Spring/Summer 2015
Number 28

China's Great Maritime Gamble

Phillip Orchard

Two years ago, at high tide, Subi Reef in the South China Sea’s Spratly Archipelago was little more than a coral crescent meekly sheltering an iridescent lagoon—a diver’s paradise, if you could get there, but a weak foundation on which to stake one’s voracious territorial claims. Today, China has dumped enough sand on the tiny atoll to give it more than two square kilometers of reclaimed land, sufficient for a four-story building, a radar station, an estimated 200 PLA troops and soon, judging by recent satellite photos, a lengthy runway.(1)

Located nearly 600 nautical miles from China, but claimed also by the far more proximate Vietnam, the Philippines and Taiwan, the reef is one of seven in the Spratly Islands that China is building up out of the sea.(2) Nearby, for example, Fiery Cross Reef has a growing port facility, coastal artillery, a 200-person garrison and a 3.3-kilometer runway capable of handling most Chinese military aircraft, plus a parallel taxi that suggests that the new island will be suitable for high-tempo military operations.(3) Further to the east, China is believed to be transforming the previously submerged Mischief Reef—which, at just 129 nautical miles from the Philippines, falls well within that country’s UN-designated exclusive economic zone—into a forward naval station already capable of hosting a PLA-Navy frigate.(4)

Through its intentionally ambiguous “9-dash line” policy, China claims nearly 90 percent of the 1.4 million square miles in the South China Sea, the potentially oil-rich, seafood-packed body of water through which nearly $5 trillion in trade flows each year. Its claims encompass nearly all of the Spratlys, including islets occupied and built on by Vietnam, the Philippines, Malaysia and even Taiwan, as well as the Vietnam-claimed Paracel archipelago, near which last summer CNOOC stationed an oil rig, sparking intense anti-Chinese protests in Vietnam.

The new islands are the physical embodiment of China’s decisive pursuit of its historical ambitions and a concerted effort to change the status quo in the South China Sea and chip away at the maritime dominance of the United States. So far, China is succeeding, and without much of a fight. Considering the lack of U.S. appetite for conflict with China (the Pentagon’s recently renewed interest in the South China Sea notwithstanding)(5), the frenzied pace of China’s military modernization, and the maritime weaknesses of other South China Sea claimants, China’s near-term strategic goals in the region are becoming a fait accompli. Yet this more aggressive posture in the sea will increase the risk of conflict over the long term, even if China itself has little reason to provide the spark.

China’s calculus

The strategy being pursued by China in the East and South China Seas is grounded in the country’s historic geographic vulnerabilities, and perceived security challenges now facing the PRC.

Throughout its history, China’s weak maritime capabilities left the nation with little power beyond its own coastline and vulnerable to intrusions by potentially hostile forces that could also impede China’s access to vital trade routes across the open oceans. Today, Chinese leaders remain concerned that the country’s maritime access could be severed at choke points along the “First Island Chain” by another Pacific power, particularly the United States, which Beijing sees as pursuing a policy of containment against it while simultaneously emboldening Southeast Asian states to destabilize the region.

As a result, Beijing has long pursued a strategy of securing its buffer zones and asserting control of its claims in the Yellow, East China and South China seas, even ones encompassing seemingly little more than half-submerged rocks. And it has assumed the role of a revisionist power seeking to shape a new order, particularly by replacing the United States as the predominant power in the Western Pacific.

The new islands will support China’s strategic imperatives by bolstering its surveillance and anti-area/access-denial capabilities, giving it the ability to harass or even blockade rival holdings, and—by changing the facts on the ground ahead of the 2016 decision in the case filed by the Philippines with a UN tribunal two years ago—preemptively weakening the influence of international law over what Beijing believes to be its core strategic imperatives. The island-building also enhances China’s preferred tactic of using non-military assets, such as fishing fleets, oil rigs and commercial shipping vessels, to solidify its authority over its maritime claims. The reefs and atolls have few of the resources needed to sustain a large military presence, and they would be difficult to defend in the outbreak of an actual conflict with a power like the United States. Nonetheless, they will also allow China to project the level of military force needed for low-intensity standoffs with its weaker neighbors.

