The Buzz

South China Sea: Beijing Is Winning, but Here's How to Retake the Initiative

China is once again causing concern in the South China Sea, this time by moving surface-to-air missiles to the Paracel Islands.

Over several years, this dispute has evolved into a clash of opposing strategies, with China steadily expanding its territorial, economic and military footprint in the South China Sea while other countries counter with either “balancing” or “rules-based order” strategies. So far, China's strategy has proved more successful. Why have these “balancing” and “rules-based order” strategies failed? What strategies might succeed?

Balancing strategies stress building greater relative power, usually militarily. A state can then threaten or employ violence to dissuade an adversary from taking unwanted actions. An example is Vietnam, which is modernizing its naval and air forces, improving its paramilitary forces (Coast Guard and Fishing Patrol Agency), purposefully strengthening relationships with India, Russia, Japan and the United States, and expanding its defense industry. Less obviously, the freedom of navigation transits through the South China Sea by U.S. Navy warships are also examples of balancing with the implicit threat of armed response in the event of trouble. 

Such strategies, however, play to China’s strengths, and so far have been easily countered.

In any test of relative power, China has advantages over all those involved in the South China Sea dispute except the U.S. (and even here, some predict China’s GDP will surpass America’s in time). Moreover, while a significant proportion of the world’s merchant shipping transits the area, much of it is en route to China. So China has the greater stake in this dispute, and thus greater credibility. The notion of waging a war with China over ownership of small islands in the South China Sea therefore seems far-fetched. The costs would be too high, the returns too low.

Even so, China is using a carefully calibrated blend of naval, private and commercial means in its territorial expansion to make the use of military force in response appear grossly inappropriate. How to respond for example, when a ship on a freedom of navigation transit is stopped by picketing fishing boats. China’s sophisticated approach is well-calibrated to control the situation without giving others cause to resort to armed conflict. And behind all this lies the fact that, for many countries involved in the South China Sea dispute, China is their major export market. This economic “carrot” provides a ready bargaining tool for rewarding or punishing states as needed.

If balancing is not a credible strategy, others emphasize a focus on a rules-based order to constrain China's actions. Such an order envisages states agreeing to be bounded by particular rules so that all benefit.

China counters by arguing that it abides by the rules, but that only some rules are pertinent. In China’s view, the disputed islands were lawfully returned after World War II under the 1943 Cairo Declaration and 1945 Potsdam Proclamation. Others insist the 1951 San Francisco Peace Treaty with Japan and the 1982 UN Convention on the Law of the Sea should hold sway. China counters that it is not a party to the San Francisco Treaty and signed UNCLOS with specified reservations applying to the South China Sea issue. China is therefore “observing international law in the true sense.”

China's stance has regional resonance. For instance, China avoids arbitration at the International Court of Justice (ICJ) over seabed boundaries, just as Australia has done with its smaller neighbor Timor Leste. The Philippines has sought an ICJ ruling against China’s island grabs, with China responding by declaring it will ignore the result. Again, such a stance is not unusual: Japan is ignoring an ICJ ruling on whaling in the Southern Ocean.

China appears determined to seek a zero-sum outcome. It wants territorial ownership of the islands it claims, so cooperative strategies in which benefits are shared among all parties appear impractical. So if 'balancing' and 'rule of law' are both ineffective strategies, what will influence Chinese policymakers? Two different approaches to impose costs on China for its behavior in the South China Sea appear possible.