Email not displaying correctly?

View it in your browser.

China's Moves in the South China Sea: Implications

and Opportunities
November 10, 2014 | 1015 GMT

A soldier stands on Pagasa Island in the South China Sea's disputed Spratly island chain in June.(STR/AFP/Getty Images)

Summary
Editor's Note: Rodger Baker, Stratfor's Vice President of Asia-Pacific Analysis, recently returned from
a trip through Australia, Micronesia and the Philippines. The analysis below is drawn from remarks he
made on the shifting realities in the East and South China seas -- particularly involving China, the
Philippines, Japan, Southeast Asia and the United States -- in a keynote speech at a meeting of the
Manila Times Business Forum.
China's recent foray into the East and South China seas is not its first, but it is perhaps its most

substantial. For a number of reasons, Beijing is no longer comfortable or confident enough to allow the
status quo in the region to remain unchanged. The natural expansion of China's interests, and its
attempts to expand and ensure its sphere of influence, inevitably lead to responses both from its
neighbors and from the more geographically (but not strategically) distant United States. Beijing's intent
is not to trigger conflict, but rather to slowly change the political reality of the region by expanding its
maritime buffer and securing its maritime trade routes. But few of these changes will go unchallenged,
adding a layer of uncertainty to the future of East Asia.

Analysis
China historically has been a land power, not a maritime power. Although China has been involved in
the maritime sphere for centuries and Chinese merchants have been active throughout Southeast Asia,
the country's geography, natural resources, population pressures and neighbors have both allowed and
encouraged Chinese leaders to focus their attention on the country's vast territory and land borders. At
times of relative stability and security in China's history, Beijing could flirt with the idea of statesponsored maritime exploration, as evidenced by the fleets of Zheng He. But for the most part, China
avoided expanding its naval activity because it was neither pressed to physically assert its overseas
diplomatic positions, nor did it have the bandwidth and freedom to look across the sea. The Silk Road
provided sufficient access to exotic trade, and security concerns with neighbors kept China focused on
the continent.

Beijing's Modern Maritime Interests

Today, there are two primary concerns driving Chinese maritime activity: economic resources and
strategic access. Although many of the concerns China is dealing with now are not new, other factors
have combined to both enable and compel Beijing to act in a more assertive manner.
The South China Sea has always had an abundance of natural resources. Although much attention is
paid to existing and potential crude oil and natural gas reserves, as well as the possibility of subsea
mineral extraction, one of the biggest resource drivers there is marine protein (fish and seafood). By
some accounts, the South China Sea accounts for one-tenth of annual global seafood take. Asia's
enclosed seas provide plentiful and readily available food resources, but fishing is a constant source of
regional tension. Even at times of low inter-regional stress, fishing fleets frequently violate one
another's territories, and run-ins with maritime patrols are not infrequent occurrences. These incidents
are normally isolated, but if they occur when political sensitivities are heightened, they can quickly
escalate into larger diplomatic incidents or even physical confrontations. (Several deadly maritime
clashes between the divided Koreas in the past 20 years have been triggered by disputes over the
location of fishing fleets.)
Crude oil, natural gas and seabed minerals are less proven, and political risk has kept significant
progress in exploration to a minimum, except near proven reserves and usually within undisputed

territory. However, this is not to say that there is no interest in tapping the subsea resources. Rising
regional demand -- to which Beijing is a significant contributor -- and a rising level of technological
proficiency in China and elsewhere is making subsea exploration and exploitation more desirable and
achievable. China is entering the realm of deep-sea exploration, something it was not consistently able
to engage in before. Still, cost and political risk will continue to impact decisions for exploration, since
mere capability doesn't necessarily translate into cost effectiveness.

In addition to resource exploitation, there is another, more strategic, driver for China's maritime
ambitions that is quickly becoming more pressing for Beijing. In the past, China was largely capable of
meeting its own needs and sustaining its economy domestically, or via land routes. This is no longer
the case, and the significant boom in the Chinese economy has raised the increasing vulnerability of

China's overseas dependence to a much higher priority for Beijing. The large shift in Chinese
consumption has created a heavy dependence on maritime routes, which high levels of Chinese
exports only add to. This dependence has shaped the strategic picture in Beijing: As with any country
dependent on maritime supply lines, China will seek to secure those routes, whether from regional
competitors, non-state actors or any major maritime power.
The United States is currently the global maritime power, and the only nation that can (and does)
operate freely throughout the world's oceans while ensuring the same opportunity for others. But the
United States' ability to use and act on the seas with near impunity also means that, from China's
perspective, Washington has the capability, if not the intent, to use that power to constrain China's
growth. China's emergence as an economic power changed the international system, as it became one
of three pillars of the global economy. This crucial role shapes not only China's perception of itself and
its place in the world order, but also the perceptions others have of China. Beijing's concern is that the
United States sees China as its only potential peer, even if an emerging regional power, and thus
Chinese leaders fear that Washington will make the decision (if it hasn't already) to contain any further
rise of China. This question of Washington's intent, combined with U.S. maritime power, has put
pressure on China to develop the defensive capability to protect its critical maritime supply lines, or
leave itself at the mercy of the United States.

The shift in Beijing's threat perception coincided with changes in the Chinese military. Under President
Jiang Zemin, the Chinese government began to restructure the military and stripped away its business
empire, in return offering the People's Liberation Army (PLA) a more modern role and more modern
equipment. The modernization of the Chinese military required a new type of soldier who was highly
educated and understood the technology of modern warfare. It also required a shift in the training,
doctrine and overall focus of the Chinese military. The PLA has evolved well beyond its previous,
politically constrained form, especially since China's land borders have remained relatively stable and
Beijing has created more civilian forces to deal with internal unrest, freeing the military to focus abroad.
The PLA's role is now more than just protecting China's borders, or preventing internal instability; it is
preserving China's broader national interests, which include the protection of China's lines of trade. The
PLA sees this global role emerging, starting in the South China Sea. New capabilities have allowed

China to act with more authority in the South China Sea than in previous decades. Beijing does not see
this as aggressive behavior but as defensive action, through which it is securing what is necessary to
preserve its national interests.

Beijing's Goals in the South China Sea

China's aims in the South China Sea are not necessarily separate from its broader goals in Southeast
Asia. Beijing sees Southeast Asia as a natural economic and political partner, and an area for trade
and investment flowing in both directions that clearly falls within China's sphere of influence. Though
not an exact parallel, China sees Southeast Asia in much the same way the United States saw Latin
America in the early 19th century. China essentially has an unspoken Monroe Doctrine for its near seas
-- it intends to remove significant foreign interference and influence from the countries around it. This
does not mean that China expects regional countries to shun all connections with the United States;
rather, China wants to ensure that it has the upper hand in influencing its neighbors' decisions to
protect its national security interests.
In the South China Sea, China's small island strategy is not necessarily one of military expansion. Far
different than the island hopping competition between Japan and the United States during World War
II, the airstrips and dock facilities on islands and atolls in the South China Sea rarely give China a true
military advantage. Modern military technology gives China the range to operate without needing these
islets, and possessing the islands does not necessarily give Beijing greater strategic control over their
surrounding waters. In some ways, from a purely military perspective, holding the islands farthest from
the mainland is more of a risk than a benefit to China. They are small, have few or no local resources
(in most cases, not even fresh water), and in times of conflict would prove hard to defend and resupply.

Building structures on the islands certainly prevents others from doing the same, and in times of
relative peace may make it slightly easier for China to conduct maritime surveillance, but the primary
purpose of occupying the islands is not military; it is political. Holding the islands over time, without
facing a concrete challenge, strengthens the reality of Chinese ownership. Beijing has assessed that,
to its neighbors and their U.S. ally, no single island is worth the military risk of physically countering
China, so there is nothing to stop Beijing from slowly absorbing the region. When tension with a
particular country rises too high, China can ease off, shift its attention to a different country, or use the
perception of heightened tensions to drive a desire for calming the situation. Over time, this strategy
slowly shifts the political reality in the region. The lack of real challenge to Chinese actions reasserts,
by default, Beijing's claims to and authority over the territory. It also shows that neither the United
States nor other extra-regional allies are going to intervene on behalf of the Southeast Asian nations. In

the end, China believes this unwillingness for intervention will lead to the realignment of political
relations as Southeast Asian nations find accommodating Beijing more beneficial than trying to oppose
Chinese expansion through alliances with powers outside the region.

