Business may temper China's claims

Oct. 19, 2011
Written by A. Gaffar Peang-Meth
Pacific Daily News (Guam)

The possibility of bountiful oil fields in the Spratly Islands, sprinkled across more than 496,000 square miles of the South China Sea, has led to numerous disputes related to control of the barren areas. Oil is a prized commodity, coveted by many nations seeking to sustain economic growth.

The BP Statistical Review of World Energy reported China's oil reserves are 1.1 percent of the world total, but Chinese consumed 10.4 percent of the world's total oil production, and 20.1 percent of the earth's energy. A world manufacturing hub, China needs imported material resources -- energy supplies and iron ore.

The International Institute for Strategic Studies says the South China Sea may contain more than 50 billion tons of crude oil and more than 20 trillion cubic meters of natural gas. Beijing thinks there are more than 200 billion barrels of oil beneath the South China Sea, the largest oil reserves outside the Middle East. Earlier this year, China's People's Daily reported Chinese geologists had found 38 oil and gas fields there.

The biggest security risk for the South China Sea rests less on the conflicting claims over tiny islands and rocks than on China's outright claim of sovereignty to the strategically important "high seas" -- international waters beyond a coastal state's territorial sea of 12 nautical miles, defined by international law as: "open to all nations, no state may validly purport to subject any part of them to its sovereignty."

China's claims of more than 80 percent of the 1.4 million square miles of the South China Sea, including the Spratly and Paracel islands, conflicts with claims, in whole or in part, by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. They interpret differently the 1982 United Nations Convention on the Law of the Sea, or UNCLOS. The absence of a "code of conduct" on how disputes should be solved has the effect of rendering conflicts insoluble.

The world's busiest sea, the South China Sea links Asia's wealthy northeast region to the Indian Ocean, and to the Persian Gulf through the Malacca Strait. Statistically, ships carry half of the world's oil supplies and two-thirds of natural gas supplies through the South China Sea yearly. The survival of Japan, Taiwan and South Korea depends on an open sea lane.

On Sept. 15, a U.S.-Australia joint statement declared "a national interest in freedom of navigation, the maintenance of peace and stability, respect for international law and unimpeded lawful commerce in the South China Sea."

Soon after, a Chinese foreign ministry spokesman told the press: "There is no question about the freedom and safety of navigation in the South China Sea. Countries in and out of the region are beneficiaries."

The reality is China's sovereignty claim over and increasing assertiveness in the South China Sea coincide with a general perception of a U.S. decline in regional power and influence. China's growing defense budget (second to the U.S.), is paralleled by planned U.S. military spending cuts during the next 10 years. China recently completed a new naval submarine base on Hainan; sent its first aircraft carrier on a sea trial; tested a stealth fighter plane; successfully built new DF-21D anti-ship ballistic missiles with a range of 2,700 kilometers; and progresses rapidly on projects for satellites, radar, submarines and drones.

In its annual report in August, the Pentagon said China had closed key technological gaps with the U.S.

Alarmed, Brunei bought two new offshore patrol vessels; Malaysia commissioned two submarines; the Philippines bought a 40-year-old U.S. Coast Guard cutter; Taiwan commissioned four Keelung-class cruisers; and Vietnam received its second Russian-made Gepard-class guided missile cruiser, and has ordered six Russian-made Kilo-class submarines worth $2 billion.

Japan Prime Minister Yoshihoko Noda told the Japanese Diet in mid-September, "I am concerned about (Chinese) reinforcement of national defense power, which lacks transparency, and acceleration of maritime activities."

China's economy currently is ranked second largest in the world, after the U.S. China is the world's largest exporter and second largest importer of goods. China is the largest holder of American debt.

Some suggest that China's assertive posture has caused a re-evaluation of the usefulness of U.S. presence in Asia. Juwono Sudarsono, former Indonesian defense minister and current professor of geopolitics at the University of Indonesia, has some reassuring words for the United States and countries in the region: Don't worry, not "for the moment!"

In "Insight: China's Pacific accommodation with America" in the Aug. 23 Jakarta Post, he wrote: "The $14.5 trillion U.S. economy is directly linked to South Korea (GDP $1.8 trillion), Japan (GDP $5 trillion), and China (GDP $5.2 trillion). ... All three East Asia economies remain strongly welded to the American trade and financial markets."

Sudarsono said China's military modernization may have "important symbolic value to satisfy Chinese pride," but "Chinese economic and business leaders understand that access to iron ore, oil, gas and other strategic minerals from (many) points ... rely on the secure sea lanes ... provided by America's unmatched U.S. Navy."

"In short," Sudarsono said, "China's future economic sustenance depends on continued American strategic preponderance" and "cool-headed defense and military leaders in the U.S. and China share much more in tacit understanding than appears in reported public debate."

Former Australian Foreign Minister Gareth Evans recently wrote that Washington and Beijing are "currently locked" in their "mutually dependent credit and consumption embrace" and their relationship will not "end in tears any time soon."

A. Gaffar Peang-Meth, Ph.D., is retired from the University of Guam. Write him at peangmeth@yahoo.com.