Tensions have been rising in the South China Sea of late, and these are threatening to put strains on China’s relations with South East Asia and the US.

Essentially, China has reiterated its long-standing claims over the whole of the South China Sea, including the Spratly and Paracel islands. Unsurprisingly, this sovereignty assertion is disputed by Brunei, Malaysia, the Philippines, Taiwan, and Vietnam, which each claim part of the islands or the sea (See this link from the US Energy Information Administration for an overview).

In late July, the US entered the fray, saying that it is willing to mediate in the dispute. This greatly angered China, which regards the South China Sea as an internal matter. Indeed, Beijing now views the South China Sea as one of its ‘core interests’ of territorial integrity, alongside Taiwan, Tibet, and Xinjiang province.

Why Is The South China Sea Important?

There are several reasons:

• Critical trade route: Much of the trade between Europe and the Middle East and East Asia passes from the Indian Ocean through the Malacca Strait, then up through the South China Sea to China, South Korea, and Japan. Japanese defence planners in particular don’t want this trade route dominated by China, even though the likelihood of interdiction is remote.
• Oil and gas reserves: Some of the islands are believed to contain significant hydrocarbon resources. Given that most Asian economies import the vast majority of their oil needs, mainly from the Middle East, they naturally wish to tap sources closer to home. The sea also has substantial fish resources.
• Global naval strategy: China is seeking naval preponderance in the South China Sea as part of its bid to become a global naval power. This would include projection capabilities in the Indian Ocean, which is fast becoming a zone of Great Power competition. Japan and South Korea, too, are seeking to strengthen their naval prowess.
  

  South China Sea

What Are The Geopolitical Implications?

The US is clearly trying to deal itself back into South East Asian geopolitics, after a decade of relative neglect by the Bush administration, which focused more on Afghanistan, Iraq, and the wider Middle East. During this time, China stepped up its influence in South East Asia through increased trade, investment, and use of ‘soft’ power. US attempts to bolster its position in the region are evident from its tentative outreach to Myanmar last year, and a planned resumption of cooperation with Indonesia’s Kopassus special forces. Both moves are considered controversial, due to human rights concerns.

However, the real clincher for the US could be its growing ties with Vietnam. The two countries are staging naval exercises this week, and Hanoi could well become Washington’s main ally in South East Asia. This is because Vietnam is arguably the country in the region most concerned about China’s rising power. Not coincidentally, Vietnam was the last sovereign state to be attacked by China, in 1979, and the two are the most active disputants in the South China Sea. China has the upper hand, as evidenced by the fact that in 2008 it forced ExxonMobil to abandon plans to explore for oil off Vietnam’s shore in disputed waters.

A US-Vietnamese alliance would be a strong counterweight to China, and could attract support from Japan, and potentially India. However, there is an inherent danger in building a counter-Chinese alliance, namely it could result in South East Asia being divided into competing camps. This would undermine efforts to build Asian unity through organisations such as ASEAN.

Should I Be Worried About War?

Back in 1997, a British journalist published a future-fiction Tom Clancy-esque novel called Dragon Strike, which portrays a Chinese attack on Vietnam and other regional states in 2001 in order to secure the South China Sea. This prompts US intervention, bringing Beijing and Washington to the brink of nuclear war. This was clearly an alarmist situation, and one that is quite at odds with China’s cautious approach to foreign policy. However, I do not preclude future skirmishes between Chinese and South East Asian vessels, and perhaps even with the US navy if tensions continue to rise.

Recall that it was only as recently as 2001 that China forced down and captured a US spy plane in its vicinity and detained its crew for almost two weeks. Back then, the world’s economy was less dependent on ‘Chimerica’, but were such an incident to replay itself, it would surely send shockwaves through the global financial system, at least in the short term, as investors pondered the future of Sino-US relations.

Even if such skirmishes are avoided, the South China Sea looks set to be another bone of contention between the China and the US, on top of exchange rate reform, trade issues, intellectual property theft, Taiwan, Tibet, and human rights.

Going forward, the key challenge for Beijing and Washington will be ensuring that geopolitical tensions are isolated from economic issues, which necessitate a high degree of cooperation. However, this will not always be easy.