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A New Wave of Chinese Assertiveness: Roping off Scarorough Shoal, Oil Leases in Vietnams EEZ, Military Garrison on Land

and Fishing Armada at Sea


Carlyle A. Thayer

Paper presented to the 2nd MIMA South China Sea Conference Geo-Strategic Developments and Prospects for Disputes Management Malaysian Institute of Maritime Studies, DoubleTree by Hilton Hotel Kuala Lumpur, Malaysia, September 4-5, 2012

A New Wave of Chinese Assertiveness: Roping off Scarborough Shoal, Oil Leases in Vietnams EEZ, Military Garrison on Land and Fishing Armada at Sea
Carlyle A. Thayer*
Introduction
This paper offers an overview of recent developments in the South China Sea in the period from December 2011 to the present. It is an update of developments in the South China Sea since the 1st Malaysian Institute of Maritime Studies (MIMA) Conference on the South China Sea.1 This paper is divided into five parts. Part 1 provides a brief background of developments from July 2011, when the Guidelines to Implement the Declaration on Conduct of Parties were adopted, until the onset of the standoff at Scarborough Shoal in April 2012. Part 2 discusses the confrontation between China and the Philippines at Scarborough Shoal and Sino-Vietnamese relations during the first half of the year. Part 3 discusses the eruption of tensions between China and Vietnam in June 2012 after a relative period of calm. China responded to Vietnams initiation of military surveillance flights over the Spratly Islands and adoption of a Law on the Sea in five ways: (a) China upgraded the administrative status of Sansha city; (b) China offered oil exploration leases in Vietnams Exclusive Economic Zone; (c) China announced the commencement of combat-ready naval patrols; (d) China dispatched thirty fishing vessels with an escort ship into disputed waters in the Spratly Islands; and (e) China established a military garrison on Woody Island. Part 4 discusses the status of ASEANs Code of Conduct in the South China Sea. Part 5 concludes by arguing that two contradictory trends are underway, and Chinas employment of new economic, commercial and military tactics to bolster its claims to the South China Sea will intensify China-United States strategic rivalry and make negotiating a binding Code of Conduct more difficult.

Part 1 ASEAN in Disarray


Part one provides an overview of developments from the 44th ASEAN Ministerial Meeting (AMM) in July 2011 to the 45th AMM in July 2012. In July 2011 China and ASEAN member states adopted the Guidelines to Implement the Declaration on Conduct of Parties. Over the course of the year ASEAN and Chinese senior officials discussed the implementation of the DOC. The adoption of the Guidelines led ASEAN to revive discussions on a Code of Conduct in the South China Sea. The key principles for the ASEAN COC were approved at the 45 th AMM. These positive developments were suddenly interrupted when a fierce internal ASEAN clash erupted at the 45th AMM between Cambodia, as ASEAN Chair, and the Philippines and
*

Emeritus Professor, The University of New South Wales at the Australian Defence Force Academy, Canberra. Email: c.thayer@adfa.edu.au. Revised September 10, 2012.
1

MIMA Conference on the South China Sea: Recent Developments and Implications for Peaceful Dispute Resolution, The Maritime Institute of Malaysia, Royal Chulan Hotel, Kuala Lumpur, Malaysia, December 12-13, 2011.

Vietnam (and other members), over how to characterize renewed Chinese assertiveness in the South China Sea (discussed in Part Three below).
Guidelines to Implement the DOC

In July 2011, the Guidelines to Implement the DOC were adopted after ASEAN dropped its insistence on prior consultation and agreed instead to promote dialogue and consultation among the parties. A new point was added to the Guidelines specifying that activities and projects carried out under the DOC should be reported to the ASEAN-China Ministerial Meeting.2 All the other points in the 2011 Guidelines remained unchanged from the original ASEAN draft tabled in 2005. ASEAN and Chinese senior officials commenced discussions on the implementation of the Guidelines. At a meeting held in Beijing from January 13-15, 2012, agreement was reached to set up four expert committees on maritime scientific research, environmental protection, search and rescue, and transnational crime. These committees were derived from the five cooperative activities mentioned in the 2002 DOC. Significantly no expert committee on safety of navigation and communication at sea was established due to its contentious nature.
Reviving the Code of Conduct

The agreement on DOC Guidelines led to the revival of the long-standing proposal by the Philippines for a COC that was included in the 2002 DOC. ASEAN senior officials began drafting the COC with the intention of reaching a common ASEAN position before presenting it to China for discussion. China initially took the position that the implementation of the DOC Guidelines should be given priority over the COC. China stated it would discuss the COC with ASEAN at an appropriate timing or when appropriate conditions were met.3 In January 2012, the Philippines circulated an informal working draft simply titled, Philippines Draft Code of Conduct. In discussions held by ASEAN senior officials during the first quarter of 2012 it became apparent that ASEAN members were divided on Articles III-VI in the Philippines draft. Some ASEAN members also shared reservations about being too prescriptive concerning dispute settlement mechanisms.4 It was at this point that China changed tack and sought a seat at the ASEAN discussions. The timing of Chinas involvement with ASEAN in drafting a COC quickly became a contentious issue within ASEAN. These tensions surfaced at the 20th ASEAN Summit held in Phnom Penh from April 3-4. Cambodia, the ASEAN Chair, pushed for Chinas inclusion in ASEAN discussions. The Philippines and Vietnam objected strongly and a compromise was reached. ASEAN would proceed on its

2 3

Guidelines to Implement the DOC, http://www.aseansec.org/documents/20185-DOC.pdf.

Carlyle A. Thayer, Sovereignty Disputes in the South China Sea: Diplomacy, Legal Regimes and Realpolitik, Presentation to International Conference on Topical Regional Security Issues in East Asia, co-sponsored by the Faculty of Asian and African Studies and the Ho Chi Minh Institute, St. Petersburg State University, St. Petersburg, Russian Federation, April 6-7, 2012, 7.
4

Carlyle A. Thayer, Is the Philippines an Orphan?, The Diplomat, May 2, 2012. http://thediplomat.com/2012/05/02/is-the-philippines-an-orphan/.

own to draft a COC, while communication with China would take place through the ASEAN Chair at the same time.5 The ASEAN SOM Working Group on the COC concluded its discussions on June 13, 2012 at its seventh meeting. According to an official statement, The meeting agreed to submit the draft ASEAN proposed key elements of the regional Code of Conduct in the South China Sea to the ASEAN SOM for consideration.6 The ASEAN SOM met in Phnom Penh from July 6-7 and forwarded the agreed draft to the ASEAN foreign ministers for deliberation at their 45 th AMM on July 9.
45th ASEAN Ministerial Meeting

Cambodia, as the ASEAN Chair for 2012, hosted the 45th AMM and related meetings in Phnom Penh from July 8-13.7 In his opening address Prime Minister Hun Sen stated that realising the ASEAN Community by 2015 is the top priority for ASEAN.8 With respect to the ASEAN Political-Security Community, Hun Sen declared, we should give emphasis to the implementation of the DOC [Declaration on Conduct of Parties in the South China Sea], including the eventual conclusion of Code of Conduct (COC) in the South China Sea [emphasis in original].9 At the end of the AMM formal discussions Kao Kim Hourn, Secretary of State in the Cambodian Ministry of Foreign Affairs, told reporters that the ASEAN foreign ministers had adopted the key elements of the COC and agreed to have the ASEAN senior officials meet with the senior official from China to discuss the (Code of Conduct) from now on.10 At the 45th AMM Cambodias Foreign Minister, Hor Namhong, assigned responsibility for drafting the joint communiqu summarizing the AMM deliberations to a working party of four foreign ministers: Marty Natalegawa (Indonesia), Anifah Aman (Malaysia), Albert del Rosario (Philippines) and Pham Binh Minh (Vietnam).11 Their 132-paragraph draft summarized the wide range of issues taken up by the AMM. The draft communiqu also summarized discussions on the South China Sea including the stand off at Scarborough
5 6 7

Thayer, Is the Philippines an Orphan?. Estrella Torres, Manila tack on China row wins Asean nod, Business Mirror, July 13, 2012.

The ASEAN-related meetings included: the ASEAN Post-Ministerial Conference with dialogue partners, the th nd 19 ASEAN Regional Forum, ASEAN Plus 3 Foreign Ministers Meeting and the 2 East Asia Summit Foreign Ministers Meeting.
8

Opening Address By Samdech Akka Moha Sena Padei Techo HUN SEN Prime Minister of the Kingdom of Cambodia At the Opening of the 45th ASEAN Foreign Ministers Meeting, Phnom Penh, 9 July 2012. http://asean2012.mfa.gov.kh/documents/150SPM_speech_khmer.pdf.
9

Martin Abbugao, Australian Associated Press, ASEAN pushed on South China Sea code, Herald Sun, July 9, 2012 and Agence France-Presse (AFP), Hun calls for ASEAN South China Sea code, The Australian, July 10, 2012.
10

Michael Lipin, Cambodia Says ASEAN Ministers Agree to Key Elements of Sea Code, Voice of America, July 9 2012; Michael del Callar, DFA chief: ASEAN agrees on key elements for Code of Conduct in West PHL Sea, GMA News, July 11, 2012; and Associated Press, Asean to take up code of conduct with China, Manila Standard Today, July 10, 2012 quotes Liu Weimin, spokesperson for Chinas Ministry of Foreign Affairs, as stating When conditions are ripe, China would like to discuss with Asean countries the formulation of the COC.
11

