Chinese Whispers: Core Interests and the South China Sea

Maneuvering for influence in the South China Sea: fact, fiction and the devil you know...


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South China Sea // Credit: Perry-Castaneda Map Collection, University of Texas at AustinIN MID-2010, the newspapers were full of revelations that China had expanded its core interests to include the South China Sea. China’s statement is said to have first emerged in a March 2010 meeting between US National Security Council Director Jeffrey Bader, Deputy Secretary of State James Steinberg and Chinese officials. Now, though, research indicates that it may never have happened.  


This revelation suggests that US Secretary of State Hilary Clinton may have been mistaken - or even deliberately stoking tensions - when she said that Dai Binguo, China’s Senior State Counsellor for Foreign Relations, had also described the South China Sea as a core interest in May 2010.  It is not clear how or why this misunderstanding arose.  Perhaps the phrasing was unclear, perhaps China did make the statement and now wants to back down in the face of US reassertion, or perhaps the US deliberately misinterpreted the comments in order to regain influence in the region.   


Tensions in the Sea rose after Malaysia, the Philippines and Vietnam filed papers with the United Nations Commission on the Convention on the Law of the Sea (UNCLOS), in compliance with a May 2009 deadline to formalise their legal claims and prompting an angry response from China.  The militarisation of the sea continues.  China has established a significant submarine base in Yilun in Hainan, to add to its naval bases in Guangdong province, and is now showing off its nearly finished aircraft carrier.   The US maintains an active presence through its Seventh Fleet, Vietnam and Malaysia are buying submarines, and the Philippines, the weakest power by far, is receiving US support for its navy and coast guard.  


The relationship that seems to define the dispute, though, is that between Vietnam and China.  It is a paradoxical connection, framed in large part by Vietnam’s much smaller size.  Indeed, Vietnam’s Red River region was the province of Annam (the Peaceful South) in the Chinese empire from 111 BC until 939 AD, when Ngo Quyen founded the country’s first independent dynasty.   This (and later) history is commonly cited as reason enough for hostility, but the truth is not so simple.  Chinese rule had a profound impact on Vietnam.  The country instituted a governing bureaucracy, selection for which was by examination.  Its scholar elite had a profound reverence for Chinese poetry, and used Chinese characters until the French reforms of the early twentieth century introduced the Roman script.  Vietnam’s society was and remains deeply Confucian, with traditional hierarchies emphasised by the use of family words in lieu of pronouns.  Indeed, it could be said that Vietnam is more Confucian than mainland China, since its revolution was less destructive of its traditions than was Mao’s Cultural Revolution.  


And yet the Vietnamese are acutely conscious of their differences from China.  The impact of Chinese thought on Vietnamese international relations is instructive in this context.  For all of its history, Vietnam has operated as a small entity within China’s regional sphere of influence, which revolved around Chinese emperors demanding tribute from smaller neighbours.  This system actually involved a good degree of autonomy – indeed, some historians argue that the benefit devolved largely on those states sending tribute, since they tended to do better in the trading relationship.   Yet realpolitik also played a role, with China continually seeking to balance regional powers, such as Vietnam, Thailand or the Khmer kingdom, against one another.  Within this context, Vietnam, conscious of its neighbour’s great size, generally sought to maintain good relations with China, even as it worked to subvert the system to its advantage - for instance by establishing its own tributary system and winning territory from the weakening Khmer kingdom in the eighteenth century.


The modern relationship shows these paradoxical tendencies.  In the 1920s when various nationalist groups sought to free Vietnam from French control, all looked to China for inspiration, sanctuary and support.  Ho Chi Minh, for one, spoke fluent Cantonese and Mandarin, and spent much time in China after his return from France and Russia in the 1920s.  He forged strong links with the Chinese Communist Party, even travelling with Mao in the same train back to China in 1950 after the signing of the Sino-Soviet Pact.  The Cold War prompted China to provide sanctuary in the struggle against the French, and Beijing took an even more supportive stance in the 1960s in the war against the US.  The People’s Liberation Army actually fielded as many as 300,000 troops in North Vietnam, carrying out road maintenance or manning anti-aircraft weapons, thereby freeing Vietnamese forces to take the struggle south.  


