 James Borton, ed., The South China Sea: Challenges and Promises, (Xlibris Corporation, 2015), x. 59 James Borton, The South China Sea: Challenges and Promises, vii. 60 Ibid, xii. 21
Literature strongly suggests there have been a deepening ties between Vietnam and the US two decades after relations were normalised61 and new recent developments in the relationship between them.62 However in his essay, Borton did not clarify to which extent the closer ties between Vietnam and the US should be, in order to effectively assist Vietnam in SCS dispute.
Borton appeared to follow in the footsteps of Sam Bateman and Ralf Emmers in arguing that it was time for all SCS claimants to establish a cooperative marine peace park for all coastal states. He qualified that concern over exploitation of the natural resources in the region was increasing thus the environmental perspectives could no longer be ignored. Although the historical, political and economic territorial claims in the region were caught up in a complex and tangled web of nationalism, the future of these islands was to recognise the country or countries that were most equipped and qualified to sustainably develop and protect the islands’ resources and diverse marine ecosystems.63
Thus in 2015, Carlyle Thayer also promoted for SCS cooperation using international law as the backdrop.64 Thayer strongly suggested that ‘China should not be permitted to pursue information warfare in order to have it both ways by circulating a position paper to the United Nations (UN) in order to demonstrate the serious nature of its dispute with Vietnam whilst rejecting UN arbitration’. He analysed that the present dispute over sovereign rights in the waters surrounding the Paracel Islands could only be resolved bilaterally by China and Vietnam based on international law as framed by UNCLOS. He further suggested that Vietnam should lobby ASEAN to be stronger in its support for the settlement of disputes on the basis of international law and
61 Murray Hiebert, Phuong Nguyen, Gregory B. Poling, A New Era in U.S.-Vietnam Relations: Deepening Ties Two Decades after Normalization, (Centre of Strategic & International Studies (CSIS): Rowman & Littlefield, 2014). 62Alexander L. Vuving, “A Breakthrough in US-Vietnam Relations- A recent visit embodies the astonishing change in bilateral relations”, The Diplomat, April 10, 2015. 63 James Borton, The South China Sea: Challenges and Promises, viii. 64 Carlyle A. Thayer, ‘The Paracel Islands Dispute: Geo-Strategic Issues and the Role of International Law in Promoting Cooperation’, in The South China Sea: Challenges and Promises, ed. James Borton (Xlibris Corporation, 2015), 1-11. 22 without threat or use of force.65 Additionally, ASEAN states should continue to pursue with China a SCS Code of Conduct (COC).66
Thayer’s suggestion seems to overlook the overlapping sovereignty claims among SCS claimants, as previously highlighted by Hayton. Furthermore, confidence between the SCS maritime powers would first need to be established before any code could be negotiated.67 Other researchers also argued that ‘this could be done by strengthening the infrastructure of maritime communications and operations through military dialogues, real-time communication channels and formalised rules of the road’.68
Thayer later admitted that ASEAN’s objective in working towards a COC with China was probably unfeasible in the near future because the COC process had actually created fractures in ASEAN and separations amongst ASEAN’s SCS claimant states.69 He also argued that China’s claim of ‘indisputable SCS sovereignty’ and its aggressive assertion had become the major obstruction to managing the SCS maritime common ground and suggested that the Australia and America could lobby for a debate on the topic by the UN Security Council (UNSC). Japan and other maritime powers with benefits from SCS stability should also be part of any process.70 However, Thayer’s suggestion would unlikely lead to a resolution since China seemingly overlooked existing international law framed by UNCLOS.
The topics of maritime cooperation, maritime peace park for all coastal states or regional joint developments, have also been discussed as options for the SCS
65 Ibid, 10. 66 Ibid, 11. 67 Lowy Institute for International Polity, South China Sea: Conflicting Claims and Tensions, (2014), http://www.lowyinstitute.org/issues/south-china-sea. 68Rory Medcalf, Raoul Heinrichs and Justin Jones, “Crisis and Confidence: Major Powers and Maritime Security in Indo-Pacific Asia”, Lowy Institute, June 20, 2011, accessed 8 September 2018, https://archive.lowyinstitute.org/publications/crisis-and-confidence-major-powers-and- maritime-security-indo-pacific-asia. 69 Thayer, ‘The Paracel Islands Dispute: Geo-Strategic Issues and the Role of International Law in Promoting Cooperation’, 11. 70 Ibid, 11. 23 disputes.71 However, these solutions are unachievable until SCS claimants, especially China adjusts their position. A book in 2015 by Sheila A. Smith, Intimate Rivals, brought a new breeze into the current literature on the SCS dispute by examining China's expanding claims over the SCS, China’s rise as a global economic and military power and the impact of China’s rise on Japan.72 Smith provided a timely review of China's recent reclamation work on the reefs near the Spratly Islands, presenting that the newly built island could have a runway large enough to handle military fast jet aircraft and that aerial surveillance appeared to show port facilities that could handle the largest vessels of the Chinese Naval fleet.
The expression of nationalism and national identity in the context of the SCS dispute has also been widely studied. For instance, Trung Nguyen observed Vietnamese nationalism surged over the Hague-based Permanent Court of Arbitration ruling that China had no legal basis to claim "historic rights" over the SCS.73 Trung Nguyen suggested that the Vietnamese regime was almost certainly stoking nationalist sentiments as a supporting measure to protect Vietnam's SCS sovereignty.74 Davis Hutt highlighted that nationalism was a factor that the CPV had to be wary of in the SCS dispute as the communist regime in Hanoi was seemingly losing the nationalism debate.75 Davis Hutt presented that the Vietnamese government was seen by the greater Vietnamese population as acting as a “Beijing puppet” and that was a considerable threat to political longevity in a country where anti-Chinese sentiment had been pervasive and deeply entrenched in history.76 Do Thanh Hai argued that political elites in Hanoi
71 Keyuan Zou, “Maritime conflict and cooperation in East Asia: recent developments and future prospects” in Assessing Maritime Disputes in East Asia: Political and Legal Perspectives, eds. Barthelemy Courmont (Frederic Lasserre and Eric Mottet, Routhledge, 2017), 36-53. 72 Sheila A. Smith, Intimate Rivals, (USA: Columbia University Press, 2015). 73 Trung Nguyen, “Vietnamese Nationalism Surges Over South China Sea Ruling”, July 19, 2016, accessed 2 April 2020, https://www.voanews.com/east-asia-pacific/vietnamese-nationalism- surges-over-south-china-sea-ruling 74 Ibid. 75 Davis Hutt, “Vietnam takes a stand in the South China Sea”, Asia Times, August 6, 2019, accessed 2 April 2020, https://asiatimes.com/2019/08/vietnam-takes-a-stand-in-the-south- china-sea/ 76 Ibid. 24 were not insensitive to rising nationalism at home in response to China’s aggressive behaviour in the SCS and Vietnam’s aim is not escalation, but gradually signalling the right message of resolve to Beijing.77
Qianping Chen also suggested that historically the past Chinese ROC government reasserted its sovereignty over the islands in the SCS via a number of government and military strategies including the stationing of troops on the Dongsha Islands, Yongxing Island, and Taiping Island.78 Some discussions consider that nationalistic desires were unnecessarily or dangerously playing an important role in the CCP policies toward the ongoing the SCS dispute.79 On the contrary, Jin Kai proposed that there seemed not to be a direct link between the CCPs “reactive assertiveness” and “nationalism,” although there was clearly a level of nationalistic sentiment amongst the PRCs netizens and casual Chinese internet users.80 Jin Kai, however, realised and presented that the CCP wanted to avoid having its policies fall into a purely negative spectrum of nationalistic sentiment.
Luo Xi analysed the SCS case and China’s new nationalism and argued that Chinese behaviour in the SCS is generally responsive and introverted, with the theme of national rejuvenation from its century of humiliation.81 Hannah Cotillon found that territorial disputes and external context are critical
77 Do Thanh Hai, ‘Vietnam confronts China in the South China Sea’, East Asia Forum, 6 December 2019, assessed 1 September 2020, https://www.eastasiaforum.org/2019/12/06/vietnam-confronts-china-in-the-south-china- sea/ 78 Qianping CHEN, “The Nationalist government’s efforts to recover Chinese sovereignty over the islands in the South China Sea after the end of World War Two”, Journal of Modern Chinese History, 11(1), 2017 79 Chun Han Wong, “Beijing Charts Course Between Nationalism, Diplomacy in South China Sea”, The Wall Street Journal, Oct 30, 2015, accessed 2 April 2020, https://www.wsj.com/articles/beijing-charts-course-between-nationalism-diplomacy-in- south-china-sea-1446204380 80 Jin Kai, “Is China’s ‘Assertiveness’ in the South China Sea All about Nationalism?”, The Diplomat, April 11, 2016, accessed 2 April 2020, https://thediplomat.com/2016/04/is-chinas- assertiveness-in-the-south-china-sea-all-about-nationalism/. 81 Luo Xi, ‘The South China Sea Case and China’s New Nationalism’, The Diplomat, 19 July 2016, accessed 1 Sep 2020, https://thediplomat.com/2016/07/the-south-china-sea-case-and- chinas-new-nationalism/ 25 conditioning factors of nationalism in autocratic governments such as in China.82 Adam Ni suggested there seems to be a lack of clarity regarding Chinese nationalism; however, the Chinese public opinion is generally hawkish.83 Therefore, greater defence spending and using armed forces to deal with territorial disputes in the SCS is supported by the Chinese people.84 Katherine Morton analysed the legal, strategic and political dimensions of China's positioning in the SCS disputes and suggested that maritime nationalism was a central motivation driving Chinese actions.85
The role of nationalism and national identity in the SCS policy making process is indeed an interesting research topic. However, this topic has been researched in the existing literature whilst there has been very little research about the domestic challenges and potential impacts on the policy making process. This dissertation focusses on the domestic challenges and potential impacts on the SCS policy formation of Vietnam and China. As analysed in Chapter Three and Four, although legitimacy is identified as a challenging issues for both Vietnam and China, this dissertation mainly explores the two countries’ legitimacy performance via economic development; and the SCS strategic importance in achieving economic development. Therefore, the role of nationalism and nationality in the SCS policy making process is not the scope of this study.
As analysed in this section, literature on the SCS dispute and Vietnam and China have covered a wide range of topics from the claimants’ position in the dispute to the claimants’ historical and legal foundations of the claims; from potential solutions for the dispute to potential benefit of having total control over the SCS. The nature of the SCS dispute, including the expression of nationalism and
82 Adam Ni, ‘Assessment of the Effects of Chinese Nationalism on China’s Foreign Policy’, RealClear Defense, 10 June 10 2019, assessed 1 Sep 2020, https://www.realcleardefense.com/articles/2019/06/10/ 83 Ibid 84 Ibid 85 Katherine Morton, ‘China's ambition in the South China Sea: is a legitimate maritime order possible?’, International Affairs, Vol 92, Issue 4, Special Issue: Chinese foreign policy on trial: contending perspectives?, July 2016, p 909-940 26 national identity have also been investigated. However, there has not enough study on the domestic source of the claimants’ SCS policy.
Furthermore, the on-going development of the SCS dispute has been captured by numerous recent publications that mainly focused on the alleged assertiveness of China’s behaviour. For instance, Ian Storey and Cheng-Yi Lin suggested that China’s assertion of their maritime rights and rapid modernisation of their armed forces increased the tensions in the SCS and propelled the dispute to the top of the Asia-Pacific's security agenda.86 Enrinco Fels and Truong Minh Vu emphasised in Power Politics in Asia’s Contested Waters – Territorial Disputes in the South China Sea, the importance of the SCS as a key part in the rise of China as an economic and military power to explain China’s aggressive SCS policy and action.87 Steven Stashwick described in his article, China’s South China Sea Militarization Has Peaked, which is China’s aggressive military build- up on its artificial islands in the SCS. Since 2013, China has constructed more than 3,000 dredged-up acres across seven features. These features are now studded with long-range sensor arrays, port facilities, runways, and reinforced bunkers for fuel and weapons.88 The most recent publications bring more insights into China’s activities and aggressive behaviours in the SCS and the potential impacts on regional and international orders. However, existing literature and the most recent publications have not provided an adequate analysis of the linkage between the domestic environments of China and the formation of international policy (including strategies toward the SCS dispute).
Similarly, and will be discussed in more detailed in Chapter Two, the contemporary literature about Vietnam and the SCS dispute have not mentioned Vietnamese domestic challenges but mainly focused on how Vietnam has been responding to China’s aggressive behaviour in the SCS. For instance, in March
86 Ian Story and Cheng-Yi Lin, eds., The South China Sea Dispute: Navigating Diplomatic and Strategic Tensions, (ISEAS: YusofIshak Institute, 2016). 87 Enrinco Fels and Truong Minh Vu, Power Politics in Asia’s Contested Waters – Territorial Disputes in the South China Sea, (Springer International Publishing, 2016). 88 Steven Stashwick, “China’s South China Sea Militarization Has Peaked”, Foreign Policy, August 19, 2019, accessed 2 April 2020 27
2019 Le Thu Huong urged Vietnam to update its SCS policy in order to effectively respond to China.89 Tran Truong Thuy, John B. Welfield and Le Thuy Trang analysed the evolving SCS dispute in 2019 and urged Vietnam and other SCS claimants to work toward a cooperative management framework for a normative order in the SCS.90 Similarly, in 2020, Leszek Buszynski and Do Thanh Hai explored the SCS from a regional maritime disputes to geo-strategic competition and highlighted the points of risks for Vietnam and other SCS claimants with discussion on how the situation is going forward.91
In summary, there have been significant amounts of literature on the SCS dispute in the last two decades. However, there has not been any systematic analysis on the domestic environment of China and Vietnam and how the underlying domestic issues would impact on their formulation of SCS policy. This dissertation proposes that this is a gap in contemporary literature and the primary task of this dissertation is to bridge this gap.
1.3 Central Argument
The SCS dispute indeed poses a significant challenge to the relationship between Vietnam and China as they are neighbours and the dispute is driven by the sovereignty of each individual country. The dispute has been predominantly analysed at the state level, as a matter of competing national interests. For instance, the SCS dispute is viewed as the most critical threat to the Vietnam- China bilateral relations.92 This level of analysis contributes little to our understanding of the conception and conduct of governmental policy and does
89 Huong Le Thu, “Vietnam should update its South China Sea Strategy”, Asia Maritime Transparency Initiative, December 6, 2018, March 21, 2019, accessed 20 May 2019, https://amti.csis.org/vietnam-should-update-south-china-sea-strategy 90 Tran Truong Thuy, John B. Welfied and Le Thuy Trang eds, Building a Normative Order in the South China Sea: Evolving Disputes, Expanding Options, (Edward Elgar Publishing Limited, 2019) 91 Leszek Buszynski and Do Thanh Hai eds, The South China Sea: From a Regional Maritime Dispute to Geo-Strategic Competition, (Routledge, 2020) 92 Nguyen Hung Son and C. J. Jenner, “Domestic politics: the overlooked undercurrent in the South China Sea” in The South China Sea: A Crucible of Regional Cooperation or Conflict-making Sovereignty Claims?, eds. C. J. Jenner and Tran Truong Thuy, (Cambridge University Press, 2016), 133-148. 28 not provide sufficient information to identify the rationale of the countries’ policies and actions in the SCS. It has been argued, ‘domestic actors can shape the agenda for international negotiations and that forms of domestic- international interaction tend to bring about large changes in the positions of the principal parties to a negotiation’.93 The possibility for a Vietnam-China international negotiation about the SCS disputes can only be reached if there is a willingness of both parties to pursue settlements through multilateral mechanisms and such willingness has not been observed from China.94
This dissertation proposes that there is a strong connection between domestic and international spheres in policy making and any challenges experienced in the domestic environment has certain impacts on Vietnams’ and China’s capability to deal with the SCS disputes. Domestic challenges in this dissertation refer to issues in three areas namely economic growth, regime legitimacy and territory control. It is important to recognise that despite the image of China as a rising power, the Chinese domestic environment currently has many issue such as a declining trend in economic growth, people’s questioning the regime’s legitimacy and on-going internal violence and conflicts. At the same time, China has to manage the SCS dispute with other claimants including Vietnam. China must manage the SCS dispute in a way that advances its interests but also not to escalate its domestic challenges. In other words, Chinese current domestic challenges are some drivers of its SCSs policies. For instance, China intends to keep the SCS situation controlled and to contain any intensifying provocations of the SCS centric countries, including Vietnam. This policy is a result of China’s efforts in managing current domestic challenges.
93 Jeffrey W. Knopf, “Beyond two-level games: domestic–international interaction in the intermediate-range nuclear forces negotiations”, International Organization, Vol 47, no. 4, (1993): 599-628. 94 C. J. Jenner and Tran Truong Thuy, “Introduction: A crucible of regional cooperation or conflict-making sovereignty claims?” in The South China Sea: A Crucible of Regional Cooperation or Conflict-making Sovereignty Claims?, eds. C. J. Jenner and Tran Truong Thuy, (Cambridge University Press, 2016), 1-13. 29
Like China, Vietnam also currently has issues in maintaining economic growth, strengthening regime legitimacy and securing sovereignty territory in the SCS. Similarly, Vietnam must manage the SCS dispute in a way that best protects its sovereignty; but its capability in dealing with China in the SCS is limited by its current domestic challenges. For instance, sustaining economic growth is necessary for Vietnam to improve the CPVs legitimacy and Vietnam created a maritime strategy to achieve this aim. However, Vietnam could only implement the maritime strategy without any coercion in the SCS. Vietnam therefore has a dilemma and consequently, there are limitations in the CPV’s formation of SCS policies against China. This dissertation argues that Vietnam’s and China’s SCS behaviour and policy in the SCS are influenced by their current domestic challenges and an understanding about this connection expands the conventional discussion on the SCS disputes.
1.4 Two-level Game Theory
In 1988, the international relations theorist and Academic, Robert Putnam introduced the two-level game as a theory to explain as well as to assist in the seeking of resolutions for international conflict between states. The model views that state representatives are strategically located in the middle of “two tables”, one of the tables represents domestic politics and factors, the other table represents the international negotiations between sovereign states. Diplomatic strategies or manoeuvres of one state are at the same time constrained by what the other state will agree to take and what domestic vested parties will endorse. Thus to have successful negotiations, the statesman must work a solution on these ‘two tables’, the aim is to reach both an international agreement and to secure domestic ratification.95 Putnam described the entanglement between domestic and international relations as: At the national level, domestic groups pursue their interests by pressuring the government to adopt favourable policies, and politicians seek power by constructing coalitions among those groups. At the international level, national
95Putnam, Robert, “Diplomacy and Domestic Politics: The Logic of Two-Level Games”, 427. 30
governments seek to maximize their own ability to satisfy domestic pressures, while minimizing the adverse consequences of foreign developments. Neither of the two games can be ignored by central decision makers, so long as their countries remain interdependent, yet sovereign.96
Putman broke the negotiation process into two stages including: 1. Level I: Discussions amongst the negotiators that leads to a cautious and first level agreement; 2. Level II: Discussions within each group of the vested parties about the possibility to approve the negotiated agreement.97
As the process continues, Level II bargaining and consultations are likely to present a Level I starting position for further discussions. On the other hand, the requirement for Level II endorsement is certainly affected by Level I brokering. Putnam argued ‘the requirement that any Level I agreement made must be ratified at Level II to impose a crucial theoretical link between the two levels’. As such, when at the international table, the representative will most often seek an arrangement that represents a possible 'win' in the country’s 'win-set'. This ‘Win- set’ is a probable outcome that is would likely be endorsed by the national interest parties, be they social or political. Ultimately, international agreement is achieved when a commonality exists between the two countries’ win-set that has come about from the international negotiations.98 Putman emphasised ‘the win- set size is important as the relative size of the respective Level II win-sets will affect the distribution of the joint gains from the international negotiations’. He highlighted three key factors that influence the win-set size, including: (i) possible coalitions among level II constituents, the distribution of power and any specific preferences; (ii) Level II political institutions and (iii) the strategies of the Level I negotiators.99
96 Ibid, 434. 97Putnam, Robert, “Diplomacy and Domestic Politics: The Logic of Two-Level Games”, 436. 98 Ibid, 438-440. 99 Ibid, 442-450. 31
Putman’s two-level game theory indeed differs from other domestic- international models in three important aspects. In the first instance, it is a concept of international negotiating whereas alternative approaches to incorporate domestic issues into international policy have concentrated on the creation of national desires and ideals. Second, the theory considers the country’s negotiator, be it political or diplomatic, to be the chief strategic player and this person’s consideration of policy is thought to be the key idea in the international negotiation forum. The third and most distinctive element is that the representative’s policies present a concurrent “double-edged” estimation of opportunities and limitations on both the national and international negotiation table.100 The two-level game theory recognises that national policy will likely be utilised to influence the product of the international negotiating and that international dealings might be exclusively set at satisfying domestic desires.
Researchers later confirmed that domestic contenders can heavily influence the plan for the international negotiation and the domestic-international interactions usually create bigger changes in the ideals of the key parties involved in the negotiation.101 It is also suggested that ‘national institutional limitations could be a factor in the possibility of war between two or more countries’.102 Another study found that ensuring endorsement requirements to the bargaining process would influence the probability of collaboration and a negotiators’ clout and in such cases, the basic institution in Putnam’s theory could be broken down.103 For instance when endorsement needs reduce, the likelihood for cooperation by reducing the ‘win set’ of an acceptable deal happens, it isn’t generally correct that
100 Peter B. Evans, Harold K, Jacobson& Robert D. Putnam, eds., Double-edged diplomacy: International bargaining and domestic politics, (University of California Press, 1993). 101 Jeffrey W. Knopf, “Beyond two-level games: domestic–international interaction in the intermediate-range nuclear forces negotiations”, International Organization, 47(4), (1993): 599-628. 102Thomas H. Hammond and Brandon C. Prins, “Domestic Veto Institutions, Divided Government, and the Status Quo: A Spatial Model of Two-Level Games with Complete Information” in Democratic Foreign Policy Making: Problems of Divided Government and International Cooperation, ed. Robert Pahre (New York: Palgrave Macmillan, 2006), 22. 103 Helen V. Milner, Interests, Institutions, and Information: Domestic Politics and International Relations, (NJ: Princeton University Press, 1997). 32 a reduced win set could make an outcome less probable. This is unless the space of jointly suitable agreements is totally abolished by the constraints.104
It was observed that in some cases, negotiation and compromises amongst a group of actors took place before the group presented their agreement at the international level. So, to reach an international settlement, the ‘win-set’ of both negotiating parties must overlap.105 There has also been other ideas presented that proclaim that national politics have no influence on the politics amongst nation-states and national power, especially a nation’s economic and military capabilities.106 Most recently, the interaction between governments and domestic nationalist groups in aggravating or preventing conflicts over the SCS has attracted attention from scholars in the field of International Relations.107
As presented in this section, the original purpose of Putnam’s two-level game is to describe the effect of domestic interest groups on a country’s negotiation of international agreement. It is important to stress that China’s and Vietnam’s SCS policies are not an international agreement.108 Nevertheless, my research is going to explore the linkage between domestic challenges and the formation of foreign policies in relation to the SCS dispute in China and Vietnam. I found the interaction between domestic and international spheres highlighted in Putnam two-level game theory is very useful to investigate the linkage between domestic factors and foreign policies. I am therefore not going to explore any negotiations at international levels nor international agreements between China and Vietnam. This research will focus mainly on the application of the two-level game theory in understanding how domestic factors challenge foreign policy and actions
104Ahmer Tara, “Constituencies and preferences in international bargaining”, Journal of Conflict Resolution, Vol 49, no. 3, (June, 2005): 383-407. 105 Ibid. 106 John J. Mearsheimer, The tragedy of Great Power politics, (New York: Norton, 2001). 107 Chien-Peng Chung, “Resolving China’s Island Disputes: A Two-Level Game Analysis”, Chinese Political Science, vol. 12, issue 1, (June, 2007): 12- 49. 108 The current international agreement is the Declaration on the Conduct of Parties in the South China Sea (DOC) between China and ASEAN (2012) while the Code of Conduct (COC) is still under negotiation. More information about the DOC and the COC can be found on ASEAN website https://asean.org/?static_post=declaration-on-the-conduct-of-parties-in-the-south- china-sea-2”. 33 taken by the two countries. In other words, the theory assists an explanation of some drivers of Vietnam’s and China’s SCS policies.
1.5 Contribution to Literature
The two-level game was developed as a framework for analysing international bargaining by Robert Putnam in 1988. The application of this theory during the 1990s and the 2000s has been mostly confined to economic bargaining over trade disputes or security issues regarding arms control agreement.109 The analysis of two-level game theory and territorial disputes were brought together the first time in a ground-breaking study by Chien-Pen Chung published in 2004.110 The study offered a combined holistic explanation of the rise, continuation and settlement of China’s maritime disputes with a theoretical framework analysing the design of international negotiations and domestic politics. Chung focused on the implications for two-level games of China’s current territorial disputes over the Spratly, Paracel and other low-lying coral reefs, shoals, rocks and islands in the SCS. Chung also identified some factors that could dominate future attempts by disputing countries to resolve their sovereignty claim over the SCS islands. These factors include the popular sentiments, bureaucratic interests, trade direction and intensity, the many impacts of benefits and costs on factional interests, institutional limitations and the likelihood of national rearrangement of a countries main concerns and priorities.
