If recent developments are any indication, the South China Sea will remain an intense flashpoint for the rest of this year. Two things are especially worth following. First is the degree of importance China will assign to the South China Sea given its myriad domestic and foreign policy priorities. Second is how far neighboring littoral states will push back against Chinese actions and overtures in the contested sea and what tools they will be able to employ.
In the South China Sea, asymmetry between China and its neighbors in Southeast Asia exists not only in terms of capabilities but also in the degree of significance attached to the disputes. The South China Sea has never occupied the top rung on Beijing’s foreign policy agenda, except perhaps during the Philippines’ initiation of arbitration against China’s claims of historic rights in 2013 and the Hague tribunal’s decision in 2016. Given economic reforms, protests in Hong Kong, President Tsai Ing-wen’s renewed mandate in Taiwan, censure of its security policies in Xinjiang, trade talks and great power rivalry with the United States, and the ongoing public health crisis of the novel coronavirus, Beijing will have its hands full. It may have little left in its tank for the South China Sea. In contrast, the six-way territorial and maritime row represents the most pressing security and foreign policy priority for other claimants. This sharp asymmetry may stimulate a willingness on the part of the biggest claimant to concede and negotiate with other disputants. That would jive well with China’s stated intention to project good neighborliness and settle the issue among the claimants without intervention by other powers. However, this readiness for dialogue may not necessarily extend to other maritime powers, especially as the South China Sea gradually emerges as a theater for great power competition.
China is apparently taking a more active role in conveying its narrative and engaging international think-tanks and publics. In April 2019, the South China Sea Strategic Situation Probing Initiative was launched by the Peking University Institute of Ocean Research. Earlier this year, the initiative has already held exchanges with regional counterparts in Singapore, Malaysia, and the Philippines. This is on top of the Hainan-based National Institute for South China Sea Studies setup in 2004 which has also been holding exchanges with foreign counterparts. Whether these attempts at public diplomacy allay concerns among Southeast Asian claimants remains to be seen.
Meanwhile, the high priority given to the dispute by other claimants means that they will exhaust the broad gamut of defense, diplomatic, and legal redress to safeguard their interests. Vietnam, for instance, concluded the 11th iteration of its Diplomatic Academy’s annual South China Sea conference in November 2019, drawing local and international experts. But pushback against Chinese incursions tends to wax and wane, and approaches vary among claimants. The nature of the threat posed by Chinese actions and the degree of economic ties with China are important variables to consider here.
Having lost the Paracels in 1974 and Johnson Reef in 1988, not to mention fighting China in a bitter land border war in 1979, Vietnam traditionally pushes back the hardest. Possible resort to legal means and international forums, especially as the country chairs ASEAN this year and assumes a nonpermanent seat on the UN Security Council (2020-2021), will diversify Hanoi’s toolkit and raise the stakes for future Chinese interference in Vietnam’s marine economic activities. The Philippines took a tougher stance after losing Mischief Reef in 1995 and control over Scarborough Shoal in 2012. The first incident pushed the country to modernize its armed forces (1995) and eventually sign a Visiting Forces Agreement (1999) with its longtime treaty ally, the United States. The second incident compelled the country to launch a legal challenge to China’s excessive maritime claims (2013) and allow U.S. troops a rotational presence in mutually agreed locations throughout the country via the Enhanced Defense Cooperation Agreement (2014). Last year, Manila also sought and obtained greater clarity on the scope of its Mutual Defense Treaty with the United States. However, Manila’s recent move to abrogate the Visiting Forces Agreement may undercut the value of the alliance at a time of growing Chinese presence in the disputed sea.
Further from China’s reach, Malaysia and Brunei have long pursued quiet diplomacy. But with Chinese outposts now enabling distant fishing fleets and patrols to scour the sea’s southern reaches, they, as well as Indonesia, may eventually recalibrate their strategy. Indonesia’s tough response to foreign illegal fishing in its waters and its strong posturing in the Natunas creates disquiet in its relations with China as well as with ASEAN neighbors like Vietnam. Thus, China’s assertiveness and the smaller claimants’ heightened sense of insecurity generates the potential for conflict, drawing other major powers in—to Beijing’s displeasure.
In addition, in the interest of gaining legitimacy, smaller claimants have been aligning their maritime claims with international law, notably the UN Convention on the Law of the Sea. Malaysia’s submission of its second extended continental shelf (ECS) claim in the South China Sea last December is instructive. Prior to that, Vietnam and Malaysia jointly submitted an ECS claim in 2009, a move which compelled Beijing to officially articulate its nine-dash line claim. The Philippines, meanwhile, ratified its first ever maritime boundary delimitation agreement with Indonesia last year. These legal foundations may serve to pressure Beijing to bring its claims into conformity with international law. This is especially so after the landmark 2016 arbitral award invalidated China’s claimed “historic rights” and ruled that none of the features in the contested Spratly Islands are capable of generating exclusive economic zones (EEZs). Other claimants will likely continue to pursue their own ECS submissions and EEZ delimitations in the South China Sea.
Southeast Asian claimants will also push back against Chinese overtures to upend security engagement and offshore energy undertakings with other countries in the South China Sea. The deep and complex web of alliances and partnerships, to which security and economic engagement with China forms just one part, is integral to ASEAN’s centrality and autonomy, an aspiration threatened by growing major power rivalry. The 2019 defense white papers of Malaysia and Vietnam both recognized this context of great power competition. Hanoi, for one, added a new caveat in its defense policy, expressing readiness to develop military relations with other countries while still upholding its four nos policy: no military alliances, no siding with one country against another, no foreign military bases, and no use of force or threat to use force in its international relations. This is a significant departure in Vietnam’s strategic thinking and goes to show the extent to which Chinese actions are driving such shifts.
In relation to hydrocarbons in the South China Sea, Southeast Asian claimants resist Chinese demands to terminate upstream contracts with foreign companies from non-claimant states because doing so would adversely affect investor confidence even outside the energy sector. For example, despite being compelled to suspend Spanish firm Repsol’s offshore work in 2017 and 2018, Vietnam continued to encourage Russian, Japanese, Indian, and U.S. energy companies to operate in its EEZ in the South China Sea. The Philippines likewise suggested it would welcome involvement from Russian energy company Rosneft in the country’s oil and gas projects. This said, the continued retreat of Western investors from offshore projects around the South China Sea may facilitate Beijing’s proposed joint development model by leaving its neighbors with few options. For instance, the exit of U.S.-based Chevron from Malampaya, the Philippines’ largest natural gas field located in the South China Sea, and the purchase of its equity by Udenna Group may pave the way for China National Offshore Oil Corporation to acquire a stake in the aging gas field that supplies up to 40 percent of the electricity for Luzon, the country’s main island. Last year, Phoenix Petroleum, one of Udenna’s companies, signed a deal with the Chinese state-owned company to develop a liquified natural gas terminal. ExxonMobil was also rumored to be exiting from the Blue Whale project off Vietnam as part of the company’s divestment efforts.
In sum, notwithstanding bilateral and regional efforts at dispute management and confidence building, the level of importance that claimants will assign to the South China Sea disputes and the extent to which they will push back against coercion will foretell how tempestuous the South China Sea will get in 2020.