Ernest Z. Bower, China Reveals Its Hand on ASEAN in Phnom Penh, Southeast Asia from the Corner of 18 and K Streets, vol. III, No. 14, July 19, 2012, 2.

th

Shoal between China and the Philippines and Vietnams concerns about the award of oil exploration leases by the China National Offshore Oil Company within Vietnams Exclusive Economic Zone and on its continental shelf (both issues are discussed separately below). The wording of one paragraph in the South China Sea section of the joint communiqu became such a sticking point between Cambodia and the drafters of the joint communiqu that no communiqu was issued. This was unprecedented. Since ASEAN was founded in 1967 all forty-four previous AMMs had issued joint communiqus. Indeed, a media advisory announcing the 45th AMM, released by Cambodia on July 6, 2002, concluded, [a] Joint Communiqu will be adopted at the end of the Meeting.12 Cambodia argues that the failure of the AMM to adopt a joint communiqu rests squarely with the Philippines and Vietnam and their insistence on including a reference to Scarborough Shoal and EEZs in the final text. According to Cambodia, the actions by the Philippines and Vietnam prevented a consensus from being reached and Cambodia had no recourse but to withhold the joint communiqu.13
Ructions Over the Joint Communiqu

Media and other reporting reveal that discussions on the wording of the South China Sea paragraphs continued until the morning of July 13 without breaking the impasse. 14 Ernest Bower, who spoke to diplomats in Phnom Penh, wrote that after the four-member ministerial committee came up with a draft communiqu, [r]epeatedly, however, after taking the draft under consideration, Hor Namhong consulted with advisers outside of the meeting room and came back rejecting language referring to Scarborough Shoal and the EEZs, even after multiple attempts to find compromise.15 He said Cambodias view was that those were bilateral issues and therefore could not be mentioned in the joint statement. By one account, the original AMM joint communiqu went through a total of eighteen drafts.16 Over the four days following the 45th AMM and AMM Retreat, the Indonesian and Singaporean foreign ministers made a last-ditch effort to broker a compromise. They persuaded Vietnam and the Philippines to agree to a compromise on the wording. But repeated attempts to persuade Cambodias Hor Namhong failed. At their last meeting Foreign Minister Hor Namhong picked up his papers, and stormed out of the room arguing it was a matter of principle for ASEAN not to take sides in bilateral disputes.17 Finally,
12

Cambodia, Ministry of Foreign Affairs, The Forty-fifth ASEAN Foreign Ministers Meeting, Media Advisory, July 6, 2012. http://www.aseansec.org/documents/PRESS%20ADVISORY_45th%20AMM.pdf.
13

For a detailed account of discussions on the draft joint communiqu at the AMM Retreat consult: Carlyle A. Thayer, ASEANS Code of Conduct in the South China Sea: A Litmus Test for Community-Building?, The AsiaPacific Journal, Vol 10, Issue 34, No. 4, August 20, 2012. http://www.scribd.com/doc/103333615/ThayerASEANS-Code-of-Conduct-in-the-South-China-Sea-A-Litmus-Test-for-Community-Building.
14

Zsosmbor Peter and Kuch Naren, Cambodia Criticized for Asean Meeting Failure, The Cambodian Daily, July 14-15, 2012.
15 16 17

Bower, China Reveals Its Hand on ASEAN in Phnom Penh. Greg Torode, ASEAN Left on a Knife Edge, South China Morning Post, July 21, 2012.

Jane Perlez, Asian Leaders at Regional Meeting Fail to Resolve Disputes Over South China Sea, The New York Times, July 12, 2012.

according to an account by a Philippine official who attended the meetings in Phnom Penh, [t]he text of the proposed Joint Communiqus item/subhead on the South China Sea was drafted by the ASEAN foreign ministers and several revisions were made to make the text acceptable to all. However, the Cambodian Chair consistently rejected any proposed text that mentions Scarborough Shoal.18 The failure of ASEAN foreign ministers to issue a joint communiqu at the conclusion of the 45th AMM led to immediate public recriminations. On the morning of the last day, immediately after a special meeting failed to reach an eleventh hour compromise, the Philippines issued a statement taking strong exception to the decision by the ASEAN Chair not to issue a joint communiqu. Foreign Minister Hor Namhong hit back accusing the Philippines of attempting to hijack the AMM and declaring that the joint communiqu has become hostage to a bilateral issue.19 The Philippine Undersecretary for Foreign Affairs, Erlinda Basilio, penned a personal account entitled, Why There Was No ASEAN Joint Communiqu that provoked a Cambodian diplomatic response.20
Chinas Shadow Over the 45th AMM

Unnamed diplomatic sources leaked information to the press suggesting collusion between China and Cambodia. One senior diplomat was quoted as stating, China bought the chair, simple as that and pointed to comments by Foreign Minister Yang Jiechi thanking Prime Minister Hun Sen for supporting Chinas core interests.21 A veteran journalist reported that when the first draft of the joint communiqu was submitted to the ASEAN Chair the Cambodians, in a breach of ASEAN protocol, showed it to the Chinese, who said it was unacceptable unless the South China Sea reference was removed. So the Cambodians sent it back for amendment.22 Analysts are divided on the details of and extent to which China influenced Cambodias decision to block the AMM joint communiqu but few analysts argue that Cambodias acted independently. Kishore Mahbubani, a former senior Singaporean diplomat, wrote the whole world, including most ASEAN countries, perceived Cambodias stance as the result of enormous Chinese pressure.23 Amitav Acharya, wrote, [t]here is little question that Hun Sens refusal to accommodate Philippines and Vietnam resulted at least partly from Chinese pressure. According to a highly placed source, the Chinese specifically reminded the Cambodians that [Norodom] Sihanouk had accepted the Chinese claims to the South China
18 19

Basilio, Why there Was No ASEAN Joint Communiqu and Basilio, What happened in Phnom Penh?

Zsosmbor Peter and Kuch Naren, Cambodia Criticized for Asean Meeting Failure, and Prak Chan Thul and Stuart Grudgings, SE Asia meeting in disarray over sea dispute with China, Reuters, July 13, 2012.
20

Basilio, What happened in Phnom Penh?, The Cambodian Ministry of Foreign Affairs and Cambodian ambassadors in Thailand, the Philippines and Singapore wrote letters to the editors of newspapers replying to th critical reports on Cambodias actions at the 45 AMM. Intemperate language by Cambodias ambassador to the Philippines led to his summons by the Department of Foreign Affairs. He failed to attend. Cambodia later recalled its ambassador.
21

Jane Perlez, Asian Leaders at Reginal Meeting Fail to Resolve Disputes Over South China Sea, The New York Times, July 12, 2012.
22 23

Roger Mitton, ASEAN Struggles for unity, The Phnom Penh Post, July 23, 2012.

Kishore Mahbubani, Is China Losing the Diplomatic Plot? Project Syndicate, July 26, 2012. http://www.project-syndicate.org/commentary/is-china-losing-the-diplomatic-plot.

Sea.24 A Chinese scholar close to the Ministry of State Security revealed, [w]e co-ordinated very well with Cambodia in that case [blocking objectionable wording in the 45th AMM joint communiqu] and prevented an incident which would have been detrimental to China.25

Part 2 Chinas Relations with the Philippines and Vietnam


This part is divided into two sections. The first provides an overview of Chinas relations with the Philippines in the first half of 2012. It discusses a continuing series of incidents in the West Philippine Sea that may be characterized as everyday security tensions between Beijing and Manila. Next, the analysis turns to the extraordinary six-week confrontation at Scarborough Shoal. This standoff was anything but normal. China assertively challenged and overrode sovereignty in the Philippines EEZ. The second section reviews Sino-Vietnamese relations following the ground-breaking visit of the Secretary General of the Vietnam Communist Party (VCP), Nguyen Phu Trong, to Beijing and the adoption of Agreement on Fundamental Principles to Guide the Settlement of Sea Disputes in October 2011.26 During the first half of 2012 Vietnam and China exchanged highlevel visits. Although there were six incidents in the South China Sea, like the incidents involving China and the Philippines, they may be classified as everyday security tensions. Up to June, all appeared quiet on the East Sea front.27 When Vietnam initiated military air patrols over the Spratlys, and more particularly when its National Assembly adopted the Law on the Sea, China reacted by assertively by applying pressure on five fronts. These are discussed below.
China-Philippines Relations

On January 14, 2012, on the sidelines of the ASEAN China Senior Officials Meeting, the Philippines and China held their 17th Foreign Ministry Consultations in Beijing.28 This meeting focused on eleven areas of cooperation contained in the already agreed Plan of

24 25

Amitav Acharya, The end of ASEAN centrality?, Asia Times Online, August 8, 2012.

Chen Xiangyang, China Institutes of Contemporary International Relations, quoted by Kathirn Halle, Bejing considers stronger foreign ties, The Financial Times, August 15, 2012. Later, Premier Wen Jiabao thanked Cambodia for its important role in maintaining the overall situation of friendly relations between China and ASEAN, Xinhua, September 2, 2012.
26

The agreement committed both parties to seek mutually acceptable fundamental and lasting solutions to sea-related disputes. In the interim, the two sides shall actively discuss provisional and temporary measures without affecting each sides positions and policies, including the active consideration and discussion on cooperation for mutual development [hop tac cung phat trien] The two parties also agreed to speed up negotiations to demarcate the waters forming the mouth of the Gulf of Tonkin and actively discuss cooperation for mutual development in these waters. The agreement also specified if the disputes involve other countries, the consultations shall include all other parties concerned.
27

Taken from the title of Carlyle A. Thayer, From Aggressive Assertiveness to All Quiet on the East Sea Front: nd The South China Sea as an Issue in China-Vietnam Relations, Presentation to 2 Conference on The South China Sea and Asia Pacific in Transition: Exploring Options for Managing Disputes, sponsored by the Center for Strategic & International Studies, Washington, D.C., June 27-28, 2012. This paper surveyed developments in the South China Sea between China and Vietnam in the year since the first CSIS conference on the South China Sea was held. http://www.scribd.com/doc/98404196/Thayer-South-China-Sea-All-is-Quiet-on-the-East-SeaFront.
28

Jerry E. Esplanada, China ties still friendly DFA, Philippine Daily Inquirer, February 24, 2012.