Since Chung’s study, there has been some research applying the two-level game theory in the setting of the territorial disputes. For instance, in 2014 James Manicom analysed the Arctic boundary disputes in Canada suggesting the negotiations were a two-level game in which bargaining and negotiation occurred domestically and internationally. The study argued that national level negotiation is dependent on how the concerns are set out and presented between policy makers and their citizens. The paper identified approaches that national
109 Chien-peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, (London: Routledge Cyrzon, 2004), 13. 110 Ibid. 34 contenders can reduce the amount of acceptable possibilities in a two-level game, therefore hindering cooperation.111 In 2016, Charles Chong-Han Wu studied the common interests of both Beijing and Taipei in the SCS dispute and suggested that the deepening of both economic and political interests boosts the political will to seek peaceable discussions between Taiwan and China.112 Wu also found that national disagreement and disputed politics in Taiwan reduced the collaboration between the two countries. The study indeed highlighted the interactions between the preferences and power of major actors at the national domestic level.113
There appears to be no recent study on the two-level game theory and the SCS dispute and more research is needed to test the appropriateness, strengths as well as limitations of using the theory to explain state behaviour over the SCS territorial claims. It is therefore timely for this thesis to verify the hypothesis of the two-level game theory in the current setting of the SCS dispute. The thesis will identify primary domestic interest groups involved in the SCS policy making process of Vietnam and China and these interest groups’ preference to analyse the possibility to endorse a ‘win-set’ or a probable outcome for negotiation at international level. The thesis therefore expects to be an elaborate exercise in hypothesising testing, not a solution for Vietnam-China conflict management, strategic behaviour or strong diplomacy. The thesis is certainly not a detailed examination of Vietnam’s and China’s foreign policy. The thesis is hopefully bringing an input to the still new and relatively inadequate academic literature to affirm the application of two-level game theory that has been considered by some well-known scholars, but using the SCS dispute between Vietnam and China as the case study. The thesis therefore would add more findings to the collaborative work on the factors influencing Vietnam’s and China’s policy in relation to the SCS disputes. The thesis also takes a step further from Chung’s
111 James Manicom, “The domestic politics of disputed Arctic boundaries: the Canadian case”, Cambridge University Press, Volume 50, Issue 2, (April 2014): 165-175. 112 Charles Chong-Han Wu, “Common interest and two-level Game theory in the South China Sea”, American Journal of Chinese Studies, Vol 23, (July 2016): 145-157. 113 Ibid. 35 and Wu’s studies by providing the analysis for both China and Vietnam to explore how their domestic and international policies interact.
1.6 Methodology
The research topic and scope of this dissertation covers current domestic challenges of Vietnam and China and implications which involve international relations. International Relations is a field of study with a diverse range of methodological contestations.114 Quantitative and qualitative methods are among the popular methodologies used in social sciences and International Relations research. Each of them has some strengths and weaknesses and neither approach is superior to the other.115 Nevertheless, qualitative research appears invaluable for the exploration of subjective opinions while quantitative methods facilitate the discovery of quantifiable information.116 This thesis use qualitative research approach because qualitative data has been known as especially effective in analysing values, opinion, human behaviour, personal characteristics and social context of a particular population.117 As such, qualitative data can provide the rich information that researchers cannot obtain from quantitative data. Additionally, qualitative data can be obtained with some flexibility in collection methods while quantitative data requires standardised collection methods.
Qualitative data can be obtained through observations, interviews, discussion groups, or document analysis.118 Due to a limitation of time, this dissertation uses qualitative data extracted from a number of sources including selected government documents, written public records and publications such as books,
114 Christopher Lamont, Research Methods in International Relations, (Washington DC: SAGE, 2015). 115 Linda T Carr, “The strengths and weaknesses of quantitative and qualitative research: what method for nursing?”, Journal of Advance Nursing, Vol 20, Issue 4, (1994): 716-721. 116 Ozlem Bak, “The Role of Qualitative Research in a Mixed Methods Study: Assessing the e- business enabled transformation in a strategic business unit”, Qualitative Research Journal, Vol. 11, No. 2, (2011). 117 NK Denzin and YS Lincoln, eds., Handbook of Qualitative Research, (London: Sage Publications, 2000), 5. 118 Ian Dey, Qualitative Data Analysis: A User- friendly Guide for Social Scientist, (Taylor & Francis, 2005). 36 journal articles, research and conference papers, as well as special reports relevant to the research topic. Sources of these data and information are always footnoted to acknowledge the origin of the data.
1.7 Outline of the thesis
This thesis contains five chapters, with the first chapter providing an introduction, a literature review on the SCS disputes; highlighting methodology used in the research and contributions that this thesis expects to bring to the current literature. Chapter Two analyses the current Sino-Vietnamese SCS tensions driven by Vietnam’s and China’s recent SCS claims and the two countries’ SCS policies. Chapter Three will address the first sub-research question by analysing China’s current domestic challenges, Chinese primary domestic interest groups and their preferences, as well as implications on Chinese foreign policy in the SCS, especially policy toward Vietnam. The assessment of China’s current domestic challenges will be done in three areas including economic growth, regime legitimacy, controlling territory and sovereignty. Chapter Four will address the second sub-research question by analysing Vietnam’s current domestic challenges, Vietnamese key domestic interest groups and their preferences as well as implications on Vietnamese foreign policy in the SCS, especially policy toward China. The analysis in this chapter has a similar structure as presented in Chapter Three. Finally, Chapter Five concludes the thesis by summarising key findings, contributions of the thesis to current literature; highlighting some limitations of the thesis and suggestions for future research.
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Chapter II: Vietnam’s and China’s Policies toward to the South China Sea
2.1 Current tension over the SCS
The SCS, bordered by China, Vietnam, the Philippines, Malaysia, Brunei, Taiwan and Indonesia and, is a strategic commercial gate for a large proportion of many countries merchant ships. It is estimated that about a third of the world’s maritime trade transits the SCS annually119 and the total global trade passed through the SCS every year worth more than US$5 trillion.120 The SCS is extremely critical for China, Japan, South Korea and Taiwan, as these countries rely on the Malacca Strait, which is the southernmost connection to the SCS and, then by extension, connects the Pacific to the Indian Ocean.121 The SCS is also seemingly a bountiful fishing ground, accounting for 12% of the 2015 global fishing catch, and as such more than half of the world’s fishing vessels are estimated to work in that region.122 For 2016, the Food and Agricultural Organisation (FAO), a UN program reported ‘the catch of all ASEAN countries with a SCS coastline at around 15 million tonnes, out of a global total of 93 million tonnes’ and ‘the share of world output for these selected ASEAN countries was just over 16%’.123 It is also estimated that the SCS fisheries officially employ around 3.7 million people and unofficially many more.124 These figures seem to
119 Roncevert Ganan Almond, “Trade, War, and the South China Sea”, The Diplomat, September 1, 2018, https://thediplomat.com/2018/09/trade-war-and-the-south-china-sea/ 120 Elizabeth Economy and Michael Levi, “Beijing’s actions in the South China Sea demand a U.S. response”, The Washington Post, May 16, 2014, accessed 20 October 2018 http://www.washingtonpost.com/opinions/rein-in-china-in-its-dispute-with-vietnam-over- energy-resources/2014/05/15/b853bbf0-d7b7-11e3-8a78-8fe50322a72c_story.html. 121 China Power Team, “How much trade transits the South China Sea?”, August 2, 2017, accessed 20 October 2018 , https://chinapower.csis.org/much-trade-transits-south-china-sea/. 122 Gregory B. Poling, “Illuminating the South China Sea’s Dark Fishing Fleets”, Asian Maritime Transparency Initiative, January 9, 2019, accessed 20 March 2019 , https://ocean.csis.org/spotlights/illuminating-the-south-china-seas-dark-fishing-fleets/. 123 Greg Austin, “China’s assault on South China Sea fisheries: doing the maths”, The Strategist, Feb 7, 2019, accessed 20 March 2019, https://www.aspistrategist.org.au/chinas-assault-on- south-china-sea-fisheries-doing-the-maths/. 124 Gregory B. Poling, “Illuminating the South China Sea’s Dark Fishing Fleets”. 38 be supportive of a suggestion that fishing and not the reported energy stocks are at the centre of the SCS tensions.125
Nevertheless, the SCS is also reportedly a significant reservoir of oil and gas. The American Energy Information Agency estimated the SCS contains around 11 billion barrels (BBL) of oil and 190 trillion cubic feet of natural gas in proven and likely reserves. The majority of these energy reserves are around the edges of the SCS rather than in and around the disputed reefs, islets and islands. A 2012 US Geological Survey projected there could possibly be another 12 BBL of oil and 160 trillion cubic feet of natural gas yet to be discovered in the SCS.126 However, China estimated the hydrocarbon energy resources beneath the seafloor were even higher, forecasting a total of oil and gas reserve approximately 30 to 72 trillion cubic metres (TCM) of natural gas and 293 to 344 BBL. In 2018, China estimated the value of proved, probable and undiscovered SCS oil and gas reserves was between US$25 and 60 trillion.127
Some authors argue that control of the SCS would enable control of the world’s economy128. This is quite agreeable as it serves as no surprise that the SCS is the centre of several complex territorial disputes that have caused conflict and ongoing tensions within the region. The SCS is the centre of two main disputes: the first is over the sovereignty of the region with China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan claiming the many islands and reefs
125 Clive Schofield, Rashid Sumaila and William Cheung, “Fishing, not oil, is at the heart of the South China Sea dispute”, August 16, 2016, accessed 20 September 2018 http://theconversation.com/fishing-not-oil-is-at-the-heart-of-the-south-china-sea-dispute- 63580. 126 South China Sea Expert Working Group, “A Blueprint for Cooperation on Oil and Gas Production in the South China Sea”, Asia Maritime Transparency Initiative, July 25, 2018, accessed 20 September 2018, https://amti.csis.org/a-blueprint-for-cooperation-on-oil-and-gas- production-in-the-south-china-sea/. 127 Anders Corr, “China’s $60 Trillion estimate of oil and gas in the South China Sea: Strategic Implications”, Journal of Political Risk, Vol. 6, No. 1, (January 2018), accessed 20 September 2018, https://www.jpolrisk.com/chinas-60-trillion-estimate-of-oil-and-gas-in-the-south-china-sea- the-strategic-implications/. 128 Pham Quang Minh, The South China Sea Issue and its Implications: Perspective from Vietnam, Paper presented at the 6th Berlin Conference on Asian Security (BCAS), (Berlin: June 18-19, 2012, accessed 20 September 2018, http://www.swpberlin.org/fileadmin/contents/products/projekt_papiere/BCAS2012_Pham_ Quang_Minh_web_final_ks.pdf. 39 and rocks located in the body of water; the second one includes the countries as mentioned above and Indonesia at the southernmost juncture; this dispute is on how to divide the sea into each country’s territorial water.129 During the 1980s and 1990s, most of the disputants tried to increase their claims to SCS ownership by the physical occupation of the islands that could support a permanent presence or by establishing nationality markers or above water platforms on the islands and reefs where physical positioning of troops was not yet feasible.130 The main research question that this thesis seeks to address involves Vietnam and China; thus Vietnam’s and China’s SCS claims will be reviewed in the following section.
2.2 Vietnam’s and China’s Claims and Actions over the SCS
2.2.1 Vietnam’s Claims and Actions over the SCS
Vietnam’s claim to the two islands groups seems to be well established in history. A study revealed that in 1802, Emperor Gia Long of Annam (Vietnam’s name at the time) established a company to exploit the Paracels and he planted a flag on the island in 1816.131 The Spratly islands were shown as Vietnamese territory on the first maps issued by the Empire of Annam in 1834.132 Another study found that Vietnam had been granted original ownership of the two island groups in the period before 1884; and at the time, China had made no objection the ownership. Both the Paracel and the Spratly island groups were declared part of Thua Thien province in 1932 by the French Governor-General of Indo-China and
129 Gregory B. Poling, “Illuminating the South China Sea’s Dark Fishing Fleets”. 130 Scott Snyder, “The South China Sea Dispute: Prospects for Preventive Diplomacy”, Unites States Institute of Peace, Special Report No. 18, accessed 20 October 2018, https://s3.amazonaws.com/academia.edu.documents/30916293/The_South_China_Sea_Dispu te_Prospects_for_Preventive_Diplomacy.pdf, 4. 131 Keesing's Record of World Events, ‘Dispute over Paracel and Spratly Islands. - Naval Clash off Paracels. Chinese Occupation of Paracel Archipelago.’, Volume 20, March, 1974, accessed 29th March 2020, http://web.stanford.edu/group/tomzgroup/pmwiki/uploads/3217-1974-03-KS- a-EYJ.pdf 132 Ibid. 40 the sovereignty over these islands was transferred from France to Vietnam in 1919.133
Later in 1954 after the Geneva Accords, in which China was a signatory, the French Indochinese territory was divided into three sovereign countries; Vietnam, Cambodia and Laos. In that division, Vietnam was to be temporarily divided at the 17th Parallel and the Paracel and the Spratly islands groups that were located below the 17th parallel came under the ownership of the Republic of South Vietnam.134 The Government of the Republic of South Vietnam asserted its claim to the Paracel and the Spratly groups in 1956 and 1973, with naval elements of the Army of the Republic of South Vietnam (ARVN) occupying several islands in both island groups.135 In January 1974, to enforce sovereign rights, the ARVN engaged in a small scale naval battle against the China’s People’s Liberation Army – Navy (PLA-N) elements near the Paracel Islands. The PLA-N later landed more than 100 soldiers on one of the islands in the Spratly group, about 350 miles to the southeast of the Paracel Group.136
The Republic of South Vietnam lost the first of the Paracel islands to Chinese hold. On the surrender of the Government of South Vietnam on 30 April 1975, the conquering Government of the Socialist Republic of Vietnam subsequently took over the South Vietnamese SCS claims, but the claims were undermined by the previous Northern Vietnamese support for Chinese sovereign claims in 1956 and 1958.137 The Northern Vietnamese support for China’s sovereignty claims in
133 Ibid. 134 Office of the Historian, “Bureau of Public Affairs, United States Department of State, Agreement on the Cessation of Hostilities in Vietnam”, accessed 20 October 2018, https://history.state.gov/historicaldocuments/frus1952-54v16/d1044. 135 Chien-peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, (London: Routledge Cyrzon, 2004), 128. 136 Cheng Tao, “Dispute over the South China Sea Islands,” Texas International Law Journal, no. 10 (1975): 265–277 137 Chien-peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, 128. 41
1958 was supported by Premier Pham Van Dong in the form of a letter sent to the Chinese State Council at the time.138
On consolidating reunified territory, the Socialist Republic of Vietnam commenced strong settlement and garrisoning activities of the Spratly island group and these included the constructions on Co Lin (Collins also known as Johnson North), Len Dao (Lansdowne) and the historically well-known Gac Ma (Johnson South) reef. Later on 14 March 1988, Vietnamese sailors from three Vietnamese ships, HQ-604, HQ-605 and HQ-505 of Brigade 125 of the Vietnamese Navy were taking construction and building materials from these vessels onto Gac Ma, when the four ships of the Chinese PLA-N in the area opened fire with naval armaments, killing 64 Vietnamese sailors.139 It was on this day that Vietnam lost the Spratly reefs and islands to China.140 Nevertheless, Vietnam continued to stand their ground on SCS sovereignty due to international rights and their national sentiment as a result of historical experiences of harassment and invasion by other countries. Consequently, due to the numerous historical events in Vietnamese history, ‘for every Vietnamese citizen, national sovereignty is sacred and sacrosanct’ and therefore ‘the CPV and the people of Vietnam are single-minded when it comes to the protection of every part of the land and the Vietnamese seafront from interference or foreign conquest’.141
To enforce its territorial rights, Vietnam has been upgrading areas it still occupies in the SCS and a paper by Greg Austin suggested that features occupied by
138 Teh-Kuang Chang, “China's Claim of Sovereignty over Spratly and Paracel Islands: A Historical and Legal Perspective”, Case Western Reserve Journal of International Law, Vol. 23, Issue 3 (1991):17-19. 139 Mai Thanh Hai and Vu Ngoc Khanh, “Vietnamese soldiers remember 1988 Spratlys battle against Chinese, Thanh Nien Newspaper, March 14, 2016, accessed 20 October 2018, http://www.thanhniennews.com/politics/vietnamese-soldiers-remember-1988-spratlys-battle- against-chinese-60161.html. 140 VnExpress, “The day Vietnam lost a Spratly reef to China”, March 14, 2017, accessed 20 October 2018, https://e.vnexpress.net/news/news/the-day-vietnam-lost-a-spratly-reef-to- china-3554895.html. 141 The Vietnamese President Truong Tan Sang statement in 2014, quoted by James Manicom in “Empathy: The Missing Link between Confidence and Trust in East Asia”, in Perspectives on the South China Sea: Diplomatic, Legal and Security Dimensions of the Disputes’, eds., Murray Hiebert, Phuong Nguyen and Gregory B. Poling, (Rowman & Littlefield: 2014), 99. 42
Vietnam in the SCS increased from 24 in 1996 to between 30 and 48 by 2015.142 Images taken by DigitalGlobe satellites in April 2016 suggest that Vietnam had reclaimed about 7.45 acres in the Southwest Cay during the period January 2005 and April 2016 (Figure 1).143
Figure 1: Vietnam’s Land Reclamation in the Southwest Cay, CSIS/AMTI/DigitalGlobe Image
Other images suggest that between May 2014 and January 2016, Vietnam had constructed about 37 acres of land on Spratly Island (Figure 2), and the total land reclamation Vietnam has constructed in the area was around 120 acres.144 In September 2017, new facilities were revealed in the Spratly Island group, including a possible shipping dry dock on West London Reef, about 680 kilometres to the southeast of Ho Chi Minh City. This would most likely give all branches of Vietnamese ships (military, police or civil) the ability to stop for
142 Greg Austin, “Who Is the Biggest Aggressor in the South China Sea?”, The Diplomat, June 18, 2015, accessed 20 October 2018, https://thediplomat.com/2015/06/who-is-the-biggest- aggressor-in-the-south-china-sea/. 143 Jeremy Bender, “China isn't the only one building islands in the South China Sea”, Business Insider Australia, May 17, 2016, accessed 20 October 2018, https://www.businessinsider.com.au/vietnam-building-islands-in-south-china-sea-2016- 5?r=US&IR=T#/#spratly-islands-2014-2016-1. 144 Ibid. 43 maintenance and due the ability to store resupplies on the island, allow for more patrols in the region and for much longer periods.145
Figure 2: Vietnam’s Land Reclamation in the Spratly Island, CSIS/AMTI/DigitalGlobe Image
In addition to such building efforts, Vietnam has used oil exploration activity to lay ownership of disputed sea areas and has reportedly attacked Chinese vessels by ramming into them in the disputed regions to protect their claimed sovereign rights.146 This is understandable as Vietnam crucially needs access to energy resources in the SCS. At present part of the Nam Con Son, Exploration Block 06.1, project close to Vanguard Bank, provides around 10% of Vietnam’s total energy need.147 Vietnam has developed oil exploration in the SCS with collaboration
145 David Tweed, “Vietnam Follows Beijing with South China Sea Upgrades of Its Own”, Bloomberg, December 18, 2018, accessed 20 January 2019, https://www.bloomberg.com/news/articles/2017-12-17/vietnam-follows-beijing-with-south- china-sea-upgrades-of-its-own. 146 Shannon Tiezzi, “China: Vietnamese Boats Rammed Our Civilian Vessels - China’s Foreign Ministry responded to allegations that Chinese ships rammed Vietnamese vessels”, The Diplomat, May 9, 2014, accessed 20 October 2018, https://thediplomat.com/2014/05/china-vietnamese- boats-rammed-our-civilian-vessels/. 147 South China Sea Expert Working Group, “A Blueprint for Cooperation on Oil and Gas Production in the South China Sea”, Asia Maritime Transparency Initiative, July 25, 2018, accessed 44 from foreign oil companies. For instance in early 2017, Vietnam authorised its biggest contract for gas exploration with ExxonMobil to advance the ‘Blue Whale’ development program and to lift the restrictions on oil and gas exploration in Exploration Block 136-03;148 in July 2017 Vietnam awarded the Indian oil firm ONGC Videsh an extra two years to review and test Exploration Oil Block 128 for further exploration.149
However, competition for gas and oil resources has constantly initiated several confrontations between China and Vietnam in recent years. For instance in 2014, tensions between Vietnam and China rose when the Chinese state-owned China National Offshore Oil Corporation (CNOOC) moved the Hai Yang Shi You 981 oil drilling platform to the area near the disputed Paracel Islands. The Vietnamese took steps to prevent the platform from establishing a fixed position; struggles ensured, tensions flared.150 More recently in 2017, China threatened to physically attack Vietnamese military facilities in the Spratly Islands if the drilling implemented by Spanish company Repsol in block 136-03 in the SCS did not stop.151 Subsequently, Vietnam directed the Repsol to suspend oil drilling activities and to leave the area.152 However, Vietnam’s leaders reportedly held firm their sovereignty ideology and defended Vietnam’s right to sovereign
20 October 2018, https://amti.csis.org/a-blueprint-for-cooperation-on-oil-and-gas-production- in-the-south-china-sea/. 148 Carl Thayer, “Alarming Escalation in the South China Sea: China Threatens Force if Vietnam Continues Oil Exploration in Spratlys - A new pattern of Chinese bellicosity?”, The Diplomat, July 24, 2017, accessed 20 October 2018, https://thediplomat.com/2017/07/alarming-escalation-in- the-south-china-sea-china-threatens-force-if-vietnam-continues-oil-exploration-in-spratlys/. 149 Panos Mourdoukoutas, “South China Sea: Vietnam Dares What Philippines Didn't”, Forbes, January 2, 2019, accessed 23 February 2019, https://www.forbes.com/sites/panosmourdoukoutas/2019/01/02/south-china-sea-vietnam- dares-what-philippines-didnt/#2c12cbea149b. 150 Michael Green, Kathleen Hicks, Zack Cooper, John Schaus and Jake Douglas, “Counter- Coercion Series: China-Vietnam Oil Rig Standoff”, Asia Maritime Transparency Initiative, June 12, 2017, accessed 20 October 2018, https://amti.csis.org/counter-co-oil-rig-standoff/. 151 Carl Thayer, “Alarming Escalation in the South China Sea: China Threatens Force if Vietnam Continues Oil Exploration in Spratlys - A new pattern of Chinese bellicosity?”, The Diplomat, July 24, 2017, accessed 20 October 2018, https://thediplomat.com/2017/07/alarming- escalation-in-the-south-china-sea-china-threatens-force-if-vietnam-continues-oil-exploration-in- spratlys/. 152 Ibid. 45 authority in their EEZ. The act of not surrendering Vietnamese ideology seeming caused further political angst for China.153
Besides oil exploration, Vietnam also has on-going fishing activities in the disputed waters. Vietnam is located on the west bank of the SCS and relies on its coastline for food resources. The SCS has around 2,038 species of marine life of which about 130 species reportedly have commercial value; 30 of these species are regularly exploited by all countries fisheries.154 The estimated total fish production of Vietnam in 2016 was 6.7 million metric ton and the value of fishery products to Vietnam from the European Union in 2016 was around US$7 million.155 Due to the dispute, Vietnamese fishermen near the Paracel and Spratly Islands have been regularly subjected to physical attacks by Chinese vessels.
For instance, in 2013, a Chinese Naval vessel fired flares at a Vietnamese fishing boat, causing a fire that those on-board were lucky to survive.156 Later in March 2019, Vietnam claimed that Chinese vessels rammed and sank a Vietnamese fishing boat when it was operating approximately 370 kilometres west of Da Nang near Discovery Reef of the Paracel islands.157 As one of the many defensive strategies, Vietnam’s fishing militia responsibilities have been expanded and now they have been tasked to better provide for the navigation and safety of its fishermen in an effort to bring down the number of direct confrontations.158
Indeed, Vietnam’s SCS claims are significant for the country as it relates to the country’s sovereign and maritime economic resources. Vietnam’s actions and
153 Ibid. 154 Nguyen Tuan Uyen, “Fisheries Country Profile: Viet Nam”, Southeast Asian Fisheries Development Centre, April 27, 2019, accessed 2 May 2019, http://www.seafdec.org/fisheries- country-profile-viet-nam/. 155 Ibid. 156 Denny Roy, “Assertive China: Irredentism or Expansionism?”, Survival – Global Politics and Strategy, Vol 61, Issue 1, (2019): 51-74. 157 New Corp Australia Network, “South China Sea tensions at new high after Vietnamese boat rammed and sunk”, March 8, 2019, accessed 20 March 2019, https://www.news.com.au/world/south-china-sea-tensions-at-new-high-after-vietnamese- boat-rammed-and-sunk/news story/10188f3d7c1d7336bcaffafd742defab. 158 Tommy Chai, “South China Sea update: the future Vietnam-China standoff”, Foreign Brief – Geopolitical Risk Analysis, August 1, 2018, accessed 20 March 2019, https://www.foreignbrief.com/asia-pacific/south-china-sea-update-the-future-vietnam-china- standoff/. 46 claims in the SCS also impacts on the dynamics of the Sino-Vietnamese relationship, which has been largely shaped by the interplay of three key factors including geographical proximity, power asymmetry and the domestic development within each country.159 Le Hong Hiep argued that although the first two are constant long term factors, it was the last one that mattered most and in fact, helped transform the present bilateral relations between Vietnam and China over shorter periods of time.160 This thesis commentary completely agrees with Hiep in relation to the implications of Vietnam’s domestic environment on its foreign policy. Therefore, Chapter Four of this thesis will analyse in more detail Vietnam’s domestic challenges in terms of ensuring sovereignty and sustaining economic development and the implications to the country’s SCS policy. The next sub section will review China’s claims and actions over the SCS.
