Thayer Consultancy

ABN # 65 648 097 123

Background Briefing: South China Sea and Regional Security Carlyle A. Thayer July 20, 2013

[client name deleted] We are preparing a report for a general audience on Chinas South China Sea claims and the impact on regional security and would greatly appreciate your input and recommendation of current sources, especially on the legal action taken by the Philippines. ASSESSMENT: China's South China Sea Claims: In May 2009, the People's Republic of China (PRC) for the first time officially tabled to the UN Commission on the Limits of the Continental Shelf its 9-dash line u-shaped map claiming over 80% of the South China Sea. This map was originally drawn up in 1947 by the Republic of China (Taiwan) and adopted by the PRC after it came to power in 1949. The 1947 map had eleven dash lines, two in the Gulf of Tonkin were removed without explanation in 1953. About two years ago the PRC added a tenth line to the east of Taiwan. The point of China's claims, other than the map, is that it has never clarified what it is claiming (all the waters, islands, rocks and other features within the 9-dash lines?). Nor has China clarified the international legal basis for its claims. China asserts "historic rights" and claims "indisputable sovereignty" over the South China Sea. Under customary international law, the "land dominates the sea". In other words, claims arise from baselines on a state's coast. From these baselines a state may claim territorial waters, contiguous zone, 200 nm Exclusive Economic Zone (EEZ) and a continental shelf. China's u-shaped line cuts deeply into the EEZs established by Vietnam, the Philippines, Brunei and Malaysia. This has led to attempts by China to assert its sovereignty by cutting the cables of oil exploration ships contracted by Vietnam to conduct operations in its EEZ. China has also put heavy diplomatic pressure on American and other oil companies to stop assisting Vietnam in the development of offshore hydrocarbon resources. The Obama Administration has pushed back. In 2009 China accosted the USNS Impeccable survey ship operating in China's EEZ off Hainan Island. China has regularly challenged other US surveillance ships off its east coast. No incidents have been reported until this past week.

2 China has also used the threat to ram a seismic exploration vessel in the Philippines' EEZ to force the vessel to leave the area (within the Philippines's EEZ). China has over the last year annexed Scarborough Shoal by posting paramilitary ships there, erecting a barrier to the mouth of the shoal, and chasing off Filipino fishing vessels. A confrontation is currently looming at Second Thomas Shoal where Filipino Marines are stationed on a LST beached there since 1999. The Philippines this year challenged China's claims by lodging a claim with the Arbitral Tribunal set up under the UN Convention on the Law of the Sea (UNCLOS). The Arbitral Tribunal has just held its first meeting. Impact on Regional Security: Southeast East Asian states may be divided into three groups: the claimant states (Vietnam and the Philippines plus Brunei and Malaysia); the other maritime states (Singapore and Indonesia); and the mainland states (Myanmar, Laos, Cambodia and Thailand). Vietnam and the Philippines are the frontline states that have borne the brunt of Chinese assertiveness. Brunei and Malaysia play a much quieter role. Chinese actions led the US to intervene diplomatically in 2010. The US alliance with the Philippines has been revived. The Philippines has embarked on the modernization of its armed forces. The US assisted in boosting the Philippines' capability in maritime domain awareness. And the US has been seeking and granted greater naval and air access to the Philippines. Vietnam has largely embarked on a self-help force modernization program. It has acquired Gepard-class stealth frigates from Russia, Su-30 multirole jet fighters, missile attack craft and has on order six Kilo-class conventional submarines. All these and other platforms are armed with anti-ship missiles. Vietnam has gradually developed limited defence ties with the US. Chinese assertiveness is partly - but not wholly - responsible for an arms buildup in Southeast Asia. The hall mark is conventional submarines; these have been acquired by Singapore and Malaysia with Indonesia and Thailand in the queue. But other forms of precision stand off weapons are being acquired. Sources: The best place to start is the home page of CSIS - Center for Strategic and International Studies, in Washington, DC. They have just posted the papers of their 3rd conference on the South China Sea. It is suggested you consult the papers presented to the legal panel. There were a variety of panels covering different topics: Recent Developments in the South China Sea Speakers: Dr. Wu Shicun President National Institute for South China Sea Studies

3 Dr. Tran Truong Thuy Director, South China Sea Studies Program Diplomatic Academy of Vietnam Dr. Renato C. De Castro Professor De La Salle University Dr. Yann-Huei Song Research Fellow Institute of European American Studies South China Sea in Regional Politics Speakers: Amb. Hemant Krishan Singh Wadhwani Chair in India-U.S. Policy Studies Indian Council for Research on International Economic Relations Vice Admiral Hideaki Kaneda, JMSDF (ret.) Director, The Okazaki Institute The Japan Institute for International Affairs Dr. Carlyle A. Thayer Emeritus Professor University of New South Wales, Australian Defense Force Academy Dr. Donald K. Emmerson Director, Southeast Asia Forum Stanford University Role of International Law in Managing the Disputes Dr. Zhang Xinjun Associate Professor of Public International Law Tsinghua University Law School Mr. Henry S. Bensurto, Jr. Secretary General, Commission on Maritime and Ocean Affairs Secretariat Department of Foreign Affairs, Philippines Dr. Peter Dutton Professor and Director, China Maritime Studies Institute U.S. Naval War College

