Analysis

China’s Efforts in the South Sea

Satellite photographs of China’s land reclamation activities on Date of publication: 2015-05-13 Author: Kit Dawnay remote atolls in the are the latest trigger for a Citation: Kit Dawnay, “China’s Land rise in tensions Reclamation Efforts in the South China Sea,” Current Intelligence Vol. 6 (13 May 2015). The speed and scale of the reclamation work for runways and deep water --- prompted Albert Del Rosario, Foreign Minister of the , to warn on 26 April Keywords: ASEAN, CHINA, ENERGY, that China could take “de facto control” of the sea. He is not alone in voicing his MARITIME BOUNDARY DISPUTES, fears; US Pacific Fleet Commander Admiral Harry Harris Junior on 31 March SHIPPING, SOUTH CHINA SEA. criticised Beijing’s “great wall of sand”.1 --

The Association of South East Asian Nations (ASEAN) also issued a statement on Explanation of dates 28 April criticising China’s actions.2 For its part, Beijing has described the work as Drafted: 2015-04-29 Information cut-off: 2015-05-12 “reasonable” and “legitimate”.3 Published online: 2015-05-14 This concern is real. China has long had the most sophisticated facilities on its -- islands, and its building of runways and deep water ports will only facilitate its For further information about this assertions of sovereignty.4 Its stance, though, not only risks damaging relations with subject or to discuss our services, its neighbours, but also those with the US, as Chinese control of the Sea would please contact: represent a real challenge to the US-led regional security order. Michael A. Innes (Director & CEO) [email protected]

Background Kyle Pizzey (Head of Operations) [email protected] The claims in the South China Sea are complex, but divide roughly in two; first, China, -- and claim the in the Sea’s north, about 200 km south west of China’s Hainan province; and second, China, Taiwan, the Philippines, THESIGERS conducts research and , Vietnam, and Darussalam claim features in the analysis of regional issues for clients. chain in the Sea’s south.5 Some other reefs and shoals are also disputed. The Selected items are released through our journal Current Intelligence. issue lay somnolent for years, until the adoption of the United Nations Convention on the Law of the Sea in 1982 raised the stakes of ownership; the growth in states’ ISSN 2052-3122 (PRINT) abilities to enforce their claims has added to tensions, too. ISSN 2044-3811 (ONLINE)

THESIGERS is a trading name of The Sea is worth disputing for four main reasons. First, reserves of oil and gas lie Thesiger & Company Limited. beneath the sea bed; the US Energy Information Administration estimates some 11 Company registered in the United billion barrels of oil reserves and 190 tcf of gas, although hopes for a ‘new Persian Kingdom. Company Reg. No.: Gulf’ may prove exaggerated.6 Second, the South China Sea is a key fishery; fish 7234402. VAT Reg. No.: 135658985. accounts for about 22% of protein in the average diet in Asia.7 Third, territorial Address: 37 Great Russell Street, sovereignty is a crucial source of legitimacy for governments, especially those in London, WC1B 3PP, United Kingdom. China and Vietnam.8 Finally, crucial sea lanes cross the South China Sea. The Office (UK): +44 (0)134 430 6541 area thus has strategic importance, particularly for China, which fears the US could Email: [email protected] 9 Web: thesigers.com/publications close the Malacca Straits in the event of a crisis. © THESIGER & COMPANY LIMITED.

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China’s claims By far the most assertive party is China, which claims over 80% of the Sea. Beijing is in a strong position; it controls all of the Paracel Islands, and occupies , , Gaven Reef, , Johnson Reef, , and in the Spratly Islands, which it calls the Nansha (南沙). It administers these atolls as part of Hainan Province. China bases its claims on historical usage, pointing to naval expeditions in 110 AD Since about 2010 China and during the Ming Dynasty, and a map drawn up in 1947 showing a ‘nine dash has acted aggressively to 10 line’. China defends its claims strongly, opposes discussing them in multilateral defend its claims. Notable fora,11 and stresses economic links as a means to reduce tensions.12 Beijing reportedly branded the South China Sea a ‘core interest’ in March 2010, thereby incidents include the setting it, at least in rhetorical terms, alongside other non-negotiable issues such as cutting of sonar arrays Xinjiang, Tibet and Taiwan.13 However, China has since played down these from Vietnamese vessels 14 claims. in 2011 and a standoff at Since about 2010 China has acted aggressively to defend its claims. Notable in incidents include the cutting of sonar arrays from Vietnamese vessels in 2011 and a standoff at Scarborough Shoal in 2012. Tensions peaked in 2012 amidst concern 2012. about a lack of coherent strategy amongst Chinese government agencies, although worries eased after the formation of a single national coast guard in March 2013 until China National Offshore Oil Company deployed an exploratory rig to the disputed area in 2014.15 Chinese vessels continue to challenge those from other claimants, though, such as those of Philippine fishermen at Scarborough Shoal in April 2015.16