Ultimately, they strengthen China’s de facto control over what is truly a critical region for the country. China’s export-dominated economy relies heavily on the waters, through which also passes more than 75 percent of China’s crude oil imports. The sea is an abundant source of seafood as well, and technological advances have made recoverable vast swathes of deep-sea oil and gas (though estimates about the region’s hydrocarbon potential vary widely, in part because seismic testing has been hindered by the region’s unsettled disputes).

In one sense, China is replicating activities previously undertaken by Vietnam, the Philippines, Malaysia and even Taiwan during earlier historical periods—when China was focused too inwardly to project power far beyond its shores. Until recently, China was the only claimant country (besides Brunei) without an airstrip in the Spratlys. And Vietnam is reportedly conducting similar reclamation work on two islets it occupies. Beijing also asserts that the construction is primarily for scientific and humanitarian purposes, though it recently admitted its military intentions as well.

But the scale and speed of China’s push into the South China Sea is setting off alarm bells around the region. Whereas Vietnam has reclaimed an estimated 60 acres of land since 2009, according to U.S. officials, China has reclaimed as much as 2,000 acres—including on reefs that were previously likely fully submerged at high tide. China’s secrecy on the matter is further heightening regional concerns, as it has denied international access to the atolls and, for a long time, refused to comment on what activities were taking place there. And, of course, the fact that most of the Spratly atolls occupied by China are nearly 1,000 nautical miles from the Chinese mainland further belies its intentions.

Of late, China has become more overtly protective of its claims. This April, for example, the Chinese coast guard used water cannons to run off a group of Philippine fishermen at Scarborough Shoal, a reef north of the Spratlys, roughly 140 miles from the Philippines, where Chinese and Philippine forces engaged in a lengthy standoff in 2012. Then, in early May, China reportedly prevented a broken-down Vietnamese fishing boat from docking at the China-occupied Gaven Reef in the Spratlys. The same week, the Philippine military said China had warned away Philippine surveillance planes from airspace over the Spratlys at least six times in the previous three months. The latter incidents have raised concerns that Beijing may be mulling establishing an Air Defense Identification Zone over the archipelago (the Chinese Foreign Ministry denies this) similar to the one it declared abruptly over waters contested with Japan in 2013. Most notably, the Pentagon released footage on May 22 of the PLA Navy issuing a warning from Fiery Cross Reef to an approaching U.S. surveillance plane.(6)

At the moment, however, Beijing appears to have little interest in triggering a conflict with any of its neighbors, much less the United States or its major treaty allies. After all, in order to secure its strategic imperatives and restore its regional leadership role, China needs to keep regional states from unifying against it. Why, then, is Beijing being so antagonistic?

Staring down a divided Southeast Asia

China thinks it can change the political reality of the region without sparking a major conflict by aggressively, yet incrementally, asserting its claims and building up its naval and coast guard presence in the region, while simultaneously strengthening its economic ties with regional states. Eventually, Beijing believes, Southeast Asian states will come to find accommodating China’s authority over the South China Sea preferable to banding together in opposition to it. The PRC similarly thinks that its overwhelming economic and military strength will compel weaker regional states to settle their disputes with it in bilateral settings, leaving the international community out of the loop.

So far, this strategy has been successful. To date, China’s push into the South China Sea has been incremental enough to avoid sparking a major conflict or compelling Southeast Asian states to unify against it—or to put aside their suspicions of the United States in a lasting fashion. No individual reclaimed island is important enough to any of these countries to risk starting a confrontation with Beijing, particularly since all the other countries control their own reefs and could presumably counter China’s moves with their own military buildups. More problematic, Southeast Asian states are inherently divided, with differing levels of interest in opposing China, varying degrees of reliance on Chinese trade and investment, and disparate strategic calculations regarding the potential threat posed by China.

The lack of unity was on display at the recently concluded ASEAN summit in Kuala Lumpur, where the consensus-oriented 10-member bloc proved capable of issuing only a milquetoast statement of disapproval of China’s ongoing land reclamation activities—albeit the strongest one to date issued by the bloc. The island-building is seen by most ASEAN members as a violation of the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea. Yet, the statement did not even mention China by name, though it provoked a denunciation from Beijing nonetheless.

