China's Dangerous $5 Trillion Dollar Bet: A South China Sea ADIZ?

May 14, 2015 Topic: Defense Region: Asia Blog Brand: The Buzz Tags: South China SeaADIZChina

China's Dangerous $5 Trillion Dollar Bet: A South China Sea ADIZ?

Is this Beijing's next move in the South China Sea? Some signs might suggest so. 

This week the annual report to the U.S. Congress on  China's Military Power  was released. It noted Beijing's use of “low-intensity coercion” across the South China Sea and East China Sea. Its assessment stated that:

“China often uses a progression of small, incremental steps to increase its effective control over disputed territories and avoid escalation to military conflict.”

Recently those “incremental steps” have been getting bigger. Southeast Asian states have reacted in turn. 

Beijing's well-reported  land reclamation  at seven sites in the South China Sea has quickened in pace. According to U.S. Defense Secretary Ashton Carter, China has  “intensified the militarization " of these islands and reefs. This has included the construction of a military-sized airstrip and at least one other non-military airstrip.

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Reports last week that China is already 'practicing' an informal Air Defense Identification Zone (ADIZ) over waters disputed with the Philippines have raised the stakes. That report, by a Filipino Vice Admiral to a Senate hearing, noted that China had warned Philippine air force and navy aircraft from flying over disputed waters on  at least six occasions .

The formal declaration of a South China Sea ADIZ would be a game changer.

The 2013  East China Sea ADIZ  has, according to some analysts, effectively given China " co-administration" over the Senkaku/Diaoyu islands. Yet the East China Sea ADIZ isn't over a strategically crucial sea line of communication through which US$5 trillion of trade passes every year. In response, an unnamed Pentagon official said this week that the  US was considering sending forces to secure freedom of navigation  through the South China Sea. Such a move wouldn't be unprecedented; the US sent B-52s through the East China Sea ADIZ in  2013

China has previously deployed its navy to secure disputed territory in the South China Sea, including in 1974 in the western Paracels and the 1988 clashes around Johnson South Reef. Its seizure of Mischief Reef has led to development since 1995.

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But the recent assertiveness, including the  ramming of Philippine ships around Scarborough Shoal, have enabled de facto control. An International Crisis Group  report released this month suggests that the new forceful approach is largely down to Xi Jinping's 'Go big and go fast' foreign-policy style. Interestingly, the report noted dissenting voices among analysts in China who worry about the impact this approach will have on relations with the emerging economic bloc of ASEAN. One analyst said that “If China wants to have little brothers following it, its foreign policy needs to be consistent and predictable.” That consistency has gone missing since Xi Jinping's bullish and forceful approach has gained strength.  

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Southeast Asian states have struggled to respond to China's actions in the South China Sea. Concern grew rapidly after the East China Sea ADIZ, and was felt closer to home last May when Beijing moved the  Haiyang Shiyou 981 oil rig , owned by CNOOC a state-run oil company, into Vietnamese EEZ. 

Since then tensions have run high, and Southeast Asian states have boosted military spending in response to China's growing assertiveness.

Data released by the Stockholm International Peace Research Institute showed steady growth between 2010 and 2014 (see Zach Abuza's graphics and summary  here), with an average net increase of 37.6%. Total military expenditure among Southeast Asian states in 2014 stood at US$38.2 billion.  That spending has included a significant advancement of Vietnam's capabilities, most notably through the  delivery of three  (out of six ordered) Kilo-class submarines armed with  land-attack missiles  under a US$2 billion deal signed with Russia in 2009. 

The Philippines, meanwhile, is implementing a  US$1.82 billion military modernization program , expecting to take delivery in 2017 of two new frigates, two anti-submarine warfare helicopters, three fast coastal patrol vessels and eight amphibious assault vehicles. Overly reliant on the U.S. alliance, Manila's defense capabilities are a long way behind others in the region, and dwarfed by China. 

The need for military modernization has been exacerbated by repeated failure at the ASEAN level, which has seen only watered down communiqués muttering tepid protests. Last month's ASEAN Summit mustered the strongest statement yet, offering that ASEAN was concerned that actions in the South China Sea could ' undermine peace, security and stability' . ASEAN stopped short of naming China. 

At a bilateral level, defense cooperation has deepened. This month saw the first  joint naval exercise  between Japan and the Philippines. Other regional naval exercises have been stepped up, as has cooperation (both military and economic) between Southeast Asian states and India. This month, the U.S. approved a  potential sale of missiles to Indonesia and Malaysia . Others are calling for a " maritime coalition of the willing "