China's Territorial Disputes (37 page)

Possible future developments

As according to our framework, while domestic forces in a democracy like the Philippines needed little probing to organize and protest against the perceived Chinese intrusion, the government of authoritarian Vietnam stayed calm after losing more than seventy men in the 1988 naval confrontation with China. As pressures for political change in the region mount, and information becomes more free-flowing, foreign policy is subjected to greater public debate, and nationalistic positions may harden even more, magnifying the stakes while making compromises harder to achieve. As an illustration, Taiwan’s continued presence in the South China Sea, though minimal, has heightened Taiwanese public sentiments to their country’s involvement there. During the Mischief Reef incident, when three patrol boats were forced to turn back to Taiwan before reaching their garrison on Taiping Island for fear of being caught in hostile cross-fire, the mission’s failure to defend Taiwanese sovereignty was heavily criticized in the legislature and the local media.
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While the principal benefits of the creeping closure of the South China Sea accrue to international oil companies and their host governments who collect the petroleum royalties, the cost falls heavily on the fishermen from regional countries. There has been an increasing number of incidents in recent years involving fishermen from the region being arrested, fined, imprisoned, and having their boats confiscated by neighboring governments for allegedly trespassing into their countries’ territorial waters or EEZ. These fishermen will have every interest in forming lobby groups to pressure their own authorities to claim as much as possible, or at least concede as little as possible, of their country’s territorial waters, thus further complicating negotiations.

There is some danger that, as a result of economic difficulties, nationalistic sentiments might rise in some East and Southeast Asian states, and weakened leaders or governments may be tempted to look for outside diversions to deflect domestic criticisms or failures. As leaders seek to reaffirm the basis of their political legitimacy, especially in the event of a potentially regime-threatening crisis such as the Asian financial and economic turmoil of the late 1990s, they may see value in adopting a hard-line stance on sovereignty disputes, thus increasing the saliency of territorial issues. In fact, Selig Harrison argued more than twenty years ago that South Vietnamese president Nguyen Van Thieu precipitated the conflict with China over the Paracels in January 1974 to rally anti-Chinese nationalist sentiments to bolster his faltering political position.
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Public opinion over territorial issues seems to have been equally potent politically, if not more so, a quarter century later, though ironically, it was exerted on the Communist leadership of a united and socialist Vietnam. In the run-up to the ninth Congress of the Vietnamese Communist Party in April 2001, general secretary Le Kha Phieu came under criticism from both within and without the party, and from Vietnamese residing overseas, for having conceded too much to China in reaching the land border agreement of 1999 (details of which have never been released by the government), thus leading to his replacement by Nong Duc Manh.
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We have postulated that the higher cost of achieving no agreement means that open trade-dependent economies will have larger win-sets for entering into international agreements than more self-sufficient economies. There is hope that increasing economic interdependence and bilateral ties will both make political leaders more interested in cooperation, and create more domestic groups in support of cooperation, while the option of confrontation is present. A positive aspect of this trade picture is that, at least from 1975, when Sino-ASEAN trade data were first systematically collected and analyzed,
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up to 1992, China-ASEAN trade increased fifteen times in value.
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Unfortunately, both China and Southeast Asian countries have comparative advantages in products that are substitutes rather than complements for one another. Furthermore, both China and ASEAN in the 1990s are heavily dependent on the US, the European Union and Japan as principal export markets, and these three entities are also the top three of the four main sources of imports for ASEAN and China.
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As a large country with a diversified economy, China competes with Indonesia, Philippines, Vietnam, Thailand and Brunei by specializing in the production of primary-based and labour-intensive commodities such as textiles, clothing, electrical appliances and toys, and with more capital-intensive economies like Singapore and Malaysia for the same high-end export markets.
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Its low wage rate and lowered exchange rate since 1979 are considered by trade analysts to be principle factors contributing to export competition among China and ASEAN in the markets of the industrialized world. China as a huge emerging market also attracts foreign investment that might have gone to other regional countries. Still, there may be more room for growth in trade, investment and tourism between China and ASEAN, as the Chinese government undertakes tariff reductions and simplification of investment procedures in the wake of China’s entry into the WTO in 2001 and its contemporaneous proposal to establish the China-ASEAN Free Trade Area in ten years’ time. Trade between China and the ASEAN countries has already increased 168 percent from US$20.4 billion to US$54.8 billion between 1996 and 2002, accounting for 7 percent and 8.8 percent of China’s total foreign trade for the two years respectively.
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If this rate of increase keeps up, it will lead to greater economic interdependence that will hopefully spill into more willingness to cooperate on other non-economic issues affecting the South China Sea region.

Despite the occasional pressure exerted by assorted nationalists, militarists and adventurers in China and the ASEAN countries, there is hope that increasing economic interdependence and deepening political ties will make their leaders more interested in cooperation and create more domestic groups in support of peace and cooperation. China remains firmly committed to economic growth, which is as much a part of the Chinese government’s effort to raise the country’s international profile as is its accumulation of military power. ASEAN countries also have an interest in maintaining a common stance with China at international conferences on issues of human rights, environmental protection and democratization against “interference” by the West. ASEAN has also had some limited success in getting China to forgo its prior insistence on conducting bilateral negotiations with claimants only,
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in accepting some degree of multilateralization of the South China Sea issues. Since 1995, China has announced that it will use international law and the law of the sea to examine the claims, and indicated that whatever it does in the South China Sea, it will not threaten the security of the sea-lanes.
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The Chinese leadership also reiterated its desire to shelve sovereignty claims in favor of joint economic development for the Spratlys, in the report of the fifteenth CCP Congress in October 1997. After three years of negotiations between China and ASEAN to draft a regional code of conduct, a non-binding China-ASEAN “Declaration on the Conduct of Parties in the South China Sea” was signed in November 2002. Though the declaration made no reference to specific geographical scope, primarily because

China opposed any mention of the Paracel Islands, an issue brought up many times by Vietnam, it expressed the parties’ voluntary commitment to refrain from further inhabiting new features, and focused on the need for dialogue and the preservation of regional stability.
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This shows that the Indonesian workshops and ARF meetings, which had built on the “ASEAN approach” of problem management by relying on personal consultations among leaders, postponing difficult issues and gradually expanding on areas of common interests, did produce some tangible, though limited results.

