China's Strategic Interests in the South China Sea

Power and Resources

Sigfrido Burgos Cáceres

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317999386
• Edition: 1
• Topic: Politik & Internationale Beziehungen
• Subtopic: Internationale Beziehungen

This title will explore China's strategic interests in the South China Sea, with a specific emphasis on power projection and resource security. China's regional actions and reactions are reshaping the power dynamics in East and South-East Asia, while economic and geopolitical futures depend on the variegated outcomes of these complex relationships with neighbours and the West. An introductory section will be complemented by four case studies (Japan, Vietnam, the USA and the Philippines) and the concluding chapter will discuss the importance of the South China Sea to China as its new leadership deals with growing economic and military might.

Part I

Introduction

1 Assessing China’s external and internal dynamics and influences

Background

Of critical importance to the Chinese Government is the maintenance of domestic security and stability, that is, the minimization of sparks that could ignite popular unrest or mass revolts. The leadership in Beijing paid close attention to the wave of demonstrations and protests that erupted in the Middle East and North Africa during 2011. They recognized the power of the people to take to the streets to complain about abuses, indifference, injustice, mistreatments, oppression and about national leaders holding on to their positions for decades. The Chinese Government perceived the Arab Spring as an expression of widespread dissatisfaction with governance and political parties, as well as with income disparity, sluggish growth, and unequal distribution of benefits among citizens. In short, the Government had a glimpse of what could happen in China were things to get out of control—a taste of techniques in civil resistance and the use of social media to bring about change.

As far as domestic security and stability are concerned, growth and prosperity move to the top of the list of influencing factors. During the period of trade openness and explosive growth in China in the 19th and 20th centuries the urban and coastal regions boomed, while the rural and interior highlands lagged behind.¹ In terms of household income, internal comparisons are dismal, while international comparisons are alarming. According to an article in Forbes, ‘the average annual household income in China, converted to dollars, was $10,220, compared with $84,300 in the United States’.² A report based on data collected in 2009 revealed that approximately 66% of Chinese household incomes were ‘lower than the average household income in Bolivia’.³ These figures suggest that China is a rich–poor country: wealthy on the surface yet impoverished at its core. The income–wealth disparities between the coast and the highlands, and the urban and rural areas, have in the past created tensions within China, especially when prosperity is not felt in the remote hinterlands.⁴ History teaches a lesson on the risks of inequality and divisiveness. In 1927, following the failed uprising in the city of Shanghai, Mao Zedong capitalized on these differences and gathered enough momentum to form a peasant army that eventually defeated the opposing forces and captured the coastal regions. In his attempt to create a more cohesive, equal and united country, Mao cut off China from the international trading system, and this ultimately resulted in protracted economic decline and a lengthy period of destitution, humiliation, shame, poverty and indigence.⁵

Current Chinese leaders, however, are smarter, incentivized and very quick learners. In March 2011 members of the Politburo Standing Committee of the Chinese Communist Party (CCP) crafted a more sensible plan to achieve domestic security and stability, one which involved securing popular trust and loyalty via economic growth, full employment, and rising incomes, and which published news of a grand and powerful China that is no longer bullied by foreign hegemons or regional imperial forces. This approach feeds on nationalistic sentiments, that is, it fuels the popular discourse with uplifting slogans such as the ‘revival of the nation’, thus signalling the intention of Chinese leaders to become reform-oriented nationalists. However, the purchase of loyalty via economic growth was bought hastily. For example, a report by 60 Minutes in early March 2013 revealed that while China’s economy is now the second largest in the world, the country’s rapid growth may have created the largest housing bubble in history, especially since the Chinese Government backed and encouraged the construction of a large number of buildings, shopping malls, and infrastructure projects that are now sitting empty or underutilized, collecting dust and accruing financing costs. Moreover, the strategy for industrial expansion was executed too rapidly and poorly, with minimal consideration for markets, pricing or profit margins. Now, as then, the driving rationale is to create an economy with full employment, and the thinking behind it is that personal and household income will be spent wholly on consumption and savings. In fact, in order to finance a percentage of industrial and manufacturing expansion, the Chinese tapped into private domestic savings, and now depositors find themselves risking their savings at the hands of greedy industrialists or inept government planners. Also, as national capital is sucked into long-term projects, many fear that internal consumption will suffer in the short term (e.g. there will be insufficient money available to buy domestic outputs), which puts more pressure on exports to Western markets that since 2008 have been sadly depressed and are recovering far too slowly.⁶