The other disputants Most littoral states dispute China’s claims. Vietnam lost control of the Paracel Islands to China in 1974, but still controls 21 features in the west of the Spratly chain.17 Its claims rest on a combination of historical evidence and the continental shelf principle. The Philippines controls features in the eastern Spratly chain, in addition to Scarborough Shoal, based on the activities of Tomas Cloma, an explorer in the 1950s, and the principle of proximity.18 Malaysia controls features close to Borneo based on the continental shelf principle. Taiwan controls the biggest island in the Spratly chain, Itu Abu or , on the same basis as China. Other disputants include Brunei, which controls no islets, and Indonesia, part of whose exclusive economic zone (near the Natuna Islands) is within the ‘nine dash line’. Efforts to resolve the dispute thus far have taken place in talks between China and ASEAN – since 2002 on a binding Code of Conduct for Parties in the South China Sea. The two sides agreed Guidelines for the Implementation of the Declaration on a Code of Conduct in July 2011, but a Code of Conduct remains out of reach.19 One major impediment is division within ASEAN, on which China plays by using proxies such as Cambodia to back its interests.20

Risks to regional security Failing resolution, all parties are strengthening their navies. China’s military capabilities have grown most rapidly; the People’s Liberation Army Navy’s (PLAN) three fleets include some 205 warships, including five nuclear submarines, 59 diesel submarines, 26 destroyers, 52 frigates, 86 missile armed patrol craft, 20 corvettes and 56 amphibious landing vessels.21 The South Sea Fleet alone is well able to cope with a conflict with an ASEAN state. Vietnam is perhaps next strongest. Hanoi spends about 3% of GDP on its Soviet- influenced military. It has recently bought 6 Kilo-class Russian made submarines, two Russian-made Gepard-class light frigates, perhaps 10 Molnyia-class missile corvettes, two Netherlands-made Sigma-class corvettes, and some Su-30MK2 fighter aircraft.22 India has also offered to sell its BrahMos missile, which would

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increase area denial capabilities, and the US has lifted a ban on arms exports to Vietnam for maritime equipment.23 The other major disputant, the Philippines, has very limited capacity; its air force cannot field a single fighter, and the navy consists of two ageing former US Coast Guard vessels, the BRP Gregorio Del Pilar and the BRP Ramon Alcaraz.24 Still, Manila is seeking to upgrade capacity, by buying anti- submarine warfare helicopters and 50 FA-50 fighters from South ; Japan is also providing 12 patrol vessels on soft financing.25 Vietnam and the Philippines are also preparing a strategic partnership aimed in part at China,26 and Manila in 2014 strengthened links with Washington by signing an agreement that gives the US military access to bases.27 However, the only regional power truly able to confront China is the US, thanks to its Seventh Fleet based in Japan and Guam. Washington has previously maintained a ‘neutral’ stance towards the territorial disputes, even while criticising China. The US has two main interests in the South China Sea – access and regional stability. In terms of access, Washington contends that all states should enjoy on the high seas outside of the 12 mile territorial waters limit (in accordance with UNCLOS);28 indeed, then US Secretary of State Hilary Clinton announced in mid-2010 that freedom of navigation in the Sea was a US national interest.29 In terms of regional stability, the US does not want to see resources diverted away from economic development to military confrontation, so damaging the region’s prosperity or risking war.30 An ancillary concern is that the dispute could harm relations between China and the US,31 particularly in light of US Secretary of Defence Ashton Carter’s recent signalling that American patrol vessels could be deployed to the area.32 In this regard, it is notable that many Chinese observers see the US presence in the South China Sea as part of a broader effort to contain China.33 Other key states with concerns include , India, Japan, Korea, and Taiwan, which rely on trade through the South China Sea or have military commitments to the US. The most important is Japan, which is sceptical of China’s rising clout and has cooperated with ASEAN states on maritime security.34 A more active role for Tokyo may now be emerging; changes in April 2015 to US-Japan Guidelines may permit the Japanese Self-Defence Forces to provide aid to US forces in the South China Sea.35 Moreover, American officials have called on Japan to patrol the Sea.36 Needless to say, China will view any such move askance.

Commercial costs The costs of rising tensions could prove significant. Trade between China and 50% of global oil tanker ASEAN had a value of USD350 billion in 2013, even if it was one sided (ASEAN ran shipments pass through a USD45 billion deficit in goods with China in 2013).37 Most importantly, the Sea is a key shipping route; some 50% of global oil tanker shipments pass through the the South China Sea, South China Sea, destined for China, Japan, Taiwan and – heavily destined for China, Japan, industrialised countries that lack energy resources.38 Any spike in tensions, or Taiwan and South Korea – outbreak of conflict, could disrupt trade or shipping, or add to insurance costs, and heavily industrialised so affect the regional and global economies. countries that lack energy

Conclusion resources. All told, the scope for conflict in the South China Sea is rising. China’s steps to reclaim land have spooked ASEAN. New ports and runways will extend the range of Chinese aircraft and ships, meaning Beijing may soon be able to assert sovereignty across the whole sea. Any such development would not only harm the interests of neighbouring states, but could represent a very real challenge to the US- led security system in . As such, Beijing’s stance risks not only poisoning relations with its neighbours, but also harming relations with the US. The dispute over China’s in the South China Sea thus has implications well beyond the immediate neighbourhood.

