September 2016


China flexes

By Michael Wesley

The dispute over the South China Sea will come to affect more than just China’s near neighbours

A couple of years ago I used a thought experiment to get some students to think harder about the territorial disputes in the South China Sea. “What if China claimed some of the outer parts of the Great Barrier Reef as its sovereign territory?” I asked them. “How should Australia respond?”

The resulting discussion was all I’d hoped for: passionate, imaginative, thought provoking. I walked away satisfied, and didn’t think very much about the class until the news came through on 12 July that the Permanent Court of Arbitration (PCA) in The Hague had found decisively against China’s territorial claims in the South China Sea.

Initially I thought that the verdict would change little. Indeed, China still refuses to recognise the PCA’s jurisdiction and has rejected its verdict. The Philippines insists the ruling must form the basis of any negotiated settlement. The countries of the Association of Southeast Asian Nations (ASEAN) maintain a divided and embarrassed silence on the dispute. And the United States and its closest regional allies, Australia and Japan, have stated their support for the countries disputing China’s claims, to Beijing’s fury. Exactly the picture as it was on 11 July.

But for Australia, it is because the verdict has changed so little that its implications are so significant. While it is highly unlikely that Beijing will claim part of the Great Barrier Reef as its territory, the eventual effect of the stand-off in the South China Sea will be a militarisation of Australia’s surrounding waters in ways we have never experienced before.

The specific interests at stake in the South China Sea are overblown. It becomes increasingly apparent that there are nowhere near the reserves of oil and gas under the seabed that were initially claimed. Overfishing has driven stocks to the point of collapse. Even the sea’s significance to global shipping needs to be placed in perspective: at little extra cost or delay, cargo can be diverted through Indonesia’s Lombok and Makassar straits, and to the east of the Philippines.

What makes the stand-off in the South China Sea important is its effect on the shared understandings and expectations that have underpinned the region’s stability, and therefore prosperity, for half a century. The way China is asserting its interests in the South China Sea is eroding other regional countries’ confidence in the basic standards and priorities of regional relations.

The Philippines’ decision to refer its maritime disputes with China to the PCA reflected not only frustration with China’s obduracy but also a deeper hope that the invocation of law and institutions would moderate Beijing’s behaviour. Since its admission to the United Nations in 1971, China has been a scrupulous proponent of the rule of international law. At a time when Western states were moving beyond foundational international norms like sovereignty and non-intervention, China remained the strongest advocate for international laws.

The countries of South-East Asia decided to focus on Beijing’s reverence for international norms when supporting its integration into the region after the Cold War. They became strong advocates for inviting a China isolated after the Tiananmen Square massacre into a range of regional institutions: Asia-Pacific Economic Cooperation meetings, the ASEAN Regional Forum, the Asia–Europe Meeting. Their reasoning was that a less isolated China would be a rising power increasingly socialised to follow regional norms of behaviour.

If Beijing’s rejection of the PCA’s jurisdiction and decision was an isolated case, there would be less to worry about. States, and especially great powers, tend to ignore international rules when it’s in their interests to do so. What’s worrying about Beijing’s stance in this case is the backdrop against which it occurs. Since the turn of the century, powerful states have increasingly accused one another of riding roughshod over international law. China and Russia argue that the United States and its allies acted illegally in bombing Serbia in 1999, invading Iraq in 2003 and attacking the Gaddafi regime in Libya in 2011. Western countries in turn have condemned Russia for its aggression in Georgia in 2008 and Ukraine since 2014, and China for its assertive claims in the South and East China seas since 2008.

The result of these exchanges is a trumping of international law by considerations of power. Power is decreasingly something subjected to law and increasingly something confirmed by the consequence-free flouting of international law. In a world of deepening rivalry between the US and assertive rising powers, to be seen as scrupulously complying with international law while your rivals ignore it when it suits them is a sign of weakness. The rules that count are not those generated by diplomatic custom and collective action, but standards of behaviour that are determined by what powerful countries are (or are not) prepared to fight over. This is a worrying trend for the region’s less powerful countries, including Australia.

