By Michal Meidan
Eurasia Group
Eurasia Group
The South China Sea is first and foremost a question of sovereignty for Beijing. But with economic interests also at play, there are compelling arguments for China to defend its interests aggressively. China’s oil companies want to unlock the sea’s potential oil and gas resources. Civilian maritime authorities seek to defend fishing grounds as coastal waters become depleted. The Chinese navy uses maritime tensions to push for a greater piece of the budget pie. Strategic thinkers and hawks want to send a clear signal to their neighbours – and to domestic public opinion – that China’s interests are not up for negotiation. Indeed, with Manila and Hanoi emboldened by Washington’s “pivot” to Asia, Beijing feels compelled to respond forcefully when its neighbours pull the US even closer into China’s stomping ground.
Events over the last few months have led to heightened tensions and have made the South China Sea one of Asia’s hottest spots. In April, the standoff between China and the Philippines around Scarborough Shoal sent shock waves throughout the region. In June and July, oil and gas companies were invited by both China and Vietnam to tender for blocks in contested areas, adding a thick layer of political risk to their commercial activities. And most recently, China’s establishment of a new administrative district and a new military garrison on an island in the Paracels soured Beijing’s ties with Washington.
These tensions are likely to persist. And Beijing is not alone in perpetuating them. Vietnam and the Philippines, concerned with the shifting balance of powers in the region, are pushing their maritime claims more aggressively and increasing their efforts to internationalise the question by involving both ASEAN and Washington. Attempts to come up with a common position in ASEAN have failed miserably but as the US re-engages Asia, it is drawn into the troubled waters of the South China Sea.
Political dynamics in China – with a once in a decade leadership transition coming up, combined with electoral politics in the US and domestic constraints for both Manila and Hanoi – all augur that the South China Sea will remain turbulent. No government can afford to appear weak in the eyes of domestic hawks or of increasingly nationalistic public opinions. The risk of a miscalculation resulting in prolonged standoffs or skirmishes is therefore higher now than ever before. But there are a number of reasons to believe that even these skirmishes are unlikely to escalate into broader conflict.
First, despite the strong current of assertive forces within China, cooler heads are ultimately likely to prevail. While a conciliatory stance toward other claimants is unlikely before the leadership transition, China’s top brass will be equally reluctant to significantly escalate the situation, since this will send southeast Asian governments running to Washington. Hanoi and Manila also recognize that despite their need for assertiveness to appease domestic political constituencies, a direct confrontation with China is overly risky.
Second, military pundits in China also realize that the cost of conflict is too high, since it will strengthen Washington’s presence in the region and disrupt trade flows. And even China’s oil company CNOOC, whose portfolio of assets relies heavily on the South China Sea, is diversifying its interests in other deepwater plays elsewhere, as its attempted takeover of Nexen demonstrates.
An uneasy balance and a highly volatile region remain, therefore, the best policy option for all sides involved.
Michal Meidan is a China analyst at Eurasia Group
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