FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 24 September 2016

What Next In The South China Sea

from the John West, Asian Century Institute

The Philippines won its South China Sea case against China. But what Philippine President Duterte would like to do next?

South China Sea's competing claims

Myriad countries surround the South China Sea (or West Philippine Sea, if you prefer), namely China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan. It is thus not surprising that since time immemorial these same countries should have had overlapping claims to these waters, their reefs, islands and atolls, including the Spratly Islands, Paracel Islands and Scarborough Shoal. The South China Sea is a massive 1.4 square million miles, an area the size of Mexico and larger than the Mediterranean Sea.

In 1947, China issued a map of its claims, which encompassed about 90% of the entire South China Sea. This claim has come to be known as the "nine-dash-line", which reflects the pictorial representation of China's claim. Chinese President Xi Jinping claims that the South China Sea has been China's since ancient times.

According to the United Nations Convention on the Law of the Sea (UNCLOS), countries have special access to marine resources, including fisheries, oil and gas, in the area up to 200 nautical miles from their shores, called exclusive economic zones. Most of the South China Sea is very much further from China than that distance.

In 2009, China submitted a diplomatic note to the UN including the nine-dash-line on a map. This overlaps with claims by the Philippines, Vietnam, Malaysia, Indonesia and Brunei.


China's conflict with the Philippines

Then in 2012, China forcibly seized control of the previously unoccupied Scarborough Shoal during a standoff with the Philippine Navy. The Scarborough Shoal is only 100 miles from the Philippines, but 500 miles from China.

With no other recourse, the Philippines took China to a UNCLOS tribunal. China boycotted the tribunal's proceedings, on the basis that it had indisputable sovereignty over its claimed area and that the tribunal did not have the authority to deal with this matter.

Reflecting its indignation and contempt for the Philippine challenge, China embarked on massive construction exercise in the South China Sea, building or expanding at least seven artificial islands, some with airports on which military aircraft can land. It is clearly a ploy to create "facts on the water", which are irreversible. This is dubbed the great wall of sand by senior US officials. In 2014, China also deployed a deep-sea oil rig within Vietnam's exclusive economic zone, leading to a drawn out dispute.

The US has responded by conducting freedom of navigation exercises and by flying military aircraft over the area, and providing support to the affected Southeast Asian countries. The US also has a mutual defense treaty with the Philippines, and the US is developing a close strategic partnership with Vietnam.

What is at stake in the South China Sea?

According to the US Department of Energy, there would be 11 billion barrels of oil in the South China Sea, and 190 trillion cubic feet of natural gas. It is also a very rich fishing ground, which is now most regrettably being depleted.

Moreover, some $5.3 trillion worth of international trade passes through the South China Sea, about 30% of global maritime trade. And $1.2 trillion of this is US trade. Japan and Korea also rely heavily on the South China Sea for their supply of energy and other raw materials, and also as an export route. Some 60% of Australia's trade passes through the South China Sea. Not surprisingly, non-claimants want the South China Sea to remain as international waters, rather than being privatized by China. Circumnavigating the South China Sea would drive up commercial shipping costs.

More fundamentally, the international rule of law is at stake. China is a country that has benefited from the multilateral system, but is now seen by most to be flagrantly flouting this very system. As French Defence Minister, Jean-Yves Le Drian said:

"If the Law of the Sea is not respected today in the South China Sea, it will be threatened tomorrow in the Arctic, the Mediterranean or elsewhere".

Vladimir Putin and other authoritarians are watching.

UNCLOS tribunal's decision

The UNCLOS arbitration tribunal accepted 14 of the 15 claims by the Philippines. In particular, it ruled that there is no legal basis for any Chinese historic rights within the nine-dash line.

The tribunal also ruled that none of the disputed maritime features in the Spratly Islands, including Scarborough Shoal, Gaven Reef and Fiery Cross Reef, are islands under the law of the sea (they are instead "rocks"). Thus, they do not result in entitlements to a 200 mile exclusive economic zone or continental shelf. In other words, Mischief Reef -- the scene of the standoff between the Philippine Navy and China -- is within the Philippines' maritime domain, rather than China's.

