For years, China has promoted the idea of “shelving disputes” in the South China Sea and focusing on areas of cooperation. Southeast Asian claimants—Brunei, Malaysia, the Philippines, and Vietnam—have been receptive to this approach to varying degrees. While this strategy brings significant economic benefits, it carries substantial long-term risks for their territorial claims and regional security interests.
Vietnam: Written Agreement
The 2011 Agreement on Basic Principles Guiding the Settlement of Sea-Related Issues between Vietnam and China stands as a quintessential manifestation of a “shelving disputes” approach. This agreement explicitly prioritizes the overall bilateral relationship over specific disagreements. It reflects Vietnam’s strategic calculus wherein maintaining favorable relations with China takes precedence over pursuing immediate resolution of South China Sea disputes. This framework enables both countries to develop robust economic ties and political cooperation while effectively sequestering thorny sovereignty questions to a separate, less urgent track of engagement.
Malaysia: Pragmatic Engagement
Although lacking a formal agreement comparable to Vietnam’s 2011 accord with China, Malaysia has developed its own variant of a “shelving disputes” policy. The country’s position on the South China Sea is characterized by avoidance of dispute escalation while maintaining diplomatic engagement with all relevant parties, including China. Malaysian policymakers deliberately avoid framing China as a threat. Furthermore, Putrajaya has agreed with Beijing to establish a bilateral dialogue mechanism focused on managing maritime issues, emphasizing cooperative engagement rather than confrontation over territorial claims.
Brunei: Two-Step Approach
Similar to Malaysia, Brunei has opted to shelve the South China Sea disputes without a written agreement with China. Employing a two-step approach, Brunei maintains that territorial disputes should be addressed directly between concerned parties through diplomatic channels—a position aligning with China’s preferred bilateral approach. Simultaneously, Brunei works within ASEAN toward developing a binding Code of Conduct in the South China Sea, seeking regional mechanisms for managing tensions.
The Philippines: Inconsistent Application
Unlike the relatively consistent approaches of Vietnam, Malaysia, and Brunei, the Philippines’ strategy regarding the South China Sea has fluctuated dramatically across administrations. The Aquino government (2010-2016) filed a landmark arbitration case against China in 2013, resulting in the historic 2016 ruling that invalidated China’s nine-dash line claim. The Duterte administration (2016-2022) deliberately set aside this legal victory in exchange for promises of Chinese investment and development assistance. The Marcos administration (2022-present) has confronted Chinese activities in contested waters through the Transparency Initiative that publicize incursions. What remains consistent across these administrations, however, is the continuation of economic engagement with China regardless of the diplomatic approach to territorial disputes.
Other Evidence of “Shelving Disputes” Policies
Another evidence of Southeast Asian claimants’ acceptance of China’s “shelving disputes” approach lies in the formalization of high-level bilateral partnerships despite unresolved territorial disputes. Vietnam, Malaysia, and the Philippines established Comprehensive Strategic Partnerships with China in 2008, 2013, and 2018 respectively. Brunei established a Strategic Cooperative Partnership with China in 2018. Furthermore, both Vietnam and Malaysia have subscribed to China’s signature foreign policy concept of Community with a Shared Future. These formal arrangements create an institutional framework for shelving disputes, preventing maritime disputes from disrupting the broader bilateral agenda.
Economic Benefits of “Shelving Disputes” Policy
Treating South China Sea disputes separately from broader bilateral relations has yielded substantial economic benefits for Southeast Asian claimants. China has been the largest trading partner of Vietnam since 2004, Malaysia since 2009, and the Philippines since 2016. As of 2024, Brunei‘s two-way trade with China valued at $2.81 billion, making China among Brunei’s top three trading partners. That same year, China’s trade with the Philippines reached $42.27 billion, with Malaysia $112.80 billion, and with Vietnam an unprecedented $260.65 billion. While Chinese investment in the Philippines remains modest, China ranks as Brunei‘s second-largest, and Malaysia‘s and Vietnam‘s third-largest source of foreign investment. These provide powerful incentives for Southeast Asian claimants to maintain economic ties with China despite territorial concerns.
Strategic Costs and Risks
However, shelving the South China Sea disputes has also normalized China’s aggressive activities in contested waters and enabled Beijing to steadily consolidate its claims. Beijing has strengthened its administrative control over the disputed waters through a unilateral fishing ban since 1999, the establishment of Sansha City in 2012, and the creation of Xisha District in 2020. Since 2013, China has reclaimed several features in the South China Sea and militarized them. These facilities have enabled an increasing presence of Chinese vessels that interfere with the economic activities of other claimants, including harassment of fishing vessels and obstruction of oil and gas development. Furthermore, the PRC has repeatedly infringed on Vietnam’s waters, for example, sending an oil rig and a survey ship into Vietnam’s Exclusive Economic Zone in 2014 and 2019 respectively. Perhaps most significantly, China has developed anti-access/area denial capabilities throughout the region, raising the costs and risks for external powers—particularly the United States—to operate military forces in support of Southeast Asian partners during potential conflicts.
Conclusion
The “shelving disputes” approach creates a challenging dilemma for Southeast Asian claimants. They either engage economically with their largest trading partner while potentially weakening their territorial position, or risk economic coercion by taking a firmer stance on maritime claims. As trade and investment ties grow more significant, the economic cost of confrontation increases, reducing Southeast Asian nations’ bargaining power on territorial issues. The passage of time without resolution benefits the party with greater capacity to establish and maintain physical presence in disputed areas. This strengthens China’s claims under certain interpretations of international law despite the 2016 Arbitral Tribunal ruling. Southeast Asian claimants are facing significant challenges in developing approaches that preserve their territorial claims while managing economic relationships with China.