2.2.2 China’s Claims and Actions over the SCS
China dogmatically presents to the world that it has indisputable sovereignty over the SCS Island masses (the Dongsha Islands, the Xisha Islands, the Zhongsha Islands and the Nansha Islands) and the waters surrounding all features.161 Position papers produced by the CCP on the matter of jurisdiction in the SCS arbitration initiated by the Republic of the Philippines in 2014 states that: ‘Chinese activities in the South China Sea date back to over 2,000 years ago. China was the first country to discover, name, explore and exploit the resources of the South China Sea Islands and the first to continuously exercise sovereign powers over them. From the 1930s to 1940s, Japan illegally seized some parts of the South China Sea Islands during its war of aggression against China.
At the end of the Second World War, the Chinese Government resumed exercise of sovereignty over the South China Sea Islands. ... In 1947, China renamed the maritime
159 Le Hong Hiep, Living Next to the Giant: The Political Economy of Vietnam’s Relations with China under Doi Moi, (Singapore: ISEAS, Ysof Ishak Institute, 2017). 160 Ibid. 161 Ministry of Foreign Affair, The People’s Republic of China, Position Paper of the Government of the People's Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines, December 07, 2014, accessed 20 October 2018, https://www.fmprc.gov.cn/nanhai/eng/snhwtlcwj_1/t1368895.htm. 47 features of the South China Sea Islands and, in 1948, published an official map which displayed a dotted line in the South China Sea. Since the founding of the People's Republic of China on 1 October 1949, the Chinese Government has been consistently and actively maintaining its sovereignty over the South China Sea Islands.
Since the founding of the People's Republic of China on 1 October 1949, the Chinese Government has been consistently and actively maintaining its sovereignty over the South China Sea Islands. Both the Declaration of the Government of the People's Republic of China on the Territorial Sea of 1958 and the Law of the People's Republic of China on the Territorial Sea and the Contiguous Zone of 1992 expressly provide that the territory of the People's Republic of China includes, among others, the Dongsha Islands, the Xisha Islands, the Zhongsha Islands and the Nansha Islands.’162
The official map with dotted lines on the SCS boundary, as mentioned in the quote above, firstly contained eleven dashes; in 1953 two dashes were erased from the eleven-dash line when the territorial title for the Bach Long Vi Island (Gulf of Tonkin) was transferred back to Vietnam from China.163 The nine-dash line map was active in the 1950s164 and at present China claims to have historic rights within that particular nine-dash line version.165 The nine-dash line map is shown in Figure 3 below.
Because the nine-dash line violates the EEZ of Vietnam, Malaysia, Indonesia, Brunei and the Philippines, Chinese territorial claims have had an enormous impact on Vietnam’s and other SCS claimants’ extension of continental shelves, their freedom and security of navigation as well as their management of internationally entitled natural resources.
162 Ministry of Foreign Affair, The People’s Republic of China, Position Paper of the Government of the People's Republic of China. 163 Shigeki Sakamoto, “Historic Waters and Rights Revisited: UNCLOS and Beyond?”, Doshisha University, accessed 20 October 2018, https://www.mofa.go.jp/files/000074505.pdf. 164 Ibid. 165 Je’ An-Luc Hebert, “The South China Sea Arbitration Award and Its Widespread Implications”, Oregon Review of International Law, No. 19, (2018): 289-314. 48
Figure 3: Dispute Islands and China’s Nine Dash Line Claim Source: UNCLOS, 2014
Whilst other SCS territorial claimants have attempted to adjust their claims to some extent to conform to UNCLOS over the questionable legality of China’s nine-dash line, a new national map of China published by SinoMaps Press, under the jurisdiction of the State Bureau of Surveying and Mapping in 2013 showed a ten-dash line that sits aside Taiwan (Figure 4). It is unclear whether or not this new ten-dash line map published by SinoMaps Press has been officially endorsed by the Chinese central government. However, the publication of the ten-dash line map might have added more tension to the SCS dispute.
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Figure 4: A new SinoMaps Press map showing China’s ten-dash line in the South China Sea Source: The Strategist166
Following territorial claims, China has actively pursued different activities to affirm SCS sovereign rights. Oil exploration has been used by China to demonstrate its legal right to control and develop energy resources in the contested water. For instance, in 1992, China entered the first joint venture in oil drilling and exploration in a block of sea at the western edge of the Spratly Group, with Creston, an American company.167 Between 1995 and 1996, the CNOOC contracted with Chevron to explore three blocks located between Hainan island province and the Paracel Island Group.
Engaging in oil exploration with foreign oil company, according to Chung, is considered a strategy that China employed to stake territorial claims in the disputed SCS islands.168 In May 2014, the CNOOC positioned the HD981 seventeen nautical miles from Triton Island, the most south-western island in the
166 Euan Graham, “China’s new map: just another dash?”, The Strategist, Sep 17, 2013, accessed 20 October 2018, https://www.aspistrategist.org.au/chinas-new-map-just-another-dash/. 167 Chien-Peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, 130. 168 Ibid, 131. 50
Paracel Islands group.169 This operation aligns with what Leszek Buszynski described as Chinese efforts to transform what was a frontier zone outside the dynastic state into national territory, similar to Taiwan or Tibet.170
China also uses land reclamation as another strategy to affirm sovereign SCS rights. China was first reported to have commenced land reclamation in 1998 and this action instantly caused regional alarm.171 Since that initial event, China embarked on a constant and intensive island improvement program with a rapid reclamation period in 2015 to see the large scale and quick construction of artificial islands in the Spratly island group. Figure 5 shows the stages of land reclamation at Gaven Reefs which commenced sometime after 30 March 2014, with imagery of 07 August 20114 showing the construction of a man-made island. Later imagery of 30 January 2015 showed a causeway that connected the island to the original facility as well as the construction of a helicopter landing pad.
169 Carl Thayer, “China's Oil Rig Gambit: South China Sea Game-Changer?”, The Diplomat, May 12, 2014, accessed 20 October 2018, http://thediplomat.com/2014/05/chinas-oil-rig-gambit- south-china-sea-game-changer/. 170 Leszek Buszynski, “The origins and development of the South China Sea Maritime Dispute” in The South China Sea Maritime Dispute: Political, legal and regional perspectives, eds. Leszek Buszynski and Christopher B. Roberts, (Routledge, 2015), 1-23. 171 Darren Boyle, “Beijing says it has nearly completed its controversial land reclamation project in the South China Sea”, Daily Mail Australia, June 16, 2015, accessed 20 October 2018, http://www.dailymail.co.uk/news/article-3125864/China-says-finish-land-reclamation-South- China-Sea.html.
51
Figure 5: Chinese progress in building an island at Gaven Reefs in the Spratly Islands
Source: IHS Jane’s 360
Rapid land reclamation and construction has also been observed on Johnson Reef South and Fiery Cross Reef with some analysts assessing that ‘this is a methodical, well-planned campaign to create a chain of air and sea-capable fortresses across the centre of the Spratly Island chain’.172 Military experts have considered that these constructed islands would permit China to ensure military and civil basing and resupply for its now sizeable and ever growing fleet of maritime security vessels and as such ‘it allows them to exert basically greater influence over what's now a contested area’.173
Besides land reclamation, China has been accelerating the military utility of its SCS outposts. For example, in 2016, China deployed eight surface-to-air missile systems and a radar installation to Woody Island, claiming that such action is consistent with self-preservation via self-defence that China is officially entitled
172 James Hardy, quoted by Jeremy Page and Julian E. Barnes in ‘China Expands Island Construction in Disputed South China Sea’, The Wall Street Journal, February 18, 2015, accessed 20 October 2018, http://www.wsj.com/articles/china-expands-island-construction-in-disputed- south-china-sea-1424290852. 173 US Commander Samuel Locklear, quoted by Mathew Pennington in ‘US commander: Land reclamation enables China to deploy more military assets in South China Sea’, Associated Press, April 15, 2015. 52 to have under international law.174 This radar system would provide a platform for early warning and the enforcement of a Chinese SCS or at least a sub-regional ADIZ as well as an interconnected Command and Control network.175 A year later in 2017, China reportedly expanded its islands outpost in the Spratly group by building 24 hangars capable of housing jet fighters, fixed and reinforced weapons positions as well as military personnel and logistic infrastructure on Fiery Cross, Subi and Mischief Reefs.176 Also in 2017, China deployed J-11 fighters to Woody Island, in the Paracel island group to test techniques for keeping their SCS bases supplied and under control in contested conditions.177 To further test airfield capacity, China later landed an H-6K strategic bomber on Woody Island in March 2018.178 These activities suggest that China is building its resupply abilities and its facilities for effective SCS control. China has even used tourism as a key tactic to assert military and administrative control against opposing claimants because tourism could affect spatial, social, political and economic order across the SCS179.
It can be stated that China’s SCS claims also relate to sovereign ownership over maritime economic resources in the SCS, whilst these claims are similar to Vietnam’s they are at a vastly different scale and are asserted by different strategies. Nevertheless, as this thesis will demonstrate in Chapter Three,
174 Daniel Hurst, Oliver Holmes and Justin McCurry, “Beijing places missile launchers on disputed South China Sea island”, The Guardian, February 17, 2016, accessed 20 October 2018, https://www.theguardian.com/world/2016/feb/17/china-places-missiles-woody-south- china-sea-islands. 175 US Commander Samuel Locklear, quote. 176 South China Morning Post, “China builds fighter hangars and fixed weapons positions on South China Sea outposts, US Says”, June 7, 2017, accessed 20 October 2018, http://www.scmp.com/news/china/diplomacy-defence/article/2097235/china-builds- fighter-hangars-and-fixed-weapons. 177Steven Stashwick, “South China Sea Militarization: Fighters in the Paracels and Combat Logistics”, The Diplomat, December 6, 2017, accessed 20 October 2018, https://thediplomat.com/2017/12/south-china-sea-militarization-fighters-in-the-paracels-and- combat-logistics/. 178 BBC News, “China lands more civilian planes on Fiery Cross reef”, January 7, 2016, accessed 20 October 2018, https://www.bbc.com/news/world-asia-china-35249092. 179 Ian Rowen, “Tourism as a Territorial Strategy in the South China Sea”, Enterprise, Localities, People and Policy in the South China Sea, November 18, 2017, 61-74. 53
Chinese policies and negotiations in relation to the SCS are influenced by the country’s domestic challenges. This thesis will now present the geostrategic importance of cooperation in the SCS to shed a light on what their SCS policies are and why the policies have been formulated that way.
2.2.3 Geostrategic co-operation in the SCS
As mentioned in section 1.2.1, the SCS poses both economic and geo-strategic importance for the SCS claimants, and for Vietnam and China in particularly, as the two countries are neighbours and they share both land and sea borders. For Vietnam, China is both its major partner for many aspects of state prosperity as well as being its major geo-strategic challenge.180 China is indeed a Vietnam’s major partner in trading, with the bilateral trade that increased from US$32 million in 1991 to US$36 billion in 2011.181 Chinese Foreign Direct Investment (FDI) in Vietnam has also increased from US$312 million in 2012 to US$2.3 billion in 2013 and in 2016, China’s FDI in Vietnam took stock of around 7.7% of the total FDI at US$ 1.88 billion.182 Vietnam has been selected as a location for investment by many Chinese companies due to its geographic business gain – being immediately next to China, hence reduced costs on transportation, commodity and a notably shorter production lead time.183 The close and increasing trading relationship between Vietnam and China makes it more problematic and challenging for Vietnam to know how much to force China on the SCS issue. Hence Nguyen Khac Giang considered that Vietnam would feel more economic pain than China should there be any political instability; mostly due to its smaller land mass and population base.184 Additionally, Vietnam has a long coastline and
180 Ramses Amer, “Vietnam’s Relations with China – A Multifaceted Partnership”, Asia Dialogue, March 17, 2014, accessed 20 October 2018, http://theasiadialogue.com/2014/03/17/vietnams- relations-with-china-a-multifaceted-partnership/. 181 Ibid. 182 Vietnam Briefing, https://www.vietnam-briefing.com/news/vietnam-and-china-growing- economic-ties-despite-strains.html/. 183 My Pham and Matthew Tostevin, “Despite Strains, Vietnam and China forge close economic ties”, Reuter, September 1, 2017, accessed 20 October 2018, https://www.reuters.com/article/us- vietnam-china/despite-strains-vietnam-and-china-forge-closer-economic-ties-idUSKCN1BC3S2. 184 Nguyen Khac Giang, Vietnam Economics and Policy Research Institution, quoted by My Pham and Matthew Tostevin in ‘Despite Strains, Vietnam and China forge close economic ties’ 54 as of December 2017, Vietnam had 44 seaports with a total capacity of 470-500 million tons per year.185 Tensions in the SCS could potentially seriously jeopardise the freedom of navigation and maritime transportation for Vietnam.
As China is in such a close geographic proximity, this has potentially turned Vietnam into a convenient target for expansionist designs of Chinese dynasties.186 As such, Vietnam has experienced many historical threats from the Vietnam-China land border in the north.187 Also being next to China, Vietnam shares many important natural resources such as the Red River and the Mekong River. Chinese projects upstream have seen developments, mainly on the Mekong River become problematic for Vietnam as the Mekong Delta region is the main rice-producing area. The Chinese construction of numerous dams along the Mekong River in numerous parts of China has had an impact on the water levels downstream in the delta.188 This has already affected Vietnamese rice production.
For China, the SCS is the gateway to the Pacific and Indian Ocean, with roughly 80% of China’s crude oil imports coming through the SCS. 189 The annual volume of shipping between China and other ASEAN countries is estimated to be about US$1.02 trillion.190 It can be said that the SCS assists as an important economic linkage that connects China with other developing economies in the region. Beyond intra-regional trade, the SCS is also key to the functioning and stability of the global economy, which includes China, as it hosts a number of international sea trade corridors. The CSIS presents that “25% of all traded goods” are transported via the Malacca Straits and “25% of all oil that travels by
185 Dezan Shira & Associates, Port Infrastructure in Vietnam, May 9, 2018, accessed 20 October 2018, https://www.vietnam-briefing.com/news/port-infrastructure-vietnam.html/. 186 Le Hong Hiep, Living Next to the Giant: The Political Economy of Vietnam's Relations with China under Doi Moi, (Singapore: ISEAS–Yusof Ishak Institute, 2017), 2. 187 Ibid. 188 Ramses Amer, Vietnam’s Relations with China – A Multifaceted Partnership. 189 Robert D. Kaplan, Asia’s Cauldron: The South China Sea and the end of a stable Pacific, (Random House, 2014), 5. 190 Michael Lanin, “At the Intersection of History, Diplomacy, and Domestic Affairs: Vietnam’s Difficult Position in the South China Sea Dispute”, SIT Graduate Institute/SIT Study Abroad, (Spring, 2017), accessed 20 October 2018, https://digitalcollections.sit.edu/cgi/viewcontent.cgi?article=3627&context=isp_collection, 8. 55 sea”, this means the Malacca Strait links to important trade flows of energy from the Arab states.191 The SCS is indeed critical for China to maintain regional as well as international trading; and China needs to maintain regional and international trading relationship for its domestic economic development.
However, pursuing the disputed claims in the SCS would place China in direct competition with Vietnam as well as other neighbouring countries and the long term stability in the region depends on whether China can work with other claimants on the disputes. The stability in the SCS is more critical for China when we place the SCS in the context of China’s master plan for the One Belt and One Road (OBOR) initiative. It is estimated that the OBOR includes 64 countries and a combined fiscal output of US$21 trillion which is about two-times the annual GDP of China, or 29% of global GDP.192 Feng Zhang points out that at present, all 10 members of ASEAN have shown their willingness to take part in this economic opportunity by joining the Chinese led Asian Infrastructure Investment Bank (AIIB), a financial arm of the OBOR. Zhang argues that China’s persistence of the SCS tensions might dispose ASEAN countries to view the OBOR as a geological concept, rather than an economic cooperation and Beijing would not want this to happen.193 Edyta Roszko also argues that the Maritime Silk Road, as part of the OBOR initiative, plays a strategic role in securing trading routes and undisturbed passage of Chinese vessels, thereby strengthening China’s military and economic position and interest in the disputed SCS. 194
191 Council on Foreign Relations, “Territorial Disputes in the South China Sea”, 2017, accessed 20 October 2018, https://www.cfr.org/interactive/global-conflict-tracker/conflict/territorial- disputes-south-china-sea. 192 Feng Zhang, “Beijing’s Master Plan for the South China Sea”, Foreign Policy, June 23, 2015, accessed 20 October 2018, https://foreignpolicy.com/2015/06/23/south_china_sea_beijing_retreat_new_strategy/. 193 Feng Zhang, “Beijing’s Master Plan for the South China Sea”. 194 Edyta Roszko, “Locating China’s Maritime Silk Road in the context of the South China Sea Disputes”, in China’s New Silk Road - An emerging World Order, ed. Carmen Amado Mendes, (Oxon: Routledge, 2019). 56
This section has essentially reinforced that the SCS has become one of the most globally key strategic sea bodies in regards to economic and strategic terms.195 The section has also illustrated that it is important for both China and Vietnam to pursue geostrategic cooperation in the SCS because of geographic locations. However, such geostrategic cooperation can only be achieved by the willingness from all parties involved. Nevertheless, the strategic importance of the SCS itself has influenced Vietnam’s and China’s SCS policies. The next sub section will present Vietnam’s and China’s current SCS policy.
2.3 Vietnam’s and China’s South China Sea Policies
The thesis’s main research question concerns the impact of Vietnam’s and China’s current domestic challenges on their foreign policy in the SCS. As such, this section will review current Vietnam’s and China’s policies in the SCS to assist the thesis to trace the domestic sources of some behaviour/policy of the two countries in the dispute. Although America has a keen interest in ensuring any SCS conflicts are contained and as such has physically increased its presence in the SCS,196 this section will not review China-US foreign policy interactions because it is out of scope of this thesis.
2.3.1 Vietnam’s SCS Policies
Vietnam’s SCS polices to date have entailed four main strategies that include (1) internationalising the dispute, (2) using a multilateral framework to address the dispute, (3) developing a credible military deterrent to China, and (4) direct engagement with China.197 Vietnam began to adopt a policy of internationalisation and publicising incidents at sea in the 2000s, aiming to increase the reputational costs for China when it abused its greater economic and
195 Andrew Scobell, “Getting beyond slow boil in the South China Sea”, in Building a Normative Order in the South China Sea: Evolving Disputes, Expanding Options, eds. Tran Truong Thuy, John Westfield and Le Thuy Trang, (Cheltenham, UK : Edward Elgar Publishing, 2019), 16-26. 196 Julian V. Advincula, “China’s Leadership Transition and the Future of US-China Relations: Insights from the Spratly Islands Case”, Journal of Chinese Political Science, Vol. 20, (2015): 51–65. 197 Huong Le Thu, “Vietnam should update its South China Sea Strategy”, Asia Maritime Transparency Initiative, December 6, 2018, March 21, 2019, accessed 20 May 2019, https://amti.csis.org/vietnam-should-update-south-china-sea-strategy. 57 military power over Vietnam.198 Vietnam has encouraged the “internationalisation” of the SCS dispute through ASEAN-centred multilateral meetings as well as the US engagement in order to respond to China’s expanding physical presence and assertive action to manage natural resources.199 However, there are some countries in Southeast Asia, such as Myanmar, Cambodia, and Thailand, which have no direct interests in the SCS, and have strong ties with China.200 These countries have expressed either opposition to the internationalisation of the SCS disputes or supports to China’s position on the issue.201 Therefore, Vietnam’s intention of internationalisation the SCS issues through ASEAN’s multilateral dialogue frameworks is ineffective. In relation to engagement with the US or countries outside the regions, this required some moderation because Vietnam itself was in a situation in which it should avoid excessive confrontation with China as a result of such a policy.
Multilateral cooperation indeed has been used by Vietnam and other SCS claimants to support progress toward peaceful outcomes in the settlement of sovereignty disputes.202 Such multilateral cooperation has been implemented by ASEAN countries and China through the SCS DOC and the later adaptation of a SCS COC.203 However, discussions on the SCS in recent years in ASEAN’s meetings have been unproductive and at a regional level and leaders have become tired of the topic.204 Vietnam in particular did not consider its prospective ASEAN membership as a strategic tool to counter China’s expansion in the SCS.205 C.J. Jenner and Tran Truong Thuy suggested the increasing agency
198 Ibid. 199 Tomotaka Shoji, “Vietnam, ASEAN, and the South China Sea: Unity or Diverseness?”, NIDS Journal of Defense and Security, No. 13, (2012): 3. 200 Ibid. 201 Nguyen Vu Tung and Dang Cam Tu, “Vietnam’s decision to join ASEAN: The South China Sea Connection”, in Vietnam’s Foreign Policy under Doi Moi, eds. Le Hong Hiep, Anton Tsvetov, (ISEAS-Yusof Ishak Institute, 2018), 186-206. 202 C. J. Jenner and Tran Truong Thuy, The South China Sea: A Crucible of Regional Cooperation or Conflict-making Sovereignty Claims?, (New York, Cambridge University Press, 2016), 2. 203 Ibid, 3. 204 Huong Le Thu, “Vietnam Should Update its South China Sea Strategy”. 205 Nguyen Vu Tung and Dang Cam Tu, “Vietnam’s Decision to Join ASEAN: The South China Sea Disputes Connection”, in Vietnam’s Foreign Policy under Doi Moi, eds. Le Hong Hiep and Anton Tsveto, (Singapore: ISEAS-Yusof Ishak Institute, 2018), 187. 58 of domestic politics in the SCS has shrunk the international space available for multilateral cooperation.206 However the work by Jenner and Tran Truong Thuy focuses more on the drivers of the disputes, not how the domestic politics of the SCS claimants have impacted on the international multilateral cooperation.
Military deterrence is the practice of discouraging or restraining a nation-state from taking unwanted actions, such as an armed attack.207 As such, this seems to be a sensible policy for Vietnam in the SCS dispute against China as they are neighbours and in general, most interstate wars are fought or begin between neighbouring countries.208 However, observers suggest that although the Vietnamese deterrence posture has been strengthening, Vietnamese society and the Vietnamese military is probably not able to keep an on-going or high- intensity conventional war in the region fully sustained.209 Additionally, deterrence might fail as China feels it can mitigate the considerable but reasonable risks.210 Again, this thesis proposes that there are domestic reasons leading to Vietnam’s policy to use military deterrence in the SCS as well as its incapability of sustaining an extended and large-scale conflict and these reasons need to be analysed.
Direct engagement is part of the hedging strategy that Vietnam has employed since the normalisation of Sino-Vietnamese relations in 1991 to manage its relations with China.211 Vietnam has maintained direct engagement via increasing and expanding a number of bilateral mechanisms to build common trust and encourage cooperation, all aimed at shaping China’s behaviour in
206 C. J. Jenner and Tran Truong Thuy, The South China Sea: A Crucible of Regional Cooperation or Conflict-making Sovereignty Claims?, 1-12. 207 Michael J. Mazarr, “Understanding Deterrence”, RAND, accessed 20 October 2018, https://www.rand.org/content/dam/rand/pubs/perspectives/PE200/PE295/RAND_PE295. pdf. 208 John A. Vasquez, “Why Do Neighbours Fight? Proximity, Interaction or Territoriality”, Journal of Peach Research, Nol 32, Issue 3, (1995). 209 Derek Grossman, “Can Vietnam's Military Stand Up to China in the South China Sea?”, Asia Policy, Vol 13, No. 1, (January, 2018). 210 Derek Grossman, “Can Vietnam's Military Stand Up to China in the South China Sea?”. 211 Le Hong Hiep, “Vietnam’s hedging Strategy against China since Normalisation”, Contemporary Southeast Asia, Vol. 35, No.3, (2013): 333-368. 59 general.212 Some argue that Vietnam has established a remarkably robust bilateral relationship with China to assure national security whilst managing the SCS issues.213 Indeed, Vietnam elevated its relationship with China to a strategic comprehensive and cooperative partnership, certainly this is the highest amongst all of Vietnam’s strategic partnerships during 2013.214 In practice, the accomplishment has been the enhanced diplomatic, political, and economic ties between the two countries together with regular high-level exchanges of official visits and meetings between the two Communist Parties and other business institutions.215 However, the SCS remains an irritant in the bilateral relations that Vietnam attempts to manage through its policy of ‘cooperation and struggle’.216 That said, it is necessary to understand Vietnam’s domestic challenges and the impacts on Hanoi’s decision in relation to the SCS policy formation and Chapter Four will analyse the domestic drivers of these four main strategies.