The tribunal also found that China's land reclamation and island-building activities had caused irreparable damage to the coral reef ecosystem and breached the UNCLOS treaty. And in the case of Mischief Reef, China breached the treaty by undertaking land reclamation without the authorization of the Philippines.

What next?

China is legally bound by the UNCLOS decision, by virtue of being a signatory to the treaty. But there are no enforcement mechanisms, and China has no intention of respecting the judgment. The Chinese government has of course lambasted the tribunal's judgment, claiming that it is part of an American conspiracy. On the Philippine side, there were great public celebrations in this nation that is tired of being bullied by more powerful nations.

Most observers hope that China and the Philippines, and the other claimants can negotiate a peaceful and mutually beneficial arrangement. It is indeed high time to negotiate a long-talked-about binding ASEAN-China South China Sea Code of Conduct, something on which China has long been dragging its feet. But China abhors multilateralism, and prefers bilateral negotiations where it can exert its power over smaller and weaker countries.

The new Philippine President, Rodrigo Duterte, is sending out mixed signals. He initially rejected a Chinese offer to engage in talks over the South China Sea that would have set aside an international tribunal's ruling against Beijing's claims to historic and economic rights in the disputed waters.

But more recently, Duterte has taken an anti-American turn. He has insulted US President Barack Obama, rejected the idea of joint patrols with America in the South China Sea, requested American military advisors to leave the southern island of Mindanao, and asked the Philippine military to buy weapons from China and Russia, rather than America. He has also insisted that he is much more concerned about his war on drugs than the South China Sea. Some argue that Duterte is merely seeking to play off China against America. But signals from Beijing suggest a lack of trust in Duterte as a reliable partner.

On the Chinese side, it is also a very complex calculation. Having stoked up nationalistic fervour, President Xi cannot just surrender. For all his apparent strength, he is in a fragile position. His survival depends on looking strong. But Xi has reportedly hosed down pressure from the Chinese navy to take a tougher stand. He is keen to avoid conflict with the US. At the same time, he recently took great joy in niggling the US with joint Chinese/Russian maritime drills in the South China Sea.

Looking further ahead, the stakes are very high for China, as it seeks to become Asia's leading country. One test of its claimed "peaceful rise" is its willingness to abide by international law, especially in its neighborhood. Its claim to the South China Sea through its nine-dash-line, and the subsequent construction of its "great wall of sand" is yet another example of China's heavy-handed approach to international relations This is counterproductive and only encourages its neighbors to run to the US for help. For China to succeed in its quest to become Asia's hegemon, it will need to learn the merits of generosity and soft power.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Taking a Wrench to Healthcare
Rising Tide Does Not Lift All Ships
News Blog
September 2016 CFNAI Super Index Moving Average Declines
Consequences Of Rising Income Inequality
America's Most Competitive Renters: Why Many Are Choosing To Rent
Historical Echoes: The Bank Teller Action Figure, Or It's All In The Packaging
Infographic Of The Day: The Oil Market Is Bigger Than All Metal Markets Combined
U.S. 2016 Election Divides Advanced And Emerging Economies
Which Countries Read The Most
The World's Most Expensive Retail Locations
How To Help Energy Demand Match Renewable Supply
Music Subscriptions Revive Revenue
How The Space Station Avoids Junk In Space
Infographic Of The Day: The Most Popular Jobs In A Decade
Early And Late Cycle Verdicts Are Baseless
Investing Blog
FinTech Is Taking A Bite Out Of Banks
Options Early Assignment - Should You Worry?
Opinion Blog
The Beer Goggles Stock Market
US 2016 Election: Will US-China Relations Change
Precious Metals Blog
Preparing For Post-Election Social Unrest
Live Markets
24Oct2016 Pre-Market Commentary: Wall Street Moves Higher Ahead Of Corporate Earnings And Friday's GDP Report, Texas Tea Slips Lower, US Dollar Not As Strong As Friday, Gold Skyrockets Upwards
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved