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Common Cents

China’s Pond

Ralph Murphy

(3/2014) Recent saber rattling in the Far East between China and Japan over territorial claims in the East China Sea has captured the attention of the Western media. This may be rooted in China's mindset of dominance in its dealings with its South China Sea neighbors. China has controlled the region with virtual impunity since the Second World War, but there is rising resistance there on both the political and economic fronts.

Oil, natural gas, and fishing rights are at stake in the current stand offs between China and its "backyard". Of the current eight disputes that exist in the area, all involve China and its neighbors. Vietnam, Indonesia, the Philippines, and islands tied to Taiwan, among others, are of current interest.

China's hegemony in the region dates back to the1947 territorial claims of the deposed Kuomintang (Taiwanese) government. The Communist-led, People's Republic of China (PRC) drew a "9 dotted line" arc of dominance in the South China Sea implying ownership. The PRC asserts a historic claim to the resources in the area based on this line.

Scholars dispute China's inference of sovereignty based on the legal concern that a "national boundary line must be a stable and defined one." The "9 dotted line" has fluctuated since the pre-Communist era, and they claim the line "doesn't have any specific geographic coordinates and does not tell how it would be connected if it was a continuous line." Exclusive Economic Zones based on territories in dispute are currently contested, and, in the case of the Philippines that calls the maritime region the West Philippine Sea, have even turned violent. Clashes have occurred between Chinese fishing boats and the Philippine Navy in the "Scarborough Shoal". Since those incidents, Philippine warships as well as Chinese surveillance craft have plied the waters that China claims are an "integral part of its territory." China has also imposed sanctions on Philippine imports as a result of the conflict.

In March, 2010 PRC officials told their U.S. counterparts that they considered the South China Sea a "core interest on par with Taiwan, Tibet, and (neighboring) Xinjiang." In a region whose resources are at an estimated $1 trillion and is the second largest shipping lane in the world- China's claim is of concern.

In July, 2010 China asserted through the "Global Times" a government run periodical that "China will never waive its right to protect its interests with military means." A PRC Ministry of Defense spokesman said, "China has undisputed sovereignty and sufficient historical and legal backing to underpin its claims."

Perhaps in response to China's strength and belligerence the ten member Association of South East Asian Nations (ASEAN) announced the formation of the Asian Economic Community (AEC) to enter into force in 2015. The goal of the bloc is to provide a single market and production base, competitive economy, equitable economic development, and free trade of goods and services. At about $2 trillion, ASEAN's combined GDP is considerably less than 25% of China's, that is conservatively estimated at over $8 trillion. China is also the primary trade partner of the major players that gives them enormous leverage in the actual operation of the nascent organization. It appears to be a budding, lightweight version of the European Union without the political surrender of sovereign powers.

Vietnam plays a key role in the ASEAN community and despite its close economic ties to the PRC appears to have made gains. The nation controls 29 Spratly islands with their associated EEZ's. China has 8, the Philippines 5, Malaysia 2, and Brunei one.

Vietnam has concluded a plethora of oil and gas exploration agreements in the South China Sea with foreign companies. Its "White Tiger" field of the Cuu Long South China Sea basin, among others, have made Vietnam a net oil exporter. Over 30% of the nation's GDP is directly tied to oil, much of it in contested waters. The resource rich Parcel Islands are also contested between the two neighboring nations.

Heavy fishing in the region provided an estimated 8% of the world’s catch by 1988. A percentage that has increased steadily in subsequent years. As China's "self styled" capitalist economy has proven dynamic and productivity risen steadily since the 1980's, half the tonnage of oil which supports the region and neighboring nations travels through that maritime area.

Again, much of the oil is also pumped directly from the disputed area. The PRC Ministry of Geological Resources and Mining estimated 17.7 billion tons of crude oil exists to be extracted from the South China Sea. The Energy Information Agency (EIA), in a recent United States Geological estimate, agrees that extensive reserves are available there, and says that 28 billion barrels could be extracted. The EIA study also points to considerable natural gas reserves in that contested area. There could be as much as 900 trillion cubic feet of the resource.

China has dubbed the region the "Second Persian Sea" (i.e. Persian Gulf?) and it will likely remain in relatively low-grade contention for some time to come. The ASEAN Secretariat, speaking for affected members, claimed the disputes must be settled within the United Nations Convention of the Law of the Sea (UNCLOS) that China signed and came into effect in 1994. It couldn't pass the U.S. Senate. Despite they signed the document, China had immediate differences with its partners, and the UN does not appear to be a source of near term solution for the parties involved.

Whether through political maneuvering and associated economic pressures, or confrontations at sea, China appears to "call the shots" in the South China Sea. While the opposition remains weak at the present time. This could change. If not forced to obey international law as interpreted by the United Nations, the country's territorial ambitions could continue to prove unsettling there and in its contingent spheres of influence.

Ralph Murphy is a former member of the CIA Headquarters Staff in Langley, VA.

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