Action and Program for the Philippines-China Years of Friendly Exchanges, 2012-2013.29 Agreement was reached to promote the comprehensive development of bilateral relations in the fields of energy, science and technology, disaster mitigation and adaptation, law enforcement and maritime cooperation. According to the Foreign Affairs Secretary del Rosario, this meeting did not specifically address maritime cooperation under the terms of the 2002 DOC or a more binding COC.30 During the first four months of 2012 there were three developments in Sino-Philippine relations that illustrate tensions continued over sovereignty disputes in the South China Sea. These developments may be characterized as more or less routine. Both China and the Philippines immediately protested an action by the other party in disputed areas lest silence be construed as acquiescence. However, the third incident developed into a standoff that has yet to be resolved. In late February the Philippines Department of Energy announced that it would proceed to offer fifteen offshore oil and gas exploration licenses. Two of the licenses included waters near Palawan that are claimed by China, Area 3 and Area 4.31 China responded by declaring, [i]t is unlawful for any country or company to explore oil and gas in sea areas under Chinese jurisdiction without the permission of the Chinese government.32 Defense Secretary Voltaire Gazmin later stated that [w]e are amenable to the (Chinese offer of joint cooperation) for as long as it conforms to our laws.33 On March 21, 2012 it was reported that the Philippines would upgrade facilities on Pagasa Island by building a roll-on roll-off dock for ferryboats. The Chinese Foreign Ministry immediately expressed its objections: China opposes any countrys illegal activities that infringe upon Chinas sovereignty over the Nansha [Spratly] Islands Relevant countries should abide by the spirit of the Declaration on Conduct of Parties in the South China Sea and avoid taking any move that may complicate the dispute so as to jointly maintain peace and stability in the South China Sea.34
Standoff at Scarborough Shoal

On April 10, the Philippines Navy dispatched the frigate BRP Gregorio del Pilar to Scarborough Shoal to investigate the presence of eight Chinese fishing boats. An armed boarding party from the frigate discovered that the fishing boats were in possession of a
29

J. P. D. Poblete, ASEAN, China tackle cooperation, BusinessWorld, January 15, 2012. Under the PhilippinesChina Years of Friendly Exchanges, 2012-2013 two former Chinese ambassadors to the Philippines made a goodwill visit from February 17-23, 2012. See: Jerry E. Esplanada, China ties still friendly - DFA, Philippine Daily Inquirer, February 24, 2012.
30 31

J. P. D. Poblete, ASEAN, China tackle cooperation, BusinessWorld, January 15, 2012.

Thomas Hogue, Philippines set to award offshore oil, gas blocks despite China claims: report, Platts, February 28, 2012; Associated Press, Philippines reignites row with China over oil exploration rights, The Guardian, February 29, 2012.
32 33

Zhao Shengnan. Manilas plan for S. China Sea illegal, China Daily, February 29, 2012.

Desiree Caluza, Philippines ready to take up China offer for talks on joint Spratly development, Inquirer Northern Luzon, March 17, 2012.
34

Pia Lee-Brago, China hits plan for Pag-asa devt, The Philippine Star, March 27, 2012 and Philippines to build dock on South China Sea island, Peoples Daily, March 23, 2012.

large illegal catch of coral, giant clams and live sharks. Before the fishing boats could be detained, two China Marine Surveillance vessels interposed themselves between the fishermen and the frigate thus preventing any further action. The Philippines attempted to diffuse the matter by replacing the warship with a Coast Guard cutter. China reinforced its presence with the dispatch of an armed Fishery Law Enforcement Command ship. All of the Chinese fishing boats and their illegal catch left the shoal unhindered. Efforts to resolve this incident though diplomatic means foundered as both parties claimed that Scarborough Shoal is an integral part of their national territory. At one point China deployed nearly one hundred surveillance ships, fishing boats, and utility craft in the lagoon at Scarborough Shoal.35 While the standoff continued, China resorted to economic pressure on the Philippines. China extended its annual unilateral fishing ban (May-August) to cover the waters around Scarborough Shoal. In April-May, Chinas quarantine officials refused to allow the import of hundreds of containers of bananas shipped from the Philippines claiming they were infested.36 This action hit an economic nerve as the Philippines exports nearly a third of its banana crop to China. Chinese inspectors also delayed the importation of other fruit from the Philippines such as pineapples, coconuts, papayas and mangoes. On August 14, the Philippine Department of Agriculture stated that China had begun relaxing its restrictions on banana imports.37 While the restrictions on bananas were in place Chinese travel agencies cancelled tourist charter flights to the Philippines on the grounds that the safety of Chinese tourists was threatened. On June 4, China and the Philippines reached verbal agreement to withdraw vessels sheltering in the lagoon at Scarborough Shoal and for China to remove its barrier from the entrance to the shoal. The barrier consisted of a thick rope and fishing nets held up by buoys and dinghies tied together across the mouth of the lagoon to prevent entry.38 Due to an impending typhoon, President Aquino ordered the withdrawal of the Philippine Coast Guard cutter and Bureau of Fisheries and Aquatic Resources vessel from the shoal on June 15; China failed to reciprocate.39 China temporarily withdrew two surveillance ships and fishing boats. On June 26, a spokesperson for the Philippine Department of Foreign Affairs announced that six Chinese fishing boats and seventeen smaller dinghies returned to lagoon during the week and five Chinese government surveillance ships were deployed outside the lagoon.40

35 36

Manuel Mogato, Reuters, Philippines pulls ships from disputed shoal due to weather, June 16, 2012.

Kesha West, Banana crisis blamed on Philippines-China dispute, Newsline, Australia Network News, June 29, 2012.
37 38

Jialin Tang, Philippines says China eases restrictions on banana imports, Morning Whistle, August 26, 2012.

Michaela del Callar, DFA: China boats blocking PHL vessels from Panatag Shoal, GMA News, July 18, 2012. China began putting up barriers in May and ignored protests by the Philippines. See: Fat Reyes, 3 Chinese vessels still at Scarborough Shoal, says DFA, Global National Inquirer, August 24, 2012.
39

Erlinda F. Basilio, Why there Was No ASEAN Joint Communiqu, Republic of the Philippines, Department of Foreign Affairs, Public Information Services Unit, July 19, 2012; and Erlinda Basilio, What happened in Phnom Penh? The Philippine Star, July 19, 2012.
40

Jim Gomez, Associated Press, China boats return to disputed area: claim, Herald Sun, June 27, 2012.

10 China-Vietnam: All Quiet on the East Sea Front

In December 2011, Vice President Xi Jinping made an official visit to Hanoi and met with all of Vietnams top party and state leaders. Xis visit was primarily a get to know you visit as he is widely viewed as Hu Jintaos heir apparent. Both sides stressed the importance of the comprehensive nature of their bilateral relationship and focused on such major issues as trade, educational and youth cooperation, and party-to-party ties. As for the South China Sea, the two leaders reaffirmed past commitments to refrain from the use of force, respect each others interests and settle the dispute through international law. The first high-level visit in 2012 was undertaken by Vietnams new Foreign Minister, Pham Binh Minh who made an official trip to Beijing from February 12-15. Minh met with his counterpart, Yang Jiechi, and held separate meetings with Zhou Yongkang, a member of the Standing Committee of the Politburo of the Chinese Communist Party (CCP) Central Committee and State Counsellor Dai Bingquo.41 Binhs visit was rumoured to have included preparations for the state visit of President Truong Tan Sang later in the year. The South China Sea issue was discussed. According to China Foreign Ministry spokesperson, China is ready to consider exploring solutions to the South China Sea disputes with all relevant parties under reasonable conditions [emphasis added].42 The next high-level visit from Vietnam was undertaken that same month by Politburo member To Huy Rua, who heads VCP Central Committees Organisation Commission. Rua met with his counterpart, Li Yuanchao, who is a member of the CCP Politburo, Secretary of the CCP Secretariat and head of the Central Committees Organisation Department. Ruas visit was not directly related to South China Sea issues and focused on ways to advance party-to-party relations as one component of the comprehensive strategic partnership.43 Ruas visit illustrated the effort by Vietnam and China to prevent South China Sea issues from spilling over and affecting bilateral relations generally.
South China Sea Tensions Persist

During the first quarter of 2012 there were six developments in Sino-Vietnamese relations that illustrate tensions continued to roil the South China Sea territorial disputes. These incidents may be characterized as more or less routine or simply everyday security tensions. Both Vietnam and China immediately protested any action by the other party in disputed areas lest silence be construed as acquiescence. The six incidents are as follows: On January 12, 2012 Chinas Ministry of Agriculture announced its annual fishing ban in the South China Sea from May 16-August 1 and threatened to punish any fishing vessels violating the ban. This prompted an immediate protest by Vietnams Foreign Ministry to Chinese diplomatic officials. Vietnam stated it had sovereign and jurisdictional rights over the Exclusive Economic Zone and continental shelf over both the Paracel and Spratly islands.44

41 42 43 44

Xinhua, Senior Official Expects Stronger China-Vietnam Ties, February 14, 2012. Cheng Guangjin, Better ties hold key to S China Sea disputes, China Daily, February 14, 2012 Xinhua, China, Vietnam agree to further cooperation, Peoples Daily, February 15, 2012

Deutsche Press-Agentur, Chinese fishing ban stokes protest from Vietnam amid sea dispute, January 20, 2012.

