Thayer Consultancy Background Brief

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We are preparing a report re-examining China’s interests in the South China Sea in
order to explain why Beijing attaches so much importance to maritime disputes which
has become dangerous flashpoints in the US-China rivalry.
We request your insights on related topics below.
Q1.Why do you think Beijing has attached so much importance to the South China Sea,
which is clearly not just about “rocks, reefs, and resources,” but also about one of the
world’s most important shipping lanes, China’s deep sea ambitions, its ties with its
Southeast Asian neighbours, and the future of a rules based order in the region?
ANSWER: China’s geo-strategic interest in the South China Sea have evolved since
China’s rise as an economic and military power.
The South China Sea assumed importance in China quest for reunification over time
after the founding of the People’s Republic of China (PRC) in October 1949. In 1950,
the PRC recovered Hainan Island and several features in the Paracel Islands after the
Kuomintang (KMT) withdrew to Taiwan.
China based its claims to the South China Sea on the 1947 eleven-dash line map drawn
up by the KMT government. The eleven-dash line was an illustration of China’s self-
perceived sphere of influence based on historic discovery and commercial interaction
in the pre-colonial era.
China’s geo-strategic interests in the South China Sea were shaped during the Cold
War, the Korean conflict and by U.S. intervention in Vietnam and the use of aircraft
carriers to attack North Vietnam. The United States withdrew from Vietnam in 1973.
In January 1974, China responded to harassment of its fishing fleets in the Paracel
Islands by sending a naval flotilla to expel South Vietnamese forces and occupy the
features on which they were based. This completed China’s occupation of the Paracel
Islands and their administrative incorporation into the PRC.
Two major factors shaped China’s geo-strategic interests in the South China Sea in the
1980s. First, the Third Indochina War that witnessed a rift between China and
Vietnam. China backed the Khmer Rouge regime in Cambodia that attacked Vietnam.
Vietnam entered into an alliance with the Soviet Union and granted Soviet naval forces
a base in Cam Ranh Bay on Vietnam’s coast facing the South China Sea.
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The second factor was Deng Xiaoping’s economic reforms in the late 1970s/early
1980s. These reforms led to an expansion of Chinese commercial exports that
traversed the South China Sea. In March 1998, China seized Johnson South Reef from
reunified Vietnam and established its first toehold in the Spratly Islands.
In the 1990s, China’s geo-strategic interests were shaped by its economic rise and
need to secure sea lines of communication (shipping lanes) from mainland China
through the South China Sea to the Indian Ocean via the Straits of Malacca.
In 1992, the United States withdrew its military forces from the Philippines when its
leases on military bases were not renewed. This provided China with the opportunity
to acquire and develop the marine and hydrocarbon resources in the South China Sea.
This involved a series of confrontations with Vietnam and the Philippines.
In 1992, the PRC granted an oil exploration lease to Crestone Corporation, a U.S. oil
company, in waters claimed by Vietnam. In 1995, China occupied Mischief Reef,
claimed by the Philippines, and erected structures ostensibly to protect its fishermen
from inclement weather. In 1999, China imposed a unilateral annual fishing ban in the
South China Sea from May to August.
A major turning point was reached in May 2009 when the United Nations Commission
on the Limits of the Continental Shelf set a deadline for claims to an extended
continental shelf. Malaysia and Vietnam made a joint submission. Malaysia also made
a separate submission. China and the Philippines objected. China, for the first time,
officially tabled its nine-dash line map. This precipitated a series of incidents between
China and Vietnam and the Philippines that have escalated in scope and intensity ever
since.
In 2012, China seized Scarborough Shoal from the Philippines in order to prevent it
from exercising sovereign jurisdiction. The following year, the Philippines lodged a
claims against China under Annex VII of the United National Convention on the Law of
the Sea (UNCLOS). In 2016, the Arbitral Tribunal ruled unanimously in favour of the
Philippines arguing that China’s claims of historic rights had been superseded by
UNCLOS.
China responded by constructing and militarising six artificial islands in the Spratly
archipelago. The new Duterte Administration in the Philippines (2016-22) abetted
China by putting aside the Arbitral Tribunal award and giving China carte blanche in
the Spratly islands.
In 2014, China parked a mega oil drilling rig in Vietnamese waters with an escort of
eighty or more vessels for several months thus provoking daily clashes involving
watercannons and ramming. In 2017-18, China harassed oil exploration in Vietnamese
waters near Vanguard Bank and threatened Vietnam. Vietnam stood down and
suspended its activities.
The current geo-strategic environment is shaped by two major factors. First, China
seeks to break through the U.S.-dominated first island chain from Japan to the
Philippines to shore up its deterrence against nuclear threats from the United States.
This mean expelling U.S. military presence from the Philippines and securing
undetected passage of Chinese ballistic nuclear submarines from the mainland and/or
Hainan Island to the Western Pacific.
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Second, China seeks to negotiate a South China Sea Code of Conduct with Southeast
Asian states that excludes states from outside the region in developing marine
resources or engaging in military activities with regional states.