Rules, of course, are the bedrock of commerce and economic success. Trade and enterprise need order and predictability. This has been a foundation of Asia’s stability and economic success since the end of the Vietnam War. China, the US and the countries of South-East Asia agreed at that time that rivalry and conflict would lead to continuing impoverishment and instability. By shelving their disputes they created the conditions for economic development, which in turn buttressed further stability in the region. The result was the Asian economic miracle.

China’s assertion of its maritime claims in the South and East China seas upsets this agreement. Beijing has decided that confrontation and non-compromise can coexist with continuing commerce – and in large measure it has been proven right. Even states in direct conflict with China’s claims – Japan, the Philippines and Vietnam – have not been willing to upset their economic relations with China to prosecute their interests. This stance has vindicated China’s doctrinaire Marxists, who argue that China’s transformation of the region’s economic structures has created contradictions in the region’s political “superstructures”, which will be resolved in China’s favour. In other words, economics and history are on Beijing’s side.

For the countries surrounding China, the days of shelving disputes seem to be coming to an end. They are caught in a bind that became all too clear at July’s ASEAN meetings in Laos. Each South-East Asian country values its economic relationship with Beijing too much to risk being seen as “ganging up on China”. On the other hand, they realise that the project of socialising China to their values has been superseded by Beijing’s intention to socialise them to its wishes. Beijing’s proposition to its neighbours is the same as that to its own people: acquiesce to the imperatives of the Chinese state and the economic benefits will flow.

For states with barely 50 years of independence, this is an unpalatable prospect. The result is an accelerating arms build-up in the region. The past quarter century has seen military budgets jump: Indonesia’s by 210%, India’s by 176%, Malaysia’s by 170%, Singapore’s by 165% and Vietnam’s by 135%. Australia’s recent Defence White Paper, promising a doubling of our submarine fleet as well as new missile forces and Joint Strike Fighters, should be read against this background.

The casualty is the confidence of all regional participants in the uncontested freedom of commerce, and the freedom of navigation on which it is based. It is easy to forget in this digital age that the vast majority of trade is still transported on ships. Any change in the ability of shipping to sail at will – for example, by requiring it to register and sail under certain conditions as China intends to impose in the South China Sea – can only have a negative impact on international trade.

The irony is that this will affect China, the world’s largest trading nation, more than any other country. China has no doubt prevailed in its campaign for the South China Sea, but at the cost of fundamentally weakening the trust-based freedom-of-navigation regime. Many of its rapidly arming neighbours can potentially control waterways that are vital to Beijing’s seaborne trade: Singapore, Malaysia and Indonesia the Strait of Malacca; Indonesia the Lombok and Sunda straits; India the Bay of Bengal and the Arabian Sea. In the new world of contested waterways, Beijing may be seeking many more permissions than it needs to grant.

What’s more, South-East Asia’s narrow waterways are not the only way to sail from the Persian Gulf and Suez Canal to North-East Asia. The other route is to the south and east of Australia – longer to be sure, but free of narrow straits that can be plugged by adversaries. The Southern and South Pacific oceans will become progressively militarised as China looks to hedge against its commerce being blocked through South-East Asia. Australia’s tranquil back door will see regular nuclear submarine and naval patrols by a range of rival powers.

These are not scenarios that our defence planners – so imbued with the need to think of threats to our north – have ever thought about. Inevitably military competition will change our relationships with countries in the South Pacific. And given the clustering of 90% of our population along our south-eastern coast, it will probably have a profound effect on our sense of self, too.

Michael Wesley

Michael Wesley is Professor of International Affairs and director of the Coral Bell School of Asia Pacific Affairs at the Australian National University. His most recent book is Restless Continent: Wealth, power and Asia’s new geopolitics.

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