Despite the relative calm and improvement in relations between China and the ASEAN countries in the past three decades, the disputes over the islands of the Spratlys and the Paracels have caused concern for many parties. Lots of natural resources are at stake. Estimates of up to 213 billion barrels of oil and natural gas are under the waters. Having been on a shopping spree, especially in South America and Africa for energy resources, China is understandably keen on putting its fingers on these potentially rich reserves.
China claims all of these islands, about 25 in the Paracels located just below Hainan and straddling Vietnam’s east coast, and about 200 in the Spratlys (Spratly Island itself being one of the 200). All told, apart from the reefs, banks, reeds, seamounts, atolls, sand bars, islets and islands, if all the rock outcrops are included the count could rise up to about 700 features. The UN, however, defines a geographic item of note as something that is always above water even at high tide. China calls the Spratlys “Nansha” and the Paracels “Xisha”. There are six claimnants: China believes it has sovereignty over all of them. Even a mere rock outcrop engages China to plant its flag on it (see photo).
Vietnam claims all of the Spratlys and half of the Paracels. The Philippines claims eight of the Spratlys close to its western coast, just off the province of Palawan. Taiwan’s claims mirror those of China but Taiwan occupies the largest island of the Spratlys, Taiping Island. Brunei claims two reefs and one bank. One of the reefs, Louisa Reef, also under Malaysia’s claim, consists of rock outcrops jutting out of the sea. Only two of these rocks are permanently above water; the others disappear at high tide. Malaysia has some form of occupation in six islands out of the 12 islands, islets and reefs they claim close to its coast.
Then there is the UN Law of the Sea where all claimnants are signatories except Taiwan. China refuses to submit the issue to UN arbitration and has insisted on one-on-one talks with the other claimnants. UN requires all parties to agree before it accepts any dispute. China wants bilateral rather than multilateral negotiations. It abhors the involvement of international parties in the talks.
Although China and Taiwan have similar claims, China itself claims Taiwan as its own. After all, Taiwan is not recognized internationally as a sovereign entity that can claim anything. China claims practically all of the South China Sea (SCS) from Hainan down to as far as Malaysia and Brunei, extending 1,600 kilometers almost reaching the shores of the large Kalimantan Island (formerly Borneo), which is shared by Indonesia, Malaysia, and Brunei. It was in 1947 that just before the communist victory in Mainland China that Chiang Kai-shek’s government declared in maps they drew that the so-called “nine dashed lines” mark China’s claim over the islands (see graphic).
The Kuomintang map makers claim that the SCS was China’s from time immemorial. When the Kuomintang government fled to Taiwan, they continued to hold to the “everything is ours” view and in fact established a garrison complete with an airstrip in the largest of the islands. Taiwan continues to maintain this garrison to this day.
Seventy percent of Japan’s oil passes through the SCS, and 60 percent of sea-transported oil passes through it supplying China, South Korea, and Japan. Also, the SCS is marked by three of the world’s busiest sea ports in its extremities -- Singapore in the south and Hong Kong in the north, and Kaoshiung, a little farther northeast at the southernmost tip of Taiwan. This body of water connects with the US-defined “choke point” of the Malacca Straits. A choke point is one which the US considers as an extremely important and vital sea lane for maintaining peace and unimpeded global trade. There are 16 of these choke points which were defined during the Reagan-era as it grappled with the geopolitics in the context of the now-defunct former Soviet Union.
US strategic interest
The US is keen that the SCS remains an international freeway, not under the sovereignty of anyone. For them, this is important for military purposes as well, apart from international commercial navigation purposes. The US insists that despite its withdrawal from Vietnam in 1975, it never left Southeast Asia and continues its presence economically, diplomatically, technologically, and militarily. The US does not accept the proposition that international commercial navigation is simply permitted by someone who claims sovereignty over that body of water. Obviously, it does not recognize China’s sovereignty claim over it.
Indonesia is not a claimnant but has joined in Malaysia’s protest against China lodged with the UN in 2009. Singapore too is not a claimnant but has declared in July 2011 that it wants China to clarify its sovereignty claims for the sake of peace in the region.
Thailand, is also not a claimnant, but has some other issues with China, including Mekong River squabbles. It is the only ASEAN country with an aircraft carrier (purchased second hand from Spain in 1997). It might be requested by ASEAN to deploy it in the SCS to display ASEAN sea-power, a possibility not to be ignored.
Thailand, however, is something of an unknown factor. His Majesty King Bhumipol himself, who is partially of Chinese descent, has sent some of his children to China for studying and extended visits. Bilateral trade in 2012 was worth US$70 billion and is expected to reach US$100 billion by 2015. Thailand was the first Asean member to sign a free-trade pact with China in 2003. Military cooperation began in 2010 with joint counter-terrorism drills code-named “Blue Strike.” Thailand is the second biggest buyer of military hardware from China, after Myanmar. This might explain why Thailand has been reluctant to make a firm position on the SCS issue, thereby weakening the Asean position.
