(Analysis) Discord in the South China Sea: What Place for Diplomacy?

Kareem Salem

The South China Sea, at the crossroads of South, Southeast and Northeast Asia, is a maritime area of great competition due to its strategic importance. With the world’s largest ports for containerized trade located around this hub nearly half of the world’s maritime trade passes this region. The maritime space is also endowed with significant fisheries and energy resources, an estimated 11 billion barrels of oil and more than 5.3 billion cubic meters of natural gas, including 10% of the world’s fish catch, are located in these waters.

The strategic nature of this space has made the South China Sea a hot spot for military skirmishes between regional coastal powers. Of the four main archipelagos in the South China Sea, the Paracel and Spratly Islands have received particular attention from the littoral countries because of their wealth in hydrocarbons. The Philippines, Brunei, Malaysia, Singapore, Thailand, the People’s Republic of China (China), Vietnam, Cambodia, Indonesia and even the Republic of China (Taiwan) all seek to appropriate a share of the resources inherent in these territories.    

Tensions have been growing especially since the 1970s. Taking advantage of the political and civil instability in Vietnam, China’s People Liberation Army Navy (PLAN) succeeded in withdrawing all South Vietnamese naval forces deployed on the Paracel Islands in 1974. This critical moment strengthened Chinese ambitions further south, particularly across the 190 to 600 islets and reefs that make up the Spratly Islands. To give weight to its claims, Beijing has embarked on a long-term project to provide the PLAN a modern navy equipped with offensive projection capabilities.  

The imperative to make the China a great naval power has truly accelerated over the past decade. As per any modern navy, the PLAN has acquired twenty Type 056 Jiangdaoclass corvettes since 2013. Its mission is to protect the exclusive economic zones (EEZ) claimed by the Beijing in the East and South China Seas. In upgrading its forward projection capabilities, the PLAN boasts 360 warships, giving it the largest tonnage in the Indo-Pacific and the world.

Type 056A guided-missile corvette Tongling. Source: CHINAMIL.COM/Chinese Ministry of Defense

The comprehensive increase in naval capabilities has enabled the Beijing to make tangible progress in extending its hegemonic control over the South China Sea. Since 2012, the Beijing has intensified the militarization of natural and man-made islands off the Spratly and Paracel Islands, including Scarborough Reef, which has greatly exacerbated incidents at sea, primarily with Vietnam and the Philippines. In April 2012, Chinese vessels dislodged Filipino fishermen from the Scarborough Shoal, an area around which they historically fished. In March 2020, in the middle of the Covid-19 pandemic, Chinese coast guard vessels struck and sank a Vietnamese fishing boat south of Woody Island. All of these events have prompted increased military engagement by the United States and its Western allies in the area, illustrated by an ever-increasing number of “freedom of navigation operation” (FONOP) along the South China Sea. 

Beijing’s Selective Targeting Strategy

While episodes of high tension in the South China Sea are generally the result of Chinese initiatives, Beijing is very selective in targeting its interventions in order to minimize the political impact of its actions on competing coastal countries. In 1988, taking advantage of Vietnam’s regional political isolation, resulting from Hanoi’s alignment with the Soviet Union during the Cold War, the Chinese navy brutally expelled Vietnamese forces from six of their positions across the Spratly Islands. In 1995, the Beijing succeeded in expanding its positions in the Spratly Islands, this time at the expense of the Filipinos, due to the Association of Southeast Asian Nations (ASEAN) not reaching a common position against Chinese regional expansion.

The slightest retaliatory measure against Chinese fishermen by the Indo-Pacific countries automatically triggers the intervention of PLAN’s military forces. For the Chinese political class, the Beijing holds historical arguments over the South China Sea, dating back to the era of the Han Dynasty and the Song Dynasty, during which the imperial courts issued licenses to Chinese fishermen to exploit the area. The PRC also builds its claim publicly using the nine-dash line argument — a line encompassing 90% of the three million km of the South China Sea, drawn on Chinese maps during the 1940s.

Economic diplomacy is additionally a vehicle through which Beijing has sought to normalize and advance its geostrategic interests. Its formidable economic opening, initiated under Deng Xiaoping, has enabled the China to become the world’s second largest economy accounting for just over 18.8% of international GDP. The Beijing’s economic liberalization during Deng tenure helped renew political relations with neighbouring Southeast Asian countries who yearn for Chinese investment and economic growth. Beijing’s decision not to devalue its national currency, the Renminbi, during the Asian crisis of 1997 was a decisive factor in reshaping relations with non-communist countries. This reaction contrasted particularly with the passive attitude of the United States, by virtue of its neoliberal economic policy. The Chinese authorities notably granted a $1 billion loan to Thailand and soft loans to Myanmar, Indonesia and Laos. 

The entry of the China into the World Trade Organization (WTO) in 2002 further convinced ASEAN to enhance economic channels with Beijing. The search for regional stability led ASEAN to conclude a Free Trade Agreement with Beijing in 2002 and a Strategic Partnership Agreement in 2004.

