Luke Hunt

Naval brinkmanship in the South China Sea is taking a backseat to diplomacy, trade and the international courts. For the time being at least, regional governments are holding back and carefully weighing the ramifications of a conflict in the disputed waters.

The softly-softly approach was adopted by ASEAN countries in the wake of last year's nasty military standoff and despite a decision by Beijing to up-the-ante over the winter with a massive land fill exercise on selective reefs, creating an international outcry.

Supply platforms, communications, gun emplacements, and docking facilities were erected on Itu, Gaven, Johnson South and Fiery Cross reefs. According to the Washington-based Center for Strategic and International Studies (CSIS) their construction is on shaky legal ground and violates the spirit of the 2002 Declaration of Conduct between China and ASEAN.

“The danger now is that China will miscalculate or misread the US’s willingness to stand behind its declaration that it will exercise its legal rights of free navigation,” Gavin Greenwood, a risk analyst with Hong Kong-based Allan & Associates, said.

At stake is half the world's trade, which is shipped through the South China Sea. This share is expected to receive a significant boost from the Trans-Pacific Trade Pact (TPP), a bloc that has incorporated Vietnam as a strategic partner in the negotiations but snubbed the demands of its political nemesis, China.

The New Silk Road

Ever since Chinese students put down their pencils in 1989 and demanded democratic reforms, which culminated in the Tiananmen Square massacre, successive Chinese governments have maintained that economic growth is key to their country's prosperity and their own survival.

Underpinning that growth is the New Silk Road strategy. China is looking to reopen thousand-year-old trade routes across Asia, known as the String of Pearls strategy, which is designed to counter US dominance of the high seas.

China has long felt hemmed-in along its eastern seaboard by US allies South Korea, Japan, Taiwan and the Philippines. Southern maritime routes to Europe, Africa and the Middle East through the Malacca Straits and the Timor Sea are also controlled by US naval power and influence.

China challenged this state of affairs in 2009 when Beijing defied international conventions, submitting to the United Nations a controversial nine-dash outline of its maritime claims in the South China Sea—known as the East Sea in Hanoi and the West Philippine Sea in Manila.

Relations between China and ASEAN countries with overlapping claims in the disputed waters— Vietnam, the Philippines, Malaysia, Brunei and Indonesia—have simmered as a result, particularly around the Spratly Islands in the southeast and Paracels in the northeast of the divided sea.

Beijing refuses to have its claims under the United Nations Convention on the Law and the Sea heard before international courts and insists that any negotiations with ASEAN nations must be done on a bilateral basis.

Hanoi, which has sided publicly and loudly with Manila and will only hold talks on a multilateral basis alongside other parties to the dispute, has further tweaked Beijing's beak by declaring its strategically important deep water port at Cam Ranh Bay open to all the world's navies.

Trans-Pacific Trade

The TPP—a Pacific Rim trade deal with twelve nations representing 40 percent of the global economy on board—was virtually given up for dead in early June when Democrats sided with Republicans to kill the bill in the House of Representatives.

However, chances that the TPP will eventually pass improved dramatically after the US Senate voted in favor of fast track legislation allowing the Barack Obama administration to quickly finalize a deal.

Observers now expect the TPP could be signed off on by its members—a who's who of American allies including Australia, Canada, Japan, New Zealand, Singapore, and Mexico—in Hawaii at the end of the month.

Gavin Greenwood says China has long held the view that the TPP was being aimed squarely at challenging its interests in the region.

“Any move by Beijing to hamper the free movement of merchant shipping or naval vessels on 'peaceful passage' through the South China Sea would be a radical escalation of the present situation and likely draw an equally radical response from the United States and its major allies, notably Japan and South Korea in the region and the EU beyond,” he said.

To date, China has countered the TPP by initiating the Asian Infrastructure Investment Bank (AIIB) and an array of bilateral deals and pledges that includes the Association of South East Asian Nations (ASEAN).

“China has its New Silk Road. They are not just standing by on the sidelines,” said Andreas Vogelsanger, Chief Executive Officer for Asia Frontier Capital in Vietnam.

But he notes that Vietnam, through its plan to replace China as the factory floor for the production of North American consumer goods, had most to gain from the TPP, anticipating it will add 30 percent to Vietnam's gross domestic product over the next ten years.

The United States, in turn, would use Vietnam—and to a much lesser extent, Singapore, Malaysia and Brunei—and its strategic position as an entry point into ASEAN and its 600 million people. Peru and Chile make up the remaining twelve negotiating TPP members while Taiwan, The Philippines, Thailand and South Korea have all signaled their intentions to get on board.

“China's been left out... and that will give Vietnam such a big advantage,” Vogelsanger added.

