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Being Smart About the South China Sea

April 15, 2019
The tension between China, the United States, and other smaller countries around the South China Sea is one frequently covered by the news as the potential for conflict there holds a constant presence. Reports note that the most recent developments in the South China Sea involve increased military tensions as China, the United States, and various other countries such as Taiwan, Vietnam, China, the Philippines, Malaysia, and Brunei vie for authority in the region.[1]

The map below outlines the different claims staked by each country (Figure 1). The area sees nearly 5 trillion dollars flow through it yearly, meaning significant political and economic capital for the country that controls the area; moreover, the South China Sea is a geographic location with prime potential for military development.[2] These implications are the driving force behind the continued interest in the South China Sea. Without a major intervention or change in current foreign policy strategy, the situation could very well escalate. Currently, the actors and organizations that normally work to deescalate international conflicts are ineffective in resolving the tension in the South China Sea.

Image: Figure 1 - South China Sea claims. Source: Voice of AmericaImage: Figure 1 - South China Sea claims. Source: Voice of America

Background Information

The Paracel and Spratly island chains are the specific areas of the South China Sea that are being focused on.[3] Recent history has seen the Chinese forcefully taking the Paracel islands from Vietnam in 1974, the Philippines and China engaging in a standoff regarding the Scarborough Shoal in 2012, and China placing a drilling rig near the Paracel Islands in 2014.[4] The most recent signs of aggression have included a set of Chinese military drills including its navy, air force, and missile units; the purpose of which is to test China’s wartime command system in simulations of actual combat situations.[5] Despite Obama’s Asia Pivot and efforts to strengthen relationships with countries such as China, Trump’s recent hostility towards China and friendliness towards North Korea has reportedly upset leadership in China.[6] The United States’ most recent moves have included bringing military forces into the region, claiming that those are peacekeeping efforts. However, the forces brought in by the United States frequently engage in what U.S. officers call freedom of navigation operations that have been perceived by countries such as China as destabilizing. Thus, the United States has been accused of being just as militant as China and encouraging dangerous competition with Chinese forces.[7]

The South China Sea’s economic potential is behind frequent scenes of confrontation, along with domestic political concerns. the South China Sea holds enormous potential in the trillions that flow through it annually, since controlling shipping lanes for global trade is almost certainly economically profitable.[8] The promise of economic prosperity has led various countries to mount disputing claims about who gets to reap the benefits of controlling the flow of trade. This is only in addition to the profit potential of the large oil and natural resource reserves the area holds, as depicted in the map below (Figure 2).[9] In addition, military confrontation is often utilized as a tactic to increase nationalistic pride in one’s country. This tactic has what is named by policy analysts as the “rally around the flag” effect, which serves to distract a country’s population from other domestic or foreign troubles by focusing on military or foreign policy conquests.[10]

Image: Figure 2 - Major crude oil trade flows in the South China Sea (2016). Source...Image: Figure 2 - Major crude oil trade flows in the South China Sea (2016). Source: U.S. Energy Information Administration

Potential for Escalation in the Current State of Affairs

The dispute in the South China Sea is problematic for international security and peace. Examples of recent destabilizing actions include Chinese warships pushing U.S. destroyers off course by threatening collision and the United States sending unauthorizing military ships to the islands.[11] If the tensions caused by such expeditions in the region are not diffused, it is possible that the current confrontational scenarios could escalate into a military conflict. Currently, Beijing is increasing its military presence in the area; existing outposts as of 2008 can be noted in the graphic below (Figure 3).[12][13] Moreover, the United States has increased the number of aircraft carriers it has in the area and military operations it carries out.[14] Such a rise in military technology and capability in the region increases the capacity for conflict; there is more ability to be aggressive as well as a growing capacity for miscalculation or fatal miscommunication. Additionally, there is no overarching authority in the South China Sea to settle the territory disputes.

