STIRRING UP THE SOUTH CHINA SEA (I) Asia Report N°223 – 23 April 2012 TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... i I. INTRODUCTION ............................................................................................................. 1 II. TROUBLED WATERS: TENSIONS SINCE 2009 ....................................................... 3 A. THE NINE-DASHED LINE .............................................................................................................. 3 B. CORE INTEREST? .......................................................................................................................... 4 C. INCIDENTS AT SEA ....................................................................................................................... 5 D. REGIONAL RESPONSE ................................................................................................................... 7 E. U.S. INVOLVEMENT ..................................................................................................................... 7 III. THE NINE DRAGONS ..................................................................................................... 8 A. BUREAU OF FISHERIES ADMINISTRATION ..................................................................................... 8 B. CHINA MARINE SURVEILLANCE ................................................................................................... 9 C. LOCAL GOVERNMENTS .............................................................................................................. 10 D. PEOPLE’S LIBERATION ARMY NAVY .......................................................................................... 10 E. ENTER THE MINISTRY OF FOREIGN AFFAIRS (MFA) .................................................................. 12 F. ENERGY COMPANIES ................................................................................................................. 12 G. THE OTHER DRAGONS ............................................................................................................... 12 IV. WHY THEY STIR .......................................................................................................... 14 A. INEFFECTUAL COORDINATION ................................................................................................... 14 1. Domestic actors playing foreign policy role .............................................................................. 14 2. Structural weakness of the foreign ministry .............................................................................. 14 3. Internal divide in the foreign ministry ....................................................................................... 15 4. Heated domestic political environment ...................................................................................... 15 5. Lack of legal clarity ................................................................................................................... 16 6. Proposals to establish a centralised mechanism ......................................................................... 18 B. COMPETING LAW ENFORCEMENT AGENCIES .............................................................................. 19 C. LOCAL ECONOMIC INTERESTS .................................................................................................... 22 D. POTENTIAL ENERGY RESOURCES ............................................................................................... 24 E. NATIONALISM ............................................................................................................................ 26 V. BEIJING’S POLICY DILEMMA ................................................................................. 29 A. NO MILITARY SOLUTION ........................................................................................................... 29 B. FAILURE OF THE DIPLOMATIC APPROACH .................................................................................. 29 1. Failure of joint development ...................................................................................................... 29 2. Inconsistent precedents .............................................................................................................. 30 3. “Leaving it to the next generation” ............................................................................................ 31 C. REJECTION OF UN MECHANISMS ............................................................................................... 31 1. International Court of Justice ..................................................................................................... 31 2. UNCLOS dispute settlement mechanisms ................................................................................. 31 VI. SHIFTING TACTICS: A NEW APPROACH? ........................................................... 32 A. STRENGTHENING COORDINATION .............................................................................................. 32 B. CALMING THE PLA .................................................................................................................... 33 C. GUIDELINES FOR THE IMPLEMENTATION OF THE DECLARATION OF CONDUCT IN THE SOUTH CHINA SEA ............................................................................................................................... 34 D. STATE COUNCIL WHITE PAPER ON PEACEFUL DEVELOPMENT ................................................... 35 E. HIGH-LEVEL BILATERAL EXCHANGES ....................................................................................... 36 VII. CONCLUSION .............................................................................................................. 37 APPENDICES A. MAP OF SOUTH CHINA SEA .............................................................................................................. 38 B. ORGANIGRAMME OF CHINESE FOREIGN POLICY ACTORS ................................................................. 39 C. ORGANIGRAMME OF KEY ACTORS IN THE SOUTH CHINA SEA .......................................................... 40 D. ORGANIGRAMME OF LAW ENFORCEMENT AGENCIES IN THE SOUTH CHINA SEA .............................. 41 E. ABOUT THE INTERNATIONAL CRISIS GROUP .................................................................................... 42 F. CRISIS GROUP REPORTS AND BRIEFINGS ON ASIA SINCE 2009 ......................................................... 43 G. CRISIS GROUP BOARD OF TRUSTEES ................................................................................................ 45 Asia Report N°223 23 April 2012 STIRRING UP THE SOUTH CHINA SEA (I) EXECUTIVE SUMMARY The conflicting mandates and lack of coordination among eign ministry has taken steps to try to reassure its neigh- Chinese government agencies, many of which strive to bours that Beijing does not claim the entire South China increase their power and budget, have stoked tensions in Sea and has at least partially justified its claims on the ba- the South China Sea. Repeated proposals to establish a sis of the United Nations Convention on the Law of the more centralised mechanism have foundered while the Sea (UNCLOS), the government cannot easily back down only agency with a coordinating mandate, the foreign min- from claims to significant portions of the sea that are istry, does not have the authority or resources to manage based on historical presence in the region. Local govern- other actors. The Chinese navy’s use of maritime tensions ment agencies take advantage of this lack of legal clarity to justify its modernisation, and nationalist sentiment when engaging in activities in disputed areas. around territorial claims, further compound the problem. But more immediate conflict risks lie in the growing num- Beijing has deliberately imbued the South China Sea dis- ber of law enforcement and paramilitary vessels playing putes with nationalist sentiment by perpetually highlighting an increasing role in disputed territories without a clear China’s historical claims. This policy has led to a grow- legal framework. They have been involved in most of the ing domestic demand for assertive action. While Beijing recent incidents, including the prolonged standoff between has been able to rein in nationalist sentiment over the China and the Philippines in April 2012 in Scarborough South China Sea when it adopts a specific policy, this Reef. Any future solution to the South China Sea disputes heated environment still limits its policy options and its will require a consistent policy from China executed uni- ability to manage the issue. formly throughout the different levels of government along with the authority to enforce it. In mid-2011, as tensions in the sea led to neighbouring countries seeking closer military ties with the U.S., China China’s maritime policy circles use the term “Nine drag- adopted a less assertive approach. While Beijing’s overall ons stirring up the sea” to describe the lack of coordina- emphasis on maintaining the status quo still includes a tion among the various government agencies involved in preference for bilateral negotiations, it is strengthening the South China Sea. Most of them have traditionally been regional relations through high-level visits and multilat- domestic policy actors with little experience in foreign eral engagement by signing with the Association of South affairs. While some agencies