Searching For China’s Concept Of Joint Development In The South China Sea – Analysis

The mantra of joint development (JD) in disputed maritime areas had been gaining ground of late. The impetus to defuse tensions, avert conflict, enhance confidence-building, aside from the obvious shared economic benefit, are raising the relevance of JD as a concept that can maritime disputants can ponder on. In East Asia alone, several countries have already entered into JD agreements, including Japan and Korea (1974), Thailand and Malaysia (1990, with the Memorandum of Understanding signed as early as 1979) in the Gulf of Thailand, Australia and Indonesia (1989) over the Timor Sea which was succeeded by Australia and Timor Leste (2002), and fellow South China Sea (SCS) claimants Malaysia and Vietnam (1992) also in the Gulf of Thailand, with the last two countries making a joint submission of their extended continental shelf (2009) as per UNCLOS. However, notwithstanding the merits and achievements of these JDs, SCS remains a major flashpoint and untoward incidents between claimant states still occur in the area. The fact that China is not involved in such deals is one reason behind the continued turbulence in this resource-rich and strategic body of water. Aside from being a dominant power in the region and the most powerful among the SCS claimants, China also lays the greatest extent of unilateral claim in the area through the U-shaped nine dash line, the coordinates of which remains to be fixed to date. Hence, the participation of China in a JD in SCS is very promising in terms of promoting long term peace and stability in the area, besides the sharing of the Sea’s immense bounty with other claimants.

Chinese leaders since the time of Deng Xiaoping in the 1980s have made references to shelving sovereignty disputes and pursuing JD in SCS. Former Chinese Premier Li Peng, in a visit to Malaysia (1990), and National People’s Congress Chairman Wu Bangguo, in a visit to the Philippines(2003), echoed similar pronouncements. It was said that China does not lay claim to the entire SCS and that SCS is big enough to be shared with other claimants. However, while expressions of interest on JD abound, the means by which the same will be operationalised have yet to be sufficiently articulated. As such, while other claimants and ASEAN welcome China’s professed interest to undertake JD in the area, they remain sceptical of Beijing’s motives.

Aside from the absence of an official position detailing China’s concept of a JD, there are other factors that can account for the persistence of doubts and misgivings on China’s JD offer. One is that compared to say Malaysia or even Vietnam, China has not yet established a good track record in JDs in disputed maritime zones. While others in East Asia have began discussing and implementing JDs for hydrocarbons exploration and production as early as the 1970s, China has yet to invoke a successful precedent that it can appeal to as an evidence to convince other SCS claimants of its noble intentions. In addition, it was only in 2000 that China was able to secure a successful maritime boundary delimitation (with Vietnam in the Tonkin /Beibu Gulf).

The 2005-2008 Joint Marine Seismic Undertaking (JMSU) between the national oil companies of the Philippines (PNOC), China (CNOOC) and Vietnam (PetroVietnam) could have been a breakthrough for the cause of peace and tranquillity in the area and a precursor for China’s JD credentials. But the deal lapsed and the exploration undertaking did not proceed to joint production. Philippine authorities later revealed that 75-80% of the area covered by JMSU is within the Philippines’ Exclusive Economic Zone (EEZ). It was also alleged that JMSU was tied to graft-ridden loans extended by China to the previous Philippine administration.

Second, China’s insistence on bilateral talks with each claimant state (in which setup, China’s advantaged bargaining position can be heightened) instead of a multilateral framework for addressing the dispute also aroused suspicions from other claimants. Unlike the Paracels and Scarborough Shoal in which only two parties respectively are in dispute (under the One China principle), the Spratlys is the most complicated dispute in the SCS since it involves five claimants, China (including Taiwan), Philippines, Vietnam, Malaysia and Brunei. That the Spratlys straddle strategic sea lanes used by international navigation further complicates the scenario as external powers attempt to play a role in the resolution of the disputes. All this puts into question the effectiveness of one-on-one talks between two parties as non-parties will surely protest or remain not bounded by any concluded agreements. Since China, Vietnam and the Philippines, in that order, have the greatest claims in the SCS, the trilateral JMSU could have been the most ideal platform from which an all encompassing multilateral JD arrangement for the SCS could be anchored upon. But its termination should not stop China and other claimants from finding other creative ways of pursuing JD.

While roadblocks and irritants exist, there are also welcome developments on the part of China along the lines of pursuing JD in SCS. For one, while China has no established track record for JD on non-living marine resources, Beijing was able to conclude joint fishery agreements with several of its maritime disputants, notably with Japan in the East China Sea (1997), with South Korea in the Yellow Sea (2000) and with Vietnam in the Tonkin/Beibu Gulf (2000). This accumulated experience in these collaborative undertakings may provide China with the basic skills and competencies needed to engage SCS claimants for a greater degree of cooperation, namely on oil and natural gas extraction. That China had by and large observed these joint fishery zone agreements should send a positive signal to SCS claimants about China’s pragmatism and honouring of its commitment.

