Background Briefing

South China Sea: China
Withdraws Oil Rig - 14
Carlyle A. Thayer
July 18, 2014

[client name deleted]
China has withdrawn its oil rig from contested waters a month earlier than initially
expected. We request your analysis of the following issues:
Q1. How do you assess this move?
ANSWER: China has withdrawn its oil drilling platform from Vietnam’s Exclusive
Economic Zone for three reasons. First, the HD-981 drilling platform reportedly
completed its commercial mission in searching for hydrocarbons. Second, China has
withdrawn the oil rig and escort vessels to mitigate the risk of Typhoon Rammasun.
Third, China moved the oil rig to influence Vietnam on the eve of a special Central
Committee meeting called to consider whether or not Vietnam should take legal
action against China. The third reason is the most important because it opens the
door for bilateral discussions between Beijing and Hanoi. This may cause the Central
Committee to take a cautious approach and hold off approving legal action. Also,
China’s early withdrawal of the oil rig will give it a month before the annual
ministerial meeting of the ASEAN Regional Forum (ARF) to shift the focus away from
Chinese provocative actions to a focus on cooperation. In summary, China is seeking
to shift from confrontation at sea to political dialogue.
Q2. Is there a link between China's move and recent US diplomacy?
ANSWER: U.S. diplomacy has played an important but not decisive role. China has
factored in the certainty that the U.S. will mount a major political offensive at this
year’s ASEAN Regional Forum meeting, and by opening the door for bilateral
discussions with Vietnam, China is seeking to undercut the U.S. More importantly, by
opening the door to bilateral discussions with Hanoi China is hoping that Vietnam
will reciprocate by dropping plans by the pro-American faction in the leadership to
align more closely with the U.S. and Japan. In other words, the oil rig crisis is another
example of China pushing its way around to see how far it can get before backing off.
China has now established that it can deploy an oil rig in disputed waters with
relative impunity.
Q3. Beijing always said that it had done nothing wrong in deploying the oil rig.
According to your analysis, what will China do next?
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ANSWER: China’s next move will be to entice Vietnam into discussions and thereby
strengthen the hand of the so-called pro-China group in Hanoi or what might be
termed the accommodationist faction. Hanoi’s leaders will be motivated to get
bilateral relations back on track. China is aiming to quash any attempt by Vietnam to
take legal action and thus encourage other regional states to do the same. China
wants to regain the political-diplomatic initiative and shift the focus back on ASEAN-
China discussions on implementing the Declaration on Conduct of Parties in the
South China Sea (DOC) and related discussions on a Code of Conduct.
China, however, will keep up the pressure on the Philippines at Scarborough Shoal
and Second Thomas Reef and continue its land reclamation activities in the Spratly
archipelago. Next May expect China to take the offensive once again in enforcing its
fishing ban and in undertaking new oil exploration activities.
Q4. Will Vietnam and China relationship be the same as before the deployment of
the oil rig?
ANSWER: China’s actions have created a deep rift in the Vietnamese leadership. The
public at large is angered by the oil rig crisis and wants the government to take firm
action. While it is likely Hanoi’s conservatives will accommodate with China,
considerable resistance to “business as usual” with China permeates the Vietnam
Communist Party. The key point of tension is the efficacy of socialist ideology as the
centre piece of bilateral relations as opposed to national interests. China’s actions in
placing the oil drilling platform in Vietnam’s Exclusive Economic Zone has served to
undermine strategic trust. In other words, the oil rig crisis has made a mockery of the
comprehensive strategic partnership between Vietnam and China. Any further usage
of this term will ring hollow among the public.
Q5. What kind of lessons will Vietnam drawfrom the standoff with China over the oil
ANSWER: Vietnam will conclude that its paramilitary forces – Coast Guard and
Fishery Surveillance Force – are insufficient to prevent China from placing an oil rig in
Vietnam’s Exclusive Economic Zone in the future. Vietnam will also conclude that
although many nations will offer their political support. ASEAN is unlikely to modify
its policy and confront China over its failure to adhere to international law and
previous declarations not to use force or the threat of force. Vietnam will also
conclude that the oil rig crisis has stirred Japan to provide material assistance in the
form of Coast Guard vessels (under soft-loans to be made available as Overseas
Development Assistance). Vietnam may hope that the United States will up its
commitment to maritime security and provide assistance in maritime domain
The basic lesson that Vietnam will carry away is that it must always be wary of China
because its actions in deploying the oil rig undermined strategic trust. Vietnam will
have to re-evaluate its policy of multilateralizing its external relations. This
framework was successful when the external powers cooperated with Vietnam, but
the framework is inadequate in the present case. Vietnam must consider new
strategies to balance China.
Q6. What do you anticipate Vietnam will do next?

ANSWER: Vietnam must obviously respond positively if China signals that it is ready
to receive a high-level Vietnamese delegation to discuss the oil rig crisis and
management of South China Sea issues. But Vietnam should not fall into the trap of
placating China without firm guarantees of China’s future behaviour. Vietnam should
be quite tough in private discussions in getting China to commit to act in accordance
with past agreements.
Vietnam must also support the US policy of stressing the importance of rules-based
behaviour and adherence to international law. Vietnam must push this strongly
within ASEAN. The main game for ASEAN should be to shift focus away from a South
China Sea Code of Conduct to pressing for adherence to international norms and
laws, including the UN Convention on Law of the Sea, by all its dialogue partners,
including China. Vietnam must keep open the possibility of taking legal action if
China transgresses in the future.
Vietnam should try to shape the program of the ASEAN Chiefs of Navy Conference,
the Enlarged ASEAN Maritime Forum and the ASEAN Defence Ministers Meeting to
give more emphasis to practical measures to bolster maritime security in Southeast
Asia including the South China Sea. Vietnam should develop closer ties with the
Philippines (already underway), Malaysia, Indonesia and Singapore. Finally, Vietnam
should step up defence and security cooperation with as many of its dialogue
partners as possible on both a bilateral and multilateral basis.

Suggested citation: Carlyle A. Thayer, “South China Sea: China Withdraws Oil Rig -
14,” Thayer Consultancy Background Brief, July 18, 2014. All background briefs are
posted on (search for Thayer). To remove yourself from the mailing list
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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.

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