1.1 Origins of the Dispute
1.2 Objects of the Conflict
2. Solutions for the South China Sea Conflict
2.1 Chinas Current Strategy
2.2 Policy options
Statement of Authorship
In the South China Sea, overlapping territory, maritime and economic claims are the reason for political tension. It is one of the most contested maritime areas in the world. On the seabed, large oil and gas deposits are expected to exist, there are rich fishing grounds and many important trade routes cross the South China Sea. Due to this, also non-claimant nations like the United States want the South China Sea to remain International Waters - to ensure the “Freedom of Navigation”, based in the International Law. The growing Chinese sphere of influence is observed with concern and China as a whole is perceived as a potential threat for the littoral states on the one and the United States on the other hand. Conversely, China accuses these states for claiming an area, which is Chinese territory since ancient times.
This thesis examines the existing policy options the Chinese government can apply to reduce the insecurities in the region and to find possible arrangements with the neighboring states. Above all, the question is if China should take a more cooperative approach to the territorial disputes. First, the origins of the conflict will be highlighted, followed by an analysis of the policy options escalation and cooperation. States involved in territorial and maritime conflicts such as the South China Sea dispute have the opportunities to cooperate or to escalate - both options can appear in various forms. At the end of this thesis, there will be one suggested political strategy for the Chinese government to operate in this stretch of water.
1.1 Origins of the Dispute
The South China Sea is located in the western part of the Pacific Ocean, enclosed by the states China, the Philippines, Indonesia, Vietnam, Taiwan, Brunei and Malaysia, which are the key players in the territorial conflicts. All these states claim parts of the South China Sea, leading to overlapping claims. The disputed territories contain hundreds of insular features like islands, shoals, reefs and archipelagos. The islands are called after Western explorers or their sunken ships, such as the Spratly Islands, the Paracel Islands, the Macclesfield Bank (Zhongsha islands) and the Scarborough Shoal (Huangyan Dao).
“As an ocean that connects all littoral territories of Southeast Asia, the South China Sea has been used for centuries due to its vital position” (Thi Lan Anh, 2014: 16). Long time, these features were nothing more than dangerous obstacles in the busy shipping routes. “On July 1933, France formally declared its sovereignty over the Paracels and Spratlys and took physical possession of the archipelagos” (ib.: 17), against the protest of China and Japan. In 1939, Japan took the two island groups by force and maintained the jurisdiction also during World War II. At the end of the war, there were four international documents, which determined the end of the Japanese occupation. But these documents neither determined the sovereignty status of the islands, nor did they create the right to put the islands under Chinese jurisdiction.
At the heart of the conflict are foremost Chinese and Vietnamese claims. “China and Vietnam claim the entire area of the South China Sea and the islands within it while Malaysia, the Philippines, Indonesia, and Brunei have laid claims to contiguous areas” (Buszynski 2012: 140). Both states justify their demands with historic rights. China claims around 90 percent of the South China Sea with the Nine- Dash-Line as their legal basis, which first appeared on Chinese maps in 1947 and was presented to the UN in 2009 (The Permanent Mission of the People’s Republic of China to the United Nations 2009). These “indisputable” historic rights conflict with rulings of the International Law claiming universal validity.
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Figure 1: Map of the overlapping claims (source: http://www.npr.org/sections/thetwo- way/2016/07/12/485666758/beijings-claims-to-south-china-sea-are-invalid-international-tribunal-says) 05. March 2017
In 1982, the United Nations Convention on the Law of the Sea (UNCLOS) was ratified and came into force in 1994, which sets up an Exclusive Economic Zone of 200 nautical miles, measured from the baseline of a coastal state seawards. In this zone, the states have a right to use the resources on the seabed. In our case, this is one factor that leads to overlapping claims in the South China Sea. Additionally, “islands are not only subjects for territorial claims, but also eligible to generate maritime zones equal to mainland for the owner states” (Thi Lan Anh: 21). The sovereign owner of the islands in the South China Sea can therefore use almost the entire South China Sea for economic reasons, including the seabed. This is why the Spratly and the Paracel Islands have an elevated position for China in terms of creating a larger Economic Zone.
