China recalibrates its territorial posturing

China decided to withdraw its oil rig from contested waters, but there is little sign of any genuine

In Hanoi and other Asian capitals, Beijing's decision to relocate the Haiyang Shiyou oil rig 981 was met by a mixture of scepticism and relief, writes Heydarian [AP]

After four months of intense maritime jostling with Vietnam, China decided to withdraw its state-of-the-art oil rig from a contested territory in the South China Sea. Previously, China announced that it intended to keep the oil rig deep into Vietnam’s 200-nautical-mile Exclusive Economic Zone (EEZ) up until August 15, a provocative demonstration of China’s territorial assertiveness. Worried by the prospects of a China-Vietnam naval confrontation, neighbouring countries were cautiously delighted by Beijing’s decision to transfer the $1bn Haiyang Shiyou 981 oil rig to China’s southern island province of Hainan. The whole episode, which initially sparked huge anti-China protests across Vietnam, marked the lowest point in China-Vietnam diplomatic relations since the end of the Cold War.

China and Vietnam meet over disputed waters

Maritime disputes in Asia are beginning to undermine decades of relentless economic integration and relative geopolitical tranquility. A new survey by Pew Research Center showed that majorities in eight Asian countries have expressed grave concern over the possibility of inter-state war between Beijing on one hand, and other claimant states in the South and East China Seas on the other.

About 93 percent of Filipinos said that they were “very concerned” with the ongoing disputes in the Western Pacific, compared to 85 percent in Japan, 84 percent in Vietnam, and 83 percent in South Korea. In China, over 60 percent of the survey respondents expressed similar concerns over the prospects of an armed conflict with neighboring states. Locked in bitter disputes with China, citizens of Japan, Vietnam, and the Philippines considered China as the biggest threat to their national security.

Deepening regional anxieties over China’s territorial posturing has contributed to a rebound in the US’ global image and its ability to maintain extraordinarily high approval ratings among a number of Asian countries, especially those that have relied on Washington’s military might to check Beijing’s territorial designs. The recent Gallup survey shows that the Obama administration, which has promised to strengthen bilateral strategic-security ties with its Asian partners, has managed to garner a 45 percent median approval rating in Asia – the highest approval rating in more than a decade.

Although China remains popular among a number of Asian countries, Beijing can’t afford to permanently estrange proximate neighbours such as Japan, Vietnam, and the Philippines, especially if it wishes to become a legitimate leader in Asia in the coming decades.

China’s latest oil rig withdrawal may have been a calibrated measure to temporarily de-escalate regional tensions and counter US rebounding soft power in Asia. China seems to have also been alarmed by Japan’s decision to revise its foreign and defence policies, paving the way for Tokyo to play a more robust leadership role in Asia. But there are still little indications that China will consider a genuine compromise over its sweeping territorial disputes in adjacent waters.

A temporary respite

Mindful of a potential backlash at home, especially among hyper-nationalist circles, who fervently believe in China’s purported “indisputable sovereignty” over much of the South China Sea, Chinese officials adamantly maintained that the oil rig had to be withdrawn since it was able to conclude its energy exploration survey ahead of schedule. There was neither any specific announcement as to whether the oil rig is set to return to the contested area anytime soon, nor did China provide any detailed report on the survey’s results.

In Hanoi and other Asian capitals, Beijing’s decision to relocate its oil rig was met by a mixture of scepticism and relief, rekindling a spirited debate over China’s real intentions. Amid a stormy season in the South China Sea, some analysts highlighted the danger posed by Typhoon Rammasun, which could have engulfed Haiyang Shiyou 981 and the protective flotilla of Chinese paramilitary forces surrounding it.

There are also lingering doubts as to whether the oil rig was able to discover any significant energy deposits in the area. In short, China’s decision could have been motivated by safety concerns and/or the lack of any significant hydrocarbon deposit in the contested area.

Regional experts such as Alexander Vuving and Zachary Abuza, meanwhile, have argued that the withdrawal was probably the result of a behind-the-scenes diplomatic compromise between Vietnam and China. Throughout the oil rig crisis, top Vietnamese leaders talked about the possibility of filing legal complaints against China, building on the Philippines’ earlier efforts at seeking a legal resolution of the South China Sea disputes.

Intent on countering the huge power asymmetry between China and Vietnam, Hanoi also pushed for stronger strategic ties with Washington, hoping to encourage the Obama administration to pressure Beijing against further provocations. In exchange for the withdrawal of the oil rig, some analysts argue, Vietnam purportedly reconsidered its plan to file a legal complaint against China and decided to tone down its encouragement of greater US role in resolving the disputes.

A permanent conflict

Based on conversations with Vietnamese officials, however, there seems to be great uncertainty in Hanoi on whether China is committed to any permanent de-escalation of the crisis. When I asked about the purported diplomatic bargain, a Vietnamese diplomat adamantly denied that there was any compromise. In short, Vietnam isn’t abandoning any measure, whether legal or strategic, to counter Chinese territorial assertiveness.

The last time the two countries edged towards full-scale naval standoff was in 1988, when they fought over the Johnson South Reef in the South China Sea, leading to the death of 70 Vietnamese sailors. For much of the post-Cold War period, however, China and Vietnam have become increasingly economically interdependent, with Beijing serving as Hanoi’s leading trading partner and a key source of investments in manufacturing and infrastructure development. Amid rising labour costs in China’s traditional manufacturing hubs, Vietnam has emerged as a favourite alternative destination for labour-intensive manufacturing investments.

Growing economic interdependence, however, has failed to ameliorate deepening tensions over bilateral maritime disputes. Both Chinese and Vietnamese people harbor strong nationalist feelings vis-a-vis their countries’ maritime claims, placing tremendous pressure on their respective governments to act tough amid the ongoing disputes.

China’s latest decision was most probably a calibrated manoeuvre to temporarily de-escalate tensions before the maritime disputes reach a critical threshold, risking permanent estrangement and full-scale military confrontation with neighbouring countries. Japan, Philippines, Vietnam and Malaysia are ramping up their defence spending, while tightening strategic ties with the US. Other Pacific powers such as Australia and India are also hedging their bets.  

As succinctly explained by China expert Taylor Fravel, China wields enough strategic acumen and flexibility to unilaterally cool down territorial tensions once it notices a stark deterioration in its regional standing. By launching multi-billion developments agencies such as the Asian Infrastructure Investment Bank and the New Development Bank, China is intent on deepening its leverage over neighbouring countries, while charming US allies such as South Korea and Australia. The aim is to prevent the formation of a regional counter-alliance in the short run.

So long as China drags its feet on negotiating a regional Code of Conduct (CoC), and refuses to cease ongoing construction activities and maritime patrols across the Western Pacific, Vietnam and other claimant states, however, will continue to welcome greater US strategic presence in Asia.

Richard Javad Heydarian is a specialist in Asian geopolitical/economic affairs and author of How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings.

Follow him on Twitter: @Richeydarian