The remaining three other ASEAN countries have ties with China in one way or another. Myanmar enjoys the highest China FDI among all ASEAN countries. Cambodia and Laos are both beholden to China for other reasons, including FDI and political support. They have no reason to dwell on the disputes over SCS being non-littoral states as far as the SCS is concerned.
Vietnam, the Philippines and Malaysia (in that order of intensity) have been the most active parties in engaging China in the SCS disputes. This is easy to understand since these three countries flank the SCS with Vietnam to the left, the Philippines to the right, and Malaysia south-bottom. It is also worth noting that Vietnam and the Philippines are the two countries in ASEAN with the most intimate familiarity with the US, especially in military terms due to historical circumstances. This is significant since China is especially irked by the possibility of US involvement in the disputes over the SCS.
The Vietnamese have their own name for the Paracels, “Hoang Sa”. They call the Spratlys “Troung Sa”. Of all the ASEAN countries, only Vietnam had the experience of actually going to war with China. In past centuries, there were minor battles and skirmishes. The recent serious one was in 1979 over border issues with China. In that battle which lasted just a few days it is thought by regional watchers that Vietnam actually was the victor; China withdrew with a bloodied nose. Like China, Vietnam claims history on its side in claiming ownership and sovereignty over the Paracels. When the post-colonial era dawned, Vietnam found itself a divided country. About half of the Paracel reefs, islets, sand bars, and islands -- about 25 in all -- were split between China and the then South Vietnam. Then came the Vietnam War debacle with China a friend and supporter of North Vietnam.
It was in 1974 that in the waning days of South Vietnam, as North Vietnam was inching its way to take over the South, China engaged the South Vietnam-occupied islands in a brief but bloody battle. When the Vietnam War finally ended in 1975, all the Paracel Islands were fully taken over and occupied by China. Every major island in the group, nine in all, was installed with some form of military presence. Unified Vietnam remained under the sway of China in the immediate succeeding years and Vietnam was busy with reconstructing the war-torn country. That cozy relationship however did not last long as evidenced by the China-Vietnam border war in 1979, just four years later. Then in 1982 Vietnam laid claim to the continental shelf along its coast and declared in its Exclusive Economic Zone (EEZ). It was perhaps the first sign that Vietnam felt it was now a secure country and thus is in a better position to assert its position on the SCS and that China should return the islands they took over by force in 1974 from erstwhile South Vietnam.
As to the Spratlys, Vietnam maintains some form of military presence in over 20 islets, reefs, islands and other “features” in the SCS. Meanwhile, fast forward to 2011 and we find Vietnam in progress in upgrading its naval capabilities under the so-called government ordinance “2020 Vietnam Ocean Strategy” which aims at a fleet by 2020 consisting of up to 40 warships (400 tons). The commercial-industrial seaport of Haiphong in the north is also the site of a new military port being built which would eventually be equipped to accommodate 40K-ton naval vessels with facilities for submarines. Vietnam in 2020 would thus have two very respectable naval military outposts, Cam-Ranh Bay and Haiphong.
The Philippines calls the island reefs and islets it claims as “Kalaya-an” which is Tagalog vernacular for freedom. A year after independence in 1946, a Philippine businessman named Tomas Cloma and his brother claimed that they discovered some islands and reefs 450 kilometers northwest of the most western island province of the Philippines, Palawan. It consisted of five islands, two sandbars, and two reefs. It seemed to be a private affair until he transferred the rights to the islands to the Philippine government in 1974, a full 25 years later. Twice -- in 1971 and 1978 -- then Philippine President Ferdinand Marcos declared that the island group forms part of the Philippine archipelago. By presidential decree in 1978 Marcos also declared the surrounding waters as part of the country’s Exclusive Economic Zone (EEZ). It has occupation in some form in eight of the island group. The biggest of them is the 37-hectare Thitu Island where the government established a colony-cum-municipality complete with a mayor elected by 200 registered voters. A 1,300-meter airstrip was built and the Philippines renamed Thitu as Pag-asa Island, which means hope in Tagalog. Some 100 soldiers are now stationed in Pag-asa and about 300-350 soldiers take part in taking turns in patrolling and occupying the other claimed islands and reefs.
Apart from some fishermen, most residents are provided with government jobs with free food provisions. It has a functioning freshwater supply system. The island has satellite television facilities and electricity is provided by solar-powered generators. A mobile phone company operates but is continuously striving to deal with unstable communication signals. The island group is patrolled by the government using World War II vintage vessels. Until 2011 when the US provided the Philippines with a decommissioned coast guard cutter, the naval flag ship of the country was a warship named Rajah Humabon, which is about 70 years old. To say the vessel is obsolete is perhaps a charitable description of it. The refurbished US Coast Guard Hamilton-class cutter was renamed BRP Gregorio del Pilar, and became the new flagship in 2011. The country has also begun a US$1.8 billion military upgrade that will put into place by 2017 new frigates, helicopters capable of anti-submarine warfare, coastal patrol vessels, and amphibious assault vehicles. In addition, Japan, which has its own marine territorial disputes with China, will provide the Philippines with 10 new Coast Guard patrol vessels. This is on top of a second US decommissioned Coast Guard cutter which joins its Philippine naval fleet in August 2013. The Philippines, alone, has also begun calling the area West Philippine Sea, instead of South China Sea."