1.2 Objects of the Conflict
Apart from sovereignty and territorial issues, the suspected rich natural resources are another catalyst for conflict in the South China Sea. The Chinese National Offshore Oil Company announced in November 2012 that there are “125 billion barrels of oil and 500 trillion cubic feet of natural gas” (Thi Lan Anh: 23) underwater. The Energy Information Administration in the US estimated 2013 in a report that “the South China Sea contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proven reserves” (ib,). These numbers set positive incentives for the Chinese government to start the production for covering the domestic requirements. “But given that China consumes about 3 billion barrels of oil and about 5 trillion cubic feet of natural gas each year, the reserves and resources of the South China Sea are hardly worth all the Sturm und Drang expended on them” (Hayton: 149). Therefore, the hydrocarbons are but one of many factors.
Another factor is that the Sea offers rich fishing grounds with a capacity “estimated at 7.5 tonnes per square kilometre per year in the waters around the Spratlys alone” (Thi Lan Anh: 23) making it to one of the richest fishing grounds in the world - important for fishery exports and Chinas domestic consumption. The extension of tourism in the region promises another potential revenue stream.
Furthermore, the South China Sea has a geo-strategic importance, providing a strongly frequented navigation route for transportation by sea. “The South China Sea has five straits that act as five gates for vessels coming in and out of the area: the Malacca Strait at the southwest, the Sunda and Lombok- Macassar Straits at the southeast, and the Luzon and Taiwan Straits at the northeast” (Thi Lan Anh: 24). These narrow passages create a vulnerability on the seaside in terms of energy security and the movement of goods associated with it. This fact motivates China to secure the area. On the other side of the Pacific Ocean, “the U.S. government seeks ‘freedom of navigation’ in the South China Sea, which includes unimpeded lawful trade and commerce as well as the exercise of high seas freedoms associated with non-hostile military activities within the EEZ of China” (McDevitt 2014: vi). Besides regional conflict, there is a broader international dispute between the USA as the historic hegemon in the region and China as their rising competitor on world stage.
2. Solutions for the South China Sea Conflict
2.1 Chinas Current Strategy
Deng Xiaoping formulated in the early 1990s three doctrines concerning the South China Sea: “sovereignty is ours, set aside disputes, pursue joint development” (Hayton 2014: 124). The first doctrine “meant, in effect, that any other country wanting to develop maritime resources within the ‘U- shaped line’ would either have to recognize Beijing’s territorial claims or directly challenge Beijing’s physical presence” (ib.). These doctrines are still today the predominant attitudes of the Chinese government towards the territorial dispute in the South China Sea. It seems that there is no room for compromise: joint development is desirable, but only under the leadership of China. Chinas physical presence was literally cemented in the last few years by building artificial islands with military infrastructure such as runways, support buildings and loading piers. Gradually, China took possession of the insular features and strengthened its position in a way that avoids the direct confrontation with the other claimants. “Over the last two years, China’s approach in the South China Sea has been characterized as a ‘salami slice’ strategy: it continues to take small, incremental steps that are not likely to provoke a military response from any of the other claimants, but over time gradually change the status-quo regarding disputed claims in its favor” (McDevitt: 30).
The Chinese Ministry of Foreign Affairs further explains the second doctrine: “When conditions are not ripe to bring about a thorough solution to territorial dispute, discussion on the issue of sovereignty may be postponed so that the dispute is set aside. To set aside dispute does not mean giving up sovereignty. It is just to leave the dispute aside for the time being” (Ministry of Foreign Affairs: Set aside dispute and pursue joint development). This passage reveals that China acts following a strategy of delaying possible solutions. In the meantime, the building of military outposts in the South China Sea continues so that the military operational range is expanded southwards and serves as a demonstration of power. “China maintains that it is open to negotiations” (Fravel: 300), but if there will be negotiations, China “wants to ensure that it will be able to negotiate from a position of strength” (ib.: 299).
Summarized, Chinas strategy is based upon maintaining the status quo while strengthening the own position, delaying possible negotiation talks and deterring the neighboring states from expanding their advantages in the South China Sea. China consolidates its jurisdiction over the contested waters by strengthening the own position while weakening the position of its opponents. This behavior is destabilizing, since it provokes incidents between contrary naval forces and runs counter International Law. The questions is, under which circumstances the Chinese government is making efforts to actively solve the dispute and what policy options are available to reach an arrangement.
