The South China Sea dispute has the potential to destabilise a region that is one of the most economically significant in the world, and home to around two billion people. Most analyses on this topic focuses on how China should be countered, without paying much attention to Chinese interests and motivations. 

Therefore, this policy paper analyses the South China Sea dispute from the perspective of the People’s Republic of China in order to offer policymakers China’s point of view.  With this view in mind, the paper offers three policy recommendations aimed at creating a peaceful de-escalation of the conflict.

Background

Before evaluating China’s interests in the region, a brief historical timeline is necessary to contextualise the current situation.  The official start to conflict can be traced back to 1947 when the nationalist party of China released what was then called the “eleven-dash line” map – a claim of ninety percent of the South China Sea.[i]  Six years later, when the communist party came to power, Mao Zedong released the “nine-dash line” map.[ii]  The decades since have been plagued by intermittent escalation in the South China Sea as China has tried to act on these claims.  

Three significant events in the latter part of the 20th century show this.  The first was in 1974, when Chinese forces led an air and ground assault on South Vietnamese positions in the Paracel island chain.[iii]  The second occurred 1988 in Spratly island chain when Vietnamese forces attempted to contest Chinese activity on Fiery Cross Reef, but were defeated.[iv]  Lastly, in 1996, a small naval clash between China and the Philippines took place as Chinese forces began to occupy islands in Mischief Reef.[v]        

However, six years later the Declaration on the Conduct of Parties in the South China Sea was signed by China and ASEAN in 2002. Although this agreement brought about a period of relative calm, it did not last long, because in 2009, Vietnam and Malaysia submitted a joint claim to the UN that would extend its maritime territory, which resulted in a strong backlash from China.[vi]  In 2012, tensions once again flared when the Philippine government sent a warship to confront Chinese fishermen in the Scarborough Shoal, which resulted in a Chinese boycott of bananas from the Philippines, costing the nation over thirty million dollars.[vii]  Most recently, in 2016, the Permanent Court of Arbitration ruled in favour of the Philippines, declaring that China’s nine-dash line, which rests on historical claims, has no legal standing.[viii] 

What Motivates China?

With the historical context established, it is now possible to explore why China is so involved in the South China Sea. China has three main interests that motivates its behaviour.  Although there is significant overlap, these interests are security, territorial reclamation, and resource extraction.

First, the desire to militarily secure the South China Sea stems from a naval theory developed by Commander Liu Huaqing, who is often called the “father of China’s navy.”[ix]  This naval policy, called jinhai fangyu or “offshore defence” outlines a plan to gradually develop Chinese naval power to be able exert control over the “first and second island chains,” then develop a blue water navy capable of operating globally.[x]  Concerning the South China Sea, this strategy has two primary goals.  First, to secure the trade routes that cut through the South China Sea.  Every year, thirty percent of the worlds maritime trade travels through the South China Sea, which includes one-third of the world’s oil, and half of its liquefied natural gas.[xi]  Therefore, China, as the world’s largest exporter and second largest importer has a strong desire to protect these vital shipping lanes from potential foreign interference and piracy.[xii]  Second, at a more basic level, China’s naval militarization of the South China is also to ensure that it can defend its land territory in the region which, lately, China feels the US has threatens with “freedom of navigation operations” and flyovers.[xiii]

This brings up China’s second interest, which is closely related to the first.  Another part of the strategy that Liu outlined is to reclaim territory that China lost during the “century of humiliation.”[xiv]  This period between 1839 and 1949, when China was subjected to European and Japanese imperialism is an important motivator for China’s policy in the region today.[xv]  Now that China has risen as a global power, it is capable of reclaiming what it lost to right the wrongs done to them, and to prevent it from ever happening again.[xvi]  Specifically, China has carried out an ongoing campaign of seizing islands through military force, and constructing artificial islands.[xvii]  Many of these sites are highly militarized, outfitted with radar, airstrips, artillery, and missile systems.[xviii]  

China’s third interest is in the vast natural resources in the South China Sea.  Estimates have shown that there are 11 billion barrels of oil, 190 trillion cubic feet of natural gas, and around twelve percent of the world fish stock located in the South China Sea, which will fuel China’s economy as it expands its Belt and Road Initiative.[xix]  However, perhaps more importantly, these energy resources are a vital aspect of Chinese national security.  Energy resources are required to meet domestic demands, and to create energy independence.[xx]  

Policy Proposals

The goal of this paper is to provide three options specifically crafted to China’s interests which are addressed to specific actors that ought to be applied in synergy in order to foster a peaceful de-escalation of this conflict.

1. Security: Confidence-building measures (CBMs)

With increased military activity in the region comes greater risk for accidental escalation.  That is why more effort should be put towards building trust and establishing lines of communication between military forces in the South China Sea.  While all parties could benefit from such measures, these policies should be pursued by the United States and China, in particular.  Here, confidence-building measures are policies that are aimed at reducing the risk of military escalation, and provide mechanisms for de-escalation when it occurs.