Yet the relationship soured in the 1970s.  As the Sino-Soviet split worsened, Vietnam found itself caught between Russia and China.  Nixon’s visit to China in 1972 was particularly damaging, coming as it did when Washington was bombing North Vietnam.   It was not until Hanoi’s victory in 1975, though, that a rupture with China occurred.  The break emerged because of Vietnamese assertion within its neighbourhood, embodied in Hanoi’s invasion of Cambodia in late 1978.  Deng Xiaoping responded in turn in February 1979 with an attack on northern Vietnam.  That action faced strong resistance and the People’s Liberation Army quickly withdrew, but the destruction was significant. Casualties amounted to about 40,000 on the Chinese side and about 100,000 on the Vietnamese side.  The two countries broke off relations, Vietnam working closely with the Soviet Union for the remainder of the Cold War.  


Relations thawed in the 1990s. Formal diplomatic ties were re-established in 1991.  The two countries issued a 16-character guideline on improving bilateral relations in 1999, and resolved land and sea border issues in the north and the Gulf of Tonkin in 2000, before publishing a Joint Statement for Comprehensive Cooperation in the New Century.  They established a Steering Committee for Bilateral Relations in 2006, and then raised their bilateral relationship to the status of strategic partnership in 2008, suggesting close and special links,.  Limited defence ties were in 2005, and in November 2010 China and Vietnam held their first Strategic Defence Security Dialogue.  The trading relationship is now substantial. China invested about US$250 million in Vietnam in 2010. Bilateral trade is worth about US$25 billion, though it is unequal, with Vietnam selling unfinished commodities and running a trade deficit with China of about US$12 billion in 2010. 


These economic links are even strengthening.  Vietnam is running a current account deficit of about 8% of GDP and foreign exchange reserves are dangerously low.   The government pushed its state owned banks to expand credit rapidly in the last few years, at the cost of a glut of non-performing loans. A default by national champion Vinashin has led to a debt downgrading.  Perhaps the main concern is that inflation is running wild.  Official estimates place price rises at over 12%, partly because Vietnam’s currency, the dong, has seen several devaluations in the last two years.  A balance of payments crisis is a growing possibility and Vietnam may be forced to turn to external lenders for succour.  In this context, some commentators argue that Vietnam’s leaders would prefer to deal with Beijing than with the IMF; while politically challenging, Chinese conditionality may prove preferable to any obligatory asset sales.  Indeed, in late April China Development Bank offered Vietnam US$1.5 billion to fund housing development, suggesting that China is becoming a preferred commercial partner. 


Yet do not expect Hanoi to depart from its long tradition of professing tributary status to China while hedging.  Indeed, Prime Minister Dung stated in October 2010 that foreign warships may use facilities in Cam Ranh Bay on a commercial basis.  Vietnam is also moving forward with plans to modernise the port with the equivalent of over US$200 million in Russian funds, and will take possession of its first diesel electric Kilo class submarine this year, with five more to follow.  Vietnam is thus seeking to deter China as it did when permitting Russian use of Cam Ranh Bay from 1979. The US for its part is now hoping for access to the port, although Vietnam may be hesitant to grant it for fear of angering Beijing.  


The interesting question is whether the US chose to stoke the “core interests” issue to push Vietnam into opening Cam Ranh Bay, or whether China backed down in the face of US pressure.  Either way, Vietnam will maintain its policy of living with China while trying to maintain its autonomy as best it can – as have other states in asymmetric relationships. Mexican caudillo Porfirio Diaz once bewailed his country’s plight, saying: “Poor Mexico; so far from God, so close to the United States”.   Ho Chi Minh was more robust, saying in 1945:  “I’d rather smell French shit for five more years than eat Chinese shit for the rest of my life”.  


The sentiment is akin, but Diaz had the more appealing turn of phrase. 


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Kit Dawnay is Current Intelligence magazine's Far East Correspondent. He lives in Hong Kong.