Image: Figure 3 - Spratly islands map showing occupied features marked with the flags of co...Image: Figure 3 - Spratly islands map showing occupied features marked with the flags of countries occupying them. Source: Wikimedia Commons

Economic Consequences

On the other hand, the South China Sea dispute has had dire economic consequences for nations involved in the dispute as well as global trade as a whole.[15] With tensions growing over the fight to gain ownership of trading rights as well as vast resources in the area, some countries have experienced negative economic repercussions. For example, China’s ventures into the South China Sea have included an attempt to influence Vietnam’s exclusive economic zone, which led to the failure of a $200 million Vietnamese oil and gas development project known as the “Red Emperor” when Vietnam halted the project’s drilling in response to the aforementioned pressure it received from China.[16] The lost project puts a hole in the year’s state budget and emphasizes the possible economic consequences for smaller countries such as Vietnam and the Philippines. Moreover, this demonstrates the way smaller countries are put at a disadvantage; the threat of destruction of their businesses is too great to attempt to negotiate with the larger powers involved.

Aside from affecting individual economies, the South China Sea dispute also affects the entire global economy. Countries are not utilizing the available resources that are untapped in the region such as oil, natural gas, rare earth metals, and marine organisms such as fish and coral reef for economic growth.[17] For example, according to the Asia Maritime Transparency Initiative, there are estimates of existing oil reserves reaching as high as 213 billion barrels; this is equivalent to 80% of oil reserves in Saudi Arabia.[18] There are also 266 trillion cubic feet of natural gas reserves and an abundance of Rare Earth Metals, which are used to produce goods such as hybrid cars, flat screen TVs, and smartphones. Finally, the South China Sea holds one third of the entire world’s marine biodiversity and provides around 10% of the world’s catch.[19] Therefore, with the global supply of fish depleting rapidly, the South China Sea is becoming increasingly vital for marine trade and obtaining crucial resources that are necessary for the production of various goods. So far, no country has been able to reap the benefits of obtaining these resources because of the intense dispute and regional tensions; thus, they are missing an opportunity for economic growth.

Proposed Solutions and Possible Future Development

An ideal world would see China and the United States de-escalate the situation, remove their military forces, and cease their displays of force and aggression in the South China Sea. Yet the method through which such a solution could be accomplished is uncertain. The Association of Southeast Asian Nations (ASEAN) is an organization meant to promote peace and cooperation amongst Southeast Asian countries through its Code of Conduct, so that is one actor that many have looked to for a solution. However, ASEAN alone likely does not have the ability to develop and execute a strategy for peace considering the magnitude of the problem. Many aspects of ASEAN make it a weaker intergovernmental association than one such as the EU; these include a wide diversity of histories, variation in cultures and values, and misalignment of national interests.[20] Moreover, the countries in ASEAN compete with each other economically due to their involvement in the same sectors such as tourism or technological involvement. Since ASEAN members are economic competitors, they would not have an incentive to cooperate with each other and would instead stand for their own independent interests.[21] All in all, the lack of one unifying factor for ASEAN countries makes it increasingly implausible that an ASEAN-led solution would be effective.

International law, some believe, could be a way to navigate the conflict. Yet, international law has consistently proven ineffective at deterring conflict, since there are few enforcement mechanisms to incentivize cooperation with these rules. This is demonstrated by instances of governments violating international law and not being held accountable.[22][23] The British Defense Secretary recently referenced the flouting of international law in a remark that many believed was aimed at China.[24]

Another idea is to allow China to negotiate with the other countries that have competing claims in a setting moderated by the United States. Negotiations involving China, the United States, and other smaller countries involved in the conflict would level the currently asymmetrical playing field. Given China’s large size and considerable influence, an unmoderated negotiation would be unbalanced, and thus unsuccessful as most smaller countries would be unable to compete against the world power. However, giving those smaller countries a stake in the negotiations and allowing them to leave the table with some material gain would reassure them. This would also give China an incentive and path to cease current confrontational actions, such as their persistent use of military navigations and weapons testing in the area.[25]

