Written by Vidya Sagar Reddy, The Red Queen’s Navy will discuss the influence of emerging naval platforms and technologies in the geostrategic contours of the Indo-Pacific region. It identifies relevant historical precedents, forming the basis for various maritime development and security related projects in the region.
“Now, here, you see, it takes all the running you can do, to keep in the same place.”– The Red Queen, Through the Looking Glass, Lewis Carroll.
By Vidya Sagar Reddy
China has been pressing to complete the Gwadar port in Pakistan and build the China-Pakistan Economic Corridor (CPEC), allowing it to be connected over land to an Indian Ocean port. Gwadar and CPEC allow China to circumvent the Strait of Malacca which can be blockaded by rival navies in the event of conflict, termed as “Malacca Dilemma.” However, the rising activism of Balochistan independence parties could complicate these projects, compelling China to continue to depend on this Strait. This situation certainly bodes well for maintaining regional stability.
As China’s economic power burgeoned, its political class sought to transform the country into a major power by building comprehensive national power, which also requires investing in a sophisticated military. Political narratives were developed citing “historical” facts and figures to re-establish China’s position in the world order. However, China’s attitude towards its neighborhood has become increasingly assertive in recent years, signaling the rise of a potential regional hegemon. Those countries with stakes in maintaining the peace dividend responded by building alliances and partnerships to counter this security threat.
By signaling the intent to blockade the Strait of Malacca, these regional countries seek to deter China from military adventurism in the region. China’s economic growth is dependent on the seas, both for receiving energy and other raw materials required for low cost manufacturing, as well as the shipping of finished goods to markets in the U.S., Europe, etc. These ships have to pass through the Strait of Malacca situated between Malaysia, Singapore, and Indonesia connecting the Indian and Pacific Oceans.
Therefore a blockade of this Strait will impose energy and trade crises in China that can trickle down to hurt society, and in turn lead to pressure on the political class. Losing the people’s support will undermine the legitimacy of the Communist Party of China and could lead to an internal political transition. In fact, China’s history shows such transitions occurring after wars.
India has established credible naval presence in the Andaman Sea adjacent to the Strait of Malacca and is partnering with the U.S. and other countries in safeguarding it. Such presence can be translated into a formidable blockade. On the other hand, China has yet to showcase its capabilities and willingness to fight to keep this Strait open for its ships. Citing these developments, Hu Jintao termed this situation “Malacca Dilemma.”
His successor Xi Jinping resolved to overcome this dilemma by investing in the One Belt, One Road initiative. China moved determinedly to build ports in the Indian Ocean countries Myanmar, Pakistan, Sri Lanka, and Maldives. The People’s Liberation Army Navy (PLAN) has been transformed into a blue water navy and is routinely deployed in the Indian Ocean. The docking of PLAN ships and submarines in Sri Lanka, Pakistan, and elsewhere in the region signals China’s intent to safeguard its energy and trade shipments in the Indian Ocean.
A map depicting China’s sea lines of communication through the Malacca Strait as well as the land route of the proposed China-Pakistan Economic Corridor. (SCMP)
The ports in Myanmar and Pakistan have the added advantage of being connected to China via overland routes. This sea/land interspersed connectivity allows China to minimize maritime threats by rerouting its energy and trade over the land. During a conflict, China can focus its forward deployed naval assets f in the Indian Ocean on safeguarding the sea lines of communication connected to its ports in Pakistan and Myanmar instead of stretching those assets across the Ocean. The development of overland routes also serves Beijing’s intention to develop poorer western regions of the country.
China’s projects in Myanmar are proceeding with difficulties, with some of them cancelled due to opposition from local communities and environmental groups. Furthermore, China’s ships have to navigate the Bay of Bengal to reach Myanmar’s port which gives opportunity for rival navies to interdict. More significantly, Myanmar has recently undergone political transition from military rule to a democratically elected government. This transition signaled the country’s willingness to break through international isolation and normalize diplomatic relations with the outside world. As a result, China lost Myanmar as a client state and can expect a review of its projects as the new government balances between competing political and economic narratives in the region.
The trump card for China remains to be Pakistan. Despite international condemnation and American displeasure for its unwillingness to cease state sponsored terrorism, Pakistan continues to enjoy diplomatic leverage with the U.S., and despite the show of political clout in Myanmar, Sri Lanka, and Maldives, India is still lacking a credible strategy to curtail Pakistan’s destabilizing behavior in the region.
China has adopted the earlier U.S. policy of hyphenating India with Pakistan and is willing to safeguard its client state’s interests across international forums. It has promised to invest $46 billion in Pakistan to complete the CPEC project. In addition, China is building nuclear plants, co-producing military jets, and will sell eight submarines; all incentives for Pakistan to align its interests with China’s.
In return, China will gain access to the Arabian Sea in the Indian Ocean, which is connected to the Persian Gulf, through the Gwadar port. The CPEC envisions building the requisite land route from Gwadar to China via the sensitive Pakistan-occupied Kashmir and Karakoram mountains, ignoring India’s apprehensions regarding building infrastructure in the disputed territories without consultations.
However, Pakistan itself is not without problems. The Balochistan province where Gwadar is located forms a major part of Pakistan’s territory and is highly rich in natural resources. However, its development needs have long been ignored by Islamabad. The Baloch people argue that neither the Gwadar port will benefit them but can instead lead to further exploitation of the province’s natural resources and affect their livelihoods.