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NOTES 1. The Diplomat, 1 April 2015, US Blasts China’s ‘Great wall of sand’ in the South China Sea 2. Reuters, 28 April 2015, China ‘extremely concerned’ by ASEAN statement on disputed sea 3. 新华, 10 April 2015, 中国进行南海岛礁建设合情合理合法 4. Bloomberg, 17 April 2015, China may gain control of South China Sea, US Navy says 5. London School of Economics, Ideas, The real story behind the South China Sea dispute 6. Bill Hayton, The South China Sea, (London: Yale University Press, 2014) 7. Lucio Blanco Pitlo, Fishing Wars: Competition for South China Sea’s fishery resources, 10 July 2013, The International Relations and Security Network (ISN). 8. Bill Hayton, The South China Sea, (London: Yale University Press, 2014) and International Crisis Group, Stirring up the South China Sea (II): Regional Responses, 24 July 2012 9. Ian Story, China’s Malacca Dilemma, The Jamestown Foundation, Volume 6, Issue 8, 2006 10. Reuters, 6 June 2014, China’s Nine Dash Line and the law of the Sea: Kemp and Gao Zhiguo, The Nine Dash Line in the South China Sea: History, Status and Implications, American Journal of International Law, 2013. This line actually now consists of ten dashes (after the addition of one east of Taiwan in 2013). 11. 段小平 and 吴苗, 解析南中国海问题：困境与出路, 2011, 理论与实践 理论月刊 and 中国新闻网, 29 April 2015, 第 26 届东盟峰会就南海问 题表态 中方严重关切 12. 中国现代国际关系研究院 时政评论, 15 October 2014, 开创中国周边 外交“新常态” 13. The National Interest, 16 May 2014, China’s big strategic mistake in the South China Sea 14. International Crisis Group, 23 April 2012, Stirring up the South China Sea (I). 15. Wall Street Journal, 11 March 2013, New fleet on the block: China’s Coast Guard comes together 16. The Diplomat, 25 April 2015, China, Philippines spar over South China Sea run-ins 17. Vietnam controls: Alison Reef, Amboyan Reef, Barque Canada Reef, Central London Reef, Cornwallis South Reef, Da Gri-san, Da Hi Gen, East London Reef, Great Discovery Reef, Ladd Reef, Landsdowne Reef, Namyit Island, Pearson Reef, Petley Reef, , Sin Cowe Island, South Reef, South West Cay, , Tennent Reef, West London Reef 18. Manila controls: Kota or , Lawak or Nansham Island, Likas or West York Island, Panata or Lamkian Cay, Pag-asa or Thitu Island, Parola or North East Cay, Patag or Flat Island, and Rizal or Commodore Reef 19. Jakarta Post, 21 July 2014, South China Sea guidelines agreed 20. Wall Street Journal, 26 April 2015, divided on response to Chinese reclamation in South China Sea

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21. iPolitics, 17 April 2015, China is now a Pacific naval power – and we’re not ready for it 22. Asia Times, 29 May 2012, Vietnam builds naval muscle 23. The Diplomat, 24 October 2014, Prominent Vietnamese dissident released, flies to LA 24. IHS Jane’s 360, 25 August 2014, Philippine Navy mulling best way to upgrade Del Pilar frigates 25. Manila Standard, 14 February 2013, Japan grants PH ‘soft loan’ for 10 patrol boats 26. Council on Foreign Relations, 25 April 2015, Philippines and Vietnam rapidly building strategic partnership 27. New York Times, 27 April 2014, US and Philippines agree to a 10- year pact on the use of military bases 28. M Taylor Fravel, US policy towards the disputes in the South China Sea since 1995, March 2014, S Rajaratnam School of International Studies 29. Washington Post, 23 July 2010, Clinton wades into South China Sea territorial dispute 30. M Taylor Fravel, US policy towards the disputes in the South China Sea since 1995, March 2014, S Rajaratnam School of International Studies 31. M Taylor Fravel, US policy towards the disputes in the South China Sea since 1995, March 2014, S Rajaratnam School of International Studies 32. Wall Street Journal, 12 May 2015, U.S. Military Proposes Challenge to China Sea Claims 33. 王传剑, 美国的南中国海政策:历史与现实 in 外交评论, 2009 年第 6 期 34. Ian Storey, Japan’s maritime security interests in Southeast Asia and the South China Sea dispute, Political Science Vol 65, No, 2, December 2013 35. Nikkei Asian Review, 29 April 2015, Obama, Abe share concerns over China’s maritime claims 36. 环球时报, 28 April 2015, 美军官：很担忧中国南海行为 期待美日巡航 南海 37. The Diplomat, 20 March 2015, Is China’s economic power in ASEAN overblown 38. Council on Foreign Relations, 14 May 2014, South China Sea Tensions

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