ASEAN Top Trading Partners. Source: ASEANstats

Xi Jinping’s accession as General Secretary of the Chinese Communist Party in 2012 has only solidified Beijing’s economic influence across Southeast Asia. During his last two terms, President Xi succeeded in entrenching the Chinese economic power through his flagship Belt and Road Initiative (BRI). Billed as a “win-win” initiative, the BRI aims to erode American and Western economic competition through trade expansion, financial integration, the internationalization of the Chinese currency and the strengthening of human relations between recipient countries and China.

Chinese investment projects have been specially active across Indonesia, Southeast Asia’s largest economy. In 2021, Chinese investments amounted to $3.2 billion and soared to $3.6 billion between January and June 2022. The billions of dollars of liquidity provided by Chinese banks and state-owned enterprises are nonetheless tipping the archipelago towards a significant debt overhang towards Beijing. More than $17 billion of Indonesian debt is owed directly to the Chinese government.

Aware of its economic dependence to Beijing, the Indonesian government has been careful to stay silent about the China’s maritime actions around its exclusive economic zone. This discretion was particularly visible in August 2021 when a Chinese survey ship spent seven weeks mapping the seabed in Indonesia’s EEZ off the Natuna Regency. Beijing’s rising economic influence has also witnessed Jakarta vote against a draft UN Human Rights Council resolution on the “Debate on the human rights situation in the Xinjiang Uygur Autonomous Region of China.” Beijing’s established economic power is equally deterring other regional countries from undertaking a Washington-desired containment policy. Cambodia, Thailand and Laos are among the countries in the region that have the most significant economic, political and military cooperation with China.

The recent change of political regime in the Philippines could, however, spark an increase in regional tensions. The conciliatory posture of the previous president, Rodrigo Duterte, toward Beijing has been quickly erased since the presidential victory of Ferdinand Marcos’ son, Bongbong Marcos. On July 12, President Marcos’ Foreign Minister, Enrique Manalo, notably celebrated the sixth anniversary of the Hague Tribunal’s ruling on the South China Sea — a verdict that vindicated the Philippines’ claim that Beijing does not have “historic rights” over the bulk of the strategic waters in the South China Sea. In his speech, the minister declared, “We firmly reject any attempt to challenge or even erase it from the laws, from history and from our collective memories,” a clear signal of Manila’s renewed resolve to defend its regional claims.

The current Philippine President has even reportedly urged a renegotiation of loan agreements struck by his predecessor, especially for railway projects worth $4.90 billion. Since the 2016 Sino-Philippines high-level meeting, in which Xi Jinping promised to unlock $24 billion worth of Chinese projects in the Philippines, only $1 billion worth of Chinese financial investments have materialized.

All these dynamics have given new impetus to political relations between Manila and Washington. President Duterte’s pro-Chinese agenda had considerably plagued relations with the White House. The former Philippine President had even threatened on several occasions to end the Philippines’ century-old alliance with the United States. The change in political direction championed by the country’s current strongman is manifested by increased high-level meetings with American senior-ranking officials. In August, days after House Speaker Nancy Pelosi’s visit to Taiwan, President Bongbong Marcos told United States Secretary of State Antony Blinken that he did not believe Nancy Pelosi’s trip had “increased the intensity” of tensions between the U.S. and China. The following month, the Philippine President openly praised American efforts “to maintain peace in [the] region” alongside President Joe Biden. All of these indicators point to a new era of U.S.-Philippine security cooperation in the South China Sea.

Can Washington Sustain its Engagement?

Initiated in 2012 under Barack Obama, the U.S. Indo-Pacific pivot aimed to respond to the China’s growing involvement across the vast maritime region, which includes the South China Sea. This rebalancing aims to re-engage traditional U.S. allies — Japan, Australia, South Korea — and forge partnerships with Southeast Asian countries to prevent Beijing from unraveling America’s hub-and-spoke system of alliances and U.S. maritime hegemony.

The arrival of Donald Trump and the Republicans to power in 2017 marked the emergence of incongruities in American strategic policy. From the moment of his inauguration, the new president was set out to deconstruct the legacy of Barack Obama’s foreign policy by pushing ahead a vision that challenged the centrality of the United States in defending its allies and the liberal international order. Donald Trump’s withdrawal from the Trans-Pacific Partnership encapsulated his willingness to embrace a form of nationalism and protectionism that neglects American strategic interests in the Indo-Pacific. This was, in essence, the cornerstone of his predecessor’s regional trade policy, calibrated to compete against Beijing’s economic reach.    

Ever since the end of the Cold War, Southeast Asian countries have come to view U.S. involvement as a source of peace and stability. President Trump’s haphazard approach to foreign policy only undermined and degraded the image and influence of the United States among ASEAN countries. Singaporean Prime Minister Lee Hsian Loong, in a rare moment of direct criticism of the United States, posed a telling question in reference to the U.S. withdrawal from the TPP — “How can anyone still believe in you? ” Unlike his predecessor, who regularly attended high-level ASEAN summits, President Trump’s tenure had been marked by chronic absenteeism from those events. This turned into a diplomatic debacle when Donald Trump fielded his national security adviser, Robert O’Brien, to represent him at the 35th ASEAN summit in Thailand, prompting regional leaders to boycott the event.