2.2 Policy options
Territorial disputes have a high conflict potential making it hard to find possible solutions. Most obvious in the South China Sea Conflict is the issue of existing natural resources. But under this surface are the more essential questions of national territory combined with strong nationalism as a driving force and the power projection in the region. The measures of creating artificial islands and building infrastructures on them carry high costs and thus show the importance of these former rocky islands. The historic claims China emphasizes and the strategic rivalry with neighboring states create another burden to find arrangements. “The territory in question may have little intrinsic value but its symbolic value can easily become inflated” (Rasler, Thompson: 147). Since territorial disputes affect the basic principles of nationality and statehood, they are more likely to lead to militarized confrontations.
The competing parties in the territorial disputes are China on the one side and Indonesia, the Philippines, Vietnam, Brunei, Taiwan and Malaysia on the other side. These last states are organized in the regional organization called “Association of the Southeast Asian Nations” (ASEAN), a compound of ten states promoting political and economic cooperation amongst each other. A third party directly affected by any policy option taken are the United States. This fact has historic roots, but also more recent ones. The former President Barack Obama initiated in 2012 a shift in the US Foreign Policy called “Pivot to East Asia”, meaning the systematic improvement of strategic influence in the region through military and diplomatic presence. The motivation behind this step is that the USA regards the countries organized in the ASEAN as ambitious economies and therefore wants to deepen the security, economic and diplomatic relationships. “The American decision to pivot its diplomacy and military forces towards the Asia-Pacific has therefore been viewed, especially in Beijing, as a response to China’s growing regional ambitions” (Emmers 2012: 41). As a result, the USA can act as a mediator, since they are not a party in the sovereignty disputes, but their mere presence can also lead to a growing strategic rivalry with China.
International arbitrations are the first option that come to mind for solving existing territorial conflicts. In 2016, an International Tribunal in The Hague ruled that “China’s claim to historic rights to resources was incompatible with the detailed allocation of rights and maritime zones in the Convention and concluded that, to the extent China had historic rights to resources in the waters of the South China Sea, such rights were extinguished by the entry into force of the Convention” (Permanent Court of Arbitration, Press release: 9). In short: Chinas claims have no legal basis. The Philippines litigated in this case against Chinese actions happening in Scarborough Shoal. China rejected this ruling in advance, saying that “the Arbitral Tribunal manifestly has no jurisdiction over the present arbitration” (Ministry of Foreign Affairs of the People’s Republic of China 2014). Moreover, this verdict is non-binding and thus, international arbitration offers a weak instrument to solve the disputes in the South China Sea sustainably. This is also due to the fact that China shows suspicion towards International Mediation and favors bilateral agreements.
States involved in territorial disputes can basically choose between three more policy options to act within an existing conflict. The first one is the delaying strategy, which “involves doing nothing, whereby states maintain their territorial claims through public declarations but neither offer concessions nor use force” (Fravel 2008: 3). This is the current strategy China pursues and was introduced in the previous part. China has also the opportunities to either make efforts in cooperating with each other or to threaten their opponents by choosing the military option of escalation.
By taking the escalation option, a state deters his rival by using military force to reach his goal of seizing disputed land. The state is more likely to do so, when power shifts appear that endanger his position. Uncertain prospects about the future and changes in the security environment are the reason why the state is becoming highly motivated to start a so-called “preventive war […] to forestall an adverse shift in the balance of power and driven by better-now-than-later logic” (Levy 2007: 1). The states attacks its opponent from a position of strength, before its rival reaches military parity. Fravel further separates these power shifts: “A ‘window of vulnerability’ is a growing defensive weakness, while a ‘window of opportunity’ is a fading offensive advantage” (Fravel 2008: 14). One can argue that taking the escalation option in territorial disputes is more a sign of becoming weaker than a sign of becoming stronger. The claim strength of a state contains two components, shown in the table: the amount of contested territory
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Table 1 "Claim strength in Territorial Disputes”, in: Fravel 2008.
the state already occupies and the “ability to project military power over all contested areas, including those a state claims but does not control” (Fravel 2008: 17). In our case, the power projection of China appears to be high, due to the massive creation of military infrastructure on the occupied islands. Despite the fact that their amount of occupied territory is smaller than the amount occupied by Vietnam for example, their claim strength is strong, making China less likely to use force at the moment. This is because China can be sure that due to its strong position, the results of negotiations would favor its claims. Only when China experiences a negative power shift, a decline of their current position relative to a competitor, they would be motivated to use force - following the explanation of Fravel (Fravel: 17). In the reverse, when the United States increase their presence in the South China Sea, or increase the arsenal of its allies to push back Chinas position, a military conflict becomes more likely - then we observe a ‘window of vulnerability’.