A graphic depicting the various forms of investment, their estimated costs, and proposed infrastructure linkages. (Wall Street Journal)
India is convinced that the Gwadar port and the CPEC projects have underlying strategic intentions while the Baloch people question the veracity of economic benefits that can be derived from these projects to their province. Both parties are concerned about infrastructure build up in those areas considered sensitive for historical or strategic reasons. In this situation, Modi’s reference to Balochistan in his recent Independence Day speech signals India’s willingness to work with the Baloch people to confront the common problem and fulfil mutual interests.
While more details are pending, China is apparently concerned with these developments as its options to connect to the Indian Ocean via land routes fall into jeopardy, forcing continued reliance on the Strait of Malacca. This could be a welcomed development for upholding regional stability as it offers concerned countries an opportunity to maintain strategic deterrence and escalation dominance against China by controlling access to the Strait of Malacca.
Vidya Sagar Reddy is a research assistant in the Nuclear and Space Policy Initiative of the Observer Research Foundation, New Delhi.
Featured Image: Crew members work on the Chinese Navy ship Wei Fang as it docks in Myanmar on the outskirts of Yangon on May 23, 2014 (AFP 2016/ SOE THAN WIN)
Part I examined the military implications of China’s continued “military” actions versus Japan in the East China Sea or the United States and other countries in the South China Sea if China were to establish an ADIZ. Part II examines whether China has real economic or trade leverage to force other countries, including the United States, to support its point of view regarding the ruling. Part II also analyzes the related question of whether there are costs to China from continuing to ignore the legal ruling and ways in which China can be legally compelled to comply.
By Mark E. Rosen
Embargoes and Sanctions
Shortly after the Tribunal ruling, China’s Deputy Minister of Trade was careful to encourage Chinese citizens to not boycott the U.S. and the Philippines; however, that does not mean that sanctions and boycotts are off the table. Bloomberg reported on August 4th that China will likely resume trade retaliation tactics against South Korea for its decision to deploy U.S. THAAD missiles to counter North Korean missile launches. Korea’s International Trade Association has identified 26 measures currently in place to restrict trade and is expecting more non-tariff barriers such as bogus safety inspections of inbound products, establishment of new licensing requirements, and manipulation of quarantine and safety inspections to frustrate Korean imports.
The above actions are not unprecedented. In 2000, China banned all imports of South Korean mobile phones and polyethylene in retaliation for Seoul’s increase of duties on Chinese Garlic. In 2010, Chinese Customs Officials halted the shipments of rare earth minerals destined for Japan (for user in hybrid cars, wind turbines and guided missiles) as a form of protest for detention of a Chinese fisherman fishing near the Senkakus. The United States has also been victimized by China’s extensive unfair trade practices (dumping and illegal subsidies), theft of intellectual property, and hacking of U.S. companies. Working within the WTO system, the U.S. has filed a record number of suits versus China in the WTO on behalf of U.S. poultry producers and is now considering the unilateral institution of a total ban on Chinese steel imports because of illegal price fixing and other illegal actions by Chinese steel producers.
The use of non-tariff barriers has been a favorite ploy by countries to sneakily frustrate imports to protect local producers while at the same time staying compliant with WTO rules. As for embargoes, WTO (Art 21) recognizes that states can impose measured national security, health, and welfare controls on both exports and imports to protect their citizens’ “essential security interests” or to prevent the proliferation of weapons. Using this exception, China passed a new national security law in 2015 which required foreign technology companies to be “secure and controllable” by Chinese National Security Agencies as a way of pushing out foreign technology firms like Microsoft, Apple, and Cisco in favor of local suppliers. However, there are limits to this type of activity, as witnessed in the 1998 Shrimp Turtle Decision in which a WTO Panel found that a U.S. ban on shrimp from India, Malaysia, Thailand and Pakistan (because those states shrimp fishermen had allegedly killed Sea Turtles) was illegal because controls can only be used to immediately protect one’s own citizens from harm. Controls cannot be used to “send signals” or indirectly pressure an exporting state to reform.
In the short term, China has considerable legal room to maneuver should it wish to impose national security controls or erect non-tariff barriers to punish Japan, the United States, the Philippines, and others for opposing them in maritime disputes. WTO cases are very time consuming to document and litigate. However, that same legal maneuver space can also be exploited by the United States and others to frustrate Chinese imports. Therefore, China should do the math and assess whether they have more to gain or lose by instituting de facto embargoes.
In 2015, China amassed a $365 billion merchandise trade surplus with the United States. Chinese businesses have put this cash to good use by investing in new plants and equipment, educating its young people abroad, and investing billions in the U.S. and other safe offshore markets. This is not unique to the U.S.; China has a global trade surplus of $600 billion. It continues to have small trade deficits with Japan and South Korea and its principal imports are electrical and industrial machinery (no. 1 and 3), oil (no. 2), and ores (no. 4). This cursory analysis of China’s economy overwhelmingly demonstrates that China is highly dependent on international trade to fuel its economy. China’s offshore investments of its U.S. trade surplus helps China diversity its holdings outside of Asia. China is also heavily reliant on international suppliers for the raw materials it lacks and risks a great deal by starting a trade war in which it is deprived access to the U.S. and other foreign markets.