2.3.2 China’s SCS Policies
To fully understand the context of China’s SCS policies at different stages as analysed in this section, it is necessary to consider two significant prompts for the intensification of the SCS dispute. The first prompt would be the 13 May 2009 deadline for coastal states to submit their claims to the UN Commission on the Limits of Continental Shelf, in accordance with the 1982 Law of the Sea Convention regarding the natural continuation of their territory into the sea.217
212 Ibid. 213 Carlyle A. Thayer, The Tyranny of Geography: Vietnamese Strategies to Constrain China in the South China Sea, Paper to International Studies Association 52nd Annual Convention, (Montréal, Québec, Canada, March 16-19, 2011). 214 Carlyle A. Thayer, “The Evolution of Vietnamese Diplomacy, 1986-2016”, in Vietnam’s Foreign Policy Under Doi Moi, ed, Hong Hiep Le and Anton Tsvetov (Singapore: ISEAS-Yusof Ishak Institute, 2018), 23-44. 215 Nhan Dan Newspaper, Vietnamese Prime Minister Nguyen Xuan Phuc, Strengthening solid foundation for comprehensive strategic cooperative partnership between Vietnam and China, interviewed by China’s Xinhua News Agency, November 4, 2018, Shanghai, China, accessed 20 May 2019, http://en.nhandan.org.vn/politics/item/6801902-strengthening-solid-foundation- for-comprehensive-strategic-cooperative-partnership-between-vietnam-and-china.html. 216 Carlyle A. Thayer, “The Evolution of Vietnamese Diplomacy, 1986-2016, in Vietnam’s Foreign Policy under Doi Moi”. 217 The United Nation, Press Conference by Secretary of Commission on Limits of Continental Shelf, 13 May 2009, accessed 31 March 2020, https://www.un.org/press/en/2009/090513_Sea.doc.htm 60
On 07 May 2009, China made a note verbale submission to Secretary-General of the United Nations in response to the joint submission by Malaysia and Vietnam concerning. China stated their sovereignty over the islands in the SCS, the adjacent waters and the seabed and subsoil thereof illustrated by a nine-dash line in an attached SCS map.218 The strong wording used by China in the note verbale and the nine-dash line map indeed created tension with other SCS claimants, particularly Malaysia and Vietnam at the time.
The second prompt would be the ASEAN Regional Forum in July 2010, when the then Secretary of State Hillary Clinton said “The United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea,”.219 Whilst the announcement could be considered a victory for Vietnam, who had been clashing with China over the Paracel and the Spratly islands, it seemed to anger the Chinese Foreign Minister at the time.220 The announcement would have been expected to upset China, considering that Dai Bingguo the then Chinese State Councillor, met Hillary Clinton in the second round of the US-China Strategic and Economic Dialogue (S&ED) meeting in May 2010 and mentioned the core interest as well as the importance of national sovereignty and territorial integrity.221 There was no public record of Dai’s statement to the US officials that the SCS was one of China’s core interests in the meeting. However, there was a media report in March 2010 that Chinese officials privately told US officials that the SCS was one of China’s core interests.222
The SCS indeed emerged as a point of contention between the Obama Administration and China after May 2009 when China officially tabled at the
218 Ibid. 219 Mark Landler, Offering to Aid Talks, U.S. Challenges China on Disputed Islands, July 23, 2010, accessed 31 March 2020, https://www.nytimes.com/2010/07/24/world/asia/24diplo.html 220 Ibid. 221 The US Department of State, Strategic and Economic Dialogue Opening Session, May 23, 2010, Beijing China, accessed 31 March 2020, https://2009- 2017.state.gov/secretary/20092013clinton/rm/2010/05/142134.htm 222 Caitlin Campbell et all, China’s “Core Interests” and the East China Sea, May 10, 2013, the U.S.- China Economic and Security Review Commission, p.4 61
United Nations its ambit claim to the SCS in the form of a map showing a nine- dashed line map enclosing from 60 to 80 percent of this semi-enclosed sea.223 According to Carl Thayer, the US-Chinese official discourse had suffered a significant roll back as a result of the United States objection to China’s unilateral actions in defining the new power relations framework to include an expanding list of core interests. The core interests here refer to the sovereignty and territorial integrity of Xinjiang, the SCS and the Senkaku/Diaoyu islands.224
Broadly speaking, the Chinese approach to dealing with the SCS dispute has transcended a number of stages. In stage one, China primarily applied a policy of shelving SCS disputes and sought out common development opportunities. The principle of this policy was always to ‘keep a low profile’ and assist China to maintain friendly relations with the ASEAN countries.225 Zhou Fangyin suggests that the first stage of China’s SCS policy started in 1978 with the introduction of the reform agenda with the goal of securing a favourable and peaceful international setting for economic development.226 However, Zhou Fangyin’s analysis did not suggest the implication of domestic challenges that China faced at the time and the formation of policy for the SCS.
After 2010, regional tensions rose partly because of China’s aggression over some of the territorial issues in the SCS with other claimants, particularly the Philippines and Vietnam. China came to the realisation that its policy of keeping a low profile had become less effective and was not calming SCS tensions. In this second stage, there was a CCP consensus that China should not allow compromise on any of its territorial sovereignty, even for the sake of maintaining
223 Carlyle A. Thayer, The South China Sea: Lynchpin of the Shifting Strategic Balance, Chennai Centre for China Studies, 12 March 2017, accessed 7 July 2020, https://www.c3sindia.org/archives/the-south-china-sea-lynchpin-of-the-shifting-strategic- balance-by-carlyle-a-thayer/ 224 Ibid 225 Zhou Fangyin, “Between assertiveness and self-restraint: understanding China’s South China Sea policy”, International Affairs, Vol. 92, Issue 4, (2016): 869–890. 226 Zhou Fangyin, “Between assertiveness and self-restraint: understanding China’s South China Sea policy”, 871. 62 regional calm. China therefore underwent a cognitive shift to prioritising the defence of China’s sovereign rights and became more proactive and assertive.227
The third stage of policy change was in the wake of the Scarborough Shoal standoff which began in 2012, when China took an unusually aggressive approach towards the Philippines over the Scarborough Shoals and essentially gained full de facto control of area.228 Zhou Fangyin argues that ‘at this stage, China chose a delicately balanced combination of self-restraint and assertiveness in handling the SCS dispute with the Philippines’.229 The rationale of this stage has been that China would draw on military force as the means to stabilize the situation and as the means of forcible persuasion to ease tensions.230
During the fourth stage, with the announcement of the ‘OBOR’ initiative in 2013 and the preparations for the creation of the AIIB, China’s diplomatic focus changed to development and aid issues and support in the countries around China.231 There have been some contradictory views in relation to China’s SCS policy during the fourth state. For instance, Kjell Tengesdal suggests that throughout this stage, China had become more controlled in its tactics towards the SCS dispute as China sought a stable region to facilitate its economic development under OBOR and an unstable region threatened that success possibility.232 Yongjin Zhang argues that the priority of China’s foreign policy under the Presidency of Xi Jinping is to keep the SCS situation controlled and to reduce any intensifying provocations of nearby countries in defence of Chinese
227 Zhou Fangyin, “Between assertiveness and self-restraint: understanding China’s South China Sea policy”, 875. 228 Christopher Woody, “Tension are rising in the South China Sea, and a US Ally there has already drawn ‘red lines’ with China”, Business Insider Australia, October 3, 2018, accessed 20 October 2018, https://www.businessinsider.com/scarborough-shoal-is-red-line-amid-us-china- tension-in-south-china-sea-2018-10. 229 Zhou Fangyin, “Between assertiveness and self-restraint: understanding China’s South China Sea policy”. 230 Ibid, 876. 231 Ibid, 876. 232 Kjell Tengesdal, “One Belt-One Road and the South China Sea: Xi Jingping’s Priorities”, Modern diplomacy, March 6, 2019, accessed 20 May 2019, https://moderndiplomacy.eu/2019/03/06/one- belt-one-road-and-the-south-china-sea-xi-jingpings-priorities/. 63 national interests.233 On the contrary, Peter Ferdinand observed that between February and July 2013, the Third Fleet of the PLA-N executed seven training exercises and military manoeuvres in the Western Pacific and he proposed that under Xi Jinping, China has toughened its ideals on territorial disputes with the SCS neighbours.234 Irene Chan and Mingjiang Li also assess that Xi Jinping, as a strongman in politics, has been a key factor that contributes to China’s assertive SCS policy.235 Chan and Li argue that China will most likely not decrease the level of forceful behaviour that it has employed during the past few years in the SCS. Under the present leadership, China will probably continue to increase its SCS presence and strongly respond towards any unilateral acts that may be initiated by other SCS claimants.236
China’s relationship with its neighbours including Vietnam in the SCS has also undergone some changes in order to construct a generally peaceful and cooperative neighbourhood for China. The most substantial are a considerable number of shared interests, the creation of cooperation mechanisms that embody this convergence of interests and subregional dialogue. Most importantly, China plays a pivotal constructive role in changing these relationships with Vietnam and other neighbouring countries.237
However, it is important to understand other factors, including history, culture, geopolitics and geo-economics that might have shaped and continue to shape China’s relations with its neighbouring countries. Regardless of the shared interests in handling the relationship appropriately, there are existing competing national interests of China and various countries in the establishment of their interdependent economic, social, and geopolitical relationships. China's
233 Yongjin Zhang, “Dynamism and contention: understanding Chinese foreign policy under Xi Jinping”, International Affairs, Vol. 92, Issue 4, (2016): 769–772. 234 Peter Ferdinand, “Westward ho—the China dream and ‘one belt, one road’: Chinese foreign policy under Xi Jinping”, International Affairs, Vol 92, Issue 4, (2016): 949. 235 Irene Chan and Mingjiang Li, “New Chinese Leadership, New Policy in the South China Sea Dispute?”, Journal of Chinese Political Science, Vol 20, (2015): 35–50. 236 Ibid, 36. 237 Zhang Yunling, “China and its neighbourhood: transformation, challenges and grand strategy”, International Affairs, Vol. 92 Issue 4, (2016): 835–848. 64 relationships with its neighbours are more complicated than being ‘generally peaceful and cooperative’ as China has claimed and if they are mishandled, all sides will suffer.
Regardless for every concession given, the CCP certainly seeks to maintain an upper hand for Chinese self-benefit and to placate a Chinese domestic audience. Also China and Vietnam agreed to keep the peace in the SCS by avoiding conflicts.238 The Vietnamese version of the agreement stated they agree to ‘well manage disputes at sea, make no moves that may complicate or expand disputes (and) maintain peace and stability on the East Sea’. The most challenging task for the Vietnamese government in SCS policy making has been the question of how to maintain its sovereignty and political autonomy while keeping stable, peaceful and beneficial relationships with powerful neighbouring China.239 Hanoi wants to avoid a repetition of history when Vietnam lived under Chinese influence. Hanoi also has memories of the brief and costly war in 1979, followed by more than a decade of hostile relations with China. Therefore, in its relations with China, Vietnam pursues a policy of both cooperation and struggle whilst maintaining a peaceful relationship.240 The Vietnamese government was cautious that the tension had not ended and they were also looking to contemplate some measures other than the diplomatic to strengthen their position in the SCS.241 The Vietnamese caution is justified as Chinese actions seem to go against the agreement. For instance, China introduced a seasonal ban
238 Agence France Press, “Vietnam and China agree to avoid conflict in the South China Sea”, South China Morning Post, November 13, 2017, accessed 20 October 2018, https://www.scmp.com/news/china/diplomacy-defence/article/2119718/vietnam-and- china-agree-avoid-conflicts-south-china-sea. 239 Tran Truong Thuy, ‘Vietnam’s Relations with China and the US and the Role of ASEAN’, in Security Outlook of the Asia Pacific Countries and Its Implications for the Defense Sector, National Institute for Defence Studies, Joint Research Serries No. 16, 2018, accessed 20 July 2020, http://www.nids.mod.go.jp/english/publication/joint_research/series14/pdf/chapter08.pdf 240 Carlyle A. Thayer, ‘Vietnam’s Strategy of ‘Cooperating and Struggling’ with China over Maritime Disputes in the South China Sea’, Journal of Asian Security and International Affairs, Vol 3, Issue 2, 2016 241 Laura Zhou, ‘Vietnam and China promise to keep talking as they look to settle differences over South China Sea’, South China Morning Post, 29 Nov, 2019, accessed 30 March 2020, https://www.scmp.com/news/china/diplomacy/article/3040014/vietnam-and-china- promise-keep-talking-they-look-settle 65 in the SCS the first time in 1999, claiming it would help sustain fishing resources in one of the world’s biggest fishing grounds.242 Since then, China has repeated the fishing ban every year.
In 2018, China’s Ministry of Agriculture announced the unilateral fishing ban during the period 1st May until 16 August 2018. It covers the sea that extends north from the 12th parallel North Latitude to the coasts of Fujian and Guangdong provinces. This includes the Gulf of Tonkin, the Paracel Islands, and the Spratly Islands claimed by Vietnam.243 China’s fishing ban in disputed waters no doubt has increased diplomatic tensions with Vietnam. Most recently, on 01 May 2019, China's Agriculture Ministry repeated the ban for three and a half months and covers the area between China's Fujian and Guangdong provinces, which includes Vietnam's Paracel Islands, parts of the Gulf of Tonkin and the Scarborough Shoal, which is still claimed by the Philippines.244 This thesis argues that China’s policy on the SCS dispute in general and its policy toward Vietnam is depended on the interactions between domestic challenges and China’s formation of foreign policy. This will be discussed further in Chapter Three and Chapter Four.
2.4 Conclusion
In summary, this chapter briefly reviewed the current SCS tensions, involving sovereignty of China, Vietnam, Taiwan, Brunei, Malaysia and the Philippines and with Indonesia on how to divide the sea with its maritime resources such as fishing and oil. The chapter provided an overview of Vietnam’s SCS claims in relation to the country’s sovereign rights and maritime economic resources. The
242 Laura Zhou, ‘Beijing’s South China Sea fishing ban threatens to raise tensions with rival claimants’, South China Morning Post, 8 May 2020, accessed 20 July 2020, https://www.scmp.com/news/china/diplomacy/article/3083572/beijings-south-china-sea- fishing-ban-threatens-raise-tensions 243 Viet Hung, “Beijing imposes fishing ban on South China Sea, Hanoi protests”, AsiaNews, April 4, 2018, accessed 20 October 2018, http://www.asianews.it/news-en/Beijing-imposes-fishing- ban-on-South-China-Sea,-Hanoi-protests-43526.html. 244 Khanh Lynh, “Vietnam rejects China's fishing ban in South China Sea”, VnExpress, May 5, 2019, accessed 20 May 2019, https://e.vnexpress.net/news/news/vietnam-rejects-china-s- fishing-ban-in-south-china-sea-3918758.html. 66 chapter suggested that Vietnam’s claims in the SCS also impacted on the dynamics of the Sino-Vietnamese relationship, which had been mostly shaped by the interaction of three factors namely geographical proximity, power asymmetry and the domestic development within each country. China’s SCS claims were similar to that of Vietnam, essentially covering sovereign rights and maritime economic resources. However, China’s SCS claims were vastly different in scale and were asserted by different strategies including massive SCS land reclamation activities.
In Section two, the chapter reviewed Vietnam’s and China’s SCS policy with an observation that Vietnam’s SCS policies include four main strategies (1) internationalising the dispute, (2) using a multilateral framework to address the dispute, (3) developing a credible military deterrent to China, and (4) direct engagement with China. Finally, the Chapter reviewed China’s SCS policy through the different stages with the latest policy being to keep the SCS situation controlled and to contain any intensifying provocations from a number of SCS neighbouring countries; all in the sole defence of Chinese national interests. This chapter therefore has provided solid background information for addressing the research questions in later chapters.
67
Chapter III: China’s Domestic Challenges and implications for Beijing’s Foreign Policy for the SCS
This chapter addresses the first sub-research question, “What are China’s current domestic challenges and how the challenges affect Beijing’s foreign policy for the SCS at present?”. This chapter seeks to systematically analyse China’s current domestic challenges and also identify Chinese primary domestic interest groups and their preferences, then assessing the implications for Chinese foreign policy toward the SCS. To achieve these objectives, the chapter consists of three sections, the first section focuses on the China’s current domestic challenges around government’s performance in three critical spheres of economy, politics, and security245; as well as Chinese primary domestic groups and their preferences. Section two analyses the implications of Chinese underlying domestic issues on their formation of strategies toward the SCS dispute and Section three concludes by providing some consolidated findings. The chapter argues that despite the image of China as a rising power, China currently has many issue such as a declining trend in economic growth, domestic population’s questioning about the CCP’s legitimacy and on-going internal violence and conflicts in some provinces. The chapter suggests that the Chinese primary domestic groups have diverse interests and they have impacts on the process of the SCS foreign policy making in China. In other words, Chinese current domestic challenges are certainly some drivers of its SCSs policies.
3.1 China’s Current Domestic Challenges
As mentioned in Chapter One, this dissertation investigate Chinese current domestic challenges in three critical domains (1) the capability to foster a equitable and sustainable economic growth; (2) the capacity to establish and maintain legitimacy; (3) and the capability to secure the population from conflict and to control territory. Firstly, this dissertation provides evidence showing that
245 Susan E. Rice and Stewart Patrick, Index of State Weakness in the Developing World, (USA: Washington DC, The Brookings Institution, 2008), 3. 68 the CCP has some challenges in fostering sustainable and equitable economic growth.
3.1.1 Challenges in fostering sustainable and equitable economic growth
Historically, the Chinese economy was mostly isolated and had extensive economic problem until 1978. In 1979, Deng Xiaoping initiated a sustained programme of economic reform which transformed the country economic system allowing free market with local governments exercising economic control.246 This appears to have contributed to the escalation of Chinese GDP growth to an average of nearly 10% per year during the period between 1985 and 2017 (Figure 10). As a result, total Chinese GDP leaped from US$307 billion in 1985 to US$12.2 trillion in 2017. Thus many economists contend that China has been amongst the fastest-growing economies and become a significant global economic power.247
GDP Growth Percentage Total GDP (Billion US$) 16 14,000 14 12,000 12 10,000 10 8,000 8 6,000 6 4 4,000 2 2,000 0 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Actual Total GPD Actual GDP growth (%)
Figure 6: China’s trend of GDP growth percentage and total GDP 1980 to 2017 Source: World Development Indicator, Databank, the World Bank 2019
246 Barry Naughton,”Deng Xiaoping: The Economist”, The China Quarterly, No. 135, (September, 1993): 491-514. 247 Wayne M. Morrison, China’s Economic Rise: History, Trends, Challenges and Implications for the United States, Congressional Research Service report, October 21, 2015, www.crs.gov, 1. 69
However, it must be noted that Chinese GDP growth had started to decline since 2010 and therefore the days of Chinese double-digit economic growth are likely finished (Figure 6). Some authors contend that as a global and regional economic power, China’s economic slowdown may trigger notable effects in neighbouring economies with every 1.6 percentage point downturn equating to a growth reduction of 0.26 percentage points in all of Asia.248 Domestically, the economic slowdown poses many strategic implications for the CCP. An economic slowdown may stymie China’s capacity to keep rapidly building its military might with the speed most recently observed.249 The economic slowdown could also challenge China’s capability to meet the population’s welfare demands given the fact that Chinese population makes up approximately 20% of the global population.250 It is estimated that by 2050, the older Chinese population will make up a quarter of its total population, therefore creating tremendous demand for welfare and health need spending.251
The connection between economic performance and a ruling entity’s legitimacy has been a widely discussed topic amongst academics.252 For instance, Paul Collier’s research concludes that economic growth rate is one of three factors that statistically make a country prone to conflict and a percentage point on the growth
248 Fan Zhai and Peter Morgan, “Impact of the People's Republic of China's Growth Slowdown on Emerging Asia: A General Equilibrium Analysis”, ADBI Working Paper 560, Asian Development Bank, March 25, 2016, accessed 20 October 2018, https://www.adb.org/publications/impact-prc-growth-slowdown-emerging-asia-general- equilibrium. 249 John Lee, “China's Economic Slowdown: what are the Strategic Implications?”, The Washington Quarterly, Volume 38, Issue 3, (2015): 123-142. 250 The World Bank, “Databank”, World Development indicator, accessed 20 October 2018, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators. 251 Yanzhong Huang, “Population Aging in China: A Mixed Blessing”, The Diplomat, November 10, 2013, accessed 20 October 2018, http://thediplomat.com/2013/11/population-aging-in- china-a-mixed-blessing/. 252 ‘Legitimacy involves the capacity of a political system to engender and maintain the belief that existing political institutions are the most appropriate or proper ones for the society’, Seymour Martin Lipset, ‘Some Social Requisites of Democracy: Economic Development and Political Legitimacy’, The American Political Science Review, Vol. 53, No. 1, (March 1959): 86. 70 rate reduces the risk of civil war by around a percentage point.253 Additionally, Adam Przeworski and Fernando Limongi observed that constant economic development that lasts over a series of generations may also provide a legitimate status to a political regime.254 Zhengxu Wang found that in China in 2005 when the GDP growth was in a strong rising trend, economic development had immediate effect of improving public support for the CCP.255 Consequently, the current economic slowdown might test the public trust on the CCP and heighten underlying social tensions in China. David Shambaugh also identified that the deteriorating economic performance was one of the many reasons that may lead to a potential collapse of the CCP.256
In addition to challenges in sustaining economic growth, China also has difficulties in fostering equitable income growth across the population. Despite strategic economic windfalls, income inequality remains a significant challenge for the CCP with research suggesting the income gap between the poor and rich in China is now arguably the highest in the world.257 Notably, the income inequality had already reached extreme levels in 2005 with the Gini258 coefficient in the range of 0.53–0.55 indicating a severe gap between rich and poor.259 In his research, Jonathan D. Ostry and François Bourguignon presented that inequality
253 Paul Collier, Development and Conflict, (Oxford University, 2004). 254Adam Przeworski and Fernando Limongi, “Political Regimes and Economic Growth”, The Journal of Economic Perspectives, Vol. 7, No. 3, (1993): 51-69. 255 Zhengxu Wang, “Before the Emergence of Critical Citizens: Economic Development and Political Trust in China”, International Review of Sociology, Vol. 15, No. 1,( March 2005): 147-163. 256 David Shambaugh, China’s future, (John Wiley & Sons, 2016). 257 Yu Xie and Xiang Zhou, Income inequality in Today’s China, PNSA, Proceeding of the National Academy of Sciences of the United States of America, Vol. 111, No. 9, accessed 20 October 2018, http://www.pnas.org/content/, 6928-6933. 258 According to the World Bank, inequality in the distribution of income is reflected in the percentage shares of income or consumption accruing to proportions of the population ranked by income or consumption levels. Gini index measures the extent to which the distribution of income (or consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. See more at World Development Indicator 2008, The World Bank, 71. 259 Yu Xie and Xiang Zhou, Income inequality in Today’s China, 6928. 71 might be destructive to growth and inequality may amplify the potential for financial crisis and political instability.260
Information presented in this section suggests that China indeed has some domestic challenges in fostering sustainable and equitable economic growth at present. Putnam highlighted in the late 1980s that domestic politics and international negotiation are often intertwined.261 Thus it can be argued that China’s current domestic challenges in sustaining economic growth have some impacts on the CCP’s policy in the SCS dispute. This will be analysed in Section 3.2 below.
3.1.2 Challenges in maintaining regime legitimacy
This dissertation will now explore CCP performance in the second domain, being the capacity to establish and maintain regime legitimacy and how this would impact on Chinese formation of foreign policies in the SCS. Yanqi Tong considers there are three layers of regime legitimacy in Chinese political tradition including: morality of political elite; benevolent governance that identifies that all levels of government have to be concerned about the people; and the state’s responsibility for the welfare of the country’s entire population.262
These three layers indeed create a two way moral bond between state and the people, nurturing the public trust of the political system. As proposed in Chapter Three Section Three, government performance in economic, political, security and social welfare domains are interconnected. The recent decline in China’s economic growth and the existence of income inequality shows that the CCP has not completely fulfilled its responsibilities to the population’s welfare.
260 Jonathan D. Ostry and François Bourguignon, “Inequality and the fragility of growth” in Inequality and Growth: Patterns and Policy- Volume II: Regions and Regularities, eds., Kaushik Basu and Joseph E. Stiglitz, (UK: Palgrave Macmillan, 2016), 136-162. 261 Robert Putnam, “Diplomacy and Domestic Politics: The Logic of Two Level Games”, International Organisation, Vol. 42, No.3, (Summer 1988): 427-460. 262 Yanqi Tong, “Morality, Benevolence and Responsibility” in Reviving Legitimacy – Lessons for and from China, eds, Deng Zhenglai and Sujian Guo, (USA: Lenxington Books, 2011), 195-214. 72
Furthermore, the morality of Chinese political leaders is also in question due to systemic political corruption. Therefore, this led Thomas Heberer and Gunter Schubert to emphasise that official corruption in China has made people increasingly dissatisfied and frustrated.263 Hence, Yanqi Tong showed that the mantra of opposing official corruption was pleasing to the people thus making mass protests and people’s movements commence in China during the early 1990s.264 This has certainly been a successful political mantle for CCP President Xi Jinping.
Research has certainly presented that a constant experience of corruption erodes confidence in the political system and decreases relational trust, thus corruption carries with it important political costs.265 That said, the CCP is faced with some challenges in maintaining its regime legitimacy and the CCP’s efforts to manage this issue also affect Chinese policies in the SCS. This will be discussed in Section 3.2 of this chapter.