But this explanation only integrates the military presence as a key variable, not the economic and symbolic value of the territory at stake. Given the Chinese argument that the South China Sea is their territory since ancient times, the symbolic value is even higher. Together with the strong domestic nationalism, which is based on the historical rivalries with the neighboring countries, this creates an explosive mixture. Paradoxically, even if China acts defensively it can be perceived as a threat by the other involved parties. This phenomena comes from the concept of security dilemma, where one state takes measures to secure its position leading to more insecurities in turn. “When sovereignty is contested, the consolidation and defense of a territorial status quo can be viewed as aggressive, especially when it entrenches a disadvantage for one side” (Fravel 2008: 19). This might lead to a spiral of military buildups and hardened fronts, since every side wants to strengthen its advantage and is exactly what can be observed at the moment. Chinese unilateral efforts to manifest its position in the South China Sea proved to be counterproductive, since they bring the United States back in the arena. This characterizes the current situation in the South China Sea.
The main economic implication of choosing the escalation strategy is that “real conflict over west Pacific territorial claims could be horribly costly” (Green 2016: 35), since “international trade and cross-border investment in East and Southeast Asia have been the prime ingredients in the region’s growth and poverty reduction” (ib.). The “ASEAN-China Free Trade Area”, according to Chinese state media, had an overall trade volume of 480 billion US dollars in 2014 (Xinhua 2015). “China is now ASEAN's largest trading partner, while ASEAN is China's third largest trading partner” (ib.). An escalation of the current dispute and a shutdown of these vital trade flows would have far-reaching, negative consequences for all parties involved. China always emphasizes that it want the South China Sea to be a stable and peaceful area to guarantee the freedom of navigation. A military conflict would have the opposite effect.
The situation would be comparable with the taking of the Crimea by Russia in 2014. China would integrate the disputed area in its territory, but on the expense of conceivable economic sanctions. For the world’s biggest export nation, this would be a measure with fatal consequences in terms of exports or foreign direct investment. A regional conflict over sovereignty and security would quickly turn into a global conflict with harsh economic consequences. The American Think Tank “Rand” published a study in 2016 that analyzed the costs of a war between China and the USA. In a long, severe conflict the authors estimate that Chinas GDP would fall by 25-35 percent within one year. (Gompert, Cevallos, Garafola 2016: 63) “China's economic development would be set back and the credibility of its leadership would likely suffer as a consequence” (Cossa 1998: 6). The Chinese leadership is highly motivated to strengthen their maritime leadership, but this is perceived as a threat on the regional and global stage. “Growing uncertainty over maritime leadership in east Asia, especially between the United States and China, is reinforcing a static conception of order based upon social hierarchy that privileges stability at the expense of legitimacy” (Morton 2016).
It is a narrow level between China's confident performance in the South China Sea and its embedding into the existing international order. It is clear that a possible power transformation must proceed peacefully not unintentionally risking what has been achieved as a result of the opening to the world trade. An escalation would be a crucial test for the economic and diplomatic relations to China and would be likely to damage China’s international reputation. Therefore, preventive measures have to be taken, to deescalate the situation. The UNCLOS emphasizes that countries bordering a semi-enclosed sea as the South China Sea “should co-operate with each other in the exercise of their rights and the performance of their duties under this Convention” (Van Dyke: 266). All conflicting states are parties to UNCLOS, therefore, this international document sets a basis for regional cooperation. Article 74, for example, “places claimant states under an obligation to make an effort to enter into provisional arrangements of a practical nature, and ensures that such provisional arrangements will not jeopardize the final boundary agreement” (Beckman in Bateman 2009: 226).
With the “Declaration on the Conduct of Parties in the South China Sea (DOC)”, China and the ASEAN member states pursued the exactly this way of enhancing regional cooperation. The declaration was signed in 2002 to establish mechanisms to build confidence among the nations, to prevent crisis and to ensure a peaceful solution of the conflict in the South China Sea. The overriding goals were to initiate regular dialogues and cooperative activities, foremost in sensitive fields as marine environmental protection. The DOC is also a guideline for behavior, since the states declare to exercise self-restraint (Thao in Bateman: 211). “The level of tension in the South China Sea has been considerably reduced since 2002. However, it is naïve to believe that the parties ceased activities that could complicate the situation” (ib.).