History confirms that China would likely suffer more than the U.S. or Japan, Australia, and the Philippines as a result of an embargo. Tough Allied embargoes against Nazi Germany and Italy proved ineffective when self-interest among allied business interests caused the embargoes to leak or, in the case of Germany, forced innovation when Germany developed synthetic substitutes for oil and other commodities. When the U.S. embargoed wheat exports to the USSR in 1973, Canada and Australia picked up the business. The latter is especially important in the current situation. If China were to stop buying Australian ore or Japanese finished products, the world economy is sufficiently diverse to compensate for some of these losses. After the U.S. embargoed exports of scrap iron, steel, and oil to Japan and froze Japan’s assets, Japan was put into the position of having to choose between fighting for additional raw materials or abandoning their plans for a “New Order” in Asia. It is unlikely that any country would launch a Pearl Harbor attack if China were to embargo their products; however, embargoes have a high potential for “blowback” and could result in unintended consequences to the PRC’s overseas businesses, mines, and industrial operations.
It is also fiction that the U.S. is vulnerable to Chinese action because of its stake in the U.S. public debt (20% foreign owned). In reality, China buys U.S. sovereign debt because it is safe, liquid and can be used by China to finance dollar denominated international transactions (such as oil). China’s central bank also buys U.S. sovereign debt to maintain the exchange rates for renminbi and help drive down the costs of Chinese exports. Also, U.S. sovereign debt is overwhelmingly held by U.S. domestic entities (66%); such that were China to dump its nearly $1 trillion in U.S. debt, that debt will simply be purchased by domestic and foreign purchasers – as happened in August 2015 when China reduced its U.S. debt holdings by $180 billion. For China, the impact of “a broad scale dump of U.S Treasuries…would be that China would actually export fewer goods to the United States.”
Sanctions and embargos tend to “leak” because the global market will almost always produce another supplier or purchaser of something that is being withheld from the international market. Philippine bananas and mangos also taste good in Tokyo, Paris, and New York. Given China’s extreme dependence on international trade to fuel its domestic growth and overseas investment, it would be almost suicidal for China to engage in actions that might restrict its access to foreign markets. Likewise, a government-lead boycott of foreign products would, apart from the legal repercussions, would have extremely destructive impacts on its economy since it still relies heavily on imports of agricultural products, industrial equipment (from mostly Japan and Korea), and metal ores for manufacturing applications. Finally, dumping U.S. debt might cause some angst but, in the long run, U.S. debt instruments would be purchased by investors in the U.S. and other countries.
Continued Trashing of the Tribunal Decision and International Law in General
China continues to condemn the Tribunal ruling. The traditional attacks focused on questions of lack of jurisdiction and “overstepping” its legal mandate. Another Chinese daily’s reported that the Tribunal was a “front” for the United States and “lackey” of outside forces and had an inherent bias because the Philippines paid the “court costs” for the proceeding. A few speculated that China might withdraw from UNCLOS, but China will more likely establish its own arbitral panel to adjudicate the territorial disputes outside of UNCLOS. This later course of action has precedent; recall China’s 2015 establishment of an Asian Infrastructure Bank to finance Asian infrastructure projects outside of the regulation-burdened World Bank system.
China seems to labor under the perception that the Tribunal Ruling is purely a regional matter and that its impacts end with the states bordering the SCS. China continues to ignore that many countries take the ruling very seriously because the SCS is a maritime superhighway between the Middle East, South Asia, East Africa, North Asia, and Australia. Roughly 60 percent of South Korea’s energy supplies, nearly 60 percent of Japan’s and Taiwan’s energy supplies, and 80 percent of China’s crude oil imports come through the South China Sea. According to a 2015 report from the Council of Foreign Relations:
“Each year, $5.3 trillion of trade passes through the South China Sea; U.S. trade accounts for $1.2 trillion of this total. Should a crisis occur, the diversion of cargo ships to other routes would harm regional economies as a result of an increase in insurance rates and longer transits.”
Money talks. For this reason, states that would ordinarily have been silent registered their support for the Tribunal decision. The EU issued a statement on July 15, underscoring their support for a rules-based order and respect for UNCLOS. The G-7 called on states to “fully implement decisions binding on them in … tribunals under the Convention.” Canada, France, Germany, the UK, Japan, Vietnam, Singapore and the U.S. issued statements support of the ruling. Indonesia, India, South Korea issued more “measured” statements urging China to show restraint and respect for UNCLOS.
There were some dissenters, but much of the industrial world supported the outcome and expects China to comply. If China continues to signal that it has no interest in conforming to the ruling, China could be excluded from important international negotiations, including, for example, the upcoming negotiation of an agreement under UNCLOS that deals with biodiversity beyond national EEZs. As I suggested in After The South China Sea Arbitration, China could have its privileges essentially suspended in three UNCLOS institutions: (1) the International Tribunal for the Law of the Sea (ITLOS); (2) the International Seabed Authority (ISA), and the (3) the Commissions on the Limits of the Continental Shelf (CLCS).