3.1.3 On-going attention on securing the population from conflict and territorial control
With regards to the CCP’s capability to secure population from violent conflict and to control territory, this has never been an easy task for any ruling entity in China. For instance, in relation to internal violent conflicts, 2008 saw widespread ethnic Tibetan protests266 in the Tibetan Autonomous Region as well as in the majority Tibetan areas of neighbouring provinces. Some of these protests turned violent
263 Thomas Heberer and Gunter Schubert, “Political reform and regime legitimacy in contemporary China”, in Critical Readings on the Communist Party of China (4 Vols. Set), 9-28, accessed 20 March 2019, https://doi.org/10.1163/9789004302488. 264 Yanqi Tong, “Morality, Benevolence and Responsibility” in Reviving Legitimacy – Lessons for and from China, eds., Deng Zhenglai and Sujian Guo (Lexington Books, Fortress Academic, 2011), 206. 265 Mitchell A. Seligson, “The Impact of Corruption on Regime Legitimacy: A Comparative Study of Four Latin American Countries”, The Journal of Politics, Vol. 64, No. 2, (May 2002): 408-433. 266 Ben Hillman and Gray Tuttle, Ethnic Conflict and Protest in Tibet and Sinjiang: Unrest in China’s West, (Columbia University Press, 2016), 1-17. 73 and saw the burning and looting of the Han owned trade stores.267 Another example of Chinese internal conflict is the CCP actions towards the Uyghur in the oil-rich Xinjiang region in northwest China, a key path for the ‘Silk Road’. When the CCP placed greater control over the area in 1949, it significantly limited the rights of the Uyghur and imposed restrictions and forbid many aspects of the Uyghur way of life.268
In relation to territorial control, China has a land boundary of more than 20,000 Kilometres and a coastline of about 18,000 Kilometres, covering approximately three million square Kilometres of territorial water.269 A number of islands and areas of land that China considers its frontier territories are still subject to international disputes. For instance, China has been involved in the dispute over the Diaoyu/Senkuka islands in the East China Sea with Japan over many years with no resolution in sight.270 China’s on-and-off negotiations with India in relation to a legal boundary between them along their mountainous border have yielded no success so far.271 China also involves in the on-going disputes with Vietnam, Taiwan, the Philippines, Brunei and Malaysia over the Spratly and other islands in the SCS.272 It can be said that China needs constant focus on securing the population from internal violent conflicts and territorial control; any negligence in this matter could led to domestic instability. The CCP’s efforts in
267 Xiaoyuan Liu, “Reins of Liberation: Geopolitics and Ethnopolitics of China, Central Asia and the Asia Pacific”, The Asia-Pacific Journal, May 2, 2007, accessed 20 October 2018, http://apjjf.org/-Xiaoyuan-Liu/2427/article.html. 268 Joseph Grieboski, “Tension, repression and discrimination: China’s Uyghurs under threat”, Georgetown Journal of International Affairs, September 24, 2014, accessed 20 October 2018, https://www.georgetownjournalofinternationalaffairs.org/online-edition/tension-repression- and-discrimination-chinas-uyghurs-under-threat. 269 Chien-peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, (NY: Routledge Curzon, 2004), 2. 270 Liu Dan, “Diaoyu Islands Dispute: A Chinese Perspective”, The Diplomat, August 9, 2018, accessed 20 October 2018, https://thediplomat.com/2018/08/diaoyu-islands-dispute-a-chinese- perspective/. 271 Mihir Bhonsale, Understanding Sino-India Border Issue: An Analysis of Incidents Reported in the Indian Media, Observer Research Foundation, 2018, accessed 20 October 2018, https://www.orfonline.org/research/understanding-sino-indian-border-issues-an-analysis-of- incidents-reported-in-the-indian-media/. 272 Nguyen Minh Quang, “Saving the China-ASEAN South China Sea Code of Conduct”, The Diplomat, June 29, 2019, accessed 20 August 2019, https://thediplomat.com/2019/06/saving-the- china-asean-south-china-sea-code-of-conduct/. 74 abolishing internal conflicts and assuring territorial control also have an impact on their international policies on the SCS dispute.
Thus far, this section has illustrated that China at present has some domestic issues including economic slowdown, corrupt government, income inequality, internal violent conflicts and on-going territorial disputes. The next section will discuss China’s primary domestic interest groups involved in influencing the Chinese SCS policy-making process.
3.1.4 China’s Primary Domestic Interest Groups
To fully appreciate the implications of current domestic challenges on China’s SCS policy making process, this section investigates China’s primary domestic interest groups and their win-set ideals. The key domestic actors involved encompass eleven government agencies, under which there are five law enforcement agencies and commercial actors including oil companies. The most active of all these eleven actors during the last five years include the China Coast Guard (CCG), the local provincial governments and the People’s Liberation Army Navy (PLA(N)).273
The CCG was created in 2013 under the command of the State Oceanic Administration. Since, 2018, the CCG has been transferred from civilian control of the State Oceanic Administration, to the People's Armed Police, consequently placing it under the command of the Central Military Commission.274 The CCG have diverse roles including patrol of territorial waters and disputed territories, harbour and coastal security, research and survey and fisheries protection. The CCG main interest is the enforcement of fisheries law, maritime law and safeguarding security at sea.275 The CCG activities in SCS has been intensified
273 International Crisis Group, Stirring up the South China Sea, Crisis Group Asia Report N°223, 23 April 2012, accessed 2 April 2020, https://www.crisisgroup.org/asia/south-east-asia/south- china-sea 274 Anguang Zheng, ‘Integrating the China Coast Guard with the PLA Navy’, In Grey and White Hulls - An International Analysis of the Navy-Coastguard Nexus, edited by Ian Bowers, Swee Lean Collin Koh, Palgrave Macmillan, Singapore, 2019, p.17-36 275 Ying Yu Lin, Changes in China’s Coast Guard, The Diplomat, 30 January 2019, accessed 1/7/2020, https://thediplomat.com/2019/01/changes-in-chinas-coast-guard/ 75 during the past couple of years, with its vessels entering Vietnam’s administered water near the Paracel Islands, ramming and sinking a Vietnamese fishing boat.276 It has also been suggested that the CCG may become the main force to ensure operation of the China’s Maritime Silk Road.277
Local governments, particularly three coastal provinces, Hainan, Guangdong and Guangxi, are involved at different levels in the SCS dispute and their profit- driven behaviour has escalated tensions in the region.278 Their three coastlines border the SCS, which serves as a key economic growth area in their economic plan. Like most local governments in China, their key interest is GDP growth, as it is the most important criteria for advancement in the political system other than inherited family political power.279 As a result, local governments are especially eager to expand their economic activities, including fisheries and tourism, into the disputed areas of the SCS even at the cost of confronting other claimants.
The PLA(N) plays a central role in China’s overall SCS affairs in general and the PLA responsibility in front-line command and control is very crucial in China’s maritime-right maintenance.280 The PLA(N)’s main interests is offshore defence strategy including four objectives: (a) ability to seize limited sea control in certain areas for a certain time, (b) ability to defend effectively China’s sea lanes, (c) ability to fight outside of China’s claimed maritime areas, and (d) ability to implement a credible nuclear deterrent.281 The PLA(N)’s power projection capability has been enhanced by its naval build-up and modernisation and was
276 Huong Le Thu and Alexandra Pascoe, this is no time to take eyes off the South China Sea, The Strategist, 6 Jul 2020, accessed 7 Jul 2020, https://www.aspistrategist.org.au/this-is-no-time-to- take-eyes-off-the-south-china-sea/ 277 Ying Yu Lin, Changes in China’s Coast Guard 278 Mingjiang Li, ‘Hainan Province in China’s South China Sea Policy: What Role Does the Local Government Play?’, Asian Politics and Policy, 20 November 2019, accessed 3 July 2020, https://onlinelibrary.wiley.com/doi/full/10.1111/aspp.12495 279 Ibid. 280 Ji You, The People’s Liberation Army in the South China Sea Dispute: Institutional Role and War Preparation, East Asian Policy, Vol 07, No.3, 2015 281 Tuan Manh Vu, The Place and Role of the People’s Liberation Army Navy (PLA(N)) and the South China Sea in Chinese Government’s Grand Strategy (from 1949 – now), University of Manitoba, 2019, p. 50 76 seen during a number of PLA(N) missions during the period 2011-2015.282 The PLA(N) with its ability to assert control over the water along the SCS is a significant interest group which is included in China’s SCS policy and this will be discussed further in the next section.
The national oil companies are considered one of the most important potential quasi-governmental actors in Chinese SCS policy formulation. There are three main companies namely China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec) and China National Offshore Oil Corporation (CNOOC).283 273 These Chinese oil companies have significant interests in exploiting oil reserves and have been urging the central government to sponsor and approve energy exploration in the disputed waters of the SCS. In June 2012, the CNOOC decided to take bids on oil blocks that overlap territory owned and being explored by Vietnam near the Paracel islands. 284 Such activity driven by these companies’ interests could stir up the tension in the Sino- Vietnamese relationship and act as a positive influence China’s SCS policy.
As discussed above, the preferences of the key interest groups in China have some similarities but do not quite overlap: the CCG focuses on the enforcement of fisheries law, maritime law and defending the sovereignty of claimed waters; the local government focuses on GDP growth; and national oil companies are interested in exploiting oil reserves. The PLA(N)’s main interest is the offshore defence strategy which is arguably overlapped with one of the CCGs focuses. All these key domestic players try to increase their power and budget by doing their part in the SCS sovereignty mission. As Putnam analysed, when a state or government engages in international negotiation, the representative will most often seek an arrangement that could persuade different domestic interests groups. The lack of coordination amongst Chinese domestic interest groups lead to the absence of a defined ‘win-set’, or a probable outcome for negotiation at
282 Tuan Manh Vu, The Place and Role of the People’s Liberation Army Navy (PLA(N)) and the South China Sea in Chinese Government’s Grand Strategy (from 1949 – now) 283 International Crisis Group, Stirring up the South China Sea, p. 12 284 Ibid. 77 international level. Additionally, the current domestic issues including sustaining economic growth and regime legitimacy make it harder for China in the whole SCS policy making process. In the next sections, this dissertation will analyse how the preferences of the above identified domestic interests groups and the current domestic challenges impact on China’s policy toward the SCS.
3.2 Implications for Chinese SCS Policy
Implications of Current Domestic Challenges
As mentioned in Chapter One, Putnam’s two-level game theory emphases the relationship between international and domestic spheres. The interconnection between domestic and international affairs as discussed by Putnam has also been observed by other authors. For instance, David Cadier and Margot Light discovered that Russian foreign policy has been driven by domestic politics and the deal that Putin offered to the Russian people, including order and prosperity at home has assisted him to renew Russia’s dignity on the international stage.285 This thesis applies the two-level game theory to analyse the connection between China’s domestic affairs and the country’s policy in the SCS, particularly the most recent policy and action of China towards Vietnam.
Analysis in Section 3.1 shows that despite the image of a rising China, the country currently has domestic challenges and the compound effects on the CCP is an effort to increase economic growth and to ensure the economic growth benefits to be spread evenly to different domestic groups in order to increase the regime legitimacy. The domestic challenge implications on China’s SCS policy is that China must manage the SCS dispute in a way that advances its interests but also not to escalate its domestic challenges. Chinese current SCS policies encompass (1) the enhancement of its SCS presence by land reclamation, deployment of weapon and other assertive activities and (2) efforts in the construction of a peaceful and cooperative relationship with Vietnam and other neighbouring
285 David Cadier and Margot Light, Russia's Foreign Policy: Ideas, Domestic Politics and External Relations, (Springer, 2015). 78 countries. Firstly, China’s massive land reclamation and deployment of weapon on the SCS is to show CCP’s continuous efforts in assuring territorial control. Since China has claimed that they have indisputable sovereignty over the SCS Islands, the CCP’s continuous efforts in assuring the SCS sovereignty assist them to increase the regime legitimacy. China also increase training exercises and military manoeuvres in the Western Pacific286 and these activities can be considered outside diversions for the CCP to deflect some current domestic criticism on the morality of Chinese political leaders.287 History showed similar diversion tactic was applied by the former Southern Vietnamese President, Nguyen Van Thieu in 1974, when he precipitated the conflict with China over the Paracels to rally anti-Chinese nationalist sentiments to bolster his faltering political position.288
Secondly, China’s deployment of weapons and other assertive activities is to showcase its military power to prohibit any intensifying provocations of certain neighbouring countries, including Vietnam, whose military capability is not comparable with China.289 This is to avoid a potential costly armed conflict and negative impacts on Chinese economy whose growth is declining. Intensified provocations of Vietnam or other neighbouring countries would likely raise tensions in the SCS and the risk of an armed conflict could become a greater possibility. The cost of an armed conflict, if it occurs, would be the interruption of trade flow between China and Vietnam, imposing negative impacts on the two way trade relationship. Noting that the two way trading relationship has been favouring China due to the fact that the value of Vietnamese import from China increased from US$ 1.4 billion to US$ 50 billion between 2000 and 2016, much faster than the increase of the values of Vietnamese export to China during the
286 Peter Ferdinand, “Westward Ho—the China dream and ‘one belt, one road’: Chinese foreign policy under Xi Jinping”, International Affairs, Vol 92, Issue 4, (2016): 949. 287 Chien-peng Chung, Domestic Politics, International Bargaining and China’s Territorial Disputes, 141. 288 Selig S. Harrison, China, Oil and Asia: Conflict Ahead, (New York: Columbia University Press, 1977), 206-207. 289 Yongjin Zhang, “Dynamism and contention: understanding Chinese foreign policy under Xi Jinping”, International Affairs, Vol. 92, Issue 4, (2016): 769–772. 79 same period of time.290 This results in a trade deficit for Vietnam and a trade surplus for China. In 2015, China had a trade surplus of US$32.2 billion, equivalent to 0.3% of total GDP.291 The two way trading relationship seems not to be significant for Chinese economic growth, since the trade surplus made up only 0.3% of Chinese GDP in 2015. However, the trade surplus shows that Vietnam has a level of dependency on imports, mainly bulk materials such as leather for shoes and fabric for garments from China. This level of dependence was so high that one Vietnamese economist suggested ‘for the garment industry, if China were to stop supplying materials, the industry would face enormous difficulties’.292 The dependency is a great benefit that China would not dispense with as it provides China with added influence in dependent countries’ economies. Consequently, China would not desire to create any interruptions in the trade with Vietnam’.
Such interruption also has direct impacts on Chinese marine industry and its employment prospects. The Chinese marine industry has grown rapidly in the 21st century with a GDP that reached US$1149.50 billion in 2017 and contains 12 major sub-sectors including offshore oil and gas, fishery, oceanic mining and marine transportation and shipping.293 In 2017, the amount of people that were employed by both the Chinese marine and marine-related sector jumped to 36.57 million, making a total of 4.17% of the national employment figures.294 Again, an armed conflict creates interruption in trading and poses negative impacts on China’s marine industry and China does not want this to happen as it would be a catalyst for further domestic issues.
290 UN Comtrade Database, accessed 30 July 2018, https://comtrade.un.org/data/ 291 Ibid 292 The Economist, Vietnam Trade with China: Fellow travellers, fellow traders, 30th June 2012, Available at http://www.economist.com/blogs/banyan/2012/06/vietnams-trade-china 293 Yixuan Wang and Nuo Wang, “The role of the marine industry in China's national economy: An input–output analysis”, Marine Policy, Vol. 99, (January 2019): 42-49, accessed 20 March 2019, https://www.sciencedirect.com/science/article/pii/S0308597X18304226. 294 B. Wang, C. Wu, L. Kang, et al., “Work safety in China's Thirteenth Five-Year plan period (2016–2020): current status, new challenges and future tasks”, Safety Science, Vol. 104, (April 2018): 164-178. 80
This dissertation therefore argues that China’s assertive strategy of land reclamation and weapons deployments on the SCS islands is likened to the use one stone to kill two birds: (1) to improve the CCP’s regime legitimacy in order to address current domestic criticisms on the government’s performance; and (2) to illustrate its big ‘stick” or its military superiority in the region as a warning to prevent Vietnam and other SCS claimants from initiating any armed reactions. Whilst the Chinese understand that Vietnamese military capability is not comparable with its own, China is still deliberately showing the strength of its SCS military deployment and modernisation to remind Vietnam to not consider initiating any armed conflict with China. An armed conflict is also not ideal for China as the CCP has made many promises to its people for its economic and security future.295 In the context of reducing economic growth, an armed conflict means an increase in military spending and this goes against the CCP’s efforts to maintain economic growth. Data showed that China’s GDP growth reduced from 10.6% in 2010 to 6.6% in 2018 and China’s military spending as a percentile of GDP was stable at 1.8% to 1.9% during the same period of time.296 In other words, China formulates the policy of continuing land reclamation and weapons deployments on the SCS islands in order to advance its interest in the SCS as well as to contain any escalation of the current domestic challenges.
In parallel with a hard line stance on the SCS sovereignty disputes, the Chinese adoption of a carrot-and-stick approach was to construct a peaceful and cooperative relationship with Vietnam and other neighbouring countries via an extension of shared interests and cooperation mechanisms as well as deeper economic ties.297 For China, such economic ties carry considered significance as it seeks ways to appease its neighbours who are eager for foreign investments
295 Huileng Tan, “Xi Jinping makes big promises for China's economic future”, CNBC, Asia-Pacific News, accessed 20 October 2018, https://www.cnbc.com/2017/10/18/xi-jinping-makes-big- promises-for-chinas-economic-future.html. 296 The World Bank, Data, accessed 20 October 2018, https://data.worldbank.org/indicator/ny.gdp.mktp.kd.zg. 297 The Wall Street Journal, China Takes Carrot-and-Stick Approach to Dealing with Neighbors, November 12, 2014, accessed 20 October 2018, https://www.wsj.com/articles/china-woos- neighbors-with-carrot-and-stick-approach-1415843541. 81 from and two-way trading with China.298 Joint exploration offers, most often framed as partnerships and built around undertakings of technical support, capital, and greater investment opportunities, have allowed China to put itself as a key partner rather than an aggressive and annoying SCS claimant.299 For instance, China has offered joint oil and gas exploration to Vietnam and other SCS claimant states and for exploring resources in their own Exclusive Economic Zones (EEZs).300 Two claimants, the Philippines and Brunei, are choosing practicality and seem keen to skirt combative sovereignty questions in order to meet their domestic objectives of future energy development.301
China’s policy of focusing on shared interests and offering cooperation mechanisms and deeper economic ties, on the one hand, makes Vietnam and other SCS claimant states strongly consider the geopolitical dangers linked to defying China, a key trade and investment partner that has a stronger military capability. On the contrary, this approach assists Chinese economic groups to expand their trading ties in the region and increase their income prospects and thus contributing to Chinese overall economic outcomes. Consequently, the policy enables China to manage one of its current domestic challenges which is the decrease in economic growth.
With Vietnam, China’s recent actions toward Vietnam including the unilateral fishing ban in May 2018 and May 2019 is also consistent with China’s SCS carrot- and-stick policy, which was driven by Chinese domestic challenges. Internationally, the fishing bans shows that China intends to continue with its SCS sovereign claims. Domestically, the fishing bans illustrate the CCP’s commitment to protect the ocean’s ecosystem and biodiversity for the development and longevity of the Chinese fishery industry. With regards to mineral wealth, most recently, in July 2019, Chinese survey ship Haiyang Dizhi
298 Ibid. 299 Mercy A. Kuo, “The Geopolitics of Oil and Gas in the South China Sea”, The Diplomat, December 12, 2018, accessed 20 March 2019, https://thediplomat.com/2018/12/the-geopolitics- of-oil-and-gas-in-the-south-china-sea/. 300 Ibid. 301 Ibid. 82
8 navigated the waters near a Vietnamese-controlled reef to commence seismic survey activity; its escorts included the armed coastguard vessels 3901, complete with helicopter, and another 2,200-tonne coastguard ship.302 This action facilitates the development of Chinese oil and gas exploration industry which would benefit certain domestic groups and the Chinese economy in general.
Hence, this dissertation proposes that China has carefully designed its SCS policy to accommodate its current domestic environment. Chinese carrot-and-stick policy approach assists them to continuously pursue SCS sovereign right without engaging in a costly armed conflict. By doing this, China avoids escalating its current domestic challenges and at the same time, is persistent in obtaining sovereign recognition in the SCS, which determines China’s roles in international affairs.303 This satisfies China’s future geostrategic and economic ambitions (as suggested by Kaplan and Durani above), which then could lead to income increases for Chinese population. Because of the interlinking between areas of domestic challenges, this could address three key government performances namely capacity to sustain economic growth; capacity to establish and maintain legitimacy and capacity to control territory. Domestic issues have certainly made CCP policies more assertive. This is the understanding on which rest the basic of the interconnection between international and domestic spheres in the two-level game theory. In other words, this thesis has illustrated that Chinese SCS policy was driven by its domestic challenges.
Implications of the key domestic interest groups
China’s massive land reclamation and island building can be considered a case of policy domination by a significant domestic interest group, the PLA(N).304
302 AFP, “China, Vietnam ships in standoff over a reef in disputed South China Sea”, July 12, 2019, accessed 20 August 2019, https://www.news18.com/news/world/china-vietnam-ships-in- standoff-over-a-reef-in-disputed-south-china-sea-2228531.html. 303 Thomas J Biersteker, “State, Sovereignty and Territory”, in Handbook of International Relations, 2nd Edition, eds., Walter Carlsnaes, Thomas Risse and Beth A. Simmons, (UK: Sage Publications Ltd, 2012), 255. 304 Feng Zhang, China’s long march at sea: explaining Beijing’s South China Sea strategy, 2009– 2016, The Pacific Review, 19 March 2019, accessed 7 July 2020, https://www.tandfonline.com/doi/full/10.1080/09512748.2019.1587497 83
Long before 2013, a number of both military and civilian actors had advocated for island building, but throughout the 2000s, the island building proposals failed to reach the attention and support from President Hu.305 In 2013, the PLA(N) gained new support after a leadership transition and was given a green light by President Xi to establish and to go ahead with an island building plan. Consequently, China has invested a premium in a large scale and speedy island building program in the SCS.306 This dissertation argues that the rapid land reclamation and construction on Johnson Reef South and Fiery Cross Reef, as detailed in Section 2.2.2, directly benefits the PLA(N) as the construction permits the PLA(N) to ensure military basing and resupply for its now sizeable and ever growing fleet of warships.
The PLA(N)’s main SCS interest is offshore defence and security of Chinese sovereign rights in the area. The establishment and control of the island and the surrounding water would assist the PLA(N) to achieve at least three objectives including ability to seize limited sea control in certain areas for a certain time periods, ability to defend effectively China’s sea lanes and ability to fight the naval battle outside of China’s claimed maritime areas. That was the reason why the PLA(N) advocated for land reclamation and island building in the SCS. Another author also observed that the PLA(N)’s island building process led to two policy track running in parallel (1) a promotion of ‘peace, cooperation and harmony’ or a friendly and stability policy started in 2013 and maintenance by China’s Ministry of Foreign Affairs,307 and (2) an assertive island building by the PLA(N). In other words, the preference of the PLA(N), a significant domestic group in China has an impact on Chinese SCS policy.308
305 Hugar, W. R., ‘Surprise! What caused China’s recent and massive land reclamation in the South China sea?’, Journal of Strategic Intelligence, Vol. 1, No.1, 2016, p. 4–36 306 Feng Zhang, China’s long march at sea: explaining Beijing’s South China Sea strategy, 2009– 2016 307 Thayer, C. A. (2013). ASEAN, China and the code of conduct in the South China Sea. SAIS Review of International Affairs, 33 (2), 75–84. 308 Feng Zhang, China’s long march at sea: explaining Beijing’s South China Sea strategy, 2009– 2016 84
Chinese policy in land reclamation and island building in the SCS also originated from the main interests of the coastal provinces’ local governments, Hainan, Guangdong and Guangxi, which is GDP growth by expanding their fisheries and tourism industries. To influence China’s policy in the SCS dispute, Hainan region has played three major roles including: an enthusiastic defender of China’s claim and position, an active definer of China’s interests in the dispute, and a helpful participant in asserting China’s national security in the SCS.309 For instance, Hainan region has claimed to govern all SCS islands and their surrounding waters since 1988; in 2006, Hainan region proposed a bill in the 10th National Political Consultative Conference that described expanding exploration further out into the SCS as vital to the defence of China’s maritime rights and interests.
In 2014, Hainan region officials proposed to Beijing officials to “push the central government to partially decentralise the rights of energy development in the SCS” to support Hainan’s participation in SCS development.310 In July 2012, the Hainan government took advantage of China’s island building policy to establish Sansha city on an anthropogenic island in the SCS, about 350 kilometres from the southernmost point of Hainan Province.311 Sansha is Chinese smallest city, occupying roughly ten square kilometres on Woody Island with a population of just over a thousand. However, the establishment of the Sansha city has significantly increased Hainan’s involvement in the SCS contestations because the city is symbolically laying claim to thousands of kilometres of sea, features and some land masses in the SCS.312
China’s island building effort is further supported with the opening of a new fishing port in Yazhou, approximately 50 km West of Sanya and about 260km
309 Mingjiang Li, ‘Hainan Province in China’s South China Sea Policy: What Role Does the Local Government Play?’, Asian Polilics and Policy, Vol 11, Issue 4, October 2019, p. 623-642. 310 Kevin Carrico, ‘Seeing Sansha: The Political Aesthetics of a South China Sea Settlement’, Critical Inquiry, Vol 46, No.3, Spring 2020, p. 646-664 311 Ibid. 312 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, Crisis Group Asia Report N°275, 26 January 2016, accessed 1 July 2020, https://www.crisisgroup.org/asia/north-east-asia/china/stirring-south-china-sea-iv-oil- troubled-waters 85 from the Paracels. This new port facility supports the fishing industry and SCS island resupply as this area is now the closest large scale port facility relative to the mainland and the Spratly Islands.313 With the opening of the Yazhou port in Sanya, it gives the PRC a greater capability to administer and supply an area of about two million square kilometres in the SCS. Hainan island authorities have now created the greatest naval, fishing and maritime economic hubs to support SCS economic and military domination of the sea body.314 Defence experts now suggest that Yazhou port is in fact a maritime militia facility which can be used to undermine and harass Freedom of Navigation Operations (FONOPS) in the SCS.315
Guangdong and Hainan governments also use their administrative power and state investment to develop large-scale deep-sea fishing and to commence fishing further into waters near the Paracel and Spratly islands. This is to increase the local governments’ profit from the fishing industry but also see more Chinese fishing vessels in disputed waters. To support the local government’s deep-sea fishing in waters near the Paracel and Spratly islands, in January 2014, the Chinese Government enacted new fishing regulations in the SCS that required foreign vessels to obtain Chinese authority before entering “maritime areas” within Hainan’s jurisdiction.316 Again, the footprint of the main interests of local government, particularly the coastal provinces can be seen in China’s SCS land reclamation and island building policy and subsequent policies supporting the fishing industry in the disputed waters.