4 Dr. Nguyen Dang Thang Vietnam Lawyers Association Policy Recommendations to Boost Cooperation in the South China Sea Ms. Bonnie S. Glaser Senior Adviser for Asia, Freeman Chair in China Studies Center for Strategic and International Studies Mr. Leonardo Bernard Research Fellow, Centre for International Law National University of Singapore Mr. Christian Le Miere Senior Research Fellow for Naval Forces and Maritime Security, Defense and Military Analysis Program International Institute for Strategic Studies Particularly recommended: Henry Bensurto is a Filipino and his country's former point man on the South China Sea (officially called the West Philippines Sea). He gave an over view of international law as the basis for his government's legal action against China. Peter Dutton is a US Navy lawyer at the Naval War College in Newport, Rhode Island. He provided an official US perspective on legal issues in the South China Sea. On other panels: Wu Shicun is head of China's National Institute of South China Sea Studies and makes China's case. Renato de Castro from the Philippines gave a strong paper on China's actions at Second Thomas Shoal. If you consult the CSIS papers and Thayer Consultancy Background Briefs on the Scribd.com site you should find more than enough sources to complete your study.

Suggested citation: Carlyle A. Thayer, South China Sea and Regional Security, Thayer Consultancy Background Brief, July 20, 2013. All background briefs are posted on Scribd.com (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key. Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Ports, Chinas Defence Expenditure and Likelihood of Conflict Carlyle A. Thayer July 19, 2013

We request your assessment and input in addressing the following issues: 1. In your assessment what is the importance of the port facilities (and naval facilities) in the South China Sea region? ANSWER: The ports are important to the United States for two reasons. First, the US wants access so it can remain "on station" in the South China Sea ready to respond to any contingencies that arise. Subic Bay in the Philippines is important in this regard. Second, the US Navy would like to arrange voyage repairs in South China Sea ports rather than return to the US for minor repairs. Up to five, and possibly more, USNS Military Sealift Command vessels, for example, have been repaired at the commercial port facilities in Cam Ranh Bay. China has not really sought port access within the circle of countries enclosing the South China Sea. It has established port access - the so-called string of pearls - in ports from Cambodia westwards across the Indian Ocean littoral. These are not military bases. They serve to show the flag and for resupply. Otherwise all the ports serve to keep trade and commerce going in the region. 2. What is your assessment of China's defence expenditure? ANSWER: We have two sets of data, the official Chinese figures (which omit ballistic missiles and research and development) and estimates by the Pentagon. In March 2012 China reported that its annual military budget had been increased by 11.2% to US $106 billion. The US Department of Defense estimated the Chinese military budget for 2011 at between US $120 and $160 billion. In the past US estimates were nearly double Chinas official estimates. In other words, there is a growing convergence between Chinese official figures and Pentagon estimates. Absolute Chinese defence spending has been rising, but defence spending as a percentage of central government expenditure has remained steady. China's defence spending also is tied to economic growth. Chinese defence spending is but a fraction of US defence spending. Nevertheless, Chinese defence spending is altering relativities. China is spending more than Japan and the gap between it and the US is narrowing. It will take many decades for China's defence spending to exceed that of the US.

2 3. What could result in China, Vietnam and the Philippines entering into conflict, whether large or small scale, with one another? (if anything) and what do you expect the U.S. reaction to be? ANSWER: It depends on how you define conflict. Large scale conventional war appears very unlikely. It is more likely that miscalculation or misjudgment will lead to a clash at sea which could escalate. At the moment Chinese posturing around Second Thomas Shoal could lead to a clash with the Philippines, especially if China attempts to block supply to the Filipino Marines on a grounded LST at the shoal. A similar situation could arise around Scarborough Shoal which China has annexed for all intents and purposes. A clash with Vietnam seems less likely. At present the most likely scenarios involve Chinese paramilitary ships and Vietnamese fishermen. This is not a conflict in the military sense. It is also possible that a clash could arise as a result of an inadvertent encounter at sea. Vietnam has gone to great lengths to keep its naval forces under strict discipline and away from the front line at sea. In both of the above cases it is the law of physics - no two objects can occupy the same space at the same time. The United States is unlikely to react to a China-Vietnam clash other than to issue a diplomatic statement calling for restraint by both sides and a return to peaceful methods and exerting diplomatic pressure behind the scenes. The US will give immediate diplomatic support to the Philippines which, unlike Vietnam, is a treaty ally. The US has and continues to consel restraint on both parties (as it has with China and Japan). Any other US response would depend on who or what caused the incident and whether or not China acted in a proportional matter. It should be noted that information is appearing in the public domain about new Chinese harassment of the USNS Impeccable, the first such reported incident since March 2009. The US can be expected to respond to Chinese provocations in a firm but decisive manner. After the 2009 incident, the USNS Impeccable was escorted by a guided missile destroyer. Since the US Navy is far superior to the PLAN (People's Liberation Army Navy) at this moment in time, China is unlikely to escalate the matter.

Suggested citation: Carlyle A. Thayer, South China Sea: Ports, Chinas Defence Expenditure and Likelihood of Conflict, Thayer Consultancy Background Brief, July 19, 2013. All background briefs are posted on Scribd.com (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key. Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.