11

Perhaps the most serious incident in the first quarter of the year took place on February 22 when Vietnam alleges that a Vietnamese fishing craft was shot at and damaged by a China Marine Surveillance vessel near the Paracel Islands. The Vietnamese alleged that the Chinese tried to rob the eleven Vietnamese fishermen and blocked them from seeking refuge in a storm. Vietnam lodged a formal protest with the Chinese Embassy in Hanoi demanding compensation and an end to attacks on fishermen. China reported that a China Marine Surveillance ship carried out a routine patrol in waters around Xisha (Paracel) Islands and denied that any shooting incident took place.45 On March 3, 2012 Chinese authorities detained twenty-one Vietnamese fishermen and their two boats for fishing in waters near the Paracel islands. Chinese authorities demanded payment of 70,000 yuan (US $11,000) for their release.46 Vietnams Foreign Ministry officials handed a protest note to the Chinese Embassy. Chinas Foreign Ministry offered this view: [r]ecently, more than 100 Vietnamese fishing boats entered the waters around the Paracel Islands for illegal fishing. Unable to drive them off, relevant Chinese authorities investigated and dealt with a Vietnamese fishing boat and 21 fishermen in accordance with the law... China has irrefutable sovereignty over the Paracel Islands, and there is no dispute over this. Vietnamese fishing activities infringe on Chinas sovereignty and maritime rights.47 On March 9, 2012 an official from the Policy and Regulation Division of the Hainan Tourism Development Commission announced that his commission would work with the National Administration of China to expand tourist activities in the Paracel archipelago. 48 Earlier, on November 22, 2011, Hunan Province government authorities reportedly issued a license to a travel company to send tourists to the Paracel Island. This action was immediately protested by a Vietnamese Foreign Ministry spokesperson who declared that every foreign activity that occurs there without the countrys permission is a violation of its sovereignty.49

45

Xinhua, China denies shooting at Vietnamese boat, February 27, 2012; Vietnam blasts China for assault on fishermen, Tuoi Tre, March 1, 2012; Jeremy Page, Beijing in Fresh Sea Row With Hanoi, The Wall Street Journal, March 1, 2012; Associated Press, Vietnam protests to China over alleged assault on fishermen in disputed waters, The Washington Post, March 1, 2012; and Reuters, China justifies expulsion of illegal Vietnam fishermen, March 1, 2012;
46 47

Anh Ngoc, Viet Nam yeu cau Trung Quoc than gay ngu dan va tau ca, The Gioi, March 21, 2012.

Reuters, China detains Vietnamese fishermen in disputed South China Sea, The Times of India, March 22, 2012; Agence France-Presse, Vietnam, China in new spat over fishermen detentions, March 22, 2012; Marianne Brown, China Urges Vietnam to Stop llegal Poaching Near Disputed Waters, Voice of America News, March 22, 2012.
48 49

UCA News, China, Vietnam In Sovereignty Spat In South China Sea, Eurasia Review, March 16, 2012.

He Dan, Xisha tourism to be developed, China Daily, March 10 2012 and Vietnam condemns China for tourism activity on archipelago, Thanh Nien News, November 25, 2011.

12

On March 12, 2012 another exchange of words occurred when provincial authorities in Khanh Hoa province announced they were sending six Buddhist monks to re-establish temples that had fallen into disrepair on the Spratly Islands.50 On March 15, 2012 Vietnams Foreign Ministry accused China of violating its sovereignty by permitting the China National Offshore Oil Corporation (CNOOC) to open bidding for nineteen oil exploration blocks near the Paracel Islands. Vietnam specifically singled out Block 65/24; this block is the southernmost offshore area that China is seeking to develop. Vietnam also complained about live-firing exercises also conducted in waters around the Paracels.51

Vietnam-Philippine Cooperation

Vietnam and the Philippines agreed to conduct coordinated maritime patrols in waters where the two countries have overlapping claims, according to a statement released by the Philippines Navy.52 This agreement was reached during discussions between Philippine Navy Flag Officer in Command Vice Admiral Alexander Pama and Vietnam Peoples Army Navy Commander Admiral Nguyen Van Hien held in Vietnam from March 11-14, 2012. The two navies plan to conduct joint naval patrols under the terms of the SOP [Standard Operating Procedures] on Personnel Interaction in the Vicinity of Southeast Cay and the Northeast Cay Island between the VPN [Vietnam Peoples Navy] and PN [Philippine Navy] as spelled out in a Memorandum of Agreement reached in October 2011. Admirals Pama and Hien also signed a MOU on the Enhancement of Mutual Cooperation and Information Sharing between the two navies; the MOU includes a provision for a hotline between the operations centres of the two navies and possible cooperation in shipbuilding. In response to these developments, the Chinese Foreign Ministry issued a standard statement that China has indisputable sovereignty over the Nansha (Spratly) Islands and their adjacent waters. China is firmly opposed to other countries acts that undermine Chinas sovereignty. Maintaining peace and stability of the South China Sea is in line with the common and fundamental interests of all countries in this region. 53 The Foreign Ministry statement also repeated a formulation used on past occasions: [w]e hope relevant countries will earnestly abide by the spirit of the Declaration on Conduct of Parties in the South China Sea (DOC) signed between China and ASEAN countries and refrain from taking
50

BBC News Asia, Vietnam to send Buddhist monks to Spratly Islands, March 12, 2012 and Benjamin Cost, Occupy Spratly Islands! Vietnamese monks sent to live on disputed South China Sea territory, http://shanghaiist.com/2012/03/13/. Accessed March 14, 2012.
51

Associated Press, Vietnam accuses China of violating sovereignty, Newsday March 15, 2012; Brian Spegele, Vietnam Protests Cnoocs Plans in Disputed South China Sea, The Wall Street Journal, March 16, 2012; Bloomberg News, Vietnam Says Cnoocs South China Sea Bids Violate Territory, March 16, 2012; UCAN News, China, Vietnam In Sovereignty Spat In South China Sea, Eurasia Review, March 16, 2012; Voice of America News, China Detains Vietnamese Fishermen in New South China Sea Dispute, March 21, 2012; Agence France-Presse, China holding 21 Vietnamese fishermen: official, March 21, 2012.
52

Rene Acosts, PHL, Vietnam navies to jointly patrol Spratlys, Business Mirror, March 27, 2012 and Barbara Mae Dacanay, Philippines and Vietnam agree to hold joint war games in the South China Sea, Gulf News, April 1, 2012.
53

Quoted in Pia Lee-Brago, China bucks joint drills of Phl, Vietnam, The Philippine Star, April 1, 2012. See also: Shannon Van Sant, China Warns Against Joint Exercises in South China Sea, Voice of America News, March 29, 2012 and Kyodo, China warns Vietnam, Philippines against damaging peace in sea, Mainichi, March 30 2012.

13

actions that will complicate and amplify the South China Sea issue or impair peace and stability of the South China Sea.

Part 3 Eruption on the East Sea Front


In June the quietness on the East Sea front came to an end with the eruption of heightened tensions between China and Vietnam. In mid-year Vietnam announced it was commencing military air patrols over the East Sea and its National Assembly passed a Law on the Sea reasserting legal jurisdiction over Vietnams EEZ and the Paracel and Spratly archipelagos. China responded with an offensive on five fronts (1) Sansha City was upgraded with continuing administrative jurisdiction over the South China Sea; (2) oil concessions lying in Vietnams EEZ were put out to international tender; (4) combat ready patrols were announced; (4) a fleet of thirty fishing boats was escorted to the Spratly islands to establish a fishing industry in disputed waters; and (5) a military garrison was established in the Paracels. The sections below deal with each of these five fronts in turn.
Vietnamese Military Air Patrols

On June 15, according to the Vietnamese media, two Vietnamese air force Su-27 jet fighters conducted a two-hour patrol over the Spratly Islands.54 Vietnamese military sources stated that the patrols were routine and would continue. On June 21, Hong Lei, a spokesperson for Chinas Foreign Ministry told a press conference that the air patrol was a serious violation of Chinas sovereignty. Hong Lei urged Vietnam to strictly abide by the DOC and avoid actions escalating or complicating the situation, and make efforts to safeguard regional peace and security.55 The Chinese media downplayed the significance of the Vietnamese air patrols. One report offered this assessment:
[Vietnams] modernization plan may not help the Vietnamese air force defeat Chinas PLA Air Force in a future conflict, according to China Radio International. The 12 Su-27 fighters can only play a limited role in missions supporting Vietnamese ground and naval forces due to the limitation of its payload They cannot conduct long-range missions because they are not able to be refuelled in mid-air. Without information provided by early warning aircraft, even the more advanced Su-30MK2Vs would be unable to attack effectively in formation. Even if Vietnam is successful in acquiring 72 Su-30 fighters by 2015, the overall combat effectiveness of its air force will still not be greatly 56 enhanced, the Chinese media reported.

