Awaiting the ruling on South China Sea

The contending states in the South China Sea disputes are awaiting the verdict of the Hague-based Permanent Court of Arbitration this month. The case was brought by the Philippines primarily concerning the legality of China’s “Nine-dash line”, a map inherited from the Nationalist period that claims almost 90% of the South China Sea. The Spratly Islands, Paracel Islands, Pratas Islands, Macclesfield Bank and the Scarborough Shoal are the main islands under dispute.

While the Philippines considers the issue as a violation of the UNCLOS (United Nations Convention on the Law of the Sea agreements), China treats it as a matter of sovereignty. The United States has warned China against provocations after the verdict. The above matter was also the dominant issue of deliberation during the 2016 Shangri-La Dialogues which took place in Singapore in June.

Strategic and Economic Significance of South China Sea

The strategic and economic significance of maritime prowess clearly explains the rising conflict. It reminds one of the extraordinary relevance of the insights of American strategist Alfred Thayer Mahan even a century after the spread of his geopolitical vision. His definition of the history of sea power as a narrative of contests between nations, of mutual rivalries, of violence, frequently culminating in war has become the present fear. Control of the sea, by maritime commerce and naval supremacy, means predominant influence in the world; because, however great the wealth product of the land, nothing facilitates the necessary exchanges as does the sea.

South China Sea which covers around 3,500,000 square kilometers and through which $5.3 trillion in trade traverses each year, functions as the economic ligament between the Western Pacific and the Indian Ocean where global sea routes integrate. While being the second most used sea lane in the world, regarding world annual fleet tonnage over 50% passes through the Strait of Malacca, the Sunda Strait, and the Lombok Strait. It is an area where more than half-a-dozen countries have overlapping territorial claims over a seabed with an estimated 11 billion barrels of oil as well as 190 trillion cubic feet of natural gas in proved and probable reserves.

Relative Peace to Rising Tensions

However, the fact that it is after decades of relative peace and cooperation, Asia has emerged as the main source of this risk gives enough thoughts to ponder over. Asian regionalism was quite strong in the 1990s and even China was altruistic enough to keep its currency stable amidst currency devaluations by crisis ridden countries in the aftermath of the Asian Financial Crisis of 1997-98. As Charles Tiefer points out in his article on China’s World Trade Organisation accession (WTO), Beijing also with stood its internal protectionist forces to pave the way for its WTO accession in 2001.

The US ‘pivot’ to Asia declaration in the 2010s accompanied by a deepening of its diplomatic, military, and economic ties with the major Southeast Asian claimant states, and the resulting reactions both from China and from America’s allies in the Asia-Pacific has been a major factor contributing to rising tensions. This is the 2011 strategic re-balancing of US military resources, to the effect that by 2020 some 60 percent of US naval forces will be deployed in the Indo-Pacific region. The US disavows any Cold War-like containment mechanism aimed at China and portrays the economic logic of closer ties with Asia. However, China complains of deliberate exclusion by the US in trade agreements like Trans-Pacific Partnership (TPP) which has resulted in the rise of alternatives like Regional Comprehensive Economic Partnership (RCEP).

Moreover, increasing economic asymmetry and sensitivity among Asian economies are a major cause of concern. This is evident through the increasingly export dependent output growth of Asian economies pointing towards lagging domestic consumption which has happened despite the resilience shown in the aftermath of the 2008 financial crisis. A 2015 report by U.S.-China Economic and Security Review Commission states that China was also the largest individual trading partner of ASEAN (14 percent share of ASEAN trade).

Apart from the above factors, the increasing salience of non-traditional security challenges for countries in the region around the South China Sea and the associated negligence on this front has added to an imbalance in the region. Despite being an area which is prone to frequent non-traditional security threats such as natural disasters like earthquakes and tsunamis, efforts to harmonize regional interests through prompt and coordinated action have been limited. Though ASEAN incorporated ‘human security’ discussions a decade ago, there has been little progress on this front because of increasing maritime concerns. This has led to the ‘securitization’ of non-traditional’ security issues which in turn has paved the way for national interest discourses on Sea Lines of Communication(SLOCs) ripping apart the previously accepted norms of Freedom of Navigation and access to resources.

Economic Impact of a Crisis

Chinese activities in the region and what US calls as its ‘pursuit of national interest’ through Freedom of Navigation Operations(FONOPs) has equally contributed to the tensions in this region. The muscle flexing in the region has led to routinised close encounters between warships of different nations creating an alarm of conflict any time soon. Though presently there are no major disruptions to the flow of trade in this region, the economic and strategic importance of the region risks potential direct conflicts. Latest reports point towards the parading of two nuclear-powered aircraft carriers by the US with Chinese ships shadowing US carrier task force.

Although economic integration between China and ASEAN has been deepening since the 1990s regarding trade and investments, the South China Sea issue remains a significant stumbling block for further integration concerning to an institutional arrangement for dispute settlement mechanism. Also, as experts suggest, though US and China may not go for a direct nuclear conflict, the factor of economic inter-dependency cannot be neglected at ease. Even a short term trade disruption in the region will affect the global economy. In 2015, the US trade deficit with China was $365.7 billion. The deficit keeps growing because imports are rising faster than exports. The main reason for the trade deficit is because of import of cheaply assembled goods from China produced through raw materials sent by US based companies. Though this is profiting American based companies, US companies are incapable of competing with low-cost Chinese firms resulting in significant job loss in the US. Although there has been a slight fall in unemployment rates in the US, it is mainly due to Americans dropping out of the workforce. Hence with respect to Sino-American trade the economic effects of open warfare are bound to affect both the countries though the relative impact may vary.


For a rational solution to the ‘security dilemma’ in the region, the demands of all the stakeholders have to be met with equal consideration but obviously at varying levels. Contending States, China and US, in particular, should exercise statesmanship to demilitarize the zone and maintain freedom of navigation in the region. The impending ruling should be taken in the right sense and the consequences of any provocation which violates international law should remain a caveat while taking future steps. ASEAN, which is a major stakeholder in this issue, has to improve relations among its members as its key challenge is that it is a very loose agglomeration of countries at different levels of development. Their lack of a common stand which was expected to be overcome once the ASEAN Political-Security Community took shape still awaits to see the light of the day. The diverse nature of ASEAN politics which is a major challenge for such a move has to be dealt with at the first place to encounter the rising tensions related to maritime security. The rights of all the nations in the region regarding sovereignty and freedom of navigation should remain intact at any cost for peace and stability in the region.

Source: Christi Thomas of the Centre for Public Policy Research. Image via The Japan Times.

A full list of references can be found here.

*Any views expressed are unintentional, personal, and might not be representative of the IndoAmerican Center.