Arms Race

Whether this optimistic outlook for the region's exports materializes will depend upon unfettered access to ports and the sea lanes of communications. With a home economy that looks perilously close to imploding amid a crackdown on corruption, China is unlikely to do its neighbors or the TPP any favors.

That and an inability to guarantee respect for each country's two hundred nautical mile Exclusive Economic Zone has encouraged governments to defend their investments through an arms race of sorts and a scramble for position.

No single country within East Asia can match Chinese naval or air power. It boasts an aircraft carrier, seventy-three destroyers/frigates, fifty-eight submarines and about 21,000 fighter/bombers. By comparison, Vietnam has seven frigate/destroyers, while The Philippines possesses just three. It’s materiel capabilities aside, China—on paper at least—would struggle against a united US-led strike force with Japan and South Korea on its side.

“China would not invade but it would be prepared to demonstrate that it is the most powerful country in the region,” Vogelsanger said. “The United States still has the power but this is clearly shifting towards China in the coming years and clearly that is creating a lot of tension.”

The Philippine navy is beefing-up. Importantly, however, its focus has shifted from the diplomacy and naval brinkmanship that characterized the stand-off a year ago, to the courts. It has pursued its claim against Chinese expansionism through the Permanent Court of Arbitration in The Hague but proceedings are bogged down by arguments surrounding the jurisdiction of the court.

Vietnam has embarked on a US$2 billion acquisition of six Kilo-class Russian submarines as part of a broader spending package. Its fourth submarine arrived in Cam Ranh Bay three weeks ago.

But perhaps more importantly, Vietnam has moved to significantly deepen its military ties with Washington, signing-off on five areas of defense cooperation; high-level dialogue, maritime security, search and rescue, disaster relief, and peacekeeping.

A further US$18 million was provided for the acquisition of American Metal Shark patrol vessels, and Reuters reports Hanoi is seeking to upgrade its air defenses by acquiring Western fighter jets and drones from US and European contractors.

Companies named by Reuters include Swedish contractor Saab, Eurofighter—the defense wing of Airbus—and US companies Boeing and Lockheed Martin.

Equally, while Vietnam was reaching out to the United States, China was extending military assistance into its old Cold War backyard. Aid-dependent Cambodia is the only country in ASEAN to publicly support China's maritime expansion plans and it has proved itself adept at ingratiating itself with donors.

Since 2013 Beijing has provided Cambodia with a US$200 million loan for Harbin Z-9 helicopters, trucks, and 30,000 military uniforms to go with military vehicles, rocket launchers, anti-aircraft guns, and support equipment for an infantry institute it established there two years ago.

The upshot is that Cambodia and Vietnam have been pushed and cajoled into very different positions on the South China Sea issue, certainly a political division between the neighbors not seen since the Khmer Rouge took up arms against the Vietnamese in the mid-1970s.

China's Hedge

War, however, is far from inevitabile in the South China Sea. As Vogelsanger points out there is simply too much at stake. “It is difficult to guess how China feels about all this, but I believe China might intensify bilateral talks and strengthen relationships going forward,” he said. His sentiments were echoed by Murray Hiebert from the CSIS who also noted that China's economy was so integrated into the global supply chain that any attempt to disrupt trade through the South China Sea would hurt its finances as much as that of its neighbors and the United States.

“I don't think China will react negatively to the TPP and step up its pressure around the Spratlys as a response. When the TPP negotiations among the current 12 countries started in earnest four or five years ago, China criticized it as another attempt by the United States to encircle and threaten China. However, in the last year or two, China has changed its tune, stopped its criticisms, and has even begun exploring with the United States and other members what it would take for China to join the TPP down the road,” he said.

China is hedging. Amid expectations that a deal on the TPP will be finalized Beijing announced a repositioning to take advantage of the trade bloc. Three big manufacturing projects worth about US$900 million have been earmarked for Vietnam, in Nam Dinh, Quang Ninh and Hai Duong provinces.

Greenwood added that neither China nor the United States could possibly want to go to war over a dredging operation but he warned the longer two opposing sides maneuver and stalk each other the greater the potential for human miscalculation or technical malfunction.

“Every typhoon begins with the slightest gust and the danger of rhetoric moving from sophistry to the kinetic is real enough. Modern weapons are now as much a risk as human error in such cases, as the response speeds for air defense and other systems are now almost entirely computerized and effectively autonomous.

“All it takes for technologically advanced militaries to move from wary respect to battle stations is for a radar or missile system to ‘paint’ or ‘lock’ a target to generate a mirror reaction that makes conflict—however limited or protracted—close to inevitable.”

Feature Image via Asia Times

Luke Hunt can be followed on Twitter at @lukeanthonyhunt