Law on the Sea

On June 21, the thirteenth legislature (3rd session) of Vietnams National Assembly formally adopted the Law of the Sea of Viet Nam (Luat Bien Viet Nam).57 This law covered Vietnams baseline, internal waters, territorial sea, contiguous zone, exclusive economic zone, continental shelf, islands, the Paracel and Spratly archipelagos and other archipelagos
54 55

Thanh Nien, June 17, 2012.

China slams Vietnams island patrols, China Daily, June 19, 2012 and Xinhua, China dissatisfied over Vietnams island patrols: spokesman, June 20, 2012.
56 57

Beijing downplays threat of Vietnams air force, WantChinaTimes.com, June 21, 2012.

The official text in Vietnamese and an unofficial translation prepared by Vietnams Ministry of Foreign Affairs may be found at: Carlyle A. Thayer, Viet Nam Law of the Sea, Thayer Consultancy Background Brief, August 5, 2012. http://www.scribd.com/doc/101998223/Thayer-Vietnam-s-Law-on-the-Sea.

14

under the sovereignty, sovereign rights and jurisdiction of Viet Nam.58 The law will take effect from January 1, 2013. Vietnams Law of the Sea had been under consideration for several years.59 It was due to be adopted in 2011 as an assertion of Vietnams legal claims under international law, including the United Nations Convention on Law of the Sea, at a time of rising tensions in the South China Sea. The law was withheld so as not to undermine the visit of party Secretary General Nguyen Phu Trong to China in October and the return visit to Vietnam by Vice Premier Xi Jinping in December. According to Vietnamese sources, Chinese Embassy officials were aware that Vietnam was drafting the Law on the Sea and made representations urging Vietnam not to proceed. Chinese officials were duly informed that Vietnam intended to proceed. It came as no surprise to the Chinese when Vietnams National Assembly adopted the law. Chinas Vice Foreign Minister Zhang Zhijun immediately summoned Vietnams Ambassador in Beijing, Nguyen Van Tho, to lodge a strong protest. At the same time, Chinas Foreign Ministry issued a statement quoting the vice minister as stating, Vietnams Maritime Law, declaring sovereignty and jurisdiction over the Paracel and Spratly Islands, is a serious violation of Chinas territorial sovereignty and called for an immediate correction. China expresses its resolute and vehement opposition.60 Vietnams Ministry of Foreign Affairs responded by issuing a statement that declared it is regrettable that China reacted with unreasonable criticism against Viet Nams legitimate conduct.61 The statement drew attention to the fact that the Law of the Sea is the continuation of a number of provisions of Viet Nams existing laws. This is not a new matter Finally the statement reiterated Vietnams policy of settling difference and disputes in the South China Sea by peaceful means on the basis of international laws, including UNCLOS and the DOC. A day later (June 22), the Foreign Affairs Committee of Chinas National Peoples Council approved a letter to be sent to its Vietnamese counterpart, the Committee on Foreign Affairs of the National Assembly. The letter stated that Vietnams Law on the Sea violates the consensus reached by both leaders, as well as the principles of the Declaration on Conduct of Parties in the South China Sea.62

58 59

Luat Bien Viet Nam, Article 1.

It should be noted that in December 2009 the Standing Committee of Chinas National Peoples Congress passed a Law on Sea Island Protection to protect the marine eco-system and promote sustainable development. This law entrenched Chinas sovereignty claims and strengthened the role of the State Oceanic Administration in monitoring compliance.
60

Jane Perlez, Vietnam Law on Contested Islands Craws Chinas Ire, The New York Times, June 21, 2012 and Reuters, China says Vietnam claims to islands nuli and void, June 21, 2012.
61

Statement of the Spokesman of the Ministry of Foreign Affairs of Viet Nam, June 21, 2012, Embassy of the Socialist Republic of Vietnam in the Kingdom of Thailand, June 233, 2012.
62

Xinhua, China urges Vietnam to correct erroneous maritime law, China Daily, June 22, 2012

15 Shansha City Upgrade

Within hours of Vietnam adopting its Law on the Sea, in a tit-for-tat response, Chinas State Council issued a statement raising the administrative status of Sansha city from county-level to prefecture level with continuing jurisdiction over the Paracel (Nansha) and Spratly (Xisha) and the Macclesfield Bank (Zhongsha) and surrounding waters.63 Sansha City is located on Woody (Yongxing) island and has a population of just over 1,000 and an area of 13 square kilometres. It has administrative responsibility over 2 million sq. km of sea. Both Vietnam and the Philippines protested to China about the elevation of Sansha to prefecture level. Vietnam lodged a protest with the Chinese Foreign Ministry claiming that Chinas establishment of so-called Sansha City violated international law, seriously violating Vietnam sovereignty over the Paracel and Spratly archipelagos.64 The Philippines handed a note verbale on June 28 to Chinas Ambassador Ma Keqing.65 Immediately after the State Council announcement, the Hainan province legislature made preparations to hold elections to select Sansha Citys first peoples committee. The elections were held on July 21 and 45 deputies were selected to the municipal peoples congress. The creation of Sansha City was formally announced at ceremonies held July 24.
CNOOC Oil Leases in Vietnams EEZ

On June 23, two days after the passage of Vietnams Law on the Sea, Chinas state-owned China National Offshore Oil Company issued an invitation to foreign companies to bid for nine offshore open blocks for exploration and development.66 Although CNOOCs statement claimed that the waters were under the jurisdiction of the Peoples Republic of China, in fact they were located wholly with in the 200 nautical-mile EEZ claimed by Vietnam under the provisions of UNCLOS (but also to eastern side of Chinas u-shaped line).67 Luong Thanh Nghi, the official spokesperson for Vietnams Ministry of Foreign Affairs, issued a formal protest on June 26. Nghi called CNOOCs offer illegal and a serious violation of Vietnams sovereignty, jurisdictional rights and legitimate national interests.68 The next day the General Director of Petrovietnam, Do Van Hau, held a press conference. Hau pointed out that these blocks lie deeply on the continental shelf of Vietnam and overlap with Vietnams blocks 128 to 132 and 145-156. Hau noted that foreign oil companies were
63 64

Perlez, Vietnam Law on Contested Islands Craws Chinas Ire,

Agence France-Presse and Associated Press, Sansha: Chinas newest toehold in disputed sea, Philippine Daily Inquirer, July 26, 2012.
65

Michaela Del Calla, PHL hands Ma Keqing signed protest over Sansha City, GMA News, July 5, 2012 and Jim Gomez, Philippines protests Chinas establishment of a new city claiming entire South China Sea, Associated Press, July 5, 2012.
66

China National Offshore Oil Company, Press Center Notification of Open Blocks in Waters Under the Jurisdiction of the Peoples Republic of China, June 13, 2012. http://en.cnooc.com.cn/data/html/news/201206-23/english.322127.html,
67

CNOOC: Seeking Foreign Firms to Jointly Operate Nine Offshore Blocks, Dow Jones Newswires, June 25, 2012 and Marianne Brown, Tension Mounts Between Vietnam, China, Voice of America, June 28, 2012.
68

Remark by Vietnamese Foreign Ministry Spokesman Luong Thanh Nghi on June 26, 2012, Ministry of Foreign Affairs, http://www.mofa.gov.vn/en/tt_baochi/pbnfn/ns120627053317/newsitem_print_preview and Song Yen Ling and Dao Dang Toan, Tensions rise as China offers blocks in waters offshore Vietnam, Platts.com News Feature, June 29, 2012. http://www.platts.com/newsfeature/2012/chinavietnam/index.

16

currently operating in those blocks. Indias ONGC Videsh Limited was operating in block 128; Russias Gazprom was operating in blocks 129-133; ExxonMobile was operating in blocks 156-158, and Vietnams PVEP (Petrovietnam Exploration Production) was operating in blocks 148-149.69 According to Stephanie Kleine-Ahlbrandt, a Beijing-based analyst with the International Crisis Group, up to June 2012 CNOOC had been unable to obtain approval for exploration in these disputed waters. In her assessment, CNOOC received approval from Chinas top leadership for its actions and this raised tensions to a new level reflecting a change in Chinas policy.70 Laban Yu, an oil and gas analyst with Jeffries Hong Kong, Ltd. offered the view that CNOOCs bidding process had been commandeered by Chinas Ministry of Foreign Affairs to use for political posturing.71 Other analysts noted that CNOOC usually conducted its joint operations with foreign companies in relatively shallow water and its offer of leases in Vietnams EEZ appeared politically motivated and designed to bolster Chinas territorial claims.72 Other analysts noted that the location of the bids were more likely to contain gas than oil. Given the low price of natural gas in China, and the distance of these blocks from Chinas mainland, it would not be commercially feasible to construct pipelines. These analysts also concluded that CNOOCs bids were more about politics than about earnings.73
Combat-Ready Naval Patrols

On June 28, Geng Yangsheng, a spokesperson for Chinas Ministry of Defence, revealed that China had commenced combat-ready patrols in disputed waters in the South China Sea. When asked how China would reply to Vietnams recent air patrols over the Spratly islands, Geng replied the Chinese military has already set up a normal, combat-ready patrol system in seas under our control to protect national sovereignty and our security and development interests.74 Geng also noted that establishing a military garrison in Sansha was under consideration (see below). In an embarrassing incident for China, one of its frigates on routine patrol ran aground near Half Moon Shoal near Palawan island on July 11. 75 The frigate reportedly had been intimidating Philippine fishing craft found in the area. Six PLAN ships and smaller utility boats came to the frigates rescue and refloated it on July 15. The frigate left the area.76
69 70

Vietnam News Agency, PetroVietnam protests Chinese companys intl oil bidding, June 27, 2012.