Among the bloc’s members, only Vietnam and the Philippines appear to have any appetite for confrontation with China. Brunei does not claim any of the disputed islands, and it is too small to forge an independent course on the matter anyway. Indonesia reportedly backed the push for a stronger statement at the ASEAN summit, and the country has been eager to play a more active role in maritime matters. Nonetheless, Indonesia’s claims overlap with the “nine-dash line” only narrowly, around the Natuna Islands, and it has little reason to adopt a significantly more aggressive posture unless Chinese provocations move further south. Malaysia, which occupies three reefs in the Spratlys, shares many of the more immediate concerns of Vietnam and the Philippines, and it has been pursuing a number of defense cooperation deals around the region. In early May, it conducted joint exercises with the U.S. Navy, and it recently endorsed the U.S. recommendation that ASEAN form a joint peacekeeping force—possibly with U.S. backing. However, among the claimants, Malaysia has the best (or at least the most cautious) relationship with China and has generally proved wary of making any moves that could harm these ties. The current government also does not want to risk upsetting the country’s delicate Malay-Chinese ethnic balance.

The front lines: The Philippines and Vietnam

The Philippines and Vietnam have the most to lose from Chinese assertiveness, and possibly the most incentives to force the issue before China’s military modernization and economic growth make it even more dominant. At this point, however, neither country can afford to become too confrontational. With Vietnam, the main constraints are political, economic and strategic. Politically, decision-making in Vietnam prioritizes consensus, and the senior leadership in Hanoi is split on China. The CNOOC oil rig standoff in 2014, in combination with China’s land reclamation activities, has unified the prevailing strategic outlook somewhat, as evidenced by its recent outreach to Washington. Still, high-level splits will hinder decisive Vietnamese action absent an unprecedented Chinese provocation. Vietnam’s long-term strategy of balancing outside powers against each other—along with pressure from Russia, still Vietnam’s foremost security patron—will ultimately limit its ties with the United States.

Moreover, Vietnam’s overwhelming reliance on Chinese investment and trade means that powerful stakeholders in Hanoi will be wary of taking decisive action against China. Low-priced raw materials and machinery from China are critical to Vietnamese exports. Vietnam is diversifying its economy, as evidenced by its recent lucrative trade deal with South Korea, and the country would reap a windfall from the Trans-Pacific Partnership. But Vietnam cannot yet afford to isolate itself from Chinese markets and suppliers.

With the Philippines, the main constraints are economic and military weakness, as well as deep internal fractures. The archipelagic nation forms the eastern wall of the South China Sea and serves as a gateway to the Pacific, so China cannot afford to see the country become openly hostile to Chinese interests. But the country’s maritime capabilities have long been neglected in favor of combating its myriad domestic insurgencies (recent spending increases and the May 4th announcement of a new naval base to be built 100 miles from the Spratlys notwithstanding). Moreover, Manila has remained ambivalent about strengthening relations with the U.S. military too much ever since the Philippine parliament voted to expel the United States from the Subic Bay Naval Base in 1991, despite signing the Enhanced Defense Cooperation Agreement with the United States in 2014 (which nonetheless stops short of allowing a permanent U.S. military presence).(7) Beijing thus has less to fear than it may seem. At the same time, considering the Philippines’ military weakness, China would have no need in the event of a conflict to employ the levels of force that would compel the United States to intervene on behalf of its treaty partner, thereby limiting the likelihood of a major escalation.

Furthermore, the Philippines relies heavily on Chinese trade and investment, albeit considerably less so than other Southeast Asian states. In 2013, it received the second-lowest total of Chinese investment among ASEAN members, and China was only its third-largest trading partner. But this nevertheless gives China ample room to strengthen ties whenever needed to defuse a conflict, particularly in light of the Philippines’ persistent economic isolation. Manila, which eagerly joined the China-led Asian Infrastructure Investment Bank, is unlikely to turn down Chinese offers of trade and investment that require modest security concessions.

The beginnings of a backlash

Nevertheless, Southeast Asia is more unified on the issue of the South China Sea than its actions and statements may suggest. ASEAN itself may never serve as a vehicle for countering Chinese assertiveness, but China’s continued provocations in the region are spurring member states to strengthen military ties both with each other and with outside powers, namely the United States, Japan, and even India. In fact, as the details of China’s island-construction efforts have come into focus over the past several months, the pace of balancing activity appears to have accelerated.