Implications for ASEAN

The changing status quo in Asia is as much a natural consequence of China's economic growth and
expansion as of the imbalance between China's rapidly changing position in the global system and its
relative lag in soft-power expansion. While China's economic rise benefits the Association of Southeast
Asian Nations (ASEAN) considerably, there is no guarantee that it doesn't also undermine the core
interests of each individual ASEAN country. The disconnect between China's economic strength on the
one hand, and the significant security role assumed by others -- namely the United States -- on the
other, highlights the imbalance of power in the region. In some ways this gap has benefited ASEAN by
giving member states the ability to take advantage of the big powers' competition for their own benefit.
But at other times, they find themselves caught in the ebbs and flows of U.S.-China relations, with little
ability to influence the direction of the relationship.
China's economic approach has been to create a reality where ASEAN countries rely much more on
China than China relies on them. As the security challenges in the South China Sea remain unsolved,
deepening economic relations may only deepen ASEAN's suspicion of China's motives. Meanwhile,
China's occasional diplomatic and economic mismanagement of its regional relationships may stir
political and social resistance in the ASEAN states, adding to the situation's complexity. Despite these
short-term conflicts, Beijing still regards its "friendly neighbor" and "peaceful rise" policies as the key
elements in its relationship with ASEAN. Rather than formally dominate ASEAN states, as colonial
powers did in the past, China is hoping to simply draw them in and gain their cooperation -- a
recreation of the age-old Chinese system of regional political management.

The Philippines' Key Role in China's Strategy

The Philippines forms the eastern wall of the South China Sea, the key route to the Pacific Ocean.
China cannot afford to have the Philippines adopt a confrontational stance toward Chinese interests
and maritime activity. The Philippines is a U.S. treaty ally, and thus is seen as part of any U.S.
containment strategy against China. Beijing feels compelled to break U.S.-Philippines ties, or at the
very least create strain in the relationship. The Philippines' somewhat ambivalent attitude toward the
U.S. military certainly helps China's cause. Furthermore, growing disappointment with the U.S. "pivot"
to Asia, a policy widely misread in the region, has added another dimension to the complexity of the
relationship between Manila and Washington. In other words, there is plenty of room to increase
cooperation between China and the Philippines -- especially economically -- despite any political speed
bumps. In 2013, the Philippines received just 1.4 percent of China's total investment in ASEAN, the
second-lowest share among the 10 member states. Cross-border trade stood at $15.1 billion that year,
ranking China as the Philippines' third most significant trading partner (and higher, if trade with Hong

Kong is included). But there is much room for expansion, if political distractions can be overcome.

The Philippines has been one of the two countries in the South China Sea, along with Vietnam, that
has noisily challenged China's expansion. Beijing's actions are the most disadvantageous to Manila
and Hanoi, which claim the largest swathes of territory in the South China Sea after China itself and are
therefore experiencing the biggest shifts from the status quo as a result of Beijing's expansionism.
However, China is confident in dealing with the Philippines because of its disproportionate advantage
in their economic relationship and because the U.S.-Philippine security relationship remains strained.
The strategic balance between China and the Philippines is tipped heavily in Beijing's favor, giving
China far more room to maneuver than Manila. Barring significant U.S. intervention, China will retain
this advantage. Ultimately, Beijing is counting on its estimation that the United States won't get tied up
in a real confrontation with China over a few unoccupied islands claimed by the Philippines.

Stratfor provides global awareness and guidance to individuals, governments and businesses around the world. We use a
unique, intel-based approach to analyze world affairs.
Copyright 2014 Stratfor Global Intelligence, All rights reserved.
Our mailing address is:
221 West 6th Street Suite 400 - Austin, TX 78701, USA
unsubscribe from this list update subscription preferences | http://us4.forward-tofriend2.com/forward?u=74786417f9554984d314d06bd&id=27dc4b5c6c&e=77343fda43