By Eric Szandzik
The People's Republic of China is fashioning an economic sphere that will solidify their regional hegemony for the next century. Oceanic regions flush with resources and pivotal sea lanes bustling with cargo vessels are slowly being absorbed into a Chinese sphere of influence. There have never been clearly defined territorial demarcations within the South China Sea, and China is beginning to force that issue
At the sunset of World War II, the Chinese government released a map to the world which laid claim to the entire South China Sea zone. While their ambition was obvious, the extent of their claim was still vague, given that no mile markers or coordinates were included.[i] Despite this, two significant island chains were clearly within its declared territory: the Spratly and Paracel Islands.
The Chinese declaration of territorial ownership was not accepted by all. Every piece of land known as the Spratly and Paracel Islands are equally claimed by China, Taiwan, and Vietnam. The Philippines also claim eight islands and Malaysia claims three islands within the Spratly Island zone.[ii] Despite this, China remained committed to its published boundaries. In 1953, a slightly modified version of China's South China Sea map was released.[iii] The unique element of this map, which outlined the disputed region, would become known as the "nine-dashed line".
Two decades later, Chinese naval vessels made clear their nation's intentions to enforce those territorial claims. An assault was launched in 1974 on the Paracel Islands which resulted in the deaths of seventy Vietnamese troops. Fourteen years later, sixty Vietnamese sailors would be killed by Chinese troops in their attempt to gain control of the Spratly Islands.
China's ambitions in the South China Sea are a concern for more than just the Association of Southeast Asian Nations. This key oceanic region contains some of the world's largest economies, provides waterways for some of the world's most abundant energy transport hubs, and has enormous potential for vital resources. Should China take control of this area, and dictate terms to its neighbors, the implications would have a global effect.
Within the ASEAN, Indonesia, Thailand, and Malaysia maintain the three largest economies. Their GDP in $USD averages $878 million, $366 million, and $305 million respectively.[iv] Exports of Indonesia, Thailand, and Malaysia, are sent out of the South China Sea region by a share of 78%, 72%, and 73% respectively.[v] A large portion of these exports are vital for the world's energy supplies, and the West's standard of living.
Around 25% of Indonesia's exports are petroleum and coal, with 10% of exports being computers and electronics. The largest portion of Thailand and Malaysia's exports are computers and electronics (34% and 43% respectively).[vi] These exported goods have grown to be a large share of imports into the United States. Indonesia exported $1.6 billion of electronic goods to the United States in 2013, and as a whole, their exports to the US doubled from 2003 to 2013. In 2013, exports of computers and electronics to the United States from Thailand and Malaysia were almost four times that of Indonesia, ($6.3 billion and $14.8 billion respectively).[vii]
These computer and electronic exports are vital building blocks for the United States technological infrastructure; and they are non-negotiables in Western modern culture. Smart phones and tablets are an irreplaceable tool for modern social life in the West. The younger generations have not experienced life without such tools, and the older generation is beginning to adapt. From 2011 to 2015, smartphone use among American adults rose from 35% to 64%,[viii] and the trend shows no indication of deviation.
Should one nation obtain control of South China Sea exports, such electronic materials could be subjected to additional tolls or fees. The increased costs and reduction in supply of such materials would ultimately raise prices of computers, smartphones, and tablets. Internet access for many in the West is only achievable through such devices. Given that the United Nations has declared Internet access to be a fundamental human right,[ix] it is possible that a disruption of such imports could contribute to social instability in the West.
Economic activity within the South China Sea is also dominated by vessels carrying various forms of oil. An estimated 14 million barrels of crude oil is transported through the South China Sea region. This accounts for almost one third of the all oil transports throughout the globe. South Korea, Japan, Taiwan, and China, depend heavily on these energy transports to fuel their massive economies, which accounts for 67%, 60%, 60%, and 80% (respectively) of their energy supplies.[x] Most of these energy transports pass near the hotly contested Spratly and Paracel Islands, which China is attempting to declare within its territorial sphere.
In addition to the ASEAN dependency on energy supplies, many of the transports are also the source of materials needed for refining. A large portion of Singapore's economic activity is related to the refining of oil that enters the South China Sea. In 2011, 15.2 million barrels of oil per day passed through the Strait of Malacca. Of that supply, Singapore received 1.4 million barrels of oil per day to refine and subsequently export.
Beyond transportation and the economic activity which benefit from refining oil, the ASEAN are vitally important when considering total world oil consumption. All countries throughout Asia (except Australia, New Zealand, Japan, and South Korea) will consume 30% of the world's liquid fuel by 2035, rising from 20% in 2008. China will contribute to almost half of that growth.ii Access to abundant energy supplies will be a prerequisite for any stable economy and workforce. Current survey results show that the region will not have to look far for such abundant supplies, the challenge will be maintaining a free flow of goods.