The problem with relying on the United States to moderate a negotiation agreement in the South China Sea is a matter of “should” versus “would.” The United States has, thus far, been vastly unhelpful in the region. Tensions due to U.S. actions have resulted from President Trump’s isolationist rhetoric, America’s retreat from the Trans-Pacific Partnership, and military activities in the form of freedom of navigation expeditions in the South China Sea.[26] These have had the overall effect of forming an unpredictable foreign policy strategy, which has worried policy analysts who wonder whether the area could later become a bargaining chip to use against China.[27]

In the end, it is not likely that the United States will be able to step up and lead the peace negotiations in the region. When even the country that many viewed as a world leader cannot resolve the conflict, it becomes imperative to try and identify a different solution. As is evident, status quo strategies are failing. The delicacy and complexity of the problem is that it is truly a problem, and that there is no clear-cut solution apparent. One thing that is certain, however, is that the sooner a resolution is found, the better the outcome will be for all parties involved.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

   [1]https://www.bbc.com/news/world-asia-pacific-13748349

   [2]https://www.forbes.com/sites/outofasia/2017/08/22/making-sense-of-the-south-china-sea-dispute/#1002f5b91c3b

   [3]https://www.bbc.com/news/world-asia-pacific-13748349

   [4]https://www.bbc.com/news/world-asia-pacific-13748349

   [5]https://www.businessinsider.com/china-drills-in-the-south-china-sea-to-test-wartime-command-system-2019-2

   [6]https://www.nytimes.com/2019/02/26/world/asia/trump-kim-vietnam-summit-north-korea-relations.html

   [7]https://www.bbc.com/news/world-asia-pacific-13748349

   [8]https://www.forbes.com/sites/outofasia/2017/08/22/making-sense-of-the-south-china-sea-dispute/

   [9]https://amti.csis.org/a-blueprint-for-cooperation-on-oil-and-gas-production-in-the-south-china-sea/

   [10]https://thediplomat.com/2016/07/new-potus-brief-getting-us-china-relations-right/

   [11]https://www.bbc.com/news/world-asia-45718000

   [12]https://www.bbc.com/news/world-asia-45718000

   [13]https://www.businessinsider.com/chinas-president-orders-military-to-prepare-for-south-china-sea-war-2018-10

   [14]https://foreignpolicy.com/2019/02/21/hanoi-is-happy-cozying-up-to-trump/

   [15]https://www.cnbc.com/2016/07/18/why-disruption-in-the-south-china-sea-could-have-gigantic-consequences-for-global-trade.html

   [16]https://www.eastasiaforum.org/2018/04/25/chinas-intimidation-in-the-south-china-sea-poses-an-economic-threat-to-vietnam/

   [17]https://amti.csis.org/a-blueprint-for-cooperation-on-oil-and-gas-production-in-the-south-china-sea/

   [18]https://amti.csis.org/a-blueprint-for-cooperation-on-oil-and-gas-production-in-the-south-china-sea/

   [19]https://www.americansecurityproject.org/resources-in-the-south-china-sea/

   [20]https://thediplomat.com/2016/07/seeking-a-solution-to-the-south-china-sea-disputes/

   [21]https://thediplomat.com/2016/07/seeking-a-solution-to-the-south-china-sea-disputes/

   [22]https://thehill.com/blogs/congress-blog/foreign-policy/279719-the-refugee-crisis-a-failure-in-international-law-and

   [23]https://thediplomat.com/2016/07/of-course-china-like-all-great-powers-will-ignore-an-international-legal-verdict/

   [24]https://abcnews.go.com/International/wireStory/recent-developments-surrounding-south-china-sea-61290518

   [25]https://www.businessinsider.com/chinas-president-orders-military-to-prepare-for-south-china-sea-war-2018-10

   [26]https://foreignpolicy.com/2019/02/21/hanoi-is-happy-cozying-up-to-trump/

   [27]https://foreignpolicy.com/2019/02/21/hanoi-is-happy-cozying-up-to-trump/

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>