In the paragraph above we touched upon nationalism and popular loyalty to the CCP. With that in mind, the reader might ask: who is pushing the Chinese Government to adopt such an approach? The answer lies in the composition of the CCP. It is now known that ‘Chinese military men, who make up about 20 percent of the Central Committee, have become increasingly vocal about their desire to drive the United States’ out of the East and South China Seas. The CCP meetings in Beijing are said to be abound with ‘long-standing rhetoric about ending a century of humiliation at foreign hands’, which makes such an approach conveniently justifiable and easy to pack into sound bites that ignite popular boldness, courage and pride. However, a firm approach to foreign policy is not always welcomed. Throughout East and South-East Asia, considerable alarm is being expressed at the way in which the CCP has abandoned Deng Xiaoping’s well-known pragmatic internationalism. Many regional actors have expressed hope that the General Secretary of the Communist Party of China, Xi Jinping, will be able tactfully to curb the military’s increasing bellicosity.⁷

The Chinese Government’s central economic and financial planning works by directing all major sectors of the economy and formulating decisions about the use of available resources. The Chinese industrial and manufacturing base intentionally produces more goods than it can consume; therefore, there is immense pressure on the Government to export these products to countries throughout the world. Thus, China has become a major exporter and importer of inputs, that is, the energy sources, raw materials and natural resources (such as diesel, petrol and oil) required to keep the economy running efficiently and at full speed. If these inputs are derived from nearby regions, it is likely that a large percentage arrive by air or land (which use even more inputs in order to run or operate), but if massive inputs are sourced from abroad, they definitely arrive by sea, that is, by ships carrying containers. These ships and vessels, almost without exception, have to pass through the East China Sea and the South China Sea, regardless of their port of origin. This being said, the safe passage of inputs through waters that are not totally controlled by China is taken as a ‘strategic vulnerability’, a weak point that can be ‘intentionally troubled’ so that China’s growth is impaired. To be sure, the dynamic works in both ways: just as it needs to draw inputs in, China needs to get outputs out. The Chinese, in this trade-dependent scenario, have to work diligently to make sure that foreign demand for its goods are either maintained or increased, which explains why China has been playing banker to the USA and the European Union (EU).

Externally, China has a strong interest in either maintaining or increasing control over buffer territories, that is, land masses adjacent to the Chinese mainland which confer what is known as the first line of natural defence. The majority of people of the traditional Han Chinese core are grouped in the eastern part of the mainland. This area is characterized by much rainfall and humidity, which separates it from the arid and dryer central and western parts of the country. From the standpoint of threat mitigation and security, the Chinese mainland is dependent upon the reciprocity or outright control of four non-Han Chinese buffer territories that hug the country. These territories are Mongolia, Manchuria, Tibet and Xinjiang. The control of these buffer territories is critical to China because it provides layers of protection against India from the west, South-East Asian countries from the south-east, Russia from the north, or any attack across the western steppes. Think of it as an artificial and natural fencing for a property, an intentional delimitation that lets outsiders know that they have crossed the line and that moving forward could mean that they are perceived to be intruders. The presence of deserts, forests, jungles, mountain ranges, steppes and wastelands (in Siberia) provide the Chinese mainland with barriers or obstacles against attacks by foreign actors. However, to the east and south, China is open to vast bodies of water (e.g. shores, East China Sea, Sea of Japan and South China Sea), and there are a number of countries that for some time have been seeking partial or total control of these shared waters (e.g. Japan, South Korea, Taiwan, the Philippines and Vietnam). This exposure carries deep implications for national security, especially when related to the protection of borders, territories and strategic interests. To China, control of the critical South China Sea is a security imperative.⁸