The South China Sea is flush with enormous energy resources. While proven oil reserves in the region settle around 2.5 billion barrels, the US Energy Information Administration estimate that the total is closer to 11 billion barrels of oil (with 5 billion barrels of oil resting near the shores of Malaysia), and the US Geological Survey places their upper limit at 22 billion barrels for the region (with the Spratly Islands containing at most 5 billion barrels of oil).
This massive supply of oil will be a key ingredient in maintaining much of Southeast Asia's workforce. One of the largest industries within the region, which also depends on clearly defined territorial boundaries, is fishing. Around 5.4 million people claim fishing as their occupation within the ASEAN. With around three fishermen per boat, the waters have become quite crowded. Most fishing zones off the coast of China are depleted or overfished. The regions ripe for fresh pursuit are within China's wider claims to the South China Sea.[xi]
Companies within the region are already flooded with concerns of political instability. In Indonesia and Thailand, 26%[xii] and 23%[xiii] (respectively) of representatives from large firms reported that political instability was a hindrance to their workforce and economic activity. Should a foreign competitor begin challenging naval access and key waterways previously employed, political pressure for overt action would undoubtedly increase.
Recognizing territorial boundaries, while maintaining a free flow of goods and energy throughout the South China Sea, is vital to the livelihood and well-being of Southeast Asians. Should one nation achieve dominance over such vast amounts of energy resources and trading activity, workforce conflicts and social instability could reach alarming levels.
The situation in the South China Sea has not improved in the last few years, unquestionably it has become worse. In 2009, China maintained its insistence on their claims to the South China Sea by submitting their "nine-dashed line" map to the United Nations.[xiv] Three years later, Yang Jiechi, China's foreign minister, announced to the US Secretary of State that China has historical and legal backing to the Paracel and Spratly Islands.
In 2012, the Philippines discovered Chinese vessels docked at the Scarborough Shoal, a reef within their 200 nautical mile economic zone. Before Philippines' vessels are able to reach the docked Chinese ships at the Scarborough Shoal, they are approached, and told to vacate the area. The declaration received from the Chinese was that the Philippines vessels were trespassing into Chinese territory. Such claims made clear the ambition of China within the region. The Scarborough Shoal is 86 nautical miles from the Philippines and 434 nautical miles from China's shore. The encounter provoked the Philippines to submit a complaint to the United Nations, which finally challenged China's Nine Dashed Line on the world stage.[xv]
In January 2013, the UN Convention on the Laws of the Sea agreed to review the Philippines formal complaint.i Despite calls for China to negotiate with ASEAN in regards to the natural resource located within the region, they have repeatedly acted upon their own initiative. In May of 2014, China launched an oceanic oil drill in the Paracel Island region, which is also claimed by Vietnam, and which led to multiple collisions of sea vessels between the two countries.[xvi] Within one year, China began building structures and a 3km runway on the Fiery Cross Reef in the Spratly Island chain.
Chinese naval provocation has also reached US shores. In August 2015, Chinese ships sailed within 12 nautical miles of Alaska, breaching the barrier of territorial waters, but not performing any hostile acts. As long as the vessels did not perform any "threatening activity," the passage did not violate the UN Law of the Sea Treaty. Stating this vague UN framework was the only response delivered by US officials.
While allowed and legal, if the passage was truly unintentional, as was claimed by China, an acknowledgement of a violated norm would be expected. None was delivered. China itself demands that vessels announce their intentions when traveling within their own 12 nautical mile territorial zone. When the US has flown within 12 nautical miles of one of China's disputed islands, they have vocally expressed their objections to such an act.[xvii]
Such double standards and testing of limits has made many wary of China's ambitions. Two months later, the United States Navy clarified such double standards with a passage of their own. On the far north end of the Spratly Island zone, the USS Lassen sailed within twelve nautical miles of the Subi Reef, which is claimed by China, the Philippines, Taiwan, and Vietnam. The US passage provoked quite a different response from China when compared to the US response of China's vessels reaching the same distance from Alaska. Instead of blandly stating the framework of the UN Law of the Sea Treaty, China claims the US had "illegally entered" its territorial waters which threatened China's "sovereignty and security interests".[xviii]
In July 2016, vague territorial claims were soon confronted by a United Nations decision on the Scarborough Shoal. It was announced that the Philippines challenge of China's claim to the reef was valid. Given that China had violated the Philippines 200 nautical mile economic zone, they did not have a valid territorial claim to the region. This decision had more impact beyond that single encounter, it announced that the UN does not recognize China's "nine-dashed line" claim to the South China Sea.[xix] Despite the fact that China had recognized the UN Law of the Sea Treaty in 1996,xv President Xi Jinping did not accept the results.[xx]
The UN decision, and influence of the US, has not diminished China's subtle attempts at regional persuasion. To prevent unintended escalation of unplanned naval encounters, China and its neighbors have established an agreed-upon framework.[xxi] Russia and China continue joint sea training operations within the South China Sea, involving submarines, aircraft, helicopters, and Marines.[xxii] The most recent joint training exercise between the two countries also included using a unified information system command for the first time. All Chinese and Russian command posts and combat units could now communicate within the same channels.[xxiii]
Economic and military persuasion is not unique to China's actions within the South China Sea. Such preparations are well within global strategic norms. What is alarming is China's overreaching claims to neighboring territory, and their determination to attain such goals. No statements or actions have given any hint that China is preparing to withdraw from the totality of their claim on the South China Sea. Achieving these goals would not only grant China additional territory at the expense of their neighbors, but it would also give them command of a large portion of the world's energy resources, and economic transport activity.