313 J. Michael Cole, “China Opens Large Fishing Port to ‘Safeguard’ South China Sea Claims,” The News Lens International, 2 August 2016, assessed 10 July 2020, https://www.andrewerickson.com/2016/08/china-opens-large-fishing-port-to-safeguard- south-china-sea-claims/ 314 Andrew S. Erickson and Conor M. Kennedy, ‘China’s Daring Vanguard: Introducing Sanya City’s Maritime Militia’, Center for International Maritime Security, 5 November 2015, assessed 10 July 2020, http://cimsec.org/chinas-daring-vanguard-introducing-sanya-citys-maritime- militia/19753 315 J. Michael Cole, “China Opens Large Fishing Port to ‘Safeguard’ South China Sea Claims,” 316 Craig Murray and Kimberly Hsu , China’s New Fishing Regulations Seek to Justify and Consolidate Control in the South China Sea, U.S.-China Economic and Security Review Commission staff report, 27 January 2014, http://origin.www.uscc.gov/sites/default/files/Research/ 86
The Chinese National Oil Companies (NOCs), including CNOOC, CNPC and Sinopec, with nickname the “Three buckets of oil” have been enthusiastic for development driven by potential political gains as much as economic interest and intensified by competition. Their eagerness is aligned with China’s appetite for fossil fuels in the SCS which has been growing in parallel with the country’s hunger for energy and overall foreign policy assertiveness and technical capabilities.317 The CNOOC is China’s largest offshore oil and gas producer and used to have an exclusive right to offshore exploration, development, production and sales.318 The competition among the NOCs started in 2004 when the CNPC obtained government permission to explore and develop eighteen SCS blocks, some in the disputed waters around the Spratly Islands. Sinopec was reported to have also submitted applications for offshore permits, including in the SCS. 319 Executives of the NOCs have been seen lobbying the Chinese government for permission and support, usually in the name of asserting Chinese sovereignty in the SCS. During the National People’s Congress in March 2009, delegate and CNOOC executive at the time, Song Enlai urged the government to boost policy and financial support for deep-water exploration near the SCS. He claimed it was an urgent task because claimant countries were engaged in “predatory exploitation” in Chinese waters.320 Of course, oil and gas exploration in the SCS cannot be done without the state providing policy support and underwriting the risk.
Being bound by the SCS policy to construct a peaceful and cooperative relationship with Vietnam and other neighbouring countries, China has quietly called off controversial projects initiated by the NOCs. For instance, in 2009,
317 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, Crisis Group Asia Report N°275, 26 January 2016, accessed 1 July 2020, https://www.crisisgroup.org/asia/north-east-asia/china/stirring-south-china-sea-iv-oil- troubled-waters 318 Lianyong Feng, Yan Hu, Charles A.S. Hall and Jianliang Wang, The Chinese Oil Industry: History and Future, New York, Heidelberg, Dordreche and London, 2013, pp. 36-37. 319 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, p.5 320 Song Enlai: Suggest Strengthening Oil and Gas exploration in the South China Sea, China.com, 10 March 2009 87
Sinopec was directed to back away from drilling in a disputed water region when Hanoi protested after company sources leaked the plan to the media.321 However, in 2012 China issued “The 12th Five-Year Plan for the Development of National Strategic Emerging Industries” dictated the goal of obtaining indigenous capability for the design and manufacture of deep-water resource exploitation equipment by 2015.322 The period of 2012 can be considered a turning point in the NOCs influences on the China’s SCS policy with the completion and operation of Haiyangshiyou 981 (HYSY 981), China’s first indigenously-designed and manufactured ultradeep-water and semi-submersible drilling platform. The then CNOOC Chairman Wang Yilin called it the “mobile national territory” that would help “ensure our country’s energy security, advance maritime-power strategy and safeguard our nation’s maritime sovereignty”.323 Two years later in May 2014, the CNOOC deployed the HYSY 981 seventeen nautical miles south to Triton Island in the Paracel Islands, within the Vietnamese EEZ, which led to a PRC deployment of large fleet of CCG, civilian and naval vessels around the platform. The HYSY 981 deployment caused some ship collisions between Chinese and Vietnamese vessels during the deployment as Vietnam sought to defend territorial claims and China sought to protect a state asset. For unstated reasons the CNOOC withdrew the HYSY 981 to a new location on 27 May 2014 and withdraw it from the area a month ahead of schedule on 15 Jul 2014.324
The Chinese deployment of a large fleet of CCG, civilian and naval vessels around the platform demonstrated the impacts of the preferences of the NOCs on China’s SCS policy and actions. The withdrawal of the HYSY 981 after several weeks’ standoffs demonstrated China’s implementation of its SCS policy “construction of a peaceful and cooperative relationship with Vietnam and other neighbouring countries” but in consideration of the interests of the NOCs, one of
321 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, p.6 322 Chinese State Council, “The 12th 5-Year Plan for the Development of National Strategic Emerging Industries”, Article 4 , 9 July 2012, accessed 10 July 2020 323 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, p.8 324 Michael Green, Kathleen Hicks, Zack Cooper, John Schaus and Jake Douglas, ‘Counter- Coercion series: China-Vietnam Oil Rig Standoff’, Asia Maritime Transparency Initiative, 12 June 2017, accessed 8 July 2020, https://amti.csis.org/counter-co-oil-rig-standoff/ 88 its significant domestic interest groups. Most recently, China has pressed for the termination of a Vietnamese offshore development with Rosneft Vietnam, a joint Russia-Vietnam venture. It was reported that China’s Foreign Minister Wang Yi had asked his Russian counterpart Sergei Lavrov on the sidelines of an ASEAN ministerial meeting in August 2019 for Moscow’s Rosneft to abandon its offshore exploration with Vietnam.325 The Russian abandonment of its oil and gas exploration with Vietnam would benefit the NOCs, particularly the CNOOC. Once again, it can be said that China’s actions and diplomatic response to the deployment of the HYSY 981 were influenced by the NOCs interests, another key domestic groups.
In summary, this dissertation argues that China’s SCS policy during the last decade was influenced by the interests of the key domestic groups. The key domestic groups lobbied and advocated for their political and economic development under the name of asserting Chinese sovereignty in the SCS. By using the ideal of asserting Chinese sovereignty in the SCS, domestic interest groups would almost always get support, by one way or another, from the Chinese government as asserting Chinese sovereignty in the SCS would address one of the domestic challenges the CCP currently faces; the need to exercise on- going attention on territorial control. It is important to note that although the key domestic interest groups have a shared support for assertiveness in the SCS, their preferences are different. Satisfying the diverse interests of key domestic groups whilst resourcing to address current domestic challenges would be a comprehensive task for the CCP.
3.3 Conclusion
This chapter analysed China’s current domestic environment and assessed the implications of the perceived domestic challenges for Chinese foreign policy with regards to the SCS dispute. It showed that despite the image of a rising China, the
325 Helen Clark, ‘Oil and gas fuelling South China Sea tensions’, Asia Times, 22 July 2020, https://asiatimes.com/2020/07/oil-and-gas-fueling-south-china-sea-tensions/ 89
Chinese current domestic environment had some issues due to economic slowdown, corrupt government, income inequality, internal violent conflicts and the need for on-going attention towards territorial control. The chapter proposed the compounded effects of these domestic challenges on the CCP would be an effort to increase economic growth; to ensure the economic growth benefits are spread evenly to different domestic groups and ultimately to increase CCP regime legitimacy.
‘The chapter highlighted key domestic interest groups involved in China’s SCS policy making and emphasised that their preferences were not overlapped. The CCG main interest is the enforcement of fisheries law, maritime law and safeguarding security at sea; the local governments focused on GDP growth; the PLA(N) focuses on offshore defence strategy and the Chinese NOCs were interested in expanding oil exploration in the disputed water in the SCS. Because their preferences were not overlapped, it was difficult for these key domestic interest groups to define and endorse a ‘win-set’ or a probable outcome for negotiation at international level. The chapter argues that China’s SCS policy during the last decade was influenced by the interests of the key domestic groups. The key domestic groups lobbied and advocated for their political and economic development under the name of asserting Chinese sovereignty in the SCS. As such, domestic interest groups would assure support from China government because asserting Chinese sovereignty in the SCS would assist the CCP to address one of the domestic challenges, the need to exercise on-going attention on territorial control.
The Chapter applied the principles of the interconnection between international and domestic spheres of the two level game theory to analyse the implications of Chinese domestic challenges on its SCS policies. The domestic challenge implications on China’s SCS policy is that China must manage the SCS dispute in a way that advances its interests but also not to escalate its domestic challenges. Additionally, Chinese SCS policies also need to take into account the preferences of key domestic interest groups, such as the PLA(N)’s interests in offshore
90 defence and security of Chinese sovereignty and the local governments’ interests in expanding their fisheries and tourism industries, and the NOCs interests in exploiting oil reserves and oil exploration in the disputed waters of the SCS. This dissertation argues that by meeting the PLA(N)’s interests in offshore defence and security of Chinese sovereignty, the CCP could also address two current domestic challenges which are regime legitimacy and territorial integrity. By meeting the local governments’ interests in expanding their fisheries and tourism industries, and NOCs interests in exploiting oil reserves and oil exploration in the disputed waters of the SCS, the CCP could also initiate economic growth to address current domestic concern over this issue.
Chinese current SCS policies encompass (1) the enhancement of its SCS presence by land reclamation, deployment of weapons and other assertive activities and (2) efforts in the construction of a peaceful and cooperative relationship with Vietnam and other neighbouring countries. This dissertation argues that the formal policy is designed to address the interests of the PLA(N), local provincial governments and NOCs and at the same time, to address the current domestic challenges in regime legitimacy, territorial integrity and economic growth. The latter policy is designed for China to avoid an armed conflict in the SCS so that its domestic challenges would not be escalated. As I mentioned earlier, an armed conflict would be costly and not desirable for China whilst economic development is one of the CCP’s current concern. Additionally, the defence capability of SCS claimants including Vietnam and the Philippines has increased significantly in the past decade with a focus on naval and air platforms, including anti-access/area-denial capabilities.326 The increased military capabilities of these nations would make it more difficult and costly for China to enter an armed conflict. In summary, the dissertation has demonstrated the implication of
326 Colonel Jason Blain, ‘The Dragon and The Eagle in the South China Sea: is conflict between China and the US inevitable?’, Australian Defence Force Journal, Issue 197, July 2015, accessed 10 July 2020, https://www.defence.gov.au/ADC/ADFJ/Documents/issue_197/Blain_July_2015.pdf 91
Chinese domestic factors including concerns over economic growth, regime legitimacy and territorial integrity on China’s SCS policies.
The plausible application of the two-level game theory in Chinese current domestic context is certainly a significant contribution to the current literature seeking to explain China’s behaviour in the SCS. The dissertation will now move to the next chapter where the Vietnamese present domestic environment will be analysed together with foreign policy options available to react to China’s actions in the SCS contention.
92
Chapter IV: Vietnam’s Domestic Environment and Limited Foreign Policy Options
This chapter addresses the second sub-research question, ‘What are Vietnam’s current domestic challenges and how these challenges have affect Hanoi’s foreign policy for the SCS at present?”. The chapter seeks to systematically analyse Vietnamese state weaknesses and assess the implications of the perceived state weakness for CPV foreign policy toward China’s behaviour in the SCS. To achieve these objectives, the chapter is broken up into three sections, the first section focuses on the Vietnam’s current domestic challenges around government’s performance in three critical spheres of economy, politics, and security as well as Vietnamese key domestic interest groups and their preferences. Section two analyses the implications of Vietnamese underlying domestic issues on their formation of strategies toward China in the SCS dispute and Section three provides some concluded findings. The chapter argues that the preferences of key domestic interest groups in Vietnam are not the same. However, the influences of key domestic groups to policy making in Vietnam would not be the same as have been observed in China, because the domestic challenges that the CPV has been facing are different to the domestic challenges that the CCP is facing. Vietnam currently has some domestic challenges including reduced economic growth and widened income inequality; questionable regime legitimacy and struggles in dealing with China in the SCS dispute. Regardless, Vietnam must confront China if it is to protect its SCS sovereignty. Most certainly, Vietnam’s current domestic challenges pose some limitations for the CPV’s ability to formulate an effective SCS policy.
4.1 Vietnam’s Current Domestic Challenges
This dissertation investigates Vietnamese current domestic challenges in three critical domains (1) the capability to foster equitable and sustainable economic growth; (2) the capacity to establish and maintain legitimacy; (3) and the capability to secure population from conflict and to control territory. Firstly, this
93 dissertation provides evidence showing that the CPV has some challenges in fostering sustainable and equitable economic growth.
4.1.1 Challenges in fostering sustainable and equitable economic growth
Vietnam’s historical economic reform, the ‘Doi Moi’ was the change from a centrally-planned to open-market economy in 1986 that transformed Vietnam from one of the world’s poorest nations, with an income per capita of around US$100 in 1990, to a lower middle income nation with an income per capita of over US$2000 in 2014.327
During the period 1990 and 2010, Vietnam’s annual GDP rate experienced high growth, averaging seven percent per year (Figure 13) and experts offered different justifications for the high economic growth. The key for this success included: domestic savings and domestic investment;328 foreign direct investment;329 dynamic demographic changes leading to increases in labour force and decrease in dependency ratio;330 increases in aid inflow331and also an increases in the tourism industry into Vietnam.332 However, Vietnam’s GDP growth rates reduced to an average of 6.4% per year during the period 2010 – 2017 and only 6.2% in 2016 (Figure 7).
327 The World Bank, Vietnam Overview, accessed on 31 January 2018, accessed 20 October 2018, http://www.worldbank.org/en/country/vietnam/overview. 328 Nhung Thi Kim Nguyen and Hiep Huu Nguyen, “Impact of domestic Saving on Economic Growth of Vietnam”, Asian Journal of Economic Modelling, Vol 5, No. 3, (2017): 245-252. 329 Nhung Thi Kim Nguyen, “The Long Run and Short Run Impacts of Foreign Direct Investment and Export on Economic Growth of Vietnam”, Asian Economic and Financial Review, Vol 7, No. 5, (2017), 519-527. 330 Minh Thi Nguyen, Dynamic Demographics and Economic Growth in Vietnam, DEPOCEN working paper series No. 2008/24, accessed 20 October 2018, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.576.9323&rep=rep1&type=pdf. 331 Jai S. Mah, “Globalisation and Aid Inflows in the Economic Growth of Vietnam”, The Global Economy Journal, Vol. 13, Issue 1, (2017). 332 Wurong Shih and Ninh T.H. Do, Impact of Tourism on Long-run Economic Growth of Vietnam, College of Business, (Taiwan: University of Science and Technology, 2017). 94
GDP Growth Total GDP (Billion Percentage US$) 10 250 9 8 200 7 6 150 5 4 100 3 2 50 1 0 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Total GDP GDP Growth %
Figure 7: Vietnam’s trend of GDP growth percentage and total GDP, 1985 to 2017
Source: World Development Indicator, Databank, the World Bank 2019
As presented in Chapter Three, economic development is a basic condition sustaining a political system whilst the stability of a given regime depends upon the effectiveness and legitimacy of that political system.333 Historical data about political economy suggests that short or medium-term fluctuations in economic growth can have a notable effect on the populations support to the regime.334
With the aforementioned in mind, it is understandable that the CPV has made a priority in sustaining its economic growth in order to strengthen its regime legitimacy. For instance, in 2007, the CPV created the ‘Vietnam’s Maritime Strategy 2020’, which included an aim to transform Vietnam into a maritime economy. Vietnam’s main plan was to develop the maritime economy which includes trade, fisheries, as well as gas and oil exploration to 60% of GDP by
333 Seymour Martin Lipset, “Economic Development and Political Legitimacy”, The American Political Science Review, Vol. 53, No. 1, (March 1959): 86. 334 Clarke, H., Ditt, N. and Kornberg, A, “The Political Economy of Attitudes toward Polity and Society in Western European Democracies”, Journal of Politics, Vol 55, (1993): 998–1021. 95
2020.335 However, being faced with China’s carrot-and-stick policy, the CPV could only implement this strategic plan effectively if there was no confrontation with China in the SCS. Therefore, Vietnam was faced with a dilemma in finding the right approach to deal with China and at the same time to protect and develop its maritime economic interests.
An equally significant challenge for the CPV is its ability to distribute economic growth equitably. The World Bank reports that promoting shared prosperity remains a challenge for Vietnam because in 2018, around 30% of the population was still not classified as economically secure. The average per capita consumption of ethnic minorities remains less than 45% of the Vietnamese majority ethnicities of the Kinh and Hoa.336 Also, income increases have been centred mainly in the large cities and in the regions that have export-oriented economic activities; whilst the Northwest and Central Highlands regions have experienced notably slower economic growth.337
The urban-rural economy and living standard gap remained substantial in 2015.338 Thus, there are increasing concerns about the rising gap between the very wealthy and the everyday Vietnamese citizen.339 Fergus Hason illustrated in the case of Indonesia, income inequality had caused challenges to economic diplomacy and domestic political discontent as well as people losing faith in their
335 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy”, ASIA Maritime Transparency Initiative, December 6, 2018, accessed 2 May 2019, https://amti.csis.org/vietnam- should-update-south-china-sea-strategy/. 336 The World Bank, Vietnam continues to reduce poverty, April 5, 2018, accessed 2 May 2019, https://www.worldbank.org/en/news/press-release/2018/04/05/vietnam-continues-to- reduce-poverty-according-to-world-bank-report. 337Milo Vandemoortele and Kate Bird, “Vietnam’s progress on economic growth and poverty reduction: impressive improvements”, Overseas Development Institute, June 2011, 8-9, accessed 2 May 2019, https://www.odi.org/publications/5057-vietnam-viet-nam-economic-growth- poverty-development-progress. 338 Do Trang Thu, Nguyen Thi My Hanh and Vu Thu Trang, “A comparative study on the self- help approach in rural development between Vietnam’s new rural development and Korea’s Saemaul Undong”, Journal of East Asian Economic Integration, Vol. 20, No. 1, (2016): 91-125. 339 The World Bank, Taking Stock: An Update on Vietnam’s Recent Economic Developments (July 2014), accessed 2 May 2019, http://www.worldbank.org/en/news/feature/2014/07/08/key- findings-of-taking-stock-an-update-on-vietnams-recent-economic-developments-july-2014. 96 government.340 As previously analysed in Chapter Three, the issues were also applicable for China. Thus, similar to the CCP, the CPV currently faces some challenges in fostering a sustainable and equitable economic growth. The implication of these challenges on the CPV’s SCS policy will later be analysed below in Section 4.2.
4.1.2 Challenges in maintaining regime legitimacy
Focus in this sub-section will analyse the CPV performance in the second domain which is the capacity to establish and maintain regime legitimacy. Since 1986, the legitimacy of the CPV has been bedded on a number of sources such as the legacy and leadership of Ho Chi Minh, successes in the defence of Vietnam from foreign occupation,341 and performance legitimacy through poverty reduction and higher rates of economic growth.342
In relation to performance legitimacy through high economic growth, Stephen Sherlock once argued that the quality and efficiency of the country's political institution ultimately underpins its economic growth.343 In Vietnam, socio- economic performance became the single most important source of CPV legitimacy in the mid-1980s.344 However, the current struggle to sustain economic growth shows that the CPV’s performance-based legitimacy has been undermined and numerous socio-economic problems certainly cast doubt on the
340 Fergus Hason, “Indonesia Poll 2012: Shattering stereotypes: Public Opinion and Foreign Policy”, Lowy Institute, 2012, accessed 2 May 2019, http://www.lowyinstitute.org/publication/indonesia-poll-2012-shettering-stereotypes-public- opinion-and-foreign-policy. 341 Carlyle Thayer, “Political Legitimacy of Vietnam’s One Party-State: Challenges and Responses”, Journal of Current Southeast Asian Affairs, Vol 28, No. 4 (2010): 47-70. 342 Le Hong Hiep, “Performance-based legitimacy: The Case of the Communist Party of Vietnam and Doi Moi”, Contemporary South East Asia, Vol 34, No. 2, (2012): 146-147. 343 Stephen Sherlock, “Democratic Achievement and Policy Paralysis: Implications for Indonesia's Continued Ascent” in Indonesia's Ascent, eds., Christopher B. Robert, Ahmad D. Habir and Leonard C. Sebastian, (New York: Palgrave MacMilan, 2015), 112-129. 344 Le Hong Hiep, ‘Performance-based legitimacy: The Case of the Communist Party of Vietnam and Doi Moi’, Contemporary South East Asia, Vol 34, No. 2, (2012): 145-172. 97 accountability and efficiency of the Communist state and single party system.345 Consequently, this has limited its ability to maintain a universal legitimacy amongst the population.
In relation to defending the country from foreign occupation, Anton Tsvetov suggests that in Vietnamese political tradition, the nation-building story of Vietnam revolved not so much around communism or ‘Ho Chi Minh thought’, but mainly the constant struggle of the Vietnamese people against foreign occupation and control. The CPV usually sees itself as deserving a monopoly on power as it was the force that consolidated power and defeated the French, the US, and then repelled Chinese invasion in 1979 on the Vietnamese northern border.346 However, the CPV was strongly questioned by the Vietnamese population in June 2018 because of the proposal to offer new Special Economic Zones (SEZs) in three highly important geographic locations, each with a 99-year lease. It was Chinese companies that were the leading contenders to be the main beneficiaries of these business areas.347 Nguyen Quang Dy argued that “Chinese firms would hold and control the SEZs as a ‘soft invasion without fighting’ as prophesied in Sun Tzu’s Art of War as a key way to achieve a battle less victory.348 Thus this would allow Chinese firms unilateral control of SEZs and the CPV could be seen as undermining Vietnam’s independence, and eroding the legacy and vision of modern Vietnam’s founding father; Ho Chi Minh. By offering the Chinese firms the unilateral control of SEZs during the 99 year lease, the CPV seems to have not holistically considered the Chinese’s soft invasion ability. In this circumstance, the CPV could be considered as not fulfilling its responsibility in defending the country from foreign occupation. Inability in defending its sovereign rights would be a political suicide for both the CPV and the regime.
345 Le Hong Hiep, “Vietnam in 2015: Challenges Persist amidst Hope for Change” in Southeast Asian Affairs, eds., Malcolm Cook and Daljit Singh (Singapore: ISEAS–Yusof Ishak Institute, 2016), 363-378. 346 Tom Fawthrop in “Sons of Revolution: Vietnam’s New Protest Movement”, The Diplomat, December 17, 2018, accessed 2 May 2019, https://thediplomat.com/2018/12/sons-of-revolution- vietnams-new-protest-movement/. 347 Ibid. 348 Ibid. 98
The CPV therefore should not neglect the importance of its SEZs in the country’s sovereignty and in the SCS policy.349 Once again, the CPV is placed in a dilemma when allowing Chinese investments in Vietnam is for improving economic growth, but this also poses some challenges in maintaining its legitimacy.
On the sea front, a second notable historical battle occurred at Johnson Reef in the Spratly Islands in 1988, which saw a tactical loss which resulted in a strategic defeat of Vietnam. China successfully occupied the island group, obtaining a significant conquest without imposing significant costs to the Vietnamese military; but causing a key loss to the CPV and Vietnam.350 The SCS dispute then became an on-going issue that challenged the CPV legitimacy. This dissertation will investigate the challenges the CPV could endeavour in securing the population from violent conflict and territory control in the next section.
4.1.3 Challenges in securing the population from conflict and territorial control
Violence and conflict amongst the population has been seen in different forms of protests in Vietnam in the late 1990s into the 2000s and they show a notable decay of the party-state apparatus and demonstrate that there are challenges of social instabilities in the country. 351 When unrest occurred in the northern province of Thai Binh between 1997 and 1998, it became a comprehensive socio-political crisis caused by political, economic, opportunity inequalities as well as widespread corruption at the local level.352 This unrest suggested that the governance at the time had difficulties in maintaining political stability and securing the population from violence. Roughly a decade later in 2012 in the Hung Yen Province, peasants
349 Bennett Murray, ‘Vietnamese see special economic zones as assault from China’, This Week in Asia, 7 June 2018, assessed 1 September 2020, https://www.scmp.com/week- asia/politics/article/2149785/vietnamese-see-special-economic-zones-assault-china 350 Koh Swee Lean Collin and Ngo Minh Tri, “Learning From the Battle of the Spratly Islands, The Diplomat, March 20, 2018, accessed 2 May 2019, https://thediplomat.com/2018/03/learning- from-the-battle-of-the-spratly-islands/. 351 Hai Hong Nguyen, Political Dynamics of Grassroots Democracy in Vietnam, (New York: Palgrave MacMillan, 2016), 2. 352 Ibid, 85-116. 99 protested over societal inequities that slowed the progress of the Ecopark investment project353 in which the CPV deployed up to 4,000 riot police and non- uniformed personnel to evict 2,000 peasants from their land. The protestors were evicted by force, beaten by riot police and given no right of appeal or empathy on their plight from the commune’s people council.354
The unrest in Hung Yen illustrated not only showed mismanagement of land resources, but also that the economic and political elites were willing to deprive peasants from peri-urban land355, this fed into a narrative of the local government’s lack of accountability and inability to voice the local inhabitants concerns. Bob Lowry described the protests and this type of riot a separatist action and he presented in an Indonesian context that all of these movements came about as a consequence of the failure of a government to appreciate the economic and political interests of the people concerned.356 This dissertation proposes the unrest in Thai Binh and Hung Yen provinces are examples of internal conflicts which the CPV failed to prevent. Such internal conflicts are not desirable for the CPV and the efforts to resolve these conflicts could compromise the CPV’s capability in dealing with other matters.