If China continues its island-building activities and interferes with Philippine fishing in the vicinity of Second Thomas Shoal, Scarborough Shoal, and Mischief Reef, an international court such as the International Court of Justice (ICJ) or ITLOS, could be asked to impose sanctions on the China for flaunting a lawful UNCLOS decision. The case would be predicated on the notion that China cannot take advantage of the benefits of UNCLOS if it lives outside of the law. In practical terms, an injunction could be sought which: recalls China’s judge on ITLOS; blocks the CLCS from any further proceedings involving the Continental Shelf entitlements of China; and lastly suspends both China’s ability to file further deep-seabed mining applications before the ISA and enjoin any further prospecting of its sites in the Indian Ocean. It might also be appropriate for a Tribunal to suspend China’s participation in UNCLOS related bodies including the International Seabed Authority (ISBA) (which writes the regulations for deep seabed mining), the International Hydrographic Organization (IHO) (the charting and oceanography body) and the International Maritime Organization (IMO). The latter action would be especially harmful for China given that the IMO has broad responsibilities to write the rules for merchant ship design, construction, operations, and navigational routes/practices while China has one of the largest merchant marine fleets in the world.
A meeting of the International Maritime Organization (IMO Photo)
These legal maneuvers would be slow to orchestrate but, like other types of sanctions, could be far-reaching and difficult to reverse once they are put in place. However, China’s continued island reclamation after the ruling, their recent military actions in the vicinity of Scarborough Shoal, and the Chinese Supreme Court’s reaffirmation of the 2012 fishing ban are in direct contravention of the Tribunal’s decision. Since the effects of China’s actions have impacts beyond the Philippines, almost any bordering state, international organization, or possibly NGO would have standing to seek to have the Tribunal’s decision enforced since the ICJ (and for that matter ITLOS) has “inherent jurisdiction…to ensure that its exercise of jurisdiction is not frustrated and that its basic judicial functions are safeguarded.”
Conclusion
Inexorably, China is painting itself into a corner in which its escape options become more limited. While it was hoped by officials in the U.S. and elsewhere that China would eventually come to the realization that it needed to capitalize on the favorable aspects of the ruling and “pivot” on those it did not like, that is not happening. The recent military displays in the ECS and SCS, the threatened sanctions towards South Korea, and continued “trashing” of the Tribunal ruling suggest that China is opting for confrontation versus conciliation and now runs the risk of becoming involved in a major military conflict with Japan and perhaps the United States. China says that it is committed to a rules-based order and leadership in Asia but its recent actions say otherwise. Lastly, and perhaps most importantly, pursuit of high risk strategies which could place China’s international trading relations at risk is antithetical to the Chinese Community Party’s 13th Five Year Plan for 2016-2020 to promote balanced international trade, inbound investment, and free trade zones.
It is entirely possible that China’s leadership does not fully appreciate the dangerous choices their countrymen are making and how their actions are being perceived on the world stage. Military-to-military encounters at sea are occurring on a daily basis, and the potential for a costly misstep increases with each passing day. So too, a miscalculation in the trade or economic arena would likely backfire since China is a trading nation and it can ill afford to have its products excluded from foreign markets. High-level diplomacy and cool heads should be the order of the day.
A maritime and international lawyer, Mark E. Rosen is the SVP and General Counsel of CNA and holds an adjunct faculty appointment at George Washington School of Law. The views expressed in this paper are those of the author alone and do not represent the views of CNA or any of its sponsors.
Featured Image: Triple-E class container ship “Madison Maersk” of Maersk Line loaded with containers is berthed at Nansha port in Guangzhou. (Reuters)
The recent Philippine-China Arbitration Award determined that China’s construction of artificial islands, installations and structures on Mischief Reef, Subi Reef, and Hughes Reef were unlawful interference with the Philippines’ exclusive sovereign rights and jurisdiction over the seabed of the exclusive economic zone (EEZ) and continental shelf. Since the three features are low-tide elevations (LTEs), rather than islands, they are incapable of appropriation and are merely features of the Philippine continental shelf, albeit occasionally above water at high tide in their natural state. Although the tribunal’s legal judgment with regard to China’s activities was correct, its reasoning was a bit too categorical. This article adds further fidelity to the tribunal’s determination by distinguishing between lawful foreign military activities on a coastal state’s continental shelf, and unlawful foreign activities on the continental shelf that affect the coastal states sovereign rights and jurisdiction over its resources – a distinction that evaded the tribunal’s analysis.
It is important to understand the lawful scope of foreign military activity on the seabed of a coastal state’s EEZ or continental shelf, as the issue is likely to recur. The Defense Advanced Research Projects Agency, for example, is exploring the idea of “upward falling payloads,” or pre-positioned containers or packages that lie on the ocean floor and wait until activated, at which time they “fall upward” into the water column to perform undersea missions, such as powering other unmanned systems. With some narrow exceptions, such as emplacement of seabed nuclear weapons or seabed mining, the use of the deep seabed is a high seas freedom enjoyed by all States. The more compelling question, however, is the extent foreign states may emplace naval devices or construct installations or structures on the continental shelf or within the EEZ of a coastal State for military purposes.
Article 56(1)(a) of UNCLOS provides that coastal States have certain “sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living….” in the EEZ. Coastal States also have “jurisdiction as provided for in the relevant provisions [of UNCLOS] with regard to “(i) the establishment and use of artificial islands, installations, and structures.” Under Article 60, coastal States enjoy the “exclusive right” to authorize or regulate the construction of structures, a rule that is extended to the continental shelf by virtue of Article 80. Coastal State jurisdiction over artificial islands and structures is not all encompassing, however, and is limited to jurisdiction “as provided for in the relevant provisions [of UNCLOS].” The relevant provisions of the EEZ, of course, relate principally to exclusive coastal State sovereign rights and jurisdiction over living and non-living resources in the EEZ and on the continental shelf, and not sovereignty over the airspace, water column, or the seabed.