China is not currently acting in a manner that should provoke armed conflict from the ASEAN or the West. They are preparing for the next century. By subtly and continually solidifying their foothold within South China Sea chokepoints, they are becoming more powerful by the nature of their position. In the near future, this leverage may not be used to provoke overt armed conflict, but it will be the ultimate bargaining chip at the negotiation table. Should the ASEAN, or the West, attempt to provoke China into withdrawing its expansive territorial claims, it will face an impressive adversary.
China is preparing for future conflict in accordance with its historic philosophers: "In war, the victorious strategist only seeks battle after the victory has been won."[xxiv] Before China's neighbors realize that the water in which they live is beginning to boil, it will be too late.
Eric James Szandzik earned his Bachelor of Science in Business Management from the Western Governors University. He currently manages accounting, human resources, and market data analysis for non-profit and government organizations in South Lake Tahoe.
[i] BBC: Why is the South China Sea contentious? July 12, 2016. Accessed September 24, 2016.
[ii] US Energy Information Administration: South China Sea. February 7, 2013. Accessed September 24, 2016.
[iii] Malik, Mohan. World Affairs: Historical Fiction: China’s South China Sea Claims. June 2013. Accessed September 24, 2016.
[iv] ASEAN Services Integration Report, page 26. 2015. Accessed September 24, 2016.
[v] ASEAN Stats Leaflet, page 1. 2016. Accessed September 24, 2016.
[vi] MIT: The Observatory of Economic Complexity.
[vii] Office of the United States Trade Representative: South East Asia and Pacific. May 8, 2014. Accessed September 24, 2016.
[viii] Smith, Aaron. Pew Research Center: US Smartphone Use in 2015. April 1, 2015. Accessed September 24, 2016.
[ix] Jackson, Nicholas. "United Nations declares internet-access a basic human right." The Atlantic. June 3, 2011. Accessed September 24, 2016.
[x] Kaplan, Robert D. "Why the South China Sea is so crucial." Business insider. February 20, 2015. Accessed September 24, 2016.
[xi] Rees, Evan. "Conflict and Cooperation in the South China Sea." Stratfor. August 31, 2016. Accessed September 24, 2016.
[xii] The World Bank, Enterprise Surveys: Indonesia, page 13. 2015. Accessed September 24, 2016.
[xiii] The World Bank, Enterprise Surveys: Thailand, page 13. 2016. Accessed September 24, 2016.
[xiv] The United States Department of State, Bureau of Oceans and International Environmental and Scientific Affairs, Limits in the Seas: No. 143 China: Maritime Claims in the South China Sea, page 3. December 5, 2014. Accessed September 24, 2016.
[xv] The Economist: Courting Trouble, An International Tribunal Delivers a Blow to China's Claims in the South China Sea. July 16, 2016. Accessed September 24, 2016.
[xvi] Johnson, Keith. Foreign Policy: How Do You Say 'Drill Baby Drill' in Chinese? May 5, 2014. Accessed September 24, 2016.
[xvii] Page, Jeremy and Lubold, Gordon. The Wall Street Journal: Chinese Navy Ships Came Within Twelve Nautical Miles of US coast. September 4, 2015. Accessed September 24, 2016.
[xviii] The Economist: An American Warship Sails Through Disputed Waters in the South China Sea. October 27, 2015. Accessed September 24, 2016.
[xix] The Economist: Why a Tribunal has Ruled Against China on the South China Sea. July 13, 2016. Accessed September 24, 2016.
[xx] Phillips, Tom; Homes, Oliver; and Bowcott, Owen. The Guardian: Beijing Rejects Tribunal's Ruling in South China Sea Case. July 12, 2016. Accessed September 24, 2016.
[xxi] Huaxia. Xinhuanet: ASEAN, China agree on code for unplanned encounters in South China Sea. September 7, 2016. Accessed September 24, 2016.
[xxii] Mengjie. Xinhuanet: China, Russia conclude joint naval drill. September 19, 2016. Accessed September 24, 2016.
[xxiii] Huaxia. Xinhuanet: China, Russia ready for joint navy drill in South China Sea. September 12, 2016. Accessed September 24, 2016.
[xxiv] Sun Tzu's Art of War