Quoted in Ben Bland and Gwen Robinson, China-Vietnam row hits energy groups, The Financial Times, June 27, 2012.
71 72

Bland and Robinson, China-Vietnam row hits energy groups.

Wayne Ma and James Hookway, Vietnam Spars With china Over Oil Plan, The Wall Street Journal, June 27, 2012.
73 74

Ma and James Hookway, Vietnam Spars With china Over Oil Plan.

Quoted in Zhao Shengnan and Zhang Yunbi, China Pledges to protect maritime sovereignty, China Daily, June 29, 2012 and Sutirtho Patranobis, China to set up new military base in south China sea, Hindustan Times, June 28, 2012.
75 76

Agence France-Presse,China navy ship stranded in disputed waters, July 13, 2012.

Manuel Mogato and Ben Blanchard, China frigate heads home, averts S. China Sea standoff, Reuters, July 15, 2012; Jim Gomez, Associated Press, China removes grounded warship, easing sea tensions, The Christian Science Monitor, July 15, 2012; and Edward Wong, Freed From Shoals, Warship Heads Back to China, The New York Times, July 16, 2012.

17

This is a significant development because up to now the PLAN has played a relatively lowkey behind-the-scenes role in South China Sea incidents. Chinas surveillance patrols have been mainly conducted by ships belonging to the China Maritime Surveillance (CMS) force or the Fishery Law Enforcement Command (FLEC).
Fishing Armada Sets Sail

On June 26, China deployed a flotilla of four CMS ships from Sanya (Hainan island) to the Spratly Islands. The CMS ships are under the jurisdiction of the State Oceanographic Administration. On arrival they broadcast a statement in Chinese, English and Vietnamese proclaiming sovereignty over the Paracel and Spratly islands.77 On July 2 the flotilla conducted a formation drill near Yongshu Reef ()78 before proceeding to Huayang Reef () located in the southwest of the Spratly islands.79 While on patrol the Chinese flotilla encountered a Vietnamese ship and forced it to turn back, an apparent breach of freedom of navigation.80 On July 12, China dispatched a fleet of thirty fishing boats from Hainan to Yougshu Reef. The Chinese media reported that it was the largest fishing fleet to be dispatched from Hainan and would remain in the area from five to ten days. 81 The fishing boats were accompanied by a 3,000 tonne supply vessel and shepherded by a FLEC ship, the Yuzheng-310. On July 17, the fleet moved its operations to waters off Zhubi Reef ().82 The Philippines immediately issued a warning to the Chinese fishing boats not to violate its EEZ. A Philippine Coast Guard vessel was dispatched to monitor the fleets activities.83 According to the captain of a Chinese fishing boat that took part in this expedition, the purpose was a trial by Hainan Province to develop the fishing industry in the Spratlys. Hainan province officials told the press that the eighteen-day operation (July 12-19) marked the beginning of the province gradually moving from offshore fishing to ocean fishing.84 On August 1, when Chinas unilateral fishing ban expired, Xinhua New Agency quoted maritime officials in Hainan to the effect that 9,000 Chinese fishing boats were ready to take

77

Press Trust of India, China rushes surveillance ships to islands claimed by Vietnam, The Times of India, July 3, 2012.
78 79

Or Fiery Cross Reef in English, da Chu Tap in Vietnamese and Kagitingan Reef in Filipino.

Calderon Reef in Filipino and Chu Vin in Vietnamese. Xinhua, China patrol ships reach South Chins Sea reef, July 1, 2012 and Agence France-Presse, China sends patrol ships to disputed waters, The Sun Daily, July 1, 2012.
80 81

Chinese patrol ships reach Nansha islands, Xinhua.net, July 4, 2012.

Xinhua, China fleet to fish in Nansha late Monday, July 16, 2012; CCTV News, 30 Chinese fishing vessels arrive in waters of Nansha Islands, July 16, 2012 and Agence France-Presse, Big China fishing fleet arrives at disputed Spratlys, July 16, 2012.
82

Subi Reef in English; Zamora in Tagalog; and Su Bi in Vietnamese. Huang Yiming, Fishing operation launched in Nansha, China Daily, July 17, 2012.
83

Agence France-Presse, Philippines warns Chinese fishermen to stay away, Daily Times, July 17, 2012 and Simone Orendain, Philippines Wary of Chinese Fishing Boats Near Spratlys, Voice of America, July 17, 2012
84

Jin Haixing and Huang Yiming, Fishing ban lifted over South Chin Sea, China Daily, August 2, 2012.

18

to the South China Sea to resume fishing.85 An additional 14,000 fishing boats were reported ready to depart Guangdong province to fish mainly around the Paracel islands but also further south in the Spratlys.86 Chinas objective of dominating the South China Sea and enforcing its jurisdiction through an increasingly modern civilian enforcement fleet was highlighted in late July with the launching of the Haixun 01.87 The Haixun 01 weighs in at 5,418 tons and its largest and most capable ship in its maritime surveillance fleet. It can travel 18,500 km without refuelling and reach a top speed of 37 km per hour. The Haixun 01 can berth 200 passengers and comes equipped with an emergency medical surgery. The ship can also embark helicopters. Chinas maritime surveillance fleet is estimated at more than 300 vessels only two of which weigh more than 3,000 tons, the Haixun 11 and Haixun 31. In October 2010, China announced it would build thirty-six new CMS vessels for maritime law enforcement over the next five years. In May 2011, the CMS announced it would recruit 1,000 more law enforcement officials, bringing its total to over 10,000 personnel. And in June 2011, China announced plans to expand its maritime surveillance force to sixteen aircraft and a total of 350 vessels by 2015.
Military Garrison

On July 19, Chinas Central Military Commission officially decided to establish a military command in Sansha City. The garrison was placed under the PLA Hainan provincial subcommand within the Guangzhou Military Command. The Sansha military garrison would assume responsibility for national defence mobilization, military operations and reserves. According to Defence Ministry spokesperson Geng Yansheng, China may set up local military command organs in the city [Sansha] according to relevant regulations.88 Senior Colonel Cai Xihong was appointed commander of the Sansha garrison and Senior Colonel Liao Chaoyi was named Political Commissar.89 In 1990 China constructed an airstrip on Woody island that can accommodate transport and fighter aircraft such as the Su-27 and Su-30MKKs. China has also built up the military infrastructure to include four aircraft hangars, fuel depots and naval docks capable of accommodating frigates and destroyers. Woody island also houses a signals intelligence (SIGINT) facility.90 The standing up of a military garrison on Woody Island, according to regional specialists, does not represent an attempt to build a base for forward deployment

85

THX chnh thc thng bo 9.000 tu c ra Bin ng, VietNamNet Bridge, August 1, 2012. http://vietnamnet.vn/vn/chinh-tri/83116/thx-chinh-thuc-thong-bao-9-000-tau-ca-ra-bien-dong.html.
86

Jin Haixing and Huang Yiming, Fishing ban lifted over South Chin Sea, and China Plans to Overwhelm the South China Sea with Fishing Fleet, New America Media, August 2, 2012.
87

China Launches the Countrys Largest and Most Advanced Patrol Vessel, The Maritime Executive, July 30, 2012.
88

Xinhua, Chinese military may establish presence in Sansha: defense spokesperson, Ministry of National Defence of the Peoples Republic of China, June 28, 2012. http://eng.mod.gov.cn/Press/201206/29/content_4381230.htm.
89 90

China steps up claims over worlds most disputed waters, National Post, July 27, 2012. J. Michael Cole, China Deploying Military Garrison; to South China Sea?, The Diplomat, July 23, 2012

19

into the South China Sea.91 In their view, the Sansha military garrison is merely an administrative response to the upgrading of Sansha to prefecture-level city. Military garrisons do not command PLA main force combat units, PLA Navy for PLA Air Force units. According to a Japanese source, PLA soldiers are already based on Woody island to protect its runway and other facilities. But Chinas decision to establish a security area in Sansha is considered preparation for full-scale military action in the South China Sea.92 This view is disputed by retired U.S. Rear Admiral Mike McDevitt who argues that a military garrison in Sansha will not affect the military balance or signal imminent hostilities. McDevitt points out that any major military operations in the South China Sea would be mounted from Hainan where the PLA has major bases. According to McDevitt, putting garrisons on Woody Island or elsewhere in the Paracels would effectively maroon these guys, so the only advantage would be just showing the flag - to say, We are serious.93 In a separate less publicized development, sources in the Philippines in July claimed that China was constructing a military airstrip on Subi Reef in the Spratlys. Philippines sources also claimed that a flotilla of ten Chinese fishing boats have begun fishing at Subi Reef escorted by two PLAN frigates and other naval patrol boats.94

Part 4 ASEANs Code of Conduct in the South China Sea


On July 9, ASEAN foreign ministers unanimously adopted the key elements of their draft Code of Conduct for the South China Sea. The preamble to ASEANs Proposed Elements of a Regional Code of Conduct in the South China Sea,95 includes references to previous agreements agreed to between ASEAN and China, including the 1997 Joint Statement of the meeting of heads of government/state of ASEAN members and China, the 2006 Joint Declaration on Strategic Partnership for Peace and Towards an Enhanced ASEAN-China Strategic Partnership, the 2002 DOC and its commitment to develop a COC and protection of the environment and biodiversity. The ASEAN draft calls for a comprehensive and durable solution of disputes.96

91

Dennis J. Blasko and M. Taylor Fravel, Much Ado About The Sansha Garrison, The Diplomat, August 23, 2012.
92 93

Chinas hard-line stance cause for grave concern, The Yomiuri Shimbun, July 26, 2012.