In the recent Philippine-China Arbitration Award, the tribunal determined that China’s artificial island construction on Mischief Reef was an unlawful violation of Philippine sovereign rights and jurisdiction over its continental shelf. Since Mischief Reef is a LTE and not a natural island, it constituted part of the Philippine continental shelf and seabed of the EEZ. China failed to seek and receive Philippine authorization for its artificial island construction, and therefore violated Articles 56(1)(b)(i), 60(1), and 80 of UNCLOS (Arbitration Award, para. 1016).
Foreign States, however, are not forbidden to construct installations and structures on a coastal State’s continental shelf per se. Only those installations and structures that are “for the [economic] purposes provided for in article 56” or that “interfere with the exercise of the rights of the coastal State” over its resources require coastal State consent. (See Article 60(1)(b) and (c)).
But even if China converts its installations and structures into military platforms, their size and scope are so immense that they dramatically affect the quantity and quality of the living and non-living resources over which the Philippines has sovereign rights and jurisdiction. Although normally installations and structures that are built pursuant to military activities are not subject to coastal state consent, the industrial scale of Chinese activity lacks “due regard” for the rights and duties of the Philippines and its sovereign rights and jurisdiction over resources under Article 56 of UNCLOS.
If China had merely emplaced a small, unobtrusive military installation or structure on the seabed or landed an unmanned aerial vehicle at Mischief Reef as part of occasional military activities, it would not have been afoul of UNCLOS. Such incidental use of the seabed or an LTE (which is part of the seabed) are within the scope of permissible military activity in the same way as emplacement on the continental shelf of a small seabed military device. Foreign States may use the seabed for military installations and structures, and even artificial islands, as these purposes do not relate to exploring, exploiting, managing and conserving the natural resources. Only those military activities that rise to the level of or of sufficient are of such scale that they do not have “due regard” for the coastal state’s rights to living and non-living resources of the EEZ and continental shelf are impermissible.
The distinction is important because creation of the EEZ and recognition of coastal state sovereign rights and jurisdiction over the continental shelf was never envisioned to limit normal military activities. Current and future naval programs, in fact, may utilize a foreign coastal State’s seabed EEZ and continental shelf in a manner that is completely in accord with UNCLOS.
Where do we draw the line, however, between an insignificant presence and negligible interference that is lawful, and large-scale disruption that is unlawful? Like all legal doctrine, what constitutes genuine interference to coastal State sovereign rights and jurisdiction must be reasonable, i.e. not de minimis or trivial, but rather a substantial and apparent effect on the resources in the zone, as I discussed in Maritime Power and Law of the Sea. Emplacement of military devices or construction of military installations or structures in the EEZ and on the continental shelf of a coastal State must be judged by reasonableness, and not be of such scale or cross a threshold of effect that it interferes in a tangible or meaningful way with the coastal State’s resource rights.
China’s operation of military aircraft from a LTE is not a priori unlawful, any more than operation of military aircraft from a warship in the EEZ would be illegal. The reason that PLA Air Force military aircraft flights from the runway at Mischief Reef are objectionable and a violation of the Philippines’ coastal State rights is the magnitude of the activity and its effect on the living and non-living resources. Operation by a foreign warship of a small aerial vehicle that lands temporarily on an LTE, for example, would not be unlawful. Likewise, if a naval force emplaced a military payload inside a container and placed it on the seabed of the EEZ – that is, on the coastal State’s continental shelf – that would also be a lawful military activity.
James Kraska is Howard S. Levie Professor of International Law at the Stockton Center for the Study of International Law, U.S. Naval War College, Distinguished Fellow at the Law of the Sea Institute, University of California at Berkeley School of Law, and Senior Fellow, Center for Oceans Law and Policy, University of Virginia School of Law.
Featured Image: MARCH 10, 2016- Philippine Naval Ship, BRP Sierra Madre, sails near disputed Spratly Islands in the South China Sea (REUTERS/Erik De Castro)
The following is a two-part series on China’s possible reactions to the Arbitration Ruling in its dispute with the Philippines. In Part I, the military implications of China’s recent and possible future actions are analyzed. Part II will look at the likely outcome of China using economic and legal leverage to register its displeasure with the ruling.
By Mark E. Rosen
The Arbitration Panel’s ruling against China on July 12 was a stinging blow to China’s international prestige. China advanced a narrative that it had historic rights to nearly the entirety of the South China Sea (SCS), and that it could prevent states like the Philippines and Vietnam from fishing in their Exclusive Economic Zones (EEZs) and drilling for oil near their coasts. China also maintained, through its actions, the right to engage in island building and fishing practices which caused severe damage to the marine environment. Since these activities occurred inside of its Nine Dashed Line Claim (9DL), China felt justified in these “internal matters” and told its neighbors in almost evangelical terms that the SCS is their patrimony and that no country or international body has a right to mess in their domestic affairs. On all these counts, the Tribunal disagreed and issued a strong rebuke of China’s activities.
The few positive signs that China is receptive to peaceful resolution and has moved past the ruling have been overtaken by a number of very disturbing trends which, regardless of which path China ultimately takes, puts it on a collision course with Japan, the United States, or even a much broader group of states. Unless something dramatic emerges as a result of the secret conclave in Beidaihe, the negative developments seem to overwhelmingly demonstrate that China’s gaze is only focused on settling scores with the U.S., Japan, Vietnam and the Philippines, because these states are responsible for its legal embarrassment and loss of face within ASEAN.
