Typhoon Season in the South China Sea

The summer typhoons are not the only storms brewing in the South China Sea.  Tensions have risen abruptly as the Philippines and Vietnam have come under pressure from China in a range of incidents aimed at preventing oil exploration activity.  The row has worsened to the extent that the Chief of Staff of the People’s Liberation Army (PLA), Chen Bingde, and his US counterpart, Admiral Mike Mullen, expressed differences over the sea in mid-July.  

The latest incidents are worth cataloguing.  In late May 2011, the Philippines accused the Chinese government of erecting military facilities on the Iroquois Reef-Amy Douglas Bank, an area located well within the Philippines Exclusive Economic Zone (EEZ).  This action followed moves in March by Chinese vessels near Palawan to harass oil exploration ships operated by the UK-based Forum Energy.  The Vietnamese government then announced in late May that a Chinese fishing boat, joined later by two China Maritime Surveillance Forces vessels, had cut the submarine tow cable of a Talisman Energy ship conducting an oil exploration survey; in June another fishing boat tangled its nets with a similar cable and was chased off by the Vietnamese.  The May incident took place just 120 nautical miles from Vietnam’s coastline, and so nowhere near the disputed Spratly or Paracel Islands.  Hanoi then conducted live fire naval exercises to demonstrate a willingness to fight.  A joint Chinese and Vietnamese naval patrol later in June presaged the dampening of differences.

The incidents prompted a major diplomatic row, overshadowing the end of May meeting of the Shangri-La Dialogue, at which China’s defence minister, Liang Guanglie, stressed that China was maintaining its “peaceful rise”.   Beijing also stated that it would not use force to resolve the issue, but vice foreign minister Cui Tiankai told the US to stay out of the dispute.  Vietnam and the Philippines condemned Chinese actions, and even Singapore has called for clarity from Beijing.  The US is moving ahead with planned exchanges with the Vietnamese navy, which PLA chief Chen Bingde described in mid-July as “extremely inappropriate”.  The US Senate also passed a unanimous resolution in June condemning China’s actions in the Sea.  The row is affecting other issues, with 45 senators currently calling for the sale of F-16 fighter aircraft to Taiwan.  Taipei is a claimant (on the same lines as China) and actually maintains a small garrison on the largest islet of the Spratly chain, Pratas or Itu Abu Island.  
Somnolent since the late 1990s, tensions in the South China Sea have spiked in the last few years partly owing to the end of a Joint Maritime Seismic Survey in 2008 and a return to unilateral oil exploration efforts, and partly because of the 2009 deadline for the filing of claims under the United Nations Convention on the Law of the Sea (UNCLOS).  Tensions rose further in mid-2010, when US Secretary of State Hilary Clinton reacted to alleged Chinese claims that the Sea comprised a “core interest” by announcing that freedom of navigation in the sea was a US national interest.  

That the latest incidents relate to oil exploration is no coincidence.  A longstanding (if unconfirmed) belief is that beneath the South China Sea lie immense reserves of untapped oil and gas.  Some estimates are as high as 213 billion barrels for the whole South China Sea; natural gas reserves may amount to about 900 million trillion cubic feet.  It is worth noting in this context that the main Chinese player in offshore oil and gas development is China National Offshore Oil Corporation (CNOOC), which produced more than 50 million tonnes of oil equivalent in China’s offshore waters in 2010.  CNOOC played a role in the multi-lateral exploration activity which took place under the Joint Maritime Seismic Survey until its termination in 2008, and the company plans to produce about 500,000 barrels per day (bpd) of oil from the South China Sea by 2015, rising to one million bpd by 2020.  In May 2011 CNOOC announced the sale of 19 South China Sea oil blocks to foreign investors (most in the Pearl River Delta region) and took possession of a massive new offshore drilling rig, Offshore Oil 981, which Xinhua stated in June would operate in the disputed sea. 

As such, it is tempting to ask whether current policy relates to CNOOC’s oil exploration efforts.  After all, in July 2008 Chinese diplomats in Washington demanded US energy major Exxon pull out of an exploration contract with PetroVietnam, and exploration work slowed until Manila and the Philippines restarted in late 2010, apparently emboldened by US statements.  It is that which has heightened tensions.  Furthermore, it is China’s Maritime Surveillance Forces which are applying pressure; they operate under the State Council, China’s executive, which tends to focus more on energy issues than other parts of the government.  If correct, such a view may be grounds for cautious optimism; a model for resolution may lie on the border between Japan and China.  Tensions in that dispute intensified with the discovery of a CNOOC drilling platform at the Chunxiao gasfield in 2006.  The Japanese protested, but by June 2008 the two governments had agreed a joint development arrangement.  The accord is not ideal, not least since the Chinese side has yet to implement it and maritime friction is a continuing problem, but it has gone some way to normalise relations. 

A less appealing alternative, though, is that the dispute is a sign of a broader assertiveness in Chinese foreign policy, the structure of which, after all, conspires against the undue influence of CNOOC.  Foreign policy decisions fall to the Politburo Standing Committee (PBSC), which receives input from three core organisations: the Chinese Communist Party (CCP), which controls three important leading groups on foreign affairs, national security and on Taiwan; the State Council, which includes both the foreign ministry and the leading group for energy; and the Central Military Commission (CMC), which is both a leadership group dealing with military affairs and the People’s Liberation Army headquarters.  CNOOC may be able to influence policymaking, then, for instance through the leading group on energy, but only insofar as its claims compete with other concerns.  This view seems plausible as Beijing appears increasingly willing to trample roughshod over the claims of smaller powers, buoyed by its growing military capacity.  Such a stance suggests that China is willing to sacrifice regional goodwill in order to maintain its claims. 

Accordingly, the militarisation of the South China Sea is moving ahead.  Vietnam is buying six Kilo class diesel submarines from Russia, while the Philippines is currently reminding the US of its treaty obligations to the island state (its coast guard receives US support).  Even Singapore has blinked, permitting the basing of two American littoral combat ships in its port, the first US ships to operate on a permanent basis from the city state.  Washington has also stated its determination to “return” to Asia, and is actively courting partners in the region.  China, though, seems unlikely to back away from its current policy.  In this context, the arrival in the Sea of China’s new oil rig may spark the next phase in the crisis, particularly if Vietnam or the Philippines seek to block its deployment and if China acts to protect it. 

A little over a century ago, Joseph Conrad wrote of the South China Sea in his novel, Typhoon:  “Observing the steady fall of the barometer, Captain MacWhirr thought, ‘There’s some dirty weather knocking about.’”  The barometer does seem to be falling.