Q2. While Beijing has remained deliberately vague about whether the South China Sea
is a “core interest,” several mainland scholars we’ve talked to recently are concerned
about China’s intimidating posture, which according to them has underlined the
importance of the maritime dispute to the Chinese leadership amid fears of armed
confrontation and a wider conflict involving the US. What are at stake for Beijing,
Washington, Manila and other rival claimants such as Hanoi?
ANSWER: The future of regional order is at stake as the era of United States primacy
is challenged by China’s economic and military rise. China seeks to disrupt the U.S.
alliance network with Japan, South Korea, Australia and the Philippines and the threat
this poses to China’s ambition to bring Taiwan under its control. China also seeks to
expel U.S. military forces from the South China Sea because of the threat they pose to
China’s sea lines of communication (SLOCs) and China’s ballistic missile submarine
nuclear deterrence force.
The United States seeks to contain China by reinforcing its position in the first island
chain so it can safeguard Taiwan’s independence by maintaining a military presence
in and over the South China Sea as well as in the Philippines and northern Australia.
The U.S. aims to prevent Chinese ballistic missile submarines from breaking out into
the Western Pacific Ocean while also threatening China’s SLOCs.
A U.S. military presence in the South China Sea is vital for both Vietnam and the
Philippines as a counter to China’s ambit claims over the South China Sea that overlap
with their entitlements under international law to sovereign jurisdiction over a 200
nm Exclusive Economic Zone.
Vietnam prefers what one senior diplomat referred to as the “Goldilocks formula” –
that relations between China and the United States are neither too hot (close) or cold
(confrontational) but “just right.”
The Philippines is facing an existential threat to its sovereign rights in the West
Philippine Sea by constant clashes initiated by the China Coast Guard and Maritime
Militia. The efficacy of its Mutual Defense Treaty with the Unit4d States is at stake.
The Philippines is pushing back against Chinese intimidation while trying to prevent an
escalation of hostilities.
Q3. Most experts are pessimistic about the future of the South China Sea dispute,
which has become a focal point in the intensifying US-China feud and created new
security dilemmas in China’s ties with the Philippines and other regional countries.
Chinese experts said Beijing is deeply concerned about the internationalization of the
dispute and the spectre of a military conflict, but its hands are largely forced at the
moment under the combined pressure from the US, the Philippines and others, as
China’s high-handed approach to asserting its expansive claims has galvanized a
growing number of countries to get involved.
What are the chances of de-escalation between Beijing and Manila in the near future?
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ANSWER: The present tensions between the Philippines and China are at an inflection
point following the 17th June incident in which Chinese Coast Guard personnel used
machetes, axes and knifes and injured a Filipino crew member. This incident was
widely viewed as an escalation by China.
Despite domestic pressures to invoke the Mutua Defence Treaty with the U.S., the
Marcos Jr. Administration has been very circumspect in “playing the American card”.
The Marcos Administration has declined for the moment U.S. offers of assistance to
deal with the present tensions. The Philippines has initiated a dialogue with China.
Q4. How will the evolving South China Sea dispute affect Beijing’s ties with Washington,
Manila and other regional players?
ANSWER: Continued Chinese pressure against South China Sea littoral states will only
raise tensions and intensify regional polarization and likely scupper negotiations for a
Code of Conduct in the South China Sea.
Chinese pressure against the Philippines has resulted in a reinvigoration of U.S.-
Philippines defence cooperation under the Mutual Defense Treaty and the Enhanced
Defence Cooperation Agreement. The Philippines has committed itself to modernizing
its armed forces under the Re-Horizon 3 Program and the development of an
archipelagic defence concept.
The ball is now in China’s court. China has to calculate the risk of causing a Filipino
fatality by pursuing its present course. Manila has to calculate what stance a future
Trump Administration might take on its obligations under the Mutual Defense Treaty.
Q5. With problems that Beijing deems as internal or regional issues, such as the South
China Sea and Taiwan, becoming increasingly internationalized, what possible
implications will it have on Beijing and other relevant parties?
ANSWER: The recent NATO Summit put the spotlight on the Russian-China partnership
without limits, with NATO calling China an enabler for Russia’s war in Ukraine. The
recent fourth China-Russian naval patrols in the western and northern Pacific Ocean
and the recent unprecedented Australian criticism of Chinese hacking, endorsed by
Japan and South Korea, only underscored the view that global order is becoming
increasingly polarised into two opposing blocs.
In other words, tensions in the South China Sea will be viewed as systemic rather than
regional. This will lead to increased cooperation among the United States and its allies
Japan, Australia and South Korea and an increase in European naval presence in the
South China Sea than heretofore. ASEAN’s much vaunted centrality in regional affairs
will be undermined due to internal divisions.

Suggested citation: Carlyle A. Thayer, “China’s Enduring Interests in the South China
Sea,” Thayer Consultancy Background Brief, July 15, 2024. All background briefs are
posted on Scribd.com (search for Thayer). To remove yourself from the mailing list
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.