China’s Negative Reactions to the Ruling
Immediately after the ruling, the Chinese Ministry of Foreign Affairs issued a detailed repudiation of the ruling on July 12; declaring that the ruling was “null and void,” “has no binding force,” and that “China neither accepts nor recognizes it.” It also stated that the Philippine’s actions in filing the action were “unilateral” and a “violation of international law,” because the Philippines deviated from its legal commitment in the 2002 ASEAN Declaration of Conduct (DOC) to resolve differences via negotiations. China, in the same breath, reaffirmed its commitment to international law and to peace and stability in the South China Sea. Two days later, the Chinese state media declared the permanent court of arbitration a “puppet” of external forces and that “China will take all necessary measures to protect its territorial sovereignty and maritime rights and interests.” Since then, the following developments have taken place:
On July 13, China sent civilian aircraft to two new airports on Mischief Reef and Subi Reef. This action was taken in spite of the Tribunal’s ruling that Mischief Reef is a low-tide elevation and part of the Philippine continental shelf, and Subi Reef is a low tide elevation and part of the territorial sea of Itu Aba. In both cases, low-tide elevations cannot be appropriated by China.
On July 13, China’s vice foreign minister asserted, “If our security is being threatened, of course we have the right to demarcate a [air defense identification] zone.”
On July 15, China posted images of its recent overflight of the highly contested Scarborough Shoal by nuclear capable H-6K bombers (and escorts) and announced that such patrols would be a “Regular Practice.” This announcement came the same day as the U.S. Navy’s Chief of Naval Operations (CNO) Adm. John Richardson was visiting his Chinese counterpart, Adm. Wu Shengli.
On July 18, Press reports cited Adm. Wu Shengli as warning the U.S. CNO that future U.S. freedom of navigation operations “will only backfire” and that Beijing will complete its planned land reclamation and reef reclamation and has made “sufficient preparations” to deal with any sovereignty infringements.
On July 19, China’s vice minister of commerce Gao Yan told reporters that trade relations between China and the Philippines were “mutually beneficial,” and added that the government did not endorse calls within China to boycott Philippine products. There were also reports of Chinese activities smashing iPhones and massing protests in front of KFC restaurants in several cities.
On July 24, ASEAN failed to achieve consensus to issue a statement on the Tribunal decision after China’s ally, Cambodia, broke away from a consensus document that was being proposed by the Philippines, Vietnam, and others.
On July 25, the United States, Australia, and Japan held a Trilateral Strategic Dialogue and issued a statement expressing “their strong support for the rule of law and called on China and the Philippines to abide by the Arbitral Tribunal’s Award of July 12 in the Philippines-China arbitration, which is final and legally binding on both parties.” The ministers also expressed opposition to any coercive or unilateral actions that could alter the status quo including future land reclamation activities.
On July 27, Chinese Foreign Minister Wang Yi dismissed the Trilateral statement and charged that the statement was not constructive and was “fanning the flames.” Foreign Ministry spokesman Lu Kang also charged that the U.S., Australia, and Japan have been adopting double standards towards international law which they adopt when it “fits their needs.”
On July 28, The Chinese Defense Ministry announced plans to hold a joint military exercise with Russia in the SCS in September; the first such bilateral exercise in that body of water.
On August 1, China held a significant live fire drill in the East China Sea (ECS) that included the firing of “dozens” of missiles and torpedoes. (AP, Aug 2, 2016). There were also reports that six PRC coast guard vessels and over 200 fishing vessels swarmed in the vicinity of the Senkaku/Diaoyu Islands.
On August 2, Japan’s Ministry of Defense published a white paper describing China’s position on the SCS an object of “deep concern.” China’s Ministry of Foreign Affairs called Japan’s paper “full of malice,” “lousy clichés,” and “irresponsible” and a smokescreen to obscure Japan’s expansionist arms policies. This exchange of statements was then followed by North Korea’s firing of a ballistic missile into Japan’s EEZ on August 3. When the UN Security Council sought to condemn North Korea’s actions, China “curtailed” the Security Council’s actions.
On August 2, China’s Supreme People’s Court clarified China’s 2014 Fishing Regulation to the effect that those that engage in illegal activities inside of the waters claimed by China will be arrested and tried as criminals. This decision settled past differences of opinion as to whether China’s EEZ and Territorial Seas empowered Chinese officials to pursue criminal liability for those involved in illegal hunting or fishing in China’s jurisdictional seas. The practical import is that fishing within the 9DL area will be met with vessel seizure and imprisonment.
On August 2, Malaysia joined Indonesia in announcing that they would sink any foreign ships that are fishing in their claimed waters. This statement was a veiled threat to China that had allowed its “fishing militia” to fish in waters claimed by both countries.
On August 6, China sent bombers and fighter jets on patrol in the vicinity of “Scarborough Shoals.” China announced that these flights would be a “regular practice” to “normalize South China Sea combat patrols” to safeguard its sovereignty interests.
Converging Flash Points
Much like current U.S. presidential campaign antics, it is hard to imagine what is likely to happen next in the high stakes poker game being played out in Asian waters. Taking into account what has happened to date and where China believes that it has leverage, there are three possible ways in which China might lash out: military, economic, and legal.