Since the start of this year, a number of bilateral security ventures have been announced among various Southeast Asian states in the region—primarily involving Vietnam and the Philippines, but encompassing Indonesia, Malaysia and Singapore as well. Moreover, and perhaps paradoxically, by antagonizing Vietnam and the Philippines the most, China is compelling the two states that could threaten it the most by strengthening military ties with the United States to actually do so, within the aforementioned limits. Vietnam—which sees itself locked in a thousand-year rivalry with China and is the only one of the littoral states to also share a border with the Asian giant—is also modernizing its naval capabilities via its enduring relationship with Russia. Washington and Manila are still implementing their 2014 defense agreement, and the U.S. Navy is likely to end up with greater access to Subic Bay. In April, the United States held its largest exercises with the Philippines in 15 years. With Vietnam, Washington partially lifted its 40-year ban on lethal arms sales to the country in October 2014, and the Communist Party of Vietnam general secretary, Nguyen Phu Trong, is expected to make a historic visit to Washington later this year.

China is also compelling these countries to invest more heavily in their own maritime capabilities, to varying degrees, creating a more militarized—and thus more explosive—South China Sea. According to recently released data from the Stockholm International Peace Research Institute (SIPRI), defense spending across ASEAN has increased by more than 44 percent on average since 2010, including even among poorer states with long-neglected militaries.(8) Vietnam’s buildup has been particularly pronounced, with overall defense spending increasing by nearly 60 percent between 2010 and 2014. Here, its enduring defense relationship with Russia has proved especially valuable; in recent years, the Russians sold Vietnam no fewer than six kilo-class submarines and four Gepard-class frigates.

Chinese assertiveness is also drawing into the region outside powers such as Japan and India. Japan’s economy would be crippled by a cutoff of oil and gas flows through the South China Sea, and Tokyo is concerned about China’s ability to hinder shipping traffic and overflight privileges in the contested waters. As a result, Tokyo has begun to turn its gaze southward. In the first two weeks of May, for example, Japan held drills with the Vietnamese coast guard and the Philippine navy. The push into Southeast Asia comes at a time when Japan is slowly shedding its self-imposed post-WWII military constraints and seeking to develop independent capabilities sufficient to balance China’s rise, even in areas outside of Japanese territorial claims. Its recently launched helicopter destroyer and new fleet of V-22 Ospreys, for example, may be ideal for amphibious combat operations. For its part, India is wary of China’s push to develop a blue-water navy and its increasing activity in the Indian Ocean basin. As a result, India has sought to gain leverage against China by eagerly strengthening defense and energy ties with Vietnam and Indonesia and voicing its concerns over freedom of navigation in the waters.

Overall, a more crowded, more heavily armed South China Sea is likely to result. For example, the greater availability of cheap, but sophisticated diesel submarines means the South China Sea is expected to be home to more than 100 electric diesel subs by 2025, according to the Singaporean military.(9) And particularly in Hanoi and Manila, U.S. backing could increase the tolerance for risk in a way that makes small confrontations more likely.

Implications for the United States

For the United States, the emerging environment in the South China Sea will pose new challenges. The land reclamation activities themselves do not pose a serious threat to the current military balance. The new islands could host Chinese long-range radars and missile technologies and, by supporting helicopter operations, could boost Chinese long-range anti-submarine warfare capabilities, thus helping counter one of the few remaining areas of overwhelming U.S. superiority.

Overall, however, the islands will give China relatively few advantages that its breakneck military modernization drive and burgeoning domestic arms industry would not already. In fact, if China continues to compel regional states toward more robust partnerships with the United States, then its South China Sea provocations would seem to be counterproductive, particularly considering Beijing’s longer-term strategic aim of replacing the United States as the predominant power in the East and South China seas. The United States may soon find itself with more capable allies who are more willing to provide logistical support, access to bases, intelligence sharing and so forth. Moreover, the boosted maritime capabilities of these countries will reduce the burden that the United States currently shoulders overwhelmingly in fighting piracy and other non-state threats in regional waters.

Nonetheless, the increased likelihood of more-frequent small-scale confrontations will threaten to draw the United States into an escalated conflict—one that goes against broader U.S. strategic interests, but which Washington deems necessary to preserve its already-weakened credibility in the region. This will force the United States to prepare for more complicated worst-case scenarios, likely requiring a diversion of attention and assets from elsewhere. Considering the pace of China’s naval modernization, the United States could easily find itself in a costly arms race against an opponent with more political will to fund it—and one whose anti-access/area-denial strategy requires far less resources than does the U.S. Navy’s global commitments.