Presently, the CPV capacity to control territory is being challenged by the SCS dispute. CPV actions thus far are considered ineffective in response to China’s encroachment of Vietnam’s SCS territorial integrity and national sovereignty.357
353 Ecopark project obtained approval from the central government in 2004 to reclaim land in a total area of about 555 hectares spreading over three districts and 12 communes and town in Hung Yen (Prime Minister’s Decision Number 742/QD-TTG of 30 June 2004). The project is to develop residential villas, apartments and high-rise condominiums as well as shop-front houses and it is regarded as an opportunity to contribute to the urbanisation strategy of Hung Yen province and the entire east are of Hanoi (Gia Minh, Nong dan Van Giang ratuyenboquyet cam tu giudat - Peasants in Van Giang declared self-scarified to keep their land, 2013, RFA). 354 Hai Hong Nguyen, Political Dynamics of Grassroots Democracy in Vietnam, 117-144. 355 Danielle Labbee, “Media Dissent and Peri-urban Land Struggles in Vietnam: the case of the Van Giang Incident”, Critical Asian Studies, Vol 46, issues 4, (2015): 495-513. 356 Bob Lowry, “Key security fault lines – unresolved issues and new challenges”, in Indonesia’s Ascent – power, leadership and the regional order, eds., Christopher B. Robert, Ahmad D. Habir, and Leonard C. Sebastian (New York: Palgrave McMillan, 2015), 103-104. 357 Do Thanh Hai, “Vietnam: riding the Chinese tide”, The Pacific Review, Vol 21, Issue 2, (2018): 205-220, accessed 2 May 2019, https://www.tandfonline.com/doi/full/10.1080/09512748.2017.1377282?src=recsys& 100
As Vietnam’s sea battle with China in 1988 shows, the dispute has resulted in infringements on territorial integrity. The recent CPV cessation order of gas and oil exploration, which has twice involved cooperation with the Spanish company Repsol, starts to show that Vietnam has been conceding to China’s expansion in the SCS. It also starts to make the CPV be seen as ineffective and an uncertain entity for international companies to deal with. As mentioned earlier, Vietnam’s traditional SCS strategies, so far, have not assisted Vietnam to completely solve the dispute with China and Vietnam is still entangled in the web of national sovereignty, the economy, and diplomatic reputation challenges.358 However, this dissertation contends that Vietnam’s creation of its SCS strategies is a result of its consideration of domestic environment and this will be analysed later on in Section 4.2 below.
In summary, this section argues that Vietnam’s current domestic environment contains critical issues including economic slowdown, income inequality internal violence, and the CPV’s lack of ability to solve territorial sovereignty disputes. All of these challenges are interconnected and have impacts on the CPV legitimacy. The next section will investigate key Vietnamese domestic interest groups, their preferences and involvement in the Vietnamese SCS policy making process.
4.1.4 Vietnam’s Primary Domestic Interest Groups The key domestic actors involved in the SCS policy making process in Vietnam are governmental ministries including law enforcement agencies and government commercial ventures. The most active groups during the last decade were the Ministry of Defence, the Vietnamese Coast Guard (VCG), the Vietnam Fisheries Resources Surveillance, and Petrovietnam, the country's largest oil producer and second-largest power producer.
The Ministry of Defense’s key tasks and interests are ensuring the nation’s maritime security and sovereignty. The Ministry of Defence has been actively
358 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy”. 101 investing in hard power technology improvements with significant investments in submarines, anti-submarine warfare capability, naval surveillance and patrol vessels. The Ministry of Defence signed a US$ 2 billion contract with Russia in 2009 to buy six Kilo-class submarines to strengthen its maritime force and established a modern submarine fleet in 2013, after the delivery of the first submarine, the symbolically named, HQ-182 Hanoi.359 To support this sea capability, an additional number of SU-30 aircraft significantly enhanced the anti-access/area-denial naval capability, thus protecting Vietnam’s sovereignty and interests in the SCS.360
The VCG was restructured in 2013, based on the former Marine Police unit, and placed under the direct command of the Minister of Defence. The VCGs main interest is law enforcement in the contested area via deployment of vessels during confrontations to demonstrate the country’s sovereign right and jurisdiction via civil domestic authority; such action is intended to avert escalation or military confrontation through use of naval vessels.361 The restructure of the VCG is to improve the country’s civil sea law enforcement capability and is also part of the hard balancing strategy.
The Vietnam Fisheries Resources Surveillance was also established in 2013 under Vietnam Directorate of Fisheries, also as a law enforcement capability. The agency focuses on improving protection of the country’s sovereign rights relating to fisheries within its EEZ.362 The agency’s involvement in the SCS dispute is also aligned with Vietnam’s decision to have a hard power balance against China.
Petrovietnam is wholly owned by the Vietnamese central government, and responsible for all oil and gas resources in the country. Petrovietnam has
359 Prashanth Parameswaran, ‘Vietnam Gets Fifth Submarine from Russia’, The Diplomat, 10 February 2019, accessed 10 July 2020, https://thediplomat.com/2016/02/vietnam-gets-fifth- submarine-from-russia/ 360 Tran Truong Thuy, Rebalancing: Vietnam’s South China Sea Challenges and Responses, National Asian Security Studies Program Issue Brief, No. 2.3 December 2016, p.15 361 Prashanth Parameswaran,‘Why Vietnam’s New Coast Guard Law Matters’, The Diplomat, April 14, 2018, accessed 2 April 2020, https://thediplomat.com/2018/04/vietnam-coast-guard- in-the-spotlight-with-new-law/ 362 Tung Nguyen Vu, Vietnam’s Security Challenges : Hanoi’s New Approach to National Security and Implications to Defense and Foreign Policies, 2014 102 continued to affirm its role as one of leading economic groups in the country, contributing to Vietnam’s GDP growth of 6.98% in the first nine months of the year 2019.363 The company’s main interest is oil and gas exploitation in the SCS. The status of Petrovietnam has risen amongst the domestic groups as Vietnam has given a high priority to the oil and gas industry, a large feature of Vietnam’s maritime strategy toward the year 2020. The company has become Vietnam’s largest corporation, accounting for about 20% of GDP and generating 25 to 30% of annual government revenue by the 2020 decade period.364 The company has rarely openly admitted that SCS tensions have had an adverse impact on its offshore exploration and production fields but has once stated the SCS tension had hurt its offshore operations.365
This section has shown that the preferences of key domestic interest groups in Vietnam are not the same. One would expect that their interactions with the CPV in the SCS policy making process would be somehow similar to what had been observed between Chinese key domestic groups and the CCP. However, the influences of key domestic groups to policy making in Vietnam would not be the same as have been observed in China, because the domestic challenges that the CPV has been facing are different to the domestic challenges that the CCP is facing. Both economic development and security are Vietnam’s strategic interests. Without sustainable economic development, which is significantly contributed to by the oil and gas industry and fishing industry, Vietnam would have constraints in funding military modernisation for security enforcement. On the other hand, without a capability for security enforcement, Vietnam’s
363 Petrovietnam, Petrovietnam achieves total revenue of over 560 trillion dong, making important contribution to GDP growth, October 4, 2019, accessed 2 April 2020, http://www.pvn.vn/sites/en/Pages/detail.aspx?NewsID=1611b7fd-8621-47dd-9652- 71b0a00008c9 364 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, Crisis Group Asia Report N°275, 26 January 2016, accessed 1 July 2020, https://www.crisisgroup.org/asia/north-east-asia/china/stirring-south-china-sea-iv-oil- troubled-waters 365 Khanh Vu, In rare comment, Petrovietnam says South China Sea tension to hurt offshore operations, Reuters, April 3, 2018, accessed 2 April 2020, https://www.reuters.com/article/us- southchinasea-petrovietnam/in-rare-comment-petrovietnam-says-south-china-sea-tension-to- hurt-offshore-operations-idUSKCN1HA0QO 103 economic development would be compromised. In other words, there seems to be a strong interdependence between the main interests of Ministry of Defence, the VCG, the Vietnamese Fishing Industry and Petrovietnam. Additionally, most of the key domestic interest groups in Vietnam have been established as a CPV’s mechanism of hard-balancing with China,366 therefore, the domestic interest groups strategy toward the SCS seems to be more aligned with the CPV’s strategy. More analysis on the influence of key domestic interest groups on the CPV’s SCS policy making will be presented in the next section.
In the next section, this dissertation will analyse how the preferences of the above identified domestic interests groups and the current domestic challenges impact on Vietnam’s policy options in the SCS.
4.2. Vietnam Policy Options in the SCS
Implications of current domestic challenges
The SCS dispute has certainly brought economic development and territorial sovereignty to the forefront of CPV political strategies, especially economic and social. These two issues are equally important for CPV longevity and in an ideal situation; they should not be traded off against one another. As mentioned in Chapter Two, Vietnam’s current SCS polices have entailed four main strategies namely internationalising the dispute, using a multilateral framework to address the dispute, creating a credible military deterrent to China, and direct engagement with China. These strategies have shown some limitations. For example, internationalisation assumes that the reputational cost would be sufficient to discourage China’s pressure but the pattern of Chinese behaviour in the SCS shows that those costs have been insufficient.367 Multilateral discussions on the SCS in the ASEAN meetings have also been unproductive. The current
366 Tran Truong Thuy, ‘Vietnam’s Maritime Security Challenges and Responses’, in NIDS Research Paper, series 13, Security Outlook of the Asia Pacific Countries and its Implications for the Defense Sector, http://www.nids.mod.go.jp/english/publication/joint_research/series13/pdf/08.pdf 367 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy”. 104
Vietnamese SCS policies are past their ‘use by date’ and expose the country to many levels of consequential challenges and negative outcomes, including to national sovereignty, diplomatic reputation and the economy, thus scholars and contemporary literature all strongly suggest that Vietnam needs to update its SCS polices.368
However, as shown in Section one of this chapter, Vietnam currently has some constraints in maintaining economic growth, regime legitimacy and territorial sovereignty and these domestic challenges might limit Vietnam’s options in relation to the SCS policy. This dissertation is going to explain why Vietnam has adopted the above-mentioned four-component strategy, given those domestic challenges. Firstly, socio-economic performance is an important source of legitimacy for the CPV369 therefore Vietnam set out “Vietnam’s Maritime Strategy 2020” to increase the size of its maritime economy to 60% of total GDP by 2020. The implementation of “Vietnam’s Maritime Strategy 2020” needs to be placed in the context of China’s applying the carrot-and-stick strategy, which seemingly rewards friendly nations and punishes those who publicly contest its SCS claims. Being at the doorstep of China, Vietnam has perhaps most strongly felt China’s economic weight and threat from physical presence. Vietnam could only achieve its SCS maritime strategy without any conflicts with or punishments from China.
This is one of the reasons why Vietnam has avoided direct confrontation with China by the utilisation of internationalising the SCS dispute and using multilateral frameworks to address any issues.370 For instance, after the Arbitral Tribunal delivered its decision on the maritime dispute case brought forward by the Philippines against China over Chinese actions in the Spratly Islands on 12 July 2016, Vietnam chose not to pursue the legal precedence it could have used
368 Ibid. 369 Le Hong Hiep, “Performance-based Legitimacy: The Case of the Communist Party of Vietnam and Doi Moi”, Contemporary Southeast Asia, Vol 34, No. 2, (2012): 145-172. 370 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy” 105 from the Tribunal’s outcome.371 Should Vietnam have considered any use of the Tribunal outcome or legal precedence to advance against China in the SCS dispute, severe Chinese diplomatic wrath may well have occurred, and economically, it would have likely served many negative consequences. Most certainly, negative consequences have already been served upon Vietnam, an example of such Chinese wrath came in June 2017 when China’s Central Military Commission Vice chairman, Fan Changlong, abruptly reduced the timeframe of an official visit to Vietnam after Hanoi rebuffed a Chinese request that the Spanish company, Repsol, stop its oil and gas exploration in Block 136-06.372 Hanoi’s refusal led to a spike in tensions between Hanoi and Beijing and a year of on-going pressure from China. As a result, Vietnam ceased oil and gas exploration cooperation with Repsol to avoid continued Chinese SCS coercion.373
It could certainly be strongly argued the CPV is aware of the capability differences between China and Vietnam are permanent, significant, and multidimensional.374 Thus, the CPV’s number one priority vis-à-vis China is seemingly to be autonomous not superior. The challenge then is for the CPV to formulate a SCS policy which could protect Vietnam’s sovereignty and, importantly, is feasible to implement in consideration of the current domestic challenges. Issues for the CPV to consider in the context of the SCS territorial disputes include the increased likelihood of armed conflict, interruption in economic ties or territorial losses.375
371 Carlyle A. Thayer, “Vietnam’s strategies in the South China Sea”, East Asia Forum, July 28, 2017, accessed 2 May 2019, http://www.eastasiaforum.org/2017/07/28/vietnams-strategies-in- the-south-china-sea/ 372 Ankit Panda, “Vietnam Requests Spain’s Repsol Suspend Work in Disputes South China Sea Oil Block”, The Diplomat, March 25, 2018, accessed 2 May 2019, https://thediplomat.com/2018/03/vietnam-requests-spains-repsol-suspend-work-in-disputed- south-china-sea-oil-block/. 373 Huong Le Thu, “Vietnam Should Update Its South China Sea Strategy”. 374 Brantly Womack, “Asymmetric Rivals: China and Vietnam”, in Asian rivalries: Conflict, escalation and limitations on two-level games, eds., Sumit Ganguly and William R. Thompson, (Standford University Press, 2011). 375 Chien-peng Chung, “Domestic Politics, International Bargaining and China’s Territorial Disputes”, 21. 106
Historically, there have been cases where claimant countries concede territory for other benefits. For instance, the Soviet Union in May 1991 signed a border agreement with China transferring to China the island of Damansky / Zhenbao, the site of two military actions between Chinese and Soviet soldiers in March 1969. Academic, Chien Peng Chung argued that at the time, Moscow strongly focussed on restructuring a Soviet economy that was nearly bankrupt and also to reduce military pressures with its neighbours and the much economically stronger democratic west. Therefore, Russia gave up its territorial right over the Damansky/Zhenbao Island to gain an outcome on the border problem in the Far East. Consequently, this enabled Russia to bring its costly military presence down and attract investment and trade into the area from around East Asia and other countries.376
In the contest of the current SCS dispute, the Philippines seem to have set a precedent that other claimants will compromise their SCS position for an economic benefit. The ‘fall of dominos’ is commencing with the Philippine President, Rodrigo Duterte, announcing a willingness to work with China and receiving a US$11 Billion incentive package.377 Certainly, what is unknown is what the negotiations behind the incentive package were; but most importantly, what were the possible threats and negative consequences for not conceding. To the Vietnamese, their territorial rights over the Spratly and Paracel islands are ideologically rested on historical declarations of sovereignty back in the 17th century 378 and based now on international law.379 The dispute on the Paracel is also a bitter memory for many Vietnamese due to the battle casualties at Gac Ma in 1988. Vietnam’s position against the SCS Sino-Vietnamese dispute has been challenged as CPV action in response to China’s encroachment of its territorial
376 Chien–Peng Chung, “Resolving China’s Island Disputes: A Two-Level Game Analysis”, Journal of Chinese Political Science, Vol. 12, no. 1, (2007). 377 Tom Phillip, “Has Duterte really ditched the US for Beijing's embrace?”, The Guardian, October 21, 2016, accessed 2 May 2019, https://www.theguardian.com/world/2016/oct/21/has- philippines-president-rodrigo-duterte-really-ditched-the-us-for-beijings-embrace#img-2. 378 Ian Storey, South China Sea Dispute, Flipside Digital Content Company Inc., 2017 379 Dzurek, Daniel J. and Schofield, Clive H, “The Spratly Islands dispute: who's on first?”, 1996, IBRU. p. 8. ISBN 978-1-897643-23-5. 107 integrity and sovereignty in the SCS has been considered low-profile.380 This directly links to the question about the CPV’s legitimacy and as mentioned above, maintaining regime legitimacy is currently a domestic challenge for Vietnam.
In other words, the CPV cannot afford to divert from pursuing its SCS sovereignty because this further escalates a current domestic challenge which is the ever enduring question about the CPV’s legitimacy to unilaterally rule. The dilemma is that pursuing SCS rights might upset China and thus jeopardise the CPV’s performance in economic growth which in turn could see China take advantage of this dilemma for advancement the SCS dispute in their favour. Thus the CPV is left in a quandary, poor economic performance may lead to governmental collapse and political unrest and on the other hand, compromising the nation’s sovereignty might damage the CPV’s legitimacy. To the Chinese, control of the Spratly and Paracel islands could ultimately assist China in monopolising the SCS and strengthen the legitimacy for the CCP. In other words, the space for negotiation in relations to territorial sovereignty over the SCS is limited because territorial sovereignty is crucial for both the CPV and the CCP. The Vietnamese Prime Minister Nguyen Xuan Phuc’s announcement in January 2019, that Vietnam wanted to enhance economic ties with China but would defend its interests and sovereignty in the SCS, illustrated the CPV’s position in the disputes.381
Nevertheless, taking military action to settle the SCS dispute in Vietnam’s favour is most certainly out of the question as Vietnam is no match to China in relation to military capability and a Vietnam’s military victory. Regardless, this is one of the reasons why Vietnam has adopted the strategy of developing a credible military deterrent which despite not being able to ‘win’ a conflict, would certainly militarily ‘cost’ China dearly and thus forces a need for direct political
380 Lye Liang Fook and Ha Hoang Hop, “Vietnam’s Responses to China’s Maritime Assertiveness in the South China Sea”, Perspective, No. 50 (August 2018): 1-10. 381 Kenji Kawase, “Vietnam seeks more trade with China but will defence interests: PM”, NIKKEI Asian Review, January 24, 2019, accessed 2 May 2019, https://asia.nikkei.com/politics/international-relations. 108 engagements. For instance, Vietnam’s recent military modernisation has been set toward defence and, if needed, the conduct of defensive attacks against the PLA elements to push China toward a situational de-escalation.382 Although Vietnam’s allocated US$5.1 billion towards military expenditure in 2019 and its military expenditure is forecasted to increase,383 the dissertation argues that current economic slowdown limits Vietnam’s defence hardware capability investments in cutting-edge technology, defence force training and recruitment in order to engage in an armed conflict with China. Therefore Vietnam’s investment in military deterrent capability is to reduce the possibility of Chinese physical threat to prevent a breakdown in current political ties with China.
In relation to economic ties, China is Vietnam’s second-largest trading partner after the US and direct inward investments by Chinese companies are surging in Vietnam.384 Carlyle Thayer once argued that Vietnam could use the economic ties in combination with the tyranny of geography as strategies to advance its economic growth.385 Le Hong Hiep further analyses that due to such a great trade deficit, Vietnam is much more economically dependent and tied to China thus the potential costs linked to a disruption of economic exchange for Vietnam is far higher than that for China.386 Such disruption escalate is not desirable for Vietnam as it escalates the current challenges in maintaining economic growth and improving regime legitimacy. This dissertation therefore proposes that Vietnam’s building military deterrent capability policy is driven by its current domestic challenges.
382 Derek Grossman, “Vietnam Is the Chinese Military’s Preferred Warm-Up Fight”, The Diplomat, May 14, 2019, accessed 2 May 2019, https://thediplomat.com/2019/05/vietnam-is-the-chinese- militarys-preferred-warm-up-fight/. 383 Army Recognition, “Vietnamese annual defense budget to reach USD 7.9Bn by 2024”, accessed 2 May 2019, https://www.armyrecognition.com/analysis_focus_army_defence_military_industry_army/vi etnamese_annual_defense_budget_to_reach_usd_7.9_bn_by_2024.html. 384 Ibid. 385 Carlyle A. Thayer, “The Tyranny of Geography: Vietnam Strategies to Constrain China in the South China Sea”, Contemporary Southeast Asia, Vol 33, No.3, (December 2011): 348-369. 386 Le Hong Hiep, Living next to the Giant: The Political Economy of Vietnam’s Relations with China under Doi Moi, (Singapore: ISEAS – Yusof Ishak Institute, 2016), 148. 109
With regard to the direct engagement part of its policy, Vietnam emphasises a need for high-level official visits with China and that SCS issues are to be one of the foremost discussion topics between the two countries’ leaders. For instance, a visit to China at the invitation of Chinese Premier Li Keqiang in September 2016 saw the Vietnamese Prime Minister Nguyen Xuan Phuc meet with Chinese President Xi Jinping, and held a number of meetings with Li and other high- ranking party members. During these meetings, Vietnamese and Chinese leaders agreed to carefully consider and handle existing disagreements and potential future problems, whilst fostering the stable development of the wide-ranging strategic cooperative partnership between two Communist countries.387 These direct engagements were anticipated to promote mutual trust, cooperation and to minimise the misunderstandings amongst the interest groups of both countries, and as a result, help both Vietnam and China prevent incidents from happening and/or to more rapidly deescalate tensions. Once again, Vietnam’s aim of direct engagement with China is, clearly, to avoid armed conflict and also to respond to China’s policy of offering cooperation in the SCS but not surrendering sovereignty.
In summary, Vietnam’s four-component SCS policy is smart business. The policy assists the CPV in pursuing its territorial sovereignty while avoiding confrontation with China which leads to interruption of trading relationships, disability on the SCS and escalates its current domestic challenges. Although the policy has not brought the SCS disputes to an end, Vietnam seems to have limited options in changing or updating it. In this context, leaning toward other global powers for aid in the dispute could assist Vietnam better in dealing with China in the SCS without deepening its domestic challenges. So with the Vietnamese bolstering of cooperation with India;388 the docking of the US aircraft carrier USS
387 Tran Truong Thuy, ‘Territorial and Maritime Disputes in the South China Sea and Vietnam’s Policy, Policy Brief No.5, The Japanese Institute of International Affair, (2019), accessed 2 May 2019, https://www2.jiia.or.jp/en/article_page.php?id=8. 388 Joshua Kurlantzick, Growing U.S. Role in South China Sea, Council on Foreign Relations, 2011, accessed 2 May 2019, https://www.cfr.org/expert-brief/growing-us-role-south-china-sea. 110
Carl Vinson at Da Nang in April 2018;389 and the arrival of Russian Pacific Fleet warships at Cam Ranh Port in June 2018,390 suggests that Vietnam has started doing so. Also, the US presence in the SCS appears to have increased after US President Trump came to power and seemingly intensified naval and aerial patrols in the region.391 President Trump had chosen Vietnam to host the second talks with North Korea, this action brought considerable spotlight to Vietnam.392 This makes some commentators believe that Vietnam needs to be sure of strong and continuing US support to stand up to Beijing and to date, this appears to be the case.393
However, The US government’s view in relation to global order and freedom of navigation in the SCS is not static as it was previously; the Obama administration also took a firm but lower-key approach to the SCS.394 Additionally, Vietnam still holds dearly the “three no’s” policy, that is summarised to ‘no foreign military bases on Vietnamese soil’, ‘no military alliances’ and ‘no relationships directed specifically against third parties’.395
389 Nate Fischler, “US won’t easily break Russia’s hold on Vietnam”, Asia Times, April 3, 2018, accessed 2 May 2019, http://www.atimes.com/article/us-wont-easily-break-russias-hold- vietnam/. 390 Russian News Agency, Russian Pacific Fleet warships arrive at Vietnam’s Cam Ranh port on a visit, accessed 2 May 2019, http://tass.com/defense/1007748. 391 Wang Xiangwei, “Growing US presence in South China Sea Threatens Accident that Sparks War”, The South China Morning Post, Oct 2, 2018, accessed 2 May 2019, https://www.scmp.com/week-asia/opinion/article/2167175/growing-us-presence-south- china-sea-threatens-accident-sparks-war. 392 Maggie Haberman and Peter Baker, “Trump and Kim Jong-un to Hold Second Summit Meeting in Hanoi, Vietnam”, The new York Times, Feb 8, 2019, accessed 2 May 2019, https://www.nytimes.com/2019/02/08/us/politics/trump-kim-jong-un-hanoi.html. 393Huong Le Thu, “US–Vietnamese cooperation: current, not past, issues are the limiting factor”, Australian Strategic Policy Institute, Feb 5, 2018, accessed 2 May 2019, https://www.aspistrategist.org.au/us-vietnamese-cooperation-current-not-past-issues- limiting-factor/. 394 Joshua Kurlantzick, “Growing U.S. Role in South China Sea”, Council on Foreign Relations, (2011), assessed 21 August 2018, https://www.cfr.org/expert-brief/growing-us-role-south- china-sea. 395 Derek Grossman and Dung Huynh, “Vietnam’s Defense Policy of ‘No’ Quietly Saves Room for ‘Yes’”, The Diplomat, January 19, 2019, accessed 29 March 2020, https://thediplomat.com/2019/01/vietnams-defense-policy-of-no-quietly-saves-room-for- yes/. 111
That said, the Vietnamese commitment to the “three no’s” policy would not facilitate any official military alliance with the US or any other global power.396 However, Vietnam’s activities, such as welcoming the US aircraft carrier into their main port in Da Nang suggested that Vietnam has been open for or ready to consider informal military cooperation which would be beneficial for solving the SCS dispute. In fact, “whilst Hanoi does not officially involve third parties in its dispute in the SCS, Vietnam will stand to gain from an increase in FONOPs397 and other challenges to Beijing’s assertion of authority under the US administration’s free and open Indo-Pacific strategy.398 Additionally, Vietnam’s latest defence White Paper 2019 opens the door to strengthening security cooperation with the US. The paper restates Hanoi’s “Three No’s” defence policy — no alliances, no foreign bases on Vietnamese territory, and no aligning with a second against a third country — but also notes that “depending on the circumstances and specific conditions, Vietnam will consider developing necessary, appropriate defence and military relations with other countries.”399 This dissertation argues that Hanoi could look to Washington for further assistance if Beijing’s behaviour in the SCS does not improve.