Challenges, obstacles and setbacks

The EU and the USA form two of the world’s largest economies. They are deeply interconnected not only between themselves but also with the rest of the world. As the world witnessed from 2008, their problems and struggles easily trickle down into global economies, especially those that depend heavily on exports to the West to support their economic growth. Hence, China is one such country to feel the impact of the continuing job crisis, declining prospects for economic recovery, sluggish growth of gross domestic product (GDP), and the delay of purchases owing to uncertainties. China’s two most important customers are undoubtedly the EU and the USA. Decreased consumption in general and fewer high-value purchases in particular by consumers, private firms, multinationals and public sector entities, along with increased competition from vibrant developing-emerging countries, has shaken the Government’s plans to achieve popular well-being and national prosperity. As China’s economic engine decelerates (GDP growth targets for 2013 rested at 7.5%),⁹ national job security has weakened and Chinese consumers have changed spending patterns to account for a world economy that is full of uncertainties and not yet on a stable footing. The amendment of domestic consumption levels has affected domestic demand for products and services, which puts further pressure on local firms to tighten belts in an effort to weather the storm. And, as if this is not enough, regional sea routes have been under closer scrutiny following a series of territorial spats in the islands and nearby waters of the South China Sea, which has ‘soured’ relations between China and its consumption-driven neighbours.¹⁰

The Chinese Government has come to understand that when the EU and the USA suffer from economic ills, a large number of countries are affected to an even greater degree. The economic and financial struggles of the West inevitably influence China, whether or not this consequence had been foreseen. The affluent and wealthy cities and towns in the coastal regions are particularly affected because they depend largely on exports and trade to keep their local economic engines running, and the marginalized and poor highlands in the interior are affected too because they are reliant upon aid, grants and subsidies that are difficult to secure from the central government in Beijing since priorities are reshuffled when national economic growth is compromised. The CCP, in order to tackle the main triggers for social unrest in the country, ‘have announced record government spending in 2013 that will sustain growth and maintain the ruling Communist Party’s grip on power through an enhanced budget for internal security’. The Chinese Government promised to raise the fiscal deficit target to 2% of GDP in 2013, its highest since 2010 and up from 1.6% in 2012.¹¹ Alongside this stimulus, the Government floated the news to media outlets of an increase of almost 9% in the 2013 domestic security budget, taking it to US $128,000m.—a boost to military expenditure for the third year in a row. However, this particular announcement gave considerable concern to East and South-East Asian leaders since it implied that China’s military apparatus would gain more strength.¹²

With regard to buffer territories, the Chinese Government has to deal tactfully with stresses and strains. Actors and networks in Tibet and Xinjiang are not very keen on the idea of being occupied by Han Chinese. The Government is fully aware that losing buffer territories is risky and ‘bad press’, especially because it threatens national security and widens the opportunity for aggressors to further destabilize already unstable regions (e.g. through the encouragement and promotion of radical religious groups). In 2009, for example, unrest and violence in Xinjiang resulted in the deaths of nearly 200 people. This was followed by a forceful crackdown that produced numerous arrests of accused protesters and rioters, as well as a near-total shutdown of internet connections and overseas telephone services. Many non-governmental organizations (NGOs), such as Amnesty International, accused the Chinese Government of abusing its authority, using excessive force, and illegally torturing detainees. As a convenient solution, ‘in both Buddhist Tibet and Muslim Xinjiang, China hopes that economic development, improved infrastructure, and steady demographic shifts will gradually ease the ethnic tensions that periodically erupt into violence’.¹³ However, the quick-fix measures do not entirely address core grievances advanced by ethnic minorities, which include, but are not limited to, government interference in religious affairs, discrimination in economic opportunities, and a steady arrival of ‘wild’ Han Chinese that threatens to erode regional cultural identities.¹⁴

Tibet has emerged as a strategic interest to both China and India. Instability in Tibet is indeed a cause for concern since neither country could profit from its control. Obviously, a full-blown war between China and India is far-fetched in view of geographical limitations: the Himalayas. This great mountain system forms a barrier between the Plateau of Tibet to the north and the alluvial plains of the Indian subcontinent to the south, and its terrain is so treacherous and challenging that a large-scale armed conflict launched from either side is unfathomable. However, if China or India were to gain control of territories on each other’s side of the Himalayas, it is believed that sustained threats could ensue via military bases or counterinsurgency outposts.¹⁵ According to the Chinese Government, the perceived threat lies in Indian troops invading Tibet. To the Indian Government in Delhi, the perceived threat is the entry of the People’s Liberation Army (PLA) into northern Pakistan from the southern mainland or accross India’s ...