The South China Sea (SCS) is a central feature of the Belt and Road Initiative’s (BRI) Maritime Silk Road (MSR). The region’s strategic location, energy resources, and potential impact on China’s domestic affairs are therefore key factors in the project’s success.
Influence in the SCS is a principle concern of Chinese foreign policy, and Beijing is pursuing this objective through a combination of diplomatic, economic, and military means. A complex “divide and conquer” approach is bolstered by infrastructure based loans, diplomatic leverage, and straight up military pressure.
SLOCs and energy security
China’s aptitude for influencing the South China Sea’s strategic affairs is crucial for several reasons. The area contains six Sea Lanes of Communications (SLOCs) linking the Indian and Pacific Oceans. The most crucial SLOC is the Malacca Straits, through which at least 80% of China’s energy supplies transit. The Strait’s status has the potential to influence China’s domestic affairs. Even if the Strait was closed for just one day, the disruption in energy supplies might cause social unrest in China.
If China secured unhindered access to the region’s energy resources, this situation might be mitigated. The United States Government’s Energy Information Agency (EIA) estimated in 2013 that the region contained approximately 11 billion barrels of oil with an additional 12 billion barrels in untapped deposits. The South China Sea contains an estimated 190 trillion cubic feet of natural gas, while the EIA suspects another 160 trillion cubic feet in untapped deposits exists.
Unimpeded access to those resources could furnish China with a reliable energy source for several decades, and so influencing the SCS’ strategic affairs is a principle objective of Chinese foreign policy.
The Chinese diplomatic approach
Beijing is probably employing a “divide and conquer” approach when ascertaining which economic, or military instruments to employ. Jihyun Kim discusses the issue in a Strategic Studies Quarterly article. Kim argues,
China offered a series of attractive measures for the [ASEAN] group as a whole, pushing for stronger integration with regional economies while hiding its stick in hope of accentuating the shared destiny of China and the ASEAN states
A key problem facing China analysts and observers is directly linking Beijing’s economic, diplomatic, and military instruments to regional events; the situation is further complicated by the potential connection between Chinese cultural practices and diplomacy.
This issue is explored by Richard Lewis in his book When Cultures Collide. His work studies how different cultures view and utilise various characteristics common in negotiations. Lewis contends that the Chinese “behave in a virtuous manner toward others. Everybody’s ‘Face’ must be maintained”. He argues that, for the Chinese, “Confrontation is avoided; harmony and consensus are ultimate goals”.
Another aspect of Chinese modus-operandi is Guanxi. Guanxi’s key element entails combining gifts and reciprocity. The Chinese will usually furnish a small gift to a party the Chinese are seeking a relationship with. They will reciprocate via a significant favour. It may be professionally, personally, or financial disadvantageous to the party, however.
The final, noteworthy elements of Chinese negotiating behaviour relate to processes and timeframes. The Chinese “negotiate [in a] step-by-step manner”. They concentrate on “general principles of mutual interest”. Finally, the Chinese “decisions have a long-term orientation”.
Many of Lewis contentions are witnessed in Beijing’s pursuits in the South China Sea. His arguments are seen in China’s interactions with the Philippines, Cambodia, Laos, and ASEAN. Lewis’ points may provide a reason why ascertaining a concise linkage between China’s financial and military instruments and diplomacy pursued by the region’s nations is difficult to prove aside from circumstantial evidence.
A direct omission by the Chinese of employing their financial/military instruments as leveraging the region’s diplomatic climate would be a direct loss of “face”. A precise discovery of either situation could probably occur via classified electronic, signals, communication, or human intelligence sources, yet through open journal or media venues, this is unlikely.
Exploiting Infrastructure Projects
Beijing’s first approach entails utilizing a mixture of economic and diplomatic instruments. The principal instrument is infrastructure linked loans. Brahma Chellany of the Centre for Policy Research in New Delhi argues that China pursues infrastructure projects in strategically vital, but financially vulnerable developing states.
The pursuits are orchestrated to support China’s access to natural resources and as a siphon for low-cost/quality Chinese exports. The projects are not profitable however. Beijing views low-profit / high debt infrastructure projects as a means of gaining diplomatic leverage over a recipient state.
China sees the projects providing diplomatic leverage via financial entrapment. China focuses on states that require infrastructure for growth, that are economically developing, but which are also strategically vital for China’s energy and financial requirements.
Beijing is targeting states with smaller economic capacities since the project expenses may equal or exceed the country’s GDP. The thinking is that the lower a project’s profitability the higher the chances a host state will incur an unmanageable debt.
The nations are faced with the choice of selling the stakes to non-Chinese parties or allowing Beijing connected State Owned Enterprises to take over the project. The receiving state thus risks a higher vulnerability to Chinese leverage. Chinese authorities may then set up a repayment plan for those projects, providing those states accept contracts for additional ventures. A situation is created whereby a state becomes permanently financially indebted to China. It traps the country before their policymakers can enact economic counter-measures to thwart Beijing’s pursuits.
There is a strong possibility that the aforementioned tactics were employed against Malaysia and Cambodia during different ASEAN meetings. The issued statement of the June 2016 China-ASEAN Summit failed to reflect the organization’s original intentions.
The Association’s members initially preferred to utilise a statement including comments regarding how events in the SCS had “eroded trust and confidence”. It would have concurrently noted that any disputes between the region’s various states should be resolved under international law. The statement finally would have emphasised the vitality of freedom of navigation and overflight of the SCS. But the above comments were withdrawn from the final communique after the Malaysian Foreign Minister objected without explanation.
The circumstances surrounding Kuala Lumpur’s June 2016 ASEAN summit diplomacy is interesting: China’s Nuclear Power Corporation invested in and acquired the Malaysian state fund 1MDB’s power assets in April – an investment worth 2.3 billion USD. The timing of the Chinese financial transaction, and Malaysia’s diplomacy during the ASEAN summit, is highly suspect.
Another example of China’s infrastructure based diplomacy involves Cambodia. During ASEAN’s July 2016 summit, the Association’s members originally wanted to include language in the meeting’s final communique mentioning the PCA’s ruling against China’s conduct in the SCS. ASEAN’s closing communique lacked the language after Cambodia objected.
The motivation for Cambodia’s objection? China forgave 89 million USD in debt. It concurrently offered to invest in Cambodia’s high speed train system and an airport in the Siem Reap Province. Where, when, and how the debt was incurred is unknown. Beijing has invested a total of 9.1 billion USD since 1994 according to the Council for the Development of Cambodia.
A strong possibility is that the aid may have had political conditions attached. Beijing pledged Cambodia 600 million USD in aid several days before the July 2016 ASEAN summit. Cambodia requested ASEAN issue a statement lacking mention of the PCA verdict– a request ASEAN agreed to.
The Malaysian and Cambodian situations mandate asking several questions. Was it coincidental that China delivered both states’ financial aid packages shortly before the countries vetoed the organisation’s preliminary Chinese critical language?
The Military Approach
The second instrument China employs is military connected. It entails enhancing/augmenting various naval and air facilities on PLA occupied Spratly/Paracel islands. China sees these sites as solidifying Beijing’s territorial claims. The islands may be employed to safeguard the SCS’ Maritime Silk Road components. Finally, Beijing may utilise the islands to exert pressure over the area’s states during negotiations or crisis.
The PLA is involved in various activities across the Paracel Islands. The Chinese currently occupies twenty sites throughout the Island chain. The PLA has developed several harbours on seven-islands – three can be utilised for civilian and naval purposes, while five islands contain helipads. On two of those sites, Duncan and Woody Islands, the Chinese military has pursued additional ameliorations. The PLA has constructed a full-fledged helicopter base on Duncan Island. On Woody Island, the Chinese have built twenty hangers, sixteen can house combat aircraft. The site additionally contains a HQ-9 surface-to-air missile (SAMs) batteries.
The Chinese occupy seven-sites in the Spratlys. All have anti-aircraft missile systems. The PLA is focusing their efforts on enhancing/augmenting their facilities on the Fiery Cross, Subi, and Mischief Reefs. The Chinese constructed twenty-four hangers and supporting logistical facilities on those same areas in the later half of 2016.
The sites can house up to three fighter regiments according to a 2016 United States Defence Department Report. The PLA has constructed missile shelters and radar/communications facilities on all three reefs. The three areas finally contain shelters with retractable roofs that could serve as missile storage and launch sites.
China’s rationale for the Island’s military expansions is questionable. PRC Premier Li Keqiang said in March 2017 China’s development of the Spratly and Paracel Islands were for “civilian purposes” and sustaining “freedom of navigation”.
The Foreign Ministry a month later said the different military sites were for “safeguarding China’s own territory”.