It is not inconceivable that, some time in the future, the claimant states will consent to mediation of the dispute by the ASEAN High Council, a ministerial level mediation body the establishment of which was provided for by the 1976 Treaty of Amity and Cooperation (Bali Treaty).
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Alternatively, they may agree to submit the dispute for adjudication under the aegis of UNCLOS III, which may involve conciliation, arbitration, special arbitration by technical specialists, the International Tribunal for the Law of the Sea (ITLS), the Sea-Bed Dispute Chamber (SBDC), or even the International Court of Justice (ICJ), depending on the nature of the dispute and the wishes of the disputants.
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Unfortunately, as far as I know, these avenues for dispute resolution have yet to be seriously explored by the parties concerned.

Serious engagement in joint development of resources in the Spratlys and the realization of a code of conduct for parties to the South China Sea dispute would provide both China, ASEAN and even Taiwan the best opportunity to show that they are responsible, trustworthy and peace-loving business partners and members of the international community. It would be best for regional governments to come together and establish a consortium of foreign and national oil companies to prospect for petroleum in the disputed Spratly Islands. It should also be stipulated that any formula for the exploration and production of oil or gas and the costs and payoffs associated with it be agreed to and altered only by consensual agreement. So doing will ensure equitable incentive to begin joint development, and at the same time dampen the desire for unilateral seizure of territory. The work of this consortium could be overseen by a committee of technical and financial experts established under the aegis of the Indonesia workshops, or even the ARF, perhaps with a person of Chinese extraction as its chairman, in deference to China’s pre-eminent position in the South China Sea region. Countries should agree that shoals and sandbanks that are presently submerged not be objects of claim, which would exclude the Macclesfield Bank. Given the proximity of the structures to one another, countries should also agree that claims to any island or reef, inhabited or otherwise, carry with it a ^
2
-mile territorial sea. Freedom of navigation and over-flight by both civilian and military craft, a key American demand,
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should be fully guaranteed to all nations, but the establishment of military bases or fortifications in the disputed areas should be discontinued. In this sense, Taiwan’s demilitarization of Pratas Island and Itu Aba (Spratly) in 2000, by removing its marine corps units and placing these islands under coastguard jurisdiction, was a step in the right direction. For the purposes of commercial fishing, the entire South China Sea should be regarded as a semi-enclosed sea surrounded by China, Taiwan and the ASEAN countries, whose governments have both the right and responsibility under UNCLOS III to come together to allocate and regulate the catching and processing of fish. Carrying out the above measures should hopefully integrate and “positivize” the roles played by transnational, governmental and subnational actors in the current dispute to the maximum extent possible under the present circumstances. Only when the economic and security interests of all regional countries become compatible, and in good time, can serious discussions on sovereignty claims be started, or postponed indefinitely.

6 Beyond two-level games?

1    Document of the Ministry of Foreign Affairs of the People’s Republic of China,

China’s Indisputable Sovereignty over the Xisha and Nansha Islands
(Beijing: Foreign Languages Press, 30 January 1980), 2-4.

2    Marwyn S. Samuels,
Contest for the South China Sea
(New York: Methuen, 1982), 61-63.

3    Samuels,
Contest for the South China Sea,
76-77.

4    
Ibid.,
81-82.    
'

5    
Ibid.,
84-86.

6    Ministry of Foreign Affairs of the People’s Republic of China,
China’s Indisputable Sovereignty over the Xisha andNansha Islands,
17-19.

7    Lee G. Cordner, “The Spratly Islands Dispute and the Law of the Sea,”
Ocean Development and International Law,
1994, vol.25, 64.

8    “First Deep-Water Oil Field in South China Sea Put into Production,”
FBIS Daily Report,
China,12 June 1996, from Beijing
Keji Ribao
[Science and Technology Daily] in Chinese.

9    
OPEC Bulletin,
May 1996,16.

10    Michael Leifer, “Chinese Economic Reform and Security Policy: The South China Sea Connection,”
Survival,
summer 1995, vol.37, no. 2, 44.

11    In 1988, United States geologists estimated reserves of 2.1 to 15.8bb of oil, while Russian estimates put the figure at 7.5bb of oil equivalents, 70 percent of which is probably gas resources. See Bruce Blanche and Jean Blanche, “Oil and Regional Stability in the South China Sea,”
Jane’s Intelligence Review,
1 November 1995, no. 7, 513.

12    Mamdouh G. Salameh, “China, Oil and the Risk of Regional Conflict,”
Survival,
winter 1995/1996, vol.37, no. 4,134.

13    Liu Haiying, China OGP (Xinhua News Agency).
http://www.chinaogp.online.com/
hottopic/ (accessed 4 July 2003). Conversion from the scale of metric tonnes to barrels is mine.

14    Sanqiang Jian, “Multinational Oil Companies and the Spratly Dispute,”
Journal of Contemporary China,
1997, vol.6, no.16, 598.

15    
China Daily,
19 December 1994, 6.