Possible Military Moves by China: The Senkakus
The statements by China’s Chief of the Naval Staff and its military activity near the Senkakus suggest that China is employing tactics of intimidation to get Japan to back away from its recent statements over the Tribunal’s decision. It may also be the case that the presence of swarming vessels in and around the Senkakus and the North Korean missile shot (presumably with tacit PRC approval) suggest that China is trying to goad Japan to militarily respond or back off its claims.
The Senkakus have always been the powder keg of Asia because it features the two leading powers in Asia: one ascending and one arguably in decline both competing on the world stage. Both are rivals for dominance over a tiny scrap of land and associated maritime space which, given the implications for access to fisheries and oil and gas, is not irrational. This is somewhat ironic because the Tribunal decision in China v. the Philippines takes away much of the incentive for the two states to fight over these rocks since they would be enclaved within the continental shelf of one of the two states; most likely Japan. In that case, the rocks themselves and the surrounding territorial sea have much less value that the large continental shelf projections of each country and aren’t worth fighting over. (See, Fixing the Senkaku/Diaoyu Problem Once and For All ).
It is somewhat curious that China is lashing out at Japan, given that the Senkaku/Diaoyu issue has been rather quiet until recently and the SCS is China’s current problem. Regardless, China would do well to revisit its strategic objectives, especially since the United States declared in April of 2014 that Japan is the lawful administrator of the islands and are within the scope of Article 5 of the 1961 Mutual Defense Treaty. The reaffirmation of solidarity between U.S., Australia, and Japan in the July 25 Trilateral declaration likely provides Tokyo the fortitude it needs to militarily respond if China continues to operate provocatively near the Senkakus.
Another important point in this calculus is Japanese President Shinzo Abe. Abe stated in 2015 that Japan is a “maritime state” and can “only ensure its own peace and security by actively engaging in efforts to make the entire world a more peaceful and secure place.” Japan’s record 2016 military budget of roughly $42 billion is further evidence of that goal. Japan has a combatant fleet of 131 vessels, including 3 aircraft carriers, 43 destroyers, and 17 submarines using frontline U.S. tactics and systems. China has substantially more hulls and submarines, but most naval analysts interviewed by the author cite the excellent Japanese submarine force as a likely game changer.
Japan’s Izumo-class helicopter destroyer. (AFP)
More important is the will to fight. Japan, as noted, has been greatly increasing its military spending even though its economy has been in the doldrums. According to the OECD, output growth has been slowed by a drop in demand from China and other Asian countries and by sluggish private consumption. This indicates that if Japan is pushed to the point that it must militarily respond, it has three valid reasons for using instant and overwhelming force now. First, Japan’s economy is too fragile to become involved in a protracted war with China. It would need to win fast and win big to reestablish economic dominance within Asia. If China is not dealt a mortal blow and forced to capitulate, it will use its economic leverage to coerce states to suspend trading with Japan. Japan’s trading economy cannot easily weather a suspension of its trade relations – even if the U.S. and Australia remain in their corner. Second, Japan cannot win a military war of attrition with China: it suffers from a lack of hulls, aircraft, personnel, and production capacity.
Like Israel did in the 1967 six-day attack on Egypt, Jordan, and Syria, Japan would feel compelled to use its current qualitative advantages to deliver a massive blow to Chinese maritime and air forces to dissuade Beijing from further military incursions in the ECS. In a few years, the military edge could shift to China because of its massive building plans. Third, Japanese domestic politics today would likely support a massive strike. This starts with Japan’s new self-defense law which entered into force in March of 2016 and allows Japan to engage in limited coalition warfare. Also, a 2012 Public Opinion Poll by the Cabinet Office shows a nose-dive in Japanese attitudes towards China. According to a 2013 paper by Stimson Center Analyst Yuki Tatsumi Chinese economic ascendancy has been a source of friction as has been the influx of Chinese citizens into Japan as members of the workforce or as tourists. People complain of the increases in crime by Chinese living and working in Japan and bad manners. Finally, the Japanese public is extremely well read and are likely becoming unnerved and physically threatened by the constant scrambling of Japanese fighters (200 times alone in April – June) to intercept Chinese aircraft, ballistic missile tests by China’s “Puppet” in Pyongyang, and live fire exercises in the Senkakus.
China needs to ask itself what it is trying to achieve in the ECS. If its intent is to beat Tokyo into submission or lure it into a limited and protracted war of attrition to undermine public support for Abe, it seems very unlikely that Tokyo will take the bait. However, if its intent is to successfully provoke a full-scale military attack, they are likely to be very disappointed, particularly since U.S. forces will be present to backstop the protection of Japan’s homeland. They may also be gravely miscalculating that Japan will only respond to Beijing’s move in a piecemeal fashion. Japan has an excellent and professional Navy – especially its submarine force – and could deliver a knock-out punch to much of China’s maritime forces.
Possible Military Moves by China: An Actual or De Facto South China Sea ADIZ
Until the combat patrols on August 6 near Scarborough Shoal, Beijing’s recent attention seemed focused on the East China Sea. However, while Chinese threats to establish an Air Defense Identification Zone (ADIZ) in the SCS seemed to have died down, the possibility cannot be reasonably excluded. The question then becomes: does an ADIZ advance China’s campaign to assert its sovereignty in the South China Sea? If China concludes that an ADIZ will send the correct signal that it has sovereignty claims in the SCS, the next concerns are the likely responses and whether or not they can succeed.