While agreements like the “notification of major military activities,” and the Code for Unplanned Encounters at Sea (CUES) have reduced accidental encounters, and created trust through the sharing of policy documents, more needs to be done.[xxi] 

Lines of communication between the two militaries must be expanded in order to avoid miscalculation.  This can be done in two ways.  First, by opening a telephone line that enables both militaries to communicate with each other in real time.  The mechanism currently in place, the Defense Telephone Line, often does not facilitate live communication, which could be dangerous in a crisis.[xxii]  Second, by creating more in-person communication between top militaries from both nations.  This could be done by reviving the Joint Staff Dialogue Mechanism which was a program that sought to build trust between the two militaries by hosting regular meetings between senior staff on both sides.[xxiii]  While these CBMs alone will not resolve the conflict, they will likely reduce military miscalculation, and lower the risk of escalation if accidents occur.

2. Resources: Joint-development agreements (JDAs)

 Joint-development agreements in the maritime context, are when states pool their rights in order to manage, explore, and extract resources from a common area.[xxiv]  In the past, JDAs have been used in the region to mitigate conflicts between parties.  These examples include in 2009 between Vietnam and Malaysia, in 2005 between the largest state-owned oil companies in China, Vietnam, and the Philippines, and the 2013 joint-fishery agreement between Japan and Taiwan.[xxv] 

Therefore, this paper recommends that policymakers from the claimant nations pursue joint-development agreements.  Specifically, this should be done by major parties in the region agreeing to work together to explore and extract energy resources throughout the South China Sea.  For example, the three major oil and gas companies, PetroVietnam, Philippines National Oil Company, and China National Offshore Oil Corporation could each separately be assigned a separate task such as exploration, resource extraction, and logistics, but share whatever resources are produced from their activities.  Furthermore, since fish in the region migrate through the waters claimed by multiple parties, this paper recommends that the nations come together to establish a “joint fishery commission of the South China Sea” whose mission is to establish a set of fishery guidelines.[xxvi]  However, while the Philippines’ constitution poses an obstacle, since it prohibits JDA’s with nations who have unresolved rival claims, an often-cited workaround to this allows joint-ventures in areas within the Philippines’ economic zone, but outside of China’s claim.[xxvii]

3. Updated code of conduct 

Lastly, this paper suggests that policymakers continue negotiating an updated code of conduct for the South China Sea.  Although a multilateral code of conduct has been implemented since 2002, and is updated frequently, it has served a more symbolic role, working only to briefly relieve tension in the region.  Therefore, a more comprehensive negotiation is recommended. 

An appropriate forum for negotiating an updated code of conduct is at the East Asian Summit which takes place biannually.  To effectively carry out these negotiations, Singapore should be used as a regional mediator.  Singapore has considerable credibility and experience, and is recognized in the region as well as globally as an “honest broker.”[xxviii]  Additionally, Singapore is in close proximity to the South China Sea yet is neutral in the conflict.  This will make it a more effective mediator because it will be able to avoid suspicions of bias while also having an incentive to negotiate a good settlement because it will have to live with the results.

Furthermore, while the agreement should be between ASEAN and China, nongovernmental and civil society organizations should be included in negotiations as well, specifically, those who represent the views of fisheries and environmental protection.  This code of conduct should also establish a dispute resolution apparatus that is in accordance with UN Law of the Sea, but specifically tailored to the regional context, which will increase the legitimacy of the body.  Negotiations should also include discussions over issues on the periphery, such as how piracy and transnational crime should be countered in the South China Sea.

If any settlement is to be successful, it must be in the spirit of the “ASEAN Way,” which advocates for comprehensive, consensus-based, and private negotiations to produce long-lasting settlements and allow for face-saving.[xxix]  Ideally, all aspects of this agreement should be made legally binding.  However, this is the main obstacle to an effective code of conduct.  So far China has been completely unwilling to agree to a binding agreement, and that does not show signs of changing.  Additionally, even if a binding document was agreed to, it is unclear how it would be enforced if China breaks it.  Regardless, a more comprehensive set of norms for the region should be pursued as it establishes guidelines and boundaries for how actors should behave in the South China Sea.

Conclusion

The protracted conflict in the South China Sea has the potential to not only disrupt the world economy, but also escalate into a military conflict in one of the most populous regions in the world if policymakers do not direct their energy towards de-escalatory measures.  This policy paper analysed the dispute from the perspective of China by outlining its three core interests.  With these interests in mind, it then recommended that confidence-building measures, joint-development agreements, and an updated code of conduct be implemented in synergy to deescalate the conflict.      

By Nesta Littlejohn

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