Kirk Spitzer, New Garrison, Old Troubles In The South China Seas, Battlefield, July 26, 2012. http://battlefield.blogs.time.com/2012/07/26/new-garrison-old-troubles-in-the-south-china-sea. Another analysts argues the Sansha garrison has minimal operational value barring a significant upgrade in naval and air infrastructure to enable sustained operations and is mainly an example of Chinese coercive diplomacy. See: Oriana Skylar Mastro, The Sansha Garrison: Chinas Deliberate Escalation in the South China Sea, Center for a new American Security, East and South China Sea Bulletin no. 5, September 2012.
94 95

Spitzer, New Garrison, Old Troubles In The South China Seas.

Carlyle A. Thayer, ASEANs Code of Conduct (Unofficial), Thayer Consultancy Background Brief, July 11, 2012. http://www.scribd.com/doc/101698395/Thayer-ASEANs-Code-of-Conduct-Unofficial.
96

Ian Storey argues that the inclusion of the words comprehensive and durable settlement of the dispute represented a partial victory for Vietnam and the Philippines and a rejection Deng Xiaopings proposal to shelve sovereignty disputes and engage in joint exploration. In fact the words comprehensive and durable were first used in the 2002 Declaration on Conduct of Parties in the South China Sea, Point 6, which China signed (http://www.aseansec.org/13163.htm). See: Ian Storey Comments, The Nelson Report, July 31, 2012.

20

Article I of the ASEAN draft COC contains its operative provisions and calls on the parties to respect and adhere to the United Nations Charter, 1982 UNCLOS, Treaty of Amity and Cooperation in Southeast Asia, DOC and the Five Principles of Peaceful Co-existence. The ASEAN draft lists four principles: (1) to develop modalities and arrangements for the promotion of settlement by peaceful means of disputes and prevent their escalation; (2) to respect the provisions of and take actions consistent with the COC; (3) to encourage other countries to respect the purposes and principles contained in the COC; and (4) to establish an effective mechanism to monitor the implementation of the COC. Article II of the ASEAN draft enumerates eight obligations: a ministerial level mechanism to monitor the implementation of the COC; prohibition on reservations to the COC; provisions of entry into force; mechanism for settling disputes; amendment of the COC; provisions for other countries to respect the COC; indefinite duration of the COC; and registration of the COC with the ASEAN Secretary General and Secretariat of the United Nations Article III(4) requires signatories to establish a mechanism for settling disputes relating to the interpretation and application of the Code of Conduct. Two dispute settlement mechanisms are included to address a breach or violation of the COC.97 The first mechanism is the dispute settlement mechanism included in the ASEAN Treaty of Amity and Cooperation in Southeast Asia (TAC).98 The TAC provides for a ministerial-level ASEAN High Council and empowers it to recommend to parties in dispute, subject to their prior agreement, such measures as good offices, mediation, inquiry or conciliation. The High Council also is given the authority to recommend appropriate measures for the prevention of a deterioration of the dispute The Peoples Republic of China acceded to the TAC in 2003 and undertook in writing faithfully to perform and carry out all the stipulations therein contained.99 In the event that parties are unable to resolve their dispute within the ASEAN framework, the ASEAN COC sets out a second mechanism: the disputants may resort to dispute settlement mechanism provided under international law, including UNCLOS. This could include taking their case to an international court for adjudication. UNCLOS, is should be noted, does not contain any provisions for the settlement of sovereignty disputes over islands and rocks. It does provide for an International Tribunal for the Law of the Sea (ITLOS) to adjudicate disputes over maritime jurisdiction.100 Under international law the land dominates the sea and before disputants could take their case to ITLOS they would first have to determine sovereignty over disputed islands and rocks on which their maritime claims are based.

97

A comparison of the two drafts does not support the conclusion reached by Storey that the laguage was watered down. See: Ian Storey Comments, The Nelson Report, July 31, 2012.
98

Treaty of Amity and Cooperation http://www.aseansec.org/1217.htm.


99

in

Southeast

Asia,

Indonesia,

24

February

1976.

Instrument of Accession to the Treaty of Amity and Cooperation in Southeast Asia, October 8, 2003, http://www.aseansec.org/15271.htm.
100

United Nations Commission on Law of the Sea, Annex VI, International Tribunal for the Law of the Sea. See also UNCLOS, Part XI, The Area, Section 5, Settlement of Disputes and Advisory Opinions, Articles 186-191 and Part XV, Settlement of Disputes, Articles 279-299.

21

At the 45th AMM Retreat, the Cambodian foreign minister as ASEAN Chair reported that, ASEAN-China met twice recently to discuss informally the drafting of [the] COC [and that] Cambodia will host another formal ASEAN China SOM on the COC in the near future.101 An informal senior-level working meeting was held on July 8 and Japanese media sources reported ASEAN and China had agreed to start talks on a legally-binding maritime code of conduct to manage the disputes.102 A day later the Cambodian Foreign Minister told his ASEAN counterparts that Vice Foreign Minister Fu Ying stated that China was willing to commence talks on the COC in September.103 Also on July 9, Foreign Minister Yang Jiechi met with Secretary of State Hillary Clinton to discus the South China Sea. After these talks, U.S. officials revealed that foreign minister Yang gave Secretary Clinton a careful indication that Beijing is willing to join a dialogue on the code as soon as September, ahead of Novembers ASEAN summit.104 On July 10, ASEAN Secretary General Surin Pitsuwan also confirmed that the first formal meeting between ASEAN and Chinese senior officials on the COC would take place in Phnom Penh in September.105 Chinas commitment to meet in September to discuss the COC may be in doubt. According to Japanese sources, on July 11, Chinas attitude suddenly shifted and it refused to begin talks.106 Ian Storey argues that Vice Foreign Minister Fu Yings agreement with ASEAN to begin talks on a COC in September was overruled by Foreign Minister Yang At present there is no timetable to discuss a CoC though both sides will meet in September or October to talk about implementing cooperative projects in areas outlined in the DoC.107 ASEANs Proposed Elements of a Regional Code of Conduct in the South China Sea (COC) between ASEAN Member States and the Peoples Republic of China, has not been officially
101 102

Summary of Cambodia Chairs intervention at the AMM Retreat, 9 July 2012, 1 and 25.

Divisions serve to weaken ASEAN, The Japan Times, July 21, 2012. A Chinese Foreign Ministry spokesperson stated that on July 8 the ASEAN-China SOM agreed to carry out the DOC in a comprehensive and effective manner, as well as carry out cooperation projects uner the DOC framework; China expects coop on South Chins Sea, China Daily, July 10, 2012.
103

Summary of Cambodia Chairs intervention at the AMM Retreat, 9 July 2012, 25 and Channel News Asia, Element of confidence building between ASEAN and China, July 10, 2012.
104 105

Scott Stearns, China Ready to Join South China Sea Talks, Voice of America July 12, 2012

According to Surwin, They [the senior officials] have to decide in the next day or two whether this process is going to be formalized with certain specific schedule. Is this going to be needed in the future when we discus whenever we come together, or are we going to have a regular schedule of meetings between both sides? Channel New Asia, Element of confidence building between ASEAN and China, July 10, 2012 and Agence France-Presse, Asean reaches out to Beijing over sea code, Gulf Times, July 10, 2012.
106 107

Divisions serve to weaken ASEAN, The Japan Times, July 21, 2012.

Ian Storey Comments, The Nelson Report, July 31, 2012. Storey used more guarded language in earlier accounts where he wrote that Foreign Minister Yang seems to have ruled out the September meeting on a code of conduct until when time was ripe. Storeys interpretation may be a misreading of Chinas position as th it has used the expression when conditions are ripe (or mature) well before the 45 AMM. A Chinese spokesperson also used this expression on July 9 two days before Yang spoke. See: Lipin, Cambodia Says ASEAN Ministers Agree to Key Elements of Sea Code and Ian Storey, Little hope of South China Sea Code of Conduct, South China Morning Post, July 27, 2012; Storey, China Pushes on the South China Sea, ASEAN Unity Collapses, China Brief, XII(15), August 4, 2012, 8-11; and Storey, China bares claws in maritime dispute, Asia Times Online, August 8, 2012.

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released and remains an internal draft document. At the 45th AMM Retreat Marty Natalegawa promised Indonesia will circulate a non paper [on] possible and additional elements of [the] COC. It is meant to be more prescriptive and operational.108 In other words, ASEAN members would have to meet to approve any suggestions by Indonesia to alter their draft COC before meeting with Chinese senior officials.109
Indonesias Shuttle Diplomacy

In the midst of the above recriminations, Indonesias Foreign Minister initiated consultations with the nine other members of ASEAN in an effort to restore unity in ASEAN ranks and commit ASEAN to a common position.110 Foreign Minister Marty conducted an intense round of shuttle diplomacy flying to five capitols (Manila, Hanoi, Bangkok, Phnom Penh and Singapore) over a two-day period (July 18-19). Marty and del Rosario agreed to a six-point proposal that Marty put to his other ASEAN counterparts. When he obtained their agreement Marty left it to Cambodias Hor Namhong, as ASEAN Chair, to complete the diplomatic formalities. On July 20, Hor Namhong, acting in his capacity as ASEAN Chair, officially released ASEANs Six-Point Principles on the South China Sea.111 In this statement all ASEAN Foreign Ministers reaffirmed their commitment to: the full implementation of the DOC; Guidelines for the Implementation of the DOC; the early conclusion of a Regional COC in the South China Sea; full respect of the universally recognized principles of international law including the 1982 UNCLOS; continued exercise of self-restraint and non-use of force by all parties; and peaceful resolution of disputes in accordance the universally recognized principles of international law including the 1982 UNCLOS. The statement concluded: The ASEAN Foreign Ministers resolve to intensify ASEAN consultations in the advancement of the above principles, consistent with the Treaty of Amity and Cooperation in Southeast Asia (1976) and the ASEAN Charter (2008). A Chinese Foreign Ministry spokesperson, Qin Gang, responded to these developments by introducing a pre-condition linking compliance with the DOC and discussions on the COC. Qin Gang stated:
What concerns people now is that some individual countries, showing no respect for or compliance with the DOC, have time and again resorted to provocative means, which undermined the basic principles and spirit of the DOC and created difficulties for discussing a code of conduct (COC) in the South China Sea. Therefore, while being open to discussing a COC with ASEAN countries, China believes that all parties concerned must act in strict accordance with the DOC to create the necessary conditions and atmosphere 112 of a COC.