In other words, Vietnam needs to consider its domestic weaknesses and assure that any step it takes at the international arena won’t upset its northern neighbour. Therefore, Vietnam would need an effective strategy to stand up to China in the new environment in the next decade. However, Vietnam would certainly be in a difficult situation with limited policy choices should China
396 Derek Grossman and Dung Huynh, ‘Vietnam’s Defense Policy of ‘No’ Quietly Saves Room for ‘Yes’’, The Diplomat, January 19, 2019, accessed 29 March 2020, https://thediplomat.com/2019/01/vietnams-defense-policy-of-no-quietly-saves-room-for-yes/ 397 FONOPs is Freedom Of Navigation Operations. 398 Gary Sands, ‘How Vietnam Benefits From US Strategy in the South China Sea’, The Diplomat, October 19, 2018, accessed 30 March 2020, https://thediplomat.com/2018/10/how-vietnam- benefits-from-us-strategy-in-the-south-china-sea/ 399 Derek Grossman, Reviewing Vietnam’s ‘Struggle’ Options in the South China Sea, The Diplomat, 5 may 2020, accessed 20 July 2020, https://thediplomat.com/2020/05/reviewing- vietnams-struggle-options-in-the-south-china-sea/ 112 impose economic threats to influence changes in Vietnam’s position in the SCS dispute.
Implications of the key domestic interest groups
The influences of key domestic groups on the SCS policy making in Vietnam needs to be viewed in the context that the CPV has now clearly emphasised that serving the national interest is the governing principle in the country’s conduct of foreign affairs.400 The CPV’s emphasis has two implications on the practice of its external relations: (1) Vietnam will weigh national interests and other interests, for example ideological interests, when it makes decisions regarding its foreign affairs, which includes its policy toward China in the SCS dispute; and (2) Vietnam will look at national interests within regional and global frameworks.401 As mentioned earlier, maintaining territorial integrity is a national interest and a high priority for the CPV because the ability to protect territorial integrity would strengthen the CPV’s legitimacy.
The Ministry of Defence plays the key role in protecting national security in Vietnam and military modernisation has been a focus of the Ministry of Defence over the past 30 years. However, due to budget constraints, the Ministry of Defence has to decide whether to prioritise investment on its navy and air force, or invest in its army.402 The Ministry of Defence’s main interest is sovereign integrity and the contested maritime territorial claims in the SCS are the most likely cause of Sino-Vietnamese conflict. As such, the Ministry of Defence’s modernisation efforts have been driven almost exclusively by the threat posed by China over Vietnam’s territorial and resource claims in the SCS.403
400 Son, N., & Jenner, C. (2016). Domestic politics: The overlooked undercurrent in the South China Sea. In C. Jenner & T. Thuy (Eds.), The South China Sea: A Crucible of Regional Cooperation or Conflict-making Sovereignty Claims? (pp. 133-148). Cambridge: Cambridge University Press 401 Son, N., & Jenner, C. (2016), Domestic politics: The overlooked undercurrent in the South China Sea, P.145 402 Wu Shang-Su, ‘Deterrence under the dragon’s shadow: Vietnam’s military modernisation’, The Interpreter, 30 Mar 2018, accessed 8 July 2020, https://www.lowyinstitute.org/the- interpreter/deterrence-under-dragon-s-shadow-vietnam-s-military-modernisation 403 Jr Ng, ‘Vietnam’s Catch Up Challenge’, Asian Military Review, 27 June 2019, assessed 9 July 2020, https://asianmilitaryreview.com/2019/06/vietnams-catch-up-challenge/ 113
Consequently, the Vietnam People’s Navy has arguably benefited the most from Hanoi’s defence budget, which is understood to have grown almost fourfold in local currency $1.3 billion (20.5 trillion đ ng) in 2006 to approximately $4.6 billion
(100 trillion đ ng) in 2015.404 However,ồ such naval modernisation has been conducted in theồ shadow of China’s superpower and by no means could the Vietnamese military stand up as peer to peer against China in the SCS.405 Deterring China in the SCS and avoiding confrontation thus become the preference of Vietnam as well as of the Ministry of Defence, in accordance with Vietnam’s strategy of hard-balancing against China.
In addition to the aforementioned maritime policing role, the VCGs establishment had an impact of reducing the work burden on the Vietnam People’s Navy during peacetime. It can also facilitate a legal approach to enforcing the maritime sovereignty and jurisdiction rights protected under the United Nations Convention on the Law of the Sea.406 To achieve these objectives, the VCG needs to be equipped to be able to face with Beijing’s strategy of using coast-guard-type vessels to enable the spread of its fishing fleets or to have direct engagement with the CCG if necessary. The VCG therefore has lobbied for modernisation of its vessels fleet for the past five years. In October 2014, the VCG successfully obtained government approval for modernising the fleet, including the acquisition of four 4300-ton multirole patrol vessels of the Damen DN-4000 class, four 2200-ton DN-2000-class cutters and eight 1500-ton offshore patrol vessels of the TT-1500 class.407 With the increased capability, the VCG has
404 Jr Ng, Vietnam’s Catch Up Challenge 405 Derek Grossman, ‘Can Vietnam's Military Stand Up to China in the South China Sea?’, Asia Policy, Volume 13, Number 1, January 2018, Pages 113-134. 406 Nguyen The Phuong and Truong Minh Vu, Vietnam Cost Guard: Challenges and Prospects of Development, Asia Maritime Transparency Initiative, 2 January 2017, accessed 20 July 2020, https://amti.csis.org/vietnam-coast-guard-challenges-prospects/ 407 Yang Fang, ‘Coast guard competition could cause conflict in the South China Sea’, East Asia Forum, 27 October 2018, accessed 7 July 2020, https://www.eastasiaforum.org/2018/10/27/coast-guard-competition-could-cause-conflict-in- the-south-china-sea/ 114 deployed vessels on patrols of disputed features.408 Most recently on April 2020, the Coast Guard Region 1 Command under the VCG sent two ships, CSB 8003 and CSB 8004, for a Vietnam-China joint fishery patrol in the shared fishing grounds in the Gulf of Tonkin.409 This was the first joint patrol in 2020 but the 19th patrol conducted by the two country on the basis of the agreement on fishery cooperation in the Gulf of Tonkin signed by Vietnam and China in 2000.410 It can be said that the VCG is far from being a source of conflict but can help bolster cooperation between China and Vietnam.
Vietnamese Fisheries Resources Surveillance main interest is protection of the country’s sovereign rights relating to fisheries within its EEZ. China has been incorporating maritime militias into its fishing industry to assert its sovereignty claims. The Vietnamese Fisheries Resources Surveillance therefore has lobbied to reinforce its own fishing fleet to protect its fishing industry. In 2009, the Vietnam’s National Assembly endorsed the Law on Militia and Self-Defence Forces that cemented the way for the ‘fishing militia’ to operate officially. In 2010, the then-prime minister Nguyen Tan Dung ratified Plan 1902 to pilot the operation of the maritime self-defence forces. An estimated 8000 vessels and 1.22 per cent of Vietnam’s maritime labour are members of the fishing militia.411 The CPV also assigned a preferential loan of around US$400 million in just three years to support building new fishing boats and renovating old vessels. Again, upgrading the fishing fleet is the mean for the Vietnamese Fisheries Resource Surveillance to achieve its own interests. This is also a part of Hanoi’s multi- dimensional approach, which includes empowering the official maritime law
408 Jay Tristan Tarriela, ‘Coast Guards’ Role in the South China Sea’, The Diplomat, 17 November 2018, accessed 7 July 2020, https://thediplomat.com/2018/11/coast-guards-role-in-the-south- china-sea/ 409 People/s Army Newspaper, translated by Tran Hoai, Vietnam, China Coast Guards conduct join patrol, 21 April 2020, accessed 20 July 2020, https://en.qdnd.vn/military/intl-relations-and- cooperation/vietnam-china-coast-guards-conduct-joint-patrol-515958 410 Ibid 411 Nguyen Khac Giang, ‘Vietnam’s response to China’s militarised fishing fleet’, East Asia Forum, 8 August 2018, accessed 7 July 2020, https://www.eastasiaforum.org/2018/08/04/vietnams- response-to-chinas-militarised-fishing-fleet/ 115 enforcement and cooperating more closely with the international community on fishing issues.
Petrovietnam plays a key role in the economic development and GDP growth of Vietnam. For instance, in 2019, Petrovietnam achieved total revenue of over 560 trillion Dong and made important contributions to the GDP growth of 6.98% in the first nine months of the year.412 Petrovietnam has a major role in making laws, regulations and policy concerning the oil and gas industry as its chairman was appointed by the Prime Minister, also serves as party secretary and a member of the CPV Central Executive Committee and its Chief Executive Officer was also appointed with the Prime Minister’s approval.413 However, Petrovietnam has rarely openly admitted that the SCS tension will hurt its offshore exploration and exploitation activities. In March 2018, Petrovietnam ordered Spanish energy firm Repsol to suspend its “Red Emperor” project off Vietnam’s south eastern coast following pressure from China.414 It was reported that it was the head of the Communist Party of Vietnam, General Secretary Nguyen Phu Trong, and the Minister of Defence, General Ngo Xuan Lich, who insisted that Repsol’s drilling be stopped in order to avoid confrontation with China. Another international company, Mubadala of the United Arab Emirates, was also forced to suspend its drilling offshore Vietnam because of Chinese pressure.415
This does not mean that Petrovietnam has no influence on the CPV’s policy on the SCS dispute, it does hold considerable sway. It does not mean that the preference of the Ministry of Defence was weighted higher than that of Petrovietnam either. This is because Vietnam is probably unable of sustaining an
412 Petrovietnam, Petrovietnam achieves total revenue of over 560 trillion dong, making important contribution to GDP growth, 4th October 2019, assessed 15 July 2020, http://www.pvn.vn/sites/en 413 International Crisis Group, Stirring up the South China Sea (IV): Oil in Troubled Waters, p.12- 13 414 Bill Hayton, ‘China’s Pressure Costs Vietnam $1 Billion in the South China Sea’, The Diplomat, 22 July 2020, accessed 25 July 2020, https://thediplomat.com/2020/07/chinas-pressure-costs- vietnam-1-billion-in-the-south-china-sea/ 415 Bill Hayton, ‘South China Sea: Vietnam 'scraps new oil project', BBC News, 23 March 2018, accessed 7 July 2020, https://www.bbc.com/news/world-asia-43507448 116 extended, large-scale, or high-intensity conventional conflict with China and its military modernisation mainly focused on deterring China from seizing the disputed territories in the SCS.416 The CPV thus has been implementing a combination of internationalising the dispute, using a multilateral framework to address the dispute, creating a credible military deterrent to China, and direct engagement with China as their SCS policy. The influence of Petrovietnam interest on the CPV’s SCS policy is illustrated by the fact that Vietnam has recently threatened China with litigation over the SCS.417 It is most likely that this is to gain clarity about Vietnam’s resource rights and to develop leverage to stop Chinese interference so that Petrovietnam can move forward with exploitation contracts for its offshore gas and oil deposits.418
In summary, this dissertation argues that Vietnam’s SCS policy during the last decade was influenced by the resources available and the interests of the key domestic groups. As analysed above, Vietnam’s implementation of four main strategies namely internationalising the dispute, using a multilateral framework to address the dispute, creating a credible military deterrent to China, and direct engagement with China illustrates the CPV’s considerations of the strengths and weaknesses as well as the preferences of the key domestic interest groups. However, as most of the key domestic interest groups in Vietnam have been established as a CPV’s mechanism of hard-balancing with China, their individual influences on the SCS policy making in Vietnam appears to be mellow and more aligned with the CPV’s strategy toward China in the SCS. Nevertheless, meeting the interests of key domestic groups while resourcing to address current domestic challenges would be a comprehensive task for the CPV.
416 Bill Hayton, ‘China’s Pressure Costs Vietnam $1 Billion in the South China Sea’ 417 Derek Grossman, ‘Can Vietnam's Military Stand Up to China in the South China Sea?’, Asia Policy, Volume 13, Number 1, January 2018, Pages 113-134. 418 Peter A. Dutton, Vietnam Threatens China with Litigation over the South China Sea, 27 July 2020, accessed 27 July 2020, https://www.lawfareblog.com/vietnam-threatens-china-litigation- over-south-china-sea 117
4.3 Conclusion
In summary, this Chapter analysed Vietnam’s current domestic environment, highlighting that the CPV currently had some challenges due to economic slowdown, income inequality, internal violence and conflicts and the territorial sovereignty dispute in the SCS. The chapter proposed that both economic development and territorial sovereignty in the SCS are equally important for CPV longevity and in an ideal situation; they should not be traded off against one another. The challenge for the CPV was to formulate a SCS policy which could protect Vietnam’s sovereignty and, importantly, is feasible to implement in consideration of the current domestic challenges. The CPV cannot afford to divert from pursuing its SCS sovereignty because this further escalates a current domestic challenge which is the ongoing questioning about the CPV legitimacy to rule unilaterally. On the other hand, it was important for the CPV to succeed in achieving the ‘Vietnam’s Maritime Strategy 2020’ in order to sustain economic growth. This created a dilemma for the CPV as they could only implement the maritime strategy without any coercion in the SCS, and consequently, there were limitations in the CPV’s formation of SCS policies against China.
The chapter highlighted primary domestic interest groups in Vietnam during the last decade including the Ministry of Defence; the VCG, the Vietnam Fisheries Resources Surveillance and Petrovietnam, the country's largest oil producer and second-largest power producer. The chapter analysed that most of the key domestic interest groups in Vietnam have been established as a CPV’s mechanism of hard-balancing with China, therefore, the domestic interest groups strategy toward the SCS seems to be more aligned with the CPV’s strategy. However, the domestic challenges that the CPV has been facing are different with the domestic challenges that the CCP is facing. Both economic development and security are Vietnam’s strategic interests. Without sustainable economic development, which is significantly contributed by oil and gas industry and fishing industry, Vietnam would have constraints in funding military modernisation for security enforcement. On the other hand, without a capability 118 for security enforcement, Vietnam’s economic development would be compromised. In other words, the main interests of Ministry of Defence, the VCG, and Vietnamese Fishing Industry and Petrovietnam are interlinked. As such, the influences of key domestic groups to policy making in Vietnam are somewhat mellow and not the same as has been observed for China.
Evidentially, the thesis illustrated that Vietnam’s formulation of the four- component SCS policy, including internationalising the dispute, using a multilateral framework to address the dispute, developing a credible and capable military deterrent to China, and direct engagement with China, is to avoid a costly armed conflict and disruptions in economic development. In other words, Vietnamese SCS policy is driven by its current domestic challenges. The thesis therefore reconfirmed the interconnection between domestic issues and international bargaining. Finally, the thesis suggested that Vietnam’s SCS policy options are influenced by the preference of its key domestic groups and the country’s current domestic challenges. However, Vietnam has limited policy choices due to current domestic challenges and the existing “three no’s” policy which had constrained potential involvements of foreign forces. There is scope for further consideration on this matter in future research.
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Chapter V: Conclusion
This Chapter is presented in two sections and will conclude the thesis. The first section summarises key findings in each chapter and provides an answer to the overall research question about the implications of Vietnam’s and China’s current domestic challenges on their foreign policy in the SCS. The second section provides some recommendations for future research.
1. Vietnam’s and China’s current domestic challenges and implications for their SCS Policies
The thesis commenced with a review of the SCS tensions over the last two decades. This review concluded that the tensions involves numerous claimants and affects the regional and global security environment such that cooperation and effective joint management have been constantly promoted by many observers as a solution to manage SCS tensions. The review identified a number of key gaps in the present conventional literature and most notably is the lack of systematic analysis on the domestic environments of both China and Vietnam and how the underlying domestic issues would impact on their SCS policy considerations and formulation. To bridge this gap in literature, the thesis proposed to investigate the nature of Vietnam’s and China’s domestic environment; primary domestic interest groups involving the SCS policy making process and their preferences, as well as the implications on the formation of the two countries’ strategies toward the SCS disputes. This thesis therefore affirmed some noteworthy propositions of two-level game that had been considered by some well-known academics, using the SCS dispute between Vietnam and China as the case study. By doing this, the thesis has expanded the conventional discussion on the SCS disputes by applying the integration between domestic and international domains to explain the drivers of Vietnam’s and China’s SCS policies.
The investigation was framed around the main research question what the implications of Vietnam’s and China’s current domestic challenges are for their 120 foreign policy in the SCS. In relation to domestic challenges, the thesis assessed three key areas including the government’s abilities to foster equitable and sustainable economic growth, to develop and maintain regime legitimacy; and to secure the population from conflicts and control territory. The main research question and sub-research questions were addressed based on Putnam’s two- level game theory which provided the framework for the discussion on how important it was for Vietnamese and Chinese policy makers to consider domestic constraints whilst negotiating over the SCS outcomes and desires.
After defining the research question the thesis proceeds to Chapter Two with a review of the SCS tensions and Vietnam’s and China’s policies toward the SCS disputes. The chapter firstly suggested that the SCS was the centre of ongoing tensions within the region because of its strategic position and economic resources. The chapter continued to a revision of Vietnam’s and China’s SCS claim and highlighted that Vietnam’s SCS claim involved the sovereignty of the Paracel and Spratly islands which overlaps Chinese territorial claims in the same region. To affirm its SCS sovereign claim, Vietnam had been implementing activities such as land reclamation on the Spratly island group; maintaining oil and gas explorations as well as on-going fishing activities on the disputed areas of the sea. China also pursued territorial claims and had been actively pursuing different activities to affirm SCS sovereign rights, including oil exploration, land reclamation and militarisation of its SCS outposts.
The chapter concluded that China’s SCS claims also relate to territorial sovereignty and maritime economic resources in the SCS, which were similar to Vietnam’s claims but at a vastly different scale and were asserted by more diverse strategies. The chapter then proceed to a review of Vietnam’s and China’s SCS policy. The chapter highlighted that Vietnam’s SCS polices contained four main strategies including internationalising the dispute, using a multilateral framework to address the dispute, developing a credible and capable military deterrent to China, and to ensure direct engagement with China. China’s current SCS policy was to keep the SCS situation controlled and to contain any
121 intensifying actions of certain neighbouring countries in defence of Chinese national interests. China’s relationship with its neighbours including Vietnam in the SCS has also undergone some changes in order to construct a peaceful and cooperative neighbourhood for China.
Chapter Three of the thesis analysed China’s current domestic challenges; Chinese primary domestic interest groups and their preferences, and assesses the implications of the perceived state weakness for Chinese foreign policy towards SCS issues. The Chapter applied the principles of the interconnection between international and domestic spheres of the two level game theory to analyse the implications of Chinese domestic challenges on its SCS policies. Chinese domestic challenges were to be found mainly in the areas of economic slowdown, income inequality, regime legitimacy and on-going close attention to internal violence and conflicts. The chapter highlighted key domestic interest groups involved in China’s SCS policy making including the Bureau of Fisheries Administration, the China Marine Surveillance, the local governments and the Ministry of Foreign Affairs. Because their preferences were not overlapped, it was difficult for these key domestic interest groups to define and endorse a ‘win-set’ or a probable outcome for negotiation at international level. The chapter analysed that the absence of a defined win-set make it difficult for Chinese negotiator to seek an international agreement in the SCS dispute.
The chapter proposed the compounded effects of these domestic challenges on the CCP would be an effort to increase economic growth; to ensure the economic growth benefits are spread evenly to different domestic groups and ultimately to increase CCP regime legitimacy. On the same timeline, China had to constantly manage the SCS disputes with other claimants including Vietnam. Thus China must manage the SCS dispute in a way that advances its national interests but also does not escalate its already significant domestic challenges.
China therefore applied a carrot-and-stick SCS policy, which encompassed of a hard line stand on the SCS disputes via land reclamation and weapon deployments and the construction of a peaceful and cooperative relationship 122 other SCS claimants via an extension of shared interests and cooperation mechanisms. The policy enables China to pursue the SCS sovereignty and to contain any intensifying provocations of certain neighbouring countries, including Vietnam, considering the current economic slowdown and potential risk of economic turmoil. Thus, the interconnection between China’s domestic issues and its SCS policy has been illustrated. The chapter proposed that the driver of China’s contemporary SCS foreign policies were its current domestic issues, which are key to the core principles of sovereignty and regime legitimacy. Thus, the interconnection between China’s domestic issues and its SCS policy has been illustrated. It is a significant contribution to the current literature that helps explain Chinese SCS behaviours.
In Chapter Four, the thesis analysed Vietnam’s current domestic challenges and assessed the implications for Vietnam’s foreign policy toward the SCS. The analysis showed that Vietnam currently had some domestic challenges due to economic slowdown, income inequality, internal violence and conflicts, and the territorial sovereignty dispute in the SCS. Both economic development and territorial sovereignty in the SCS are equally important for CPV longevity and in an ideal situation; they should not be traded off against one another. The challenge for the CPV was to formulate a SCS policy which could protect Vietnam’s sovereignty and, importantly, is feasible to implement in consideration of the current domestic challenges.
The chapter highlighted primary domestic interest groups in Vietnam including the Ministry of Defence; the Vietnamese Coast Guard, the Vietnam Fisheries Resources Surveillance, the Vietnamese Ministry of Foreign Affairs and Petro Vietnam, the country's largest oil producer and second-largest power producer. The chapter analysed the key interests of the domestic group and suggested that many of key domestic interest groups in Vietnam had a similar interest in the SCS disputes, which was the country’s sovereignty. This overlap in preferences of the national interest groups would assist Vietnam to identify a possible outcome at international level which could be endorsed by domestic interest
123 groups. However this was not the only factor for Vietnam to obtain an international agreement in the SCS dispute.
The CPV cannot afford to divert from pursuing its SCS sovereignty because this further escalates a current domestic challenge which is the question about the CPV legitimacy. On the other hand, it was important for the CPV to succeed in achieving the ‘Vietnam’s Maritime Strategy 2020’ in order to sustain economic growth. This created a dilemma for the CPV as they could only implement the maritime strategy without any coercion in the SCS, and consequently, there were limitations in the CPV’s formation of SCS policies against China. Vietnam therefore formulated the four-component SCS policy, including internationalising the dispute, using a multilateral framework to address the dispute, developing a credible and capable military deterrent to China, and direct engagement with China, is to avoid a costly armed conflict and disruptions in economic development. Once again, the thesis illustrated that Vietnam’s domestic challenges had implications on its formulation of the SCS policy, and therefore reconfirmed the interconnection between domestic issues and international bargaining.
The thesis proposed that Vietnam’s four-component SCS policies are influenced by the preference of its key domestic groups and the country’s current domestic challenges’. However, Vietnam had limited policy choices due to current domestic challenges and the existing “three no’s” policy which had constrained potential involvements of foreign forces. Plausibly, the sovereignty disputes in the SCS were on-going issues for both Vietnam and China and the underlying domestic issues in each country had impact on their SCS policy.
2. Recommendation for Future Research
Firstly, any miscalculation in the SCS dispute could potentially lead to an armed conflict and this would affect both China and Vietnam, regardless of who initiates. As such, it would beneficial to further study what the potential is for the China-Vietnam SCS dispute to turn into an armed conflict, in consideration of the domestic challenges of both Vietnam and China. Secondly, The SCS dispute
124 remains an on-going issue with no end in sight and more research is most certainly needed to widen the discussion on a win-win solution for all parties involved. Analysis in this thesis suggests that a peaceful solution for the SCS dispute would be desirable to not cause hardships on both China and Vietnam. As such, new research on multilateral cooperation and effective management regimes with consideration of an increased US presence in the SCS would add value to the current literature.
In relation to Vietnam and its strategies toward China, in 2018, Huong Le Thu urged Vietnam to update its strategy in developing a credible military deterrent to China. However, this dissertation shows that Vietnam’s current domestic issues could challenge the CPV’s capability to appropriately update the strategy. Thus, it would be beneficial if there is more research on Vietnam’s military modernisation and how Vietnam has used it military capability to deter China. Such research is not only important for Vietnam to understand how much military modernisation is enough for its deterrence strategy to be effective, but also enriching the current literature about Vietnamese soft and hard power.
This dissertation did not observe any potential influence that domestic interest groups might have on the shaping of the international agreement between Vietnam and China in the SCS dispute because there has not been any international agreement at this stage. However, such international agreements might be achieved in the future. To further apply Putnam theory in explaining the domestic source of a country’s foreign policy, it would be beneficial to understand what impacts the key domestic interest groups in Vietnam and China would have on the content of the international agreement when it becomes available.
Further research on the role of nationalism and national identity on the SCS policy making process is also recommended. Additionally, further investigation on the need to promote or protect ontological security on the part of the two nationalistic communist countries, Vietnam and China, could assist in the
125 creation of published mechanisms to understand their part of the conflict in the SCS.
126
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