Interest in JD among Chinese academicians, legal experts, and government officials also grew over time, leading to a series of conferences on the subject matter (1991, 2002 and 2011). Likewise, an academic institute based in Hainan was also established in 2004 to focus on SCS issues, including prospects for JD. This show the burgeoning importance attached by China in the area.

In recent years, China is also gradually expressing more receptiveness towards multilateral approaches in addressing the SCS disputes as demonstrated by its adherence to the 2002 Declaration of Conduct of Parties in the SCS, although Beijing has not shown the same enthusiasm for a more binding code of conduct.

Therefore, while many challenges and disagreements remain, the forces that may stimulate JD in SCS are already there. For a start, it would be conducive if the area to be subjected for a JD will, as much as possible, be farthest from the continental shelf limits or EEZs of claimants as this could dampen vocal opposition to the idea. It is obvious that the Philippines dislikes the idea of a JD in Reed Bank, in the same way as Vietnam objects to the idea of a JD in Vanguard Bank, as these areas are closer to their coastal areas and are well within the two countries respective EEZs. Riflemen Bank is floated as a suitable place since it best fits this condition being away from most claimants. Hence, China should demonstrate more flexibility and should identify the most ideal place to commence JD. A successful cornerstone of any enduring JD in SCS is a JD in the right place and the right time. In turn, a good precedent will build the needed trust and confidence for a wider JD zone.

Major Southeast Asian oil producers are fast becoming net oil importers with their impressive growth rates and they see SCS as an area from which they can secure supplies to meet their ever growing domestic demand. In the Philippines, for instance, oil and gas in the Reed Ban k alone is projected to have a transformative capacity. This means that the country with the most underdeveloped national upstream sector among the claimants can expect to generate considerable revenues from the same may which would translate to the country’s development. It is in this light that popular opposition against harassment and intimidation of Philippine-sanctioned oil exploration ship in the Reed Bank in 2011 can be best appreciated. But, however tempting, the recognition of the risks, as well as the enormous costs, associated with unilateral exploration and production in SCS is also making littoral states contemplate on the salience of a JD. All these practical economic considerations can help condition the acceptance of a JD.

Moreover, although unfortunate incidents still happen, China is doing its part in winning the goodwill of Southeast Asia through generous aid and investment flows. The ASEAN-China Free Trade Agreement provided reciprocal benefits and opportunities and prospects are bright for this evolving formidable trading bloc. China had emerged to become the leading export market, import source, investor and trading partner for many ASEAN nations. It is said that economic forces encouraged claimants to stake out their claims in the SCS. Given this, will China eventually buy out claimants into surrendering sovereignty of SCS to China in return for energy cooperation and favourable aid, investment and trade terms? And would the claimants agree to the same?

There are some who opined that China’s increasing demand for energy, growing naval might and political clout may erode incentives for China to enter into a JD since it will have the wherewithal to engage in more unilateral actions in the SCS. While this could be a likely scenario, an alternative can also be considered. There is more to Southeast Asia than SCS and China knows this. Southeast Asia is both a proximate source of oil and, increasingly, more environment-friendly natural gas, and an important energy corridor (e.g. Malacca Strait). Beijing places a high importance in cultivating friendly ties with the countries in the region not only for economic, but also for political and security reasons. China would not want to see Southeast Asia being used as bases from which to check its growth or influence. To this end, it may not be wise for Beijing to antagonize or alienate ASEAN by engaging in hostile or provocative actions in the SCS even if Beijing have the means to effect the same.

In sum, much is expected from China as the responsible big power in any comprehensive JD in the SCS. A good showing of China on this regard will illustrate the hallmark of a brilliant Chinese leadership for which countries not only in the region, but also around the world, shall recognize Beijing for. A just and fair JD will discourage claimants from inviting the intervention of outside powers to redress perceived or actual power imbalance, a scenario which will surely be not to Beijing’s liking. JD agreements as provisional interim measures may also serve as the foundation for the final delimitation of overlapping maritime boundaries in SCS. Thus, how the JD will be worked out and implemented can impact in the permanent resolution of one of the world’s longest running disputes. JD in SCS is sending a challenge to the concept of China’s peaceful rise and claimants, as well as the international community, would be eager to see how Beijing would respond.

This article appeared at The School of International Relations, Academy of Overseas Chinese Studies and is reprinted with the author’s permission.