108 109 110

Summary of Cambodia Chairs intervention at the AMM Retreat, 9 July 2012, 20. Several ASEAN diplomats consulted by the author felt that this was unlikely.

Carlyle A. Thayer, ASEAN Unity Restored by Shuttle Diplomacy? Thayer Consultancy Background Brief, July 24, 2012, http://www.scribd.com/doc/101075293/Thayer-ASEAN-Unity-Restored-by-Shuttle-Diplomacy.
111

Statement of ASEAN Foreign Ministers on ASEAN's Six-Point Principles on the South China Sea, July 20, 2012. Cambodias Foreign Minister could not resist using this occasions to lay the blame for ASEAN's failure to issue a joint communiqu on Vietnam and the Philippines.
112

Statement by Spokesperson Qin Gang of the Ministry of Foreign Affairs of China on the US State Department issuing a So-called Press Statement on the South China Sea, August 4, 2012. I am grateful to Greg Torode of the South China Morning Post for pointing out the significance of this statement.

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China then dispatched its foreign minister for a fence-mending visit to Indonesia, Brunei and Malaysia for talks with his counterparts. Foreign Minister Yang Jiechi stated at a joint press conference in Jakarta that China was willing to work with ASEAN to implement the DOC and on the basis of consensus to work toward the eventual adoption of the COC. 113 Foreign Minister Yang held discussions with Malaysian Foreign Minister Y.B. Dato Sri Anifah Hj Aman in Kuala Lumpur. There was no joint press conference. Anifah Aman stated he was confident we can resolve this matter [disputes in the South China Sea] through peaceful means. He then observed, [t]here are overlapping claims by member countries. Let us discuss these among ASEAN countries first before we talk to China. We can only achieve this objective in the South China Sea if all parties agree. Then China can appreciate this and realise it is ASEANs wish.114 This statement seemed to imply that ASEAN-China discussions on the COC, if and when they take place, would be a protracted process. Foreign Minister Yang pointedly did not visit the Philippines during his three-nation swing. Nonetheless, the Philippines kept diplomatic channels open with the visit of Secretary del Rosario to Beijing to visit the ailing Philippine ambassador.115 On August 25 he met with his counterpart Yang Jiechi. The content of these discussions was closely held. A spokesperson for the Department of Foreign Affairs laconically noted discussions were productive and issues of mutual concern were discussed in a positive atmosphere.116 Del Rosario told the press that he would be agreeable to a visit to Manila by a high-level delegation from China.

Part 5 Conclusion
This paper reviewed developments in the South China Sea over the first eight months of 2012. Part One discussed developments after ASEAN and China adopted the Guidelines to Implement the DOC in July 2011. Although ASEAN and China have set up four expert committees (on maritime scientific research, environmental protection, search and rescue, and transnational crime) no practical project has yet been funded or initiated. It is also significant that no expert committee on safety of navigation and communication at sea has been established. During this period ASEAN revived discussions on the COC and reached agreement on the key principles to be included in the ASEAN draft COC. The Philippines made considerable concessions during this process. The 45th AMM approved these key principles, a fact overshadowed by ASEANs failure to issue a Joint Communiqu at the conclusion of their 45th ministerial meeting. Some regional analysts have concluded that ASEANs failure to issue a joint communiqu raises technical and procedural matters over the status of ASEANs Draft COC containing the key principles.117 ASEAN keeps detailed internal records of ministerial discussions that are passed to their heads of state/government for action. The failure to issue a Joint Communiqu robbed ASEAN of an opportunity to publicise decisions
113

Tarra Quismundo, China says its willing to ease Asean rift on sea, Philippines Daily Inquirer, August 11, 2012.
114 115 116

Agence France-Presse, Malaysia urges ASEAN to unite over South China Sea, August 12, 2012. Pia Lee-Brago, Del Rosario flies to Beijig to visit Brady, The Philippine Star, August 27, 2012.

Quoted in Tarra Quismundo, Del Rosario meet with Chinese official, Philippine Daily Inquirer, August 25, 2012.
117

Donald K. Emmerson, ASEAN stumbles in Phnom Penh, East Asia Forum, July 23, 2012.

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made at the 45th AMM and validat[e] the draft [COC] as the groups official basis for negotiation.118 ASEAN failed to adopt a Joint Communiqu because of the obstinacy of Cambodia, as ASEAN Chair. This raises the question whether ASEAN decision-making on South China Sea issues will continue to be poisoned until Cambodia relinquishes the Chair at the end of this year. This episode also raises questions about the ability of China to use its economic muscle to influence the behaviour of future ASEAN Chairs and thus impact on ASEANs internal decision-making processes. Part Two reviewed Chinas relations with the Philippines and Vietnam. China-Philippine relations became hostage to the standoff at Scarborough Shoal. This episode revealed that China is developing and employing new economic and commercial tactics to overwhelm the Philippines defence of its sovereignty. China marshalled a force of civilian enforcement ships and fishing boats to occupy the lagoon at Scarborough Shoal. China also employed commercial levers (banana imports and tourism) and applied direct pressure on the Philippines economy. Sino-Vietnamese relations appeared to be moving in a positive direction following the adoption of the Agreement on Fundamental Principles to Guide the Settlement of Sea Disputes in October 2011. The two sides compartmentalised the disputes in the South China Sea and prevented them from affecting the tenor of their bilateral relations. Up until June 2012, all appeared quiet on the East Sea front. China used Vietnams adoption of a Law on the Sea as a pretext to open a largely symbolic offensive on five fronts. It raised the administrative status of Sansha City, it offered oil leases in Vietnams EEZ, it announced combat ready patrols, it dispatched a fishing armada under escort to develop new commercial interests in the Spratly islands and it announced the standing up of a military garrison in the Paracels. The decision to establish a military garrison was made by Chinas Central Military Commission (CMC).119 This raises the stakes in the South China Sea by increasing the profile and responsibility of the Peoples Liberation Army. This development coupled with the deployment of combat ready patrols contributes to the militarisation of South China Sea disputes. Part Four discussed the adoption of the key elements in ASEANs COC. It noted that Indonesia promised to prepare a non paper to add more prescriptive and operational proposals to the current draft. If Indonesia does submit a non paper all ASEAN members will have to approve any additions to the current draft COC. ASEAN appears to favour moving in tandem on the DOC and COC, and, with respect to the latter, engage China in a discussion on principles before proceeding to the actual text of the agreement. China stresses the implementation of the DOC and offers vague promises to discuss the COC when conditions are ripe. It is unclear if Chinas commitments to start discussions with ASEAN on a COC are still on track, or whether China will take advantage of ASEANs current disarray to delay discussions.
118 119

Emmerson, ASEAN stumbles in Phnom Penh.

Mastro, The Sansha Garrison: Chinas Deliberate Escalation in the South China Sea, 3, argues [t]he Chinese State Council, CMC and the PLA were all involved in these decisions suggesting top-down direction from the Politburo Standing Committee of the Chinese Communist Party

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Two conflicting trends appear to be at work. On the one hand, China is proceeding down the diplomatic path with ASEAN promising to fund cooperative activities under the DOC and to eventually enter into discussions on a COC. On the other hand, China continues rapidly to build up its civilian and military capacity while at the same time it is employing new economic and commercial tactics to exercise jurisdiction over the South China Sea lying within its u-shaped line. The long-term trends do not bode well for agreement between China and ASEAN on a binding Code of Conduct. Why should China agree to an agreement that would constrain it from using novel forms of assertiveness and intimidation to assert its indisputable sovereignty over the South China Sea? Over the past half decade it has become clear that Chinas South China Sea policy is being shaped by the forces of jingoism, resource nationalism and militarization. These drivers encourage Chinas hardliners to take ever more assertive actions.120 This in turn runs the risk of intensifying strategic rivalry between China and the United States.

120

Willy Lam, Chinas Hawks in Command, The Wall Street Journal, July 1, 2012; Michael Sheridan, Control of PLA at heart of Chinas power struggle, The Australian, July 2, 2012; David Lague, Reuters, Chinas Hawks Gaining Sway in South China Sea Dispute, Jakarta Globe, July 26, 2012; Yohanes Sulaiman, China Puts On a Show of Strength, But One-Party System Showing Weaknesses, Jakarta Globe, August 1, 2012; China military strength put on display, Sky News, August 2, 2012; and Michael Sainsbury, Hu sets in motion train of succession, The Weekend Australian, August 4-5, 2012.