Large parts of the territorial waters in the South China Sea are contested and China is the biggest and the most assertive claimant country. In the South China Sea Beijing’s territorial claims include the Paracel Islands (also claimed by Taiwan and Vietnam), the Spratly Islands (claimed by Taiwan, Vietnam, the Philippines, Malaysia and Brunei) and the Scarborough Shoal, claimed by both Taiwan and the Philippines. Nevertheless, Beijing does not acknowledge the existence of any territorial disputes in the South China Sea to begin with. Indeed, through its ‘Nine-Dash Line’ Beijing has unilaterally decided that more than 90% of the South China Sea is part of Chi-nese territory, from a Chinese perspective rendering other claimants countries’ territorial claims de facto irrelevant. The ‘Nine-Dash Line’ stretches several hundreds of miles south and east from China’s most southerly province of Hainan and it indeed encompasses almost the entire South China Sea. While China is actively and increasingly frequently challenging the territorial status quo in the South China Sea through the construction of facilities on reefs claimed by others, the possibility of military clashes between China and other claimant countries over disputed territories will probably remain relatively low in 2016. However, they cannot be completely excluded either and claimant countries in general and China in particular are in the year ahead charged with the (very) urgent task of making sure that misperceptions and misinterpretations of activities in disputed waters (such as drilling for oil and gas, building facilities or sailing into each others’ Economic Exclusive Zones, EEZs) do not trigger the outbreak of military hostilities.
Unless China changes its policy approach towards disputed territories in the South China Sea dramatically (which remains very unlikely given Beijing’s strategy to discuss territorial disputes bilaterally as opposed to multilaterally - from Chinese policymakers’ perspective an attempt to gang-up on China), Beijing will continue to insist on negotiating bilaterally with other claimant countries. However, from a Chinese perspective there is really not that much to negotiate on as the South China Sea – at least judging by the above-mentioned ‘Nine-Dash Line’ – belongs to China, i.e. is an integral and indeed undisputable part of Chinese national territory.
While there are no guarantees, U.S. navy ships patrol-ling in international waters in the South China Sea will probably continue to deter China from (even) more aggressively defending its territorial claims. It is therefore from a strategic viewpoint crucial that the U.S. navy continue to show its presence in the South China Sea. And it will. The U.S. insists on the freedom of navigation and in October 2015 the USS Lassen sailed within 12 nautical miles of Subi Reef — off the western coast of the Philippines — on which China built a weather monitoring station and other facilities. While Beijing threatened (unspecified) consequences in the case of repeated ‘intrusions’ into what Beijing refers to as its territorial waters, Washington has announced that in 2016 the U.S. will continue to sail within what it (and pretty much the rest of the international community) argues are international waters. Leaving its belligerent rhetoric aside, China will continue to avoid risking a military clash with the U.S. navy, which in terms of capabilities, equipment and reach is far superior. However, China’s ongoing rapid naval military modernization process is clearly aimed at challenging U.S. naval superiority in Asian territorial waters.
Over the course of the year 2015, China built a number of facilities on contested reefs in the South China Sea. In 2016 it will most probably continue to do so and, worse from a regional security viewpoint, these alleg-edly civilian facilities and structures can easily be transformed into military bases equipped with runways in the future. Beijing’s assertiveness in the South China Sea does not go unnoticed in Tokyo and while Japan has until recently almost categorically excluded joint naval patrols with the U.S. navy in the South China Sea, Japan’s government last November indicated that it could order Japanese vessels into the South China Sea to conduct joint patrols with the U.S. navy in the future.
The good news is that the problem-free transportation of goods, crude oil and gas is of vital economic importance to all parties involved in territorial disputes in the South China Sea.
Roughly 30% of global maritime trade goes across the South China Sea, including goods worth $1.2 trillion destined for the U.S. The South China Sea accounts for over 10% of world fishery production and is believed to have significant oil and natural gas deposits beneath its floor. Furthermore, up to 75% of global crude and natural gas transits the South China Sea annually. Al-most a third of global crude oil and over half of global liquefied natural gas (LNG) passes through the South China Sea each year and more than 50,000 vessels transit the Straits of Malacca. While it is estimated that by 2020 the amount of oil and gas shipped through the South China Sea will double, China receives roughly 90% of its overseas-sourced crude oil through the South China Sea. Roughly half of the global liquefied natural gas (LNG) trade is shipped through the South China Sea and, finally, large quantities of coal from Australia and Indonesia pass through the South China Sea to markets around the world, above all to China, Japan, and India.
More than enough (economic) good reason for Chi-na and all other claimant countries not to let territorial disputes in the South China Sea escalate beyond the current level in 2016.
Axel Berkofsky, is Professor at the University of Pavia, Italy and Senior Associate Research Fellow at ISPI
