The South China Sea is a critical commercial gateway for a significant portion of the world’s merchant shipping, and hence is an important economic and strategic sub-region of the Indo-Pacific. It is also the site of several complex territorial disputes that have been the cause of conflict and tension within the region and throughout the Indo-Pacific.
Geographically, the South China Sea plays a significant role in the geopolitics of the Indo-Pacific. The South China Sea is bordered by Brunei, Cambodia, China, Indonesia, Malaysia, the Philippines Singapore, Taiwan, Thailand and Vietnam. Their recent economic growth has contributed to a large portion of the world’s commercial merchant shipping passing through these waters. Japan and South Korea rely heavily on the South China Sea for their supply of fuels and raw materials and as an export route, although the availability of diversionary sea lanes bypassing the South China Sea provides non-littoral states with some flexibility in this regard. The South China Sea also contains rich, though unregulated and over-exploited fishing grounds and is reported to hold significant reserves of undiscovered oil and gas, which is an aggravating factor in maritime and territorial disputes. The major island and reef formations in the South China Sea are the Spratly Islands, Paracel Islands, Pratas, the Natuna Islands and Scarborough Shoal.
Competing claims of territorial sovereignty over islands and smaller features in the South China Sea have been a longstanding source of tension and distrust in the region. The United Nations Convention on the Law of the Sea (UNCLOS), which was concluded in 1982 and came into force in 1994, established a legal framework intended to balance the economic and security interests of coastal states with those of seafaring nations. UNCLOS enshrines the Exclusive Economic Zone (EEZ), a 200 nautical mile area that extends sole exploitation rights to coastal nations over marine resources. However, the EEZ was never intended to serve as a security zone, and UNCLOS also guarantees wide-ranging passage rights for naval vessels and military aircraft.
While UNCLOS has been signed and ratified by nearly all the coastal countries in the South China Sea, its interpretation is still hotly disputed. Moreover, legal and territorial disputes persist, primarily over the Spratly and Paracel Islands as well as Scarborough Shoal, the scene of ongoing tensions between China and the Philippines. In terms of the Spratlys, more than 60 geographic features are reportedly occupied by claimants, which consist of Taiwan, Vietnam, the Philippines, China and Malaysia. The Paracel Islands are the subject of overlapping claims by China, Vietnam and Taiwan. China makes the largest claim in the South China Sea, within a ‘dash-line’ map published by the Kuomintang Government in 1947. The ambiguous nine or ten ‘dash line’, which China asserts is based on evidence of historical usage, is disputed by other South China Sea territorial claimants and lacks a legal foundation under UNCLOS.
The current round of tensions in the South China Sea dates back to 2008-09. A tense but bloodless stand-off between China and the Philippines over Scarborough Shoal, in 2012, led to China gaining de facto control over the feature. In May 2014 tensions between Vietnam and China rose when China began drilling operations with an oil rig owned by the Chinese state-owned China National Offshore Oil Corporation (CNOOC), 120 nautical miles from the Vietnamese coast and 17 nautical miles from Triton Island, part of the disputed Paracel Islands. This was vehemently protested by the Vietnamese Government and a fleet of coast guard and maritime patrol vessels was sent to intercept the CNOOC rig and its supporting vessels. A stand-off ensued, with multiple collisions between Vietnamese and Chinese vessels, one of which resulted in the sinking of a Vietnamese fishing boat. The incident sparked anti-Chinese riots throughout Vietnam.
Since 2014 the focus has shifted to China’s large-scale construction and installation of military-capable infrastructure at seven of the features it occupies in the Spratly Islands. China is not the only or the first claimant to artificially extend the size of the features it occupies, but the pace and scale of its island-building work has dwarfed others, and is beginning to take on a more overtly strategic character – including the construction of multiple runways and port facilities.
Fiery Cross Reef in May 2014 and September 2015 respectively. Photo: Getty Images/DigitalGlobe/ScapeWare3d
Diplomatic efforts are also ongoing to lower tensions, restore confidence and establish a binding code of conduct in the South China Sea. In 2002, ASEAN and China issued a joint ‘Declaration on the Conduct of Parties in the South China Sea’, which affirmed the signatories' commitment to international law and freedom of navigation in the South China Sea. The Declaration also called for the adoption of a code of conduct for the South China Sea, to be subsequently negotiated by the parties. In Crisis and Confidence: Major Powers and Maritime Security in Indo-Pacific Asia, Lowy Institute researchers argued that regional confidence could be improved by strengthening the infrastructure of maritime communications and operations through military dialogues, real-time communication channels and formalised ‘rules of the road.’ A more recent report, Shifting waters: China’s new passive assertiveness in Asian maritime security [www.lowyinstitute.org/publications/shifting-waters-chinas-new-passive-as..., accounts for the evolution of China’s maritime security conduct into less confrontational but still strategically assertive behaviour.
Another major factor weighing on the South China Sea is the Philippines’ launch of a case with the UN’s Permanent Court of Arbitration (the International Tribunal on the Law of the Sea), questioning the legal basis for China’s maritime claims. China has said it will not participate or be bound by the Court’s ruling.
Since October 2015, the United States has launched three freedom of navigation operations (FONOPs), designed to challenge excessive maritime claims in the South China Sea. The first of these since 2012 was conducted by the USS Lassen through the Spratly Islands in October, 2015. The patrol was controversial, as by apparently exercising ‘innocent passage’ within 12 nautical miles of Subi Reef, the United States may have in fact bolstered China’s claims. This was later rebutted by US Secretary of Defense Ashton Carter in a letter to Senator John McCain. In January 2016, the United States Navy conducted a second FONOP, this time near Triton Island in the Paracels, claimed by China, Vietnam and Taiwan. The patrol was clearly stated as one of ‘innocent passage’. Both patrols were strongly condemned by Chinese authorities. A third ‘innocent passage’ surface FONOP was conducted close to Fiery Cross Reef in May 2016. More FONOP patrols are likely be conducted in the future.
Australia & the South China Sea
Australia has significant interests in the South China Sea, both economically, in terms of freedom of trade and navigation, and geopolitically, as the United States is invested in upholding the rules-based order in the region. Australia has been conducting its own airborne surveillance operations in the South China Sea and Indian Ocean, called Operation Gateway, since 1980. These patrols are conducted by P-3 Orion maritime aircraft and some of them have been verbally challenged by China. While Australia has not conducted a surface FONOP operation similar to those of the US Navy, it regularly conducts naval presence patrols, exercises and port calls throughout the region. As Washington’s closest ