China's Moves in the South China Sea: Implications and Opportunities

11 MINS READNov 10, 2014 | 10:15 GMT
A soldier stands on Pagasa Island in the South China Sea's disputed Spratly island chain in June.
(STR/AFP/Getty Images)

Editor's Note: Rodger Baker, Stratfor's Vice President of Asia-Pacific Analysis, recently returned from a trip through Australia, Micronesia and the Philippines. The analysis below is drawn from remarks he made on the shifting realities in the East and South China seas — particularly involving China, the Philippines, Japan, Southeast Asia and the United States — in a keynote speech at a meeting of the Manila Times Business Forum.

China's recent foray into the East and South China seas is not its first, but it is perhaps its most substantial. For a number of reasons, Beijing is no longer comfortable or confident enough to allow the status quo in the region to remain unchanged. The natural expansion of China's interests, and its attempts to expand and ensure its sphere of influence, inevitably lead to responses both from its neighbors and from the more geographically (but not strategically) distant United States. Beijing's intent is not to trigger conflict, but rather to slowly change the political reality of the region by expanding its maritime buffer and securing its maritime trade routes. But few of these changes will go unchallenged, adding a layer of uncertainty to the future of East Asia.

China historically has been a land power, not a maritime power. Although China has been involved in the maritime sphere for centuries and Chinese merchants have been active throughout Southeast Asia, the country's geography, natural resources, population pressures and neighbors have both allowed and encouraged Chinese leaders to focus their attention on the country's vast territory and land borders. At times of relative stability and security in China's history, Beijing could flirt with the idea of state-sponsored maritime exploration, as evidenced by the fleets of Zheng He. But for the most part, China avoided expanding its naval activity because it was neither pressed to physically assert its overseas diplomatic positions, nor did it have the bandwidth and freedom to look across the sea. The Silk Road provided sufficient access to exotic trade, and security concerns with neighbors kept China focused on the continent.

Beijing's Modern Maritime Interests

Today, there are two primary concerns driving Chinese maritime activity: economic resources and strategic access. Although many of the concerns China is dealing with now are not new, other factors have combined to both enable and compel Beijing to act in a more assertive manner.

The South China Sea has always had an abundance of natural resources. Although much attention is paid to existing and potential crude oil and natural gas reserves, as well as the possibility of subsea mineral extraction, one of the biggest resource drivers there is marine protein (fish and seafood). By some accounts, the South China Sea accounts for one-tenth of annual global seafood take. Asia's enclosed seas provide plentiful and readily available food resources, but fishing is a constant source of regional tension. Even at times of low inter-regional stress, fishing fleets frequently violate one another's territories, and run-ins with maritime patrols are not infrequent occurrences. These incidents are normally isolated, but if they occur when political sensitivities are heightened, they can quickly escalate into larger diplomatic incidents or even physical confrontations. (Several deadly maritime clashes between the divided Koreas in the past 20 years have been triggered by disputes over the location of fishing fleets.)

China's Moves in the South China Sea: Implications and Opportunities

East Asian Offshore Resources

Crude oil, natural gas and seabed minerals are less proven, and political risk has kept significant progress in exploration to a minimum, except near proven reserves and usually within undisputed territory. However, this is not to say that there is no interest in tapping the subsea resources. Rising regional demand — to which Beijing is a significant contributor — and a rising level of technological proficiency in China and elsewhere is making subsea exploration and exploitation more desirable and achievable. China is entering the realm of deep-sea exploration, something it was not consistently able to engage in before. Still, cost and political risk will continue to impact decisions for exploration, since mere capability doesn't necessarily translate into cost effectiveness.

In addition to resource exploitation, there is another, more strategic, driver for China's maritime ambitions that is quickly becoming more pressing for Beijing. In the past, China was largely capable of meeting its own needs and sustaining its economy domestically, or via land routes. This is no longer the case, and the significant boom in the Chinese economy has raised the increasing vulnerability of China's overseas dependence to a much higher priority for Beijing. The large shift in Chinese consumption has created a heavy dependence on maritime routes, which high levels of Chinese exports only add to. This dependence has shaped the strategic picture in Beijing: As with any country dependent on maritime supply lines, China will seek to secure those routes, whether from regional competitors, non-state actors or any major maritime power.

China's Moves in the South China Sea: Implications and Opportunities

East Asian Sea Lanes

The United States is currently the global maritime power, and the only nation that can (and does) operate freely throughout the world's oceans while ensuring the same opportunity for others. But the United States' ability to use and act on the seas with near impunity also means that, from China's perspective, Washington has the capability, if not the intent, to use that power to constrain China's growth. China's emergence as an economic power changed the international system, as it became one of three pillars of the global economy. This crucial role shapes not only China's perception of itself and its place in the world order, but also the perceptions others have of China. Beijing's concern is that the United States sees China as its only potential peer, even if an emerging regional power, and thus Chinese leaders fear that Washington will make the decision (if it hasn't already) to contain any further rise of China. This question of Washington's intent, combined with U.S. maritime power, has put pressure on China to develop the defensive capability to protect its critical maritime supply lines, or leave itself at the mercy of the United States.

The shift in Beijing's threat perception coincided with changes in the Chinese military. Under President Jiang Zemin, the Chinese government began to restructure the military and stripped away its business empire, in return offering the People's Liberation Army (PLA) a more modern role and more modern equipment. The modernization of the Chinese military required a new type of soldier who was highly educated and understood the technology of modern warfare. It also required a shift in the training, doctrine and overall focus of the Chinese military. The PLA has evolved well beyond its previous, politically constrained form, especially since China's land borders have remained relatively stable and Beijing has created more civilian forces to deal with internal unrest, freeing the military to focus abroad. The PLA's role is now more than just protecting China's borders, or preventing internal instability; it is preserving China's broader national interests, which include the protection of China's lines of trade. The PLA sees this global role emerging, starting in the South China Sea. New capabilities have allowed China to act with more authority in the South China Sea than in previous decades. Beijing does not see this as aggressive behavior but as defensive action, through which it is securing what is necessary to preserve its national interests.

Beijing's Goals in the South China Sea

China's aims in the South China Sea are not necessarily separate from its broader goals in Southeast Asia. Beijing sees Southeast Asia as a natural economic and political partner, and an area for trade and investment flowing in both directions that clearly falls within China's sphere of influence. Though not an exact parallel, China sees Southeast Asia in much the same way the United States saw Latin America in the early 19th century. China essentially has an unspoken Monroe Doctrine for its near seas — it intends to remove significant foreign interference and influence from the countries around it. This does not mean that China expects regional countries to shun all connections with the United States; rather, China wants to ensure that it has the upper hand in influencing its neighbors' decisions to protect its national security interests.

China's Moves in the South China Sea: Implications and Opportunities

East Asian Maritime Claims

In the South China Sea, China's small island strategy is not necessarily one of military expansion. Far different than the island hopping competition between Japan and the United States during World War II, the airstrips and dock facilities on islands and atolls in the South China Sea rarely give China a true military advantage. Modern military technology gives China the range to operate without needing these islets, and possessing the islands does not necessarily give Beijing greater strategic control over their surrounding waters. In some ways, from a purely military perspective, holding the islands farthest from the mainland is more of a risk than a benefit to China. They are small, have few or no local resources (in most cases, not even fresh water), and in times of conflict would prove hard to defend and resupply.

Building structures on the islands certainly prevents others from doing the same, and in times of relative peace may make it slightly easier for China to conduct maritime surveillance, but the primary purpose of occupying the islands is not military; it is political. Holding the islands over time, without facing a concrete challenge, strengthens the reality of Chinese ownership. Beijing has assessed that, to its neighbors and their U.S. ally, no single island is worth the military risk of physically countering China, so there is nothing to stop Beijing from slowly absorbing the region. When tension with a particular country rises too high, China can ease off, shift its attention to a different country, or use the perception of heightened tensions to drive a desire for calming the situation. Over time, this strategy slowly shifts the political reality in the region. The lack of real challenge to Chinese actions reasserts, by default, Beijing's claims to and authority over the territory. It also shows that neither the United States nor other extra-regional allies are going to intervene on behalf of the Southeast Asian nations. In the end, China believes this unwillingness for intervention will lead to the realignment of political relations as Southeast Asian nations find accommodating Beijing more beneficial than trying to oppose Chinese expansion through alliances with powers outside the region.

Implications for ASEAN

The changing status quo in Asia is as much a natural consequence of China's economic growth and expansion as of the imbalance between China's rapidly changing position in the global system and its relative lag in soft-power expansion. While China's economic rise benefits the Association of Southeast Asian Nations (ASEAN) considerably, there is no guarantee that it doesn't also undermine the core interests of each individual ASEAN country. The disconnect between China's economic strength on the one hand, and the significant security role assumed by others — namely the United States — on the other, highlights the imbalance of power in the region. In some ways this gap has benefited ASEAN by giving member states the ability to take advantage of the big powers' competition for their own benefit. But at other times, they find themselves caught in the ebbs and flows of U.S.-China relations, with little ability to influence the direction of the relationship.

China's economic approach has been to create a reality where ASEAN countries rely much more on China than China relies on them. As the security challenges in the South China Sea remain unsolved, deepening economic relations may only deepen ASEAN's suspicion of China's motives. Meanwhile, China's occasional diplomatic and economic mismanagement of its regional relationships may stir political and social resistance in the ASEAN states, adding to the situation's complexity. Despite these short-term conflicts, Beijing still regards its "friendly neighbor" and "peaceful rise" policies as the key elements in its relationship with ASEAN. Rather than formally dominate ASEAN states, as colonial powers did in the past, China is hoping to simply draw them in and gain their cooperation — a recreation of the age-old Chinese system of regional political management.

The Philippines' Key Role in China's Strategy

China's Moves in the South China Sea: Implications and Opportunities

China's Investment in ASEAN, 2013

The Philippines forms the eastern wall of the South China Sea, the key route to the Pacific Ocean. China cannot afford to have the Philippines adopt a confrontational stance toward Chinese interests and maritime activity. The Philippines is a U.S. treaty ally, and thus is seen as part of any U.S. containment strategy against China. Beijing feels compelled to break U.S.-Philippines ties, or at the very least create strain in the relationship. The Philippines' somewhat ambivalent attitude toward the U.S. military certainly helps China's cause. Furthermore, growing disappointment with the U.S. "pivot" to Asia, a policy widely misread in the region, has added another dimension to the complexity of the relationship between Manila and Washington. In other words, there is plenty of room to increase cooperation between China and the Philippines — especially economically — despite any political speed bumps. In 2013, the Philippines received just 1.4 percent of China's total investment in ASEAN, the second-lowest share among the 10 member states. Cross-border trade stood at $15.1 billion that year, ranking China as the Philippines' third most significant trading partner (and higher, if trade with Hong Kong is included). But there is much room for expansion, if political distractions can be overcome.

The Philippines has been one of the two countries in the South China Sea, along with Vietnam, that has noisily challenged China's expansion. Beijing's actions are the most disadvantageous to Manila and Hanoi, which claim the largest swathes of territory in the South China Sea after China itself and are therefore experiencing the biggest shifts from the status quo as a result of Beijing's expansionism. However, China is confident in dealing with the Philippines because of its disproportionate advantage in their economic relationship and because the U.S.-Philippine security relationship remains strained. The strategic balance between China and the Philippines is tipped heavily in Beijing's favor, giving China far more room to maneuver than Manila. Barring significant U.S. intervention, China will retain this advantage. Ultimately, Beijing is counting on its estimation that the United States won't get tied up in a real confrontation with China over a few unoccupied islands claimed by the Philippines.

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