The Philippines however, being a former colony of the US could seek support through the Visiting Forces Agreement it maintains with the US. The country was host to Subic Bay, a deep water naval military facility which in its heyday accommodated submarines, aircraft carriers, and even unconfirmed stockpiles of nuclear weapons. Nearby is Clark Air Base, now a commercial airport, but which was a US standard-bearer air base in the days of the Vietnam War. Thus, whatever deficiencies the Philippines may have in its naval military capabilities, there is this window of possible support it could have from the US which would be a convenient excuse for why the US may get easily involved in the SCS disputes.
In the case of Malaysia, the main reason for its claims is its continental shelf definition following the Geneva Convention of 1958. It claims 12 islands and reefs but only has some form of occupation in six of them. It has built a 600-meter airstrip in Terembu Layang Layang, the largest island it occupies. Its continental shelf demarcation, however, overlaps with that of Indonesia and Brunei, all three countries sharing the gigantic island of Kalimantan (Borneo). Since the 1990s Malaysia has been upgrading its naval military capabilities. After all, it is an important part of the vital “choke point” of the Malacca Straits. It obtained its first French-made submarine in 2009, to be followed by two more. It has a relatively modern fleet of naval patrol crafts circling around its claimed islands and reefs. It has lodged a protest to the UN against China over the disputed islands in 2009. This protest was joined in by Indonesia.
What Is At Stake
Apart from the freedom in navigation in the SCS, with all its consequences for military/security operations, marine research, fishing, over-flight rights, one of the obvious motivations to get a hold of the sovereignty is the potential of natural gas and oil reserves suspected to be lurking under the seabed of the SCS. Some scholars have pointed out that the estimates resemble those of the Persian Gulf.
From the business point of view, however, any hostility in the SCS will affect the current dynamics of trade and commerce. At first tier would of course be the ASEAN countries and China. In 2004, trade volume between China and ASEAN stood at US$55 billion. In 2011 this is estimated to be about $250 billion and growing. In 2010 the ASEAN Free Trade Agreement (AFTA) came into full effect. As a result, 7,000 tariff-free items enjoy inter-trade among the various members in the pact.
Another issue to consider is the complementarity between ASEAN and China that could be affected by any hostilities in the region. It is a fact that China has had the distinction of being the so-called factory of the world. It is also observed that this title may have already begun its sell-by date as initiated by the events in 2010 which China watchers call the “Foxconn effect,” in which workers from the computer technology company named Foxconn demanded higher wages, triggering the rise in labour costs across all manufacturing in China. It is in this light that several countries in ASEAN will be the beneficiaries of those factories that would move out of China by looking for cheaper labour.
A second tier business and trade concern would be other users of the SCS. All commodities going to China, Japan, Taiwan, Korea coming from Europe, Africa, India, and the Middle East would also pass through this sea lane. Hostilities would disrupt this trade.
It would have been simpler if we can regard ASEAN as one single player in the SCS dispute with China. But ASEAN is not one, and even among the various ASEAN members there are overlaps in their respective vested interests. There are overlapping and conflicting claims. The problem of one ASEAN country pitted against each other has not yet appeared since at the moment the overwhelming claims of China drowns out all other talks of interspersed-intertwining claims. For example, the prospect of Vietnam meeting the Philippines head on is not an unrealistic scenario. Malaysia against Brunei, Malaysia against Indonesia are other scenarios. At this point in the disputes, it is easier and tempting to think of one-ASEAN against China. This is not the case. Finally, China is willing to talk to Vietnam over the Spratlys, but China is adamant that the Paracels are not for discussion. This in fact can be a doorway to hostilities since as history as shown, Vietnam is not the ASEAN country that will shy away from a war or battle.
It is well known that China adamantly wants a bilateral form of talks to deal with the disputes. In July 2011, however, at an ASEAN summit in Bali, China and ASEAN agreed on a document that would push to implement the guidelines of the 2002 document called Declaration of Conduct (DOC) in the South China Sea. Again, after China being viewed by ASEAN members as having abandoned the 2002 DOC, it is now back to talking to ASEAN.
In these days that China is seen as a prime economic engine of the world, while Europe and Japan languish, and the US is in an economic auto-pilot to nowhere, China is at pains to explain that its rise is a peaceful one. China tries hard to demonstrate that it does not want to impose its values on others as they have displayed in their dealings with South America and Africa. Yet, its behaviour in the dispute with ASEAN countries over the South China Sea will be looked at with interest by the global community. It will show what China will do when its interests collide with those of others, and not just any normal “others”. In this case the “others” are a host of countries in its own backyard. Whatever China and ASEAN can come up with, it will reflect the China in an era of 21st Century characterized by globalization and challenged by competing interests.
( Reuben Mondejar, PhD and Ming Yang, MSc work for the Department of Management, City University of Hong Kong. This is the first of their two-part article. )