Several questions need asking: How does Li Keqiang define “civilian purposes”? And which state or states does China fear a “Freedom of Navigation” impediment from? Beijing’s military, diplomatic, and civilian policymakers realise the “Nine Dash Line Claims” are not recognised by the United States, ASEAN, Southeast Asia’s different states or others with a strong interest in the SCS, Japan or India.
China understands that none of those states have overtly threatened Beijing’s holdings in the region – nor have they expressed an interest in pursuing similar military action against Beijing’s SCS bases. China is probably pursuing a long-term strategy via its development activities across the Spratly/Paracel islands. Beijing may be thinking the aforementioned countries might directly challenge Beijing over its SCS activities or Nine-Dash Line claims in the future. It is seeking to mitigate the threats’ materialization by militarising its South China Sea sites.
The types of military hardware China is installing on its island developments may be indicative of Beijing’s intentions. A strong possibility is that the island emplacements are employed with a flexible offense/defensive mission in mind. The Chinese deployment of SAMs suggests the PLA is concerned about air, naval, or ground based missiles attacks, plus aircraft originated strikes – most likely from Vietnamese, American, or Filipino forces.
China is probably deploying short range fighters/bombers to the Paracels, given their proximity to Vietnam and Chinese ports. Their mission probably involves providing coverage/protection to Chinese bound maritime/energy vessels transiting the northern SCS. The PLA is likely stationing long range fighters/bombers in the Spratly Islands with a similar mission for the Malacca Straits and the South China Sea’s southern area. Beijing is also probably deploying naval vessels to both areas with a related objective. Those same forces may be utilised against Vietnam, the Philippines, and/or other SCS states as pressure points during economic or diplomatic tensions.
Beijing tends to argue that the islands are for “civilian purposes”, “freedom of navigation” and “safeguarding China’s own territory” . The first two terms may refer to Beijing’s view of the sites in the Maritime Silk Road’s context; the last may be directed at the territorial claims under the “Nine-Dash Line” element.
Beijing may see the islands as serving a “civilian purpose” plus protecting “freedom of navigation” via furnishing an air/naval shield over the SCS energy transit routes vital for China’s economy.
Those same islands might permit China to deploy PLAAF and PLAN forces to the various region’s various SLOC’s – most notably the Malacca Straits – to deter blockades during crisis events. The strategy maybe utilised until the SCS becomes obsolete as an energy transit route.
The event will not occur until the BRI’s new Central/Southeast Asia overland energy pipeline projects and non-SCS maritime routes are operational. Chinese policymakers may contend the islands “safeguard” China’s own territory consequently until those events transpire. Beijing considers the SCS area within the “Nine-Dash Line” as existing within its jurisdiction. China may be using the islands to dissuade the other SCS states against challenging Beijing’s claims and thus “Safeguarding China’ territory”. The islands may also provide what China views as a permanent “presence” in the region.
The final potential usage of the Paracel/Spratly Islands fortifications is diplomatic. China might be directing the sites’ weaponry against the Philippines and Vietnam, as alluded to previously. Beijing may see those facilities as potential leverage against both states. The SCS’ islands military enhancements may be designed to allow Beijing to exert diplomatic pressure on the region’s other claimants as well.
That scenario might unfold during negotiations over various diplomatic, economic, or energy exploitation issues. The Islands may additionally permit China to initiate military operations against the South China Sea’s different states if heightened tensions occur at some point.
Influencing the SCS’s events and/or strategic climate is crucial to the Maritime Silk Road’s success. The region’s status also influences China’s domestic environment. A direct challenge to Beijing’s economic climate and the CCP’s authority may arise, if China’s consumers are prohibited from accessing the energy supplies transiting the South China Sea. Beijing understands the factors instigating the above scenario could include a deterioration of Sino-Vietnamese, Filipino, or ASEAN relations. China is employing several diplomatic, economic and military instruments to address these issues and ensure the Road’s realisation.
These instruments will be utilised until the SCS’ loses its status as an energy transportation route. That might happen 1) once the construction of different China connected Middle East and Central Asia natural gas/oil pipeline routes are operational; 2) the Road’s non-SCS maritime routes are realised; or 3) China is allowed exploit the region’s energy resources. The first two events are long-term possibilities. The last scenario is the least likely to occur owing to the SCS’ strategic dynamics. Beijing will utilise the discussed economic, diplomatic, and military instruments until one or all of the previously mentioned events occurs.