The arrival of Joe Biden and the Democrats in January 2021 has sought to halt plunging U.S.-Southeast Asian relations. Over the last two years, a series of high-level visits were conducted by Vice President Kamala Harris, Secretary of Defense Lloyd Austin and Secretary of State Antony Blinken with their Southeast Asian counterparts. In May 2022, the U.S. President convened a two-day summit at the White House with representatives from Brunei, Indonesia, Cambodia, Singapore, Thailand, Laos, Vietnam, Malaysia and the Philippines, during which Joe Biden pledged $150 million for their infrastructure, security and health systems. The former Delaware senator also attended an ASEAN summit in the Cambodian capital Phnom Penh days after the U.S. midterm elections, cementing all the interpersonal ties he had forged earlier in the year and upgrading Washington-ASEAN relations to a comprehensive strategic partnership.

But while Joe Biden’s team has focused on correcting the course of Donald Trump’s nationalistic and protectionist policies, Southeast Asian countries still remain deeply concerned about the Democrats’ desire to escalate the regional arms race. In September 2021, some Southeast Asian countries expressed deep concern when Joe Biden unveiled a new strategic alliance with his Australian and British counterparts, “AUKUS,” which is primarily focused on enabling Canberra to acquire a fleet of nuclear-powered submarines with the help of U.S. and British defense contractors. Malaysia and Indonesia have been the most explicit as both nations have long advocated neutrality and non-interference by outside powers in the Indo-Pacific. Political representatives in both countries are primarily concerned that the new agreement will make the South China Sea the site of a future nuclear conflict between Beijing and Washington, especially since the Pentagon is also preparing to deploy up to six B-52 bombers to northern Australia. 

The regional security backdrop is likely to be further exacerbated by the prospect of a returning Republican administration in 2024. The landslide victory of rising Florida Governor Ron DeSantis — known for his isolationist views toward U.S. allies and hawkish views on China — combined with the Republican Party’s takeover of the House of Representatives bodes ominously for Democrats for the 2024 U.S. presidential election. Indicative of the turning tide, the New York Post, which previously endorsed ex-President Trump for re-election, pronounced the Florida governor “DeFUTURE” atop its front page. With momentum on the side of the rising GOP governor, Joe Biden will have a hard time fending off a new right-wing populist American presidential hopeful in 2024, an outcome which could see America’s re-engagement of Southeast Asia being revoked after four-short years.

Code of Conduct

The fear of an arms race and accelerated power competition in the region could ultimately undermine the sustainable economic growth of Southeast Asian powers. It is worth noting that the Asian tiger cub economies: Indonesia, Malaysia, Thailand, the Philippines and Vietnam were growing at an average of 4.7% before the outbreak of Covid-19 in 2020. According to the Asian Development Bank (ADB), their economies are expected to grow by 5.3% in 2023, returning to their pre-pandemic economic momentum.

Despite Beijing’s bellicose stance, ASEAN has in the past played a leading role in facilitating the resolution of disputes between the parties involved in the South China Sea. In 2002, it signed the Declaration on the Conduct of Parties in the South China Sea (DOC) with China, which has paved the way for a negotiations on a maritime code of conduct. Southeast Asian leaders hoped that this declaration would be the first step in convincing Beijing to turn towards multilateral cooperation.

Given China’s actions in recent years, neither the DOC, nor their negotiations on how to implement it, have done much to ease tensions in the South China Sea. Rather than working together to achieve a diplomatic solution, ASEAN countries have merely developed their own strategies. Vietnam has strengthened its maritime forces and the new Philippine government has increased its military budget by 8 percent for 2023. Meanwhile, Indonesia and Malaysia are playing down their differences with Beijing, hoping that quiet diplomacy will persuade China to back down.

There is no prospect of resolving sovereignty disputes in the South China Sea in the short term. Southeast Asian claimant countries lack the hard power capabilities to assert their claims and have not yet demonstrated a willingness to resolve their intra-ASEAN disputes. A common approach to the dispute has often been hampered by Beijing’s ASEAN allies, like Cambodia and Laos, who continually hamper the regional organization’s attempts to form a mutual consensus on the South China Sea. But amidst the increasingly volatile geopolitical backdrop between Beijing and Washington, the two main regional powers, Jakarta and Kuala Lumpur, should urgently step up their diplomatic dialogue with Beijing and Washington to limit the risk of nuclear war, which would drag the region to ruin.

  • How can ASEAN sustain its legitimacy within the rapidly changing geopolitical landscape?
  • Can major regional powers achieve greater consensus?
  • Is a nuclear war in Southeast Asia inevitable?

Suggested Reading

Murphy, A.M., 2021. “America is back? Opportunities and obstacles to restoring US credibility in Southeast Asia.” Asia Policy, 28(4): 66-76.

Paszak, P., 2021. “The Malacca Strait, the South China Sea and the Sino-American Competition in the Indo-Pacific.” Journal of Asian Security and International Affairs, 8(2): 174-194.

Storey, I., 2020. The South China Sea Dispute in 2020-2021. ISEAS-Yusof Ishak Institute, Singapore.

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(Analysis) Discord in the…

by Kareem Salem time to read: 11 min