Moreover, any measures to impose costs on China’s activities are likely to further strain U.S.-China relations, as would strengthened cooperation with regional states. The United States is likely to continue deploying U.S. military aircraft and ships to waters near the reclaimed islands to prevent China from gaining de facto, uncontested control of the region and reassure U.S. allies in the region. Chinese political imperatives will compel the PLA to respond, even if largely for show. Such moves are likely to harden the positions of both countries. The United States and China may be destined for a more confrontational relationship, considering mutual suspicions about each other’s intentions and overlapping imperatives. But the United States and China still have myriad areas of mutual interest that call for bilateral cooperation, such as North Korea, and there still reason to believe that the two countries can avoid falling into the “Thucydides Trap.”(10)

Overall, the abilities of China, the United States and Southeast Asian countries to prevent minor incidents from escalating will soon be put to tests of increasing complexity. With the Philippines, small-scale conflicts triggered by run-ins between Philippine activists or fishermen and Chinese forces in the Spratlys appear inevitable. In such a situation, Manila may see an opportunity to gauge the strength of its newly minted U.S. security guarantees. With Vietnam, another attempt by China to drill for oil in Vietnamese waters is possible—one that again sparks anti-Chinese riots like those that followed the 2014 oil rig standoff, and which pressure Hanoi to put its new submarines to work.

These sorts of incidents—and worse—have happened repeatedly over the past decade, and have yet to escalate into a major confrontation. And all of the Southeast Asian claimants would prefer to play China off against the United States rather than attempting to go toe-to-toe with their powerful northern neighbor. But the historical status quo, in which Southeast Asian states preferred the path of least resistance to peace by leaving each other’s overlapping claims largely unresolved is no longer viable. Going forward, with more Chinese forces in the South China Sea, with claimants increasingly militarizing and aligning with outside powers, and, ultimately, with the resource demands of each party growing, regional leaders will be forced to navigate far more turbulent waters.

Phillip Orchard works as a writer and analyst at Stratfor, with a particular focus on East and Southeast Asia. He recently completed his master’s work in security, law and diplomacy at the Lyndon B. Johnson School at the University of Texas at Austin. His studies there focused on energy and national security, Chinese foreign policy, intelligence and institutional pathologies.

1.   “China’s First Runway in Spratlys Under Construction,” IHS Jane’s Defense Weekly, April 16, 2015, http://www.janes.com/article/50714/china-s-first-runway-in-spratlys-unde....

2.   The author recommends CSIS’s Asia Maritime Transparency Initiative as an invaluable resource on the reclaimed islands: http://amti.csis.org/island-tracker/.

3.   Andrew Erickson, “Runway to the Danger Zone? Lengthening Chinese Airstrips May Pave Way for South China Sea ADIZ,” April 24, 2015. http://www.andrewerickson.com/2015/04/runway-to-the-danger-zone-lengthen...

4.   Jaime Laude, “China Transforms Reef into Naval Station.” The Philippine Star, July 27, 2013. http://www.philstar.com/headlines/2013/07/27/1018091/china-transforms-re....

5.   Adam Entous, Gordon Lubold and Julian E. Barnes, “U.S. Military Proposes Challenge to China Sea Claims,” Wall Street Journal, May 12, 2015.

6.   Brad Lendon, “U.S. Threatens Peace in South China Sea, China Says.” CNN, May 22, 2015.

7.   Carl Thayer. “Analyzing the US-Philippines Enhanced Defense Cooperation Agreement.” The Diplomat, May 2, 2014. http://thediplomat.com/2014/05/analyzing-the-us-philippines-enhanced-def....

8.   Zachary Abuza, “Analyzing Southeast Asia’s Military Expenditures,” cogitASIA, May 7, 2015. http://cogitasia.com/analyzing-southeast-asias-military-expenditures/.

9.   Xue Jianyue, “Singapore, Malaysia, Indonesia Could Extend Maritime Patrols in the South China Sea.” Today Online, May 11, 2015. http://www.todayonline.com/singapore/spore-msia-indonesia-could-extend-j....

10. Graham Allison, “Avoiding Thucydides’s Trap,” Financial Times, August 22, 2012.