The United States was the first country to establish an ADIZ during the height of the Cold War as a way of providing notice to Soviet flights entering the zone near the United States that the United States reserved the right to undertake a radio challenge or dispatch fighter aircraft to ascertain the incoming flights course and intentions if it was not flying on a predetermined flight plan. The United States now has four ADIZs in operation: the U.S. ADIZ (Continental U.S.); Alaska ADIZ, Guam ADIZ, and Hawaii ADIZ. Upwards of 20 other countries have established these zones adjacent to their coastlines. These zones do not seek to restrict freedoms of navigation or overflight; their sole purpose is to ascertain a particular flights intention to reassure the coastal state that no surprise attack is being launched. When China established its ADIZ in late 2013 over the contested Senkaku islands, it was diplomatically protested because it was overbroad and inappropriate to defend an uninhabited rock as a sort of occupation measure. China’s ECS ADIZ was also criticized for including civil aircraft flying on established flight plans.
China’s ECS ADIZ declared in November 2013. (Wire Agencies, BBC, Yonhap News)
ADIZs have no explicit foundation in UNCLOS or other international instruments, yet they are regarded as customary and lawful when used for the limited purpose of identifying aircraft near a country’s coastline, not to deny such aircraft their lawful rights of overflight. For this reason, the United States and other countries protested the Chinese ADIZ, since it was established to “control and react to aircraft entering the zone” and warned that aircraft flying in the ECS Zone “must comply” with the requirements to provide detailed identification data and “comply with the instructions” of the zone controller.
The same legal issues in China’s ECS zone would apply in a SCS Zone. Depending on how it was actually constituted, it would certainly be provocative because it is not associated mainland protection but rather protection of mostly uninhabited rocks and islets from surprise attack. As it relates to military aircraft lawfully operating in the SCS, there is a fear that China will seek to limit military flights to corridors that they can instrument and hold at risk with missiles. There are also the impacts of a large SCS ADIZ and the impact on civil aviation. According to the International Civil Aviation Organization (ICAO), the South China Sea is a “Main Truck” for all traffic on “all routes” and there are concerns that added reporting and routing by Chinese civil authorities will impede international air traffic.
The last possibility is that China, through deeds and action, will establish a de facto ADIZ as an adjunct of its promised combat air patrols. It might simply declare that all aircraft flying in the SCS have to provide flight information to Chinese Military authorities or risk interception or being shot down.
In the last analysis, if China were to establish an actual or de facto ADIZ encompassing the SCS and used the same sort of rules as its ECS ADIZ, the United States will almost certainly protest the action and fly combat aircraft into those portions of the ADIZ which are illegitimate. Australia and France are two other states that are also unlikely to stand idly by if a SCS ADIZ is established because of Australia’s longstanding commitment to UNCLOS, order at sea, and also because of the verbal barrage which it received from China following the Trilateral Strategic Dialogue statement. Also, this support from Australia is consistent with the U.S./Australia Security Treaty of 1952 in which security guarantees are triggered by an “armed attack in the Pacific Area on any of the Parties.” Finally, France announced at the Shangri-La Dialogue Forum in June that it would, on its own right, conduct “regular and visible” patrols in the South China Sea. This is logical, because France frequently operates in those waters in conjunction with the protection of its vast South Pacific Territories. The French defense minister has also urged the EU to also join in these patrols to reinforce “a rules-based maritime order.” Great Britain, Vietnam, and India are other countries voicing public support for the ruling and could conceivably contribute to a “FON Coalition.”
If China goes forward with an ADIZ, it is very reasonable to expect that the United States, France, Australia and even Japan will mount FON-like operations to protest with the zone’s establishment. If these operations are “regular and visible” as suggested by France, China would need to ask itself whether or not it is is achieving its political objectives when foreign aircraft can operate with impunity in their new ADIZ. Also, if China continues to engage in persistent combat patrols around Scarborough Shoal, then a declaration that the United States that regards Scarborough to be within the scope of the “metropolitan territory” of the Philippines under Article V of the 1951 Mutual Defense Treaty is both possible and a fresh challenge to Beijing that would cause it embarrassment.
China puts itself greatly at risk if it moves forward with an ADIZ or something resembling it given the widespread international support for the Tribunal Ruling, abhorrence with China’s behavior towards its neighbors, and general concern that China’s bad behavior be deterred. Now that the U.S. has bed down rights in five bases in the Philippines adjacent to the South China Sea, it has gained a significant military advantage in being able to operate fixed wing combat aircraft from land locations to conduct its own FON operations or combat patrols that don’t put a carrier at risk. China’s ADIZ gamble might have paid off if only the United States were involved so that it could “declare victory” in a future contacts with U.S. ships or aircraft such as the EP3 incident. However, given the threat dynamic and the potential to trigger alliance support from Australia and France, China will hopefully conclude that it will be biting off more than it can chew by going down the ADIZ path or, as noted above, further provoking Japan in the East China Sea.
A maritime and international lawyer, Mark E. Rosen is the SVP and General Counsel of CNA and holds an adjunct faculty appointment at George Washington School of Law. The views expressed in this paper are those of the author alone and do not represent the views of CNA or any of its sponsors.
Featured Image:Japanese submarine Oyashio arrives at the former U.S. naval base in Subic bay. (AFP)
influence of emerging naval platforms and technologies in the geostrategic contours of the Indo-Pacific region. It identifies relevant historical precedents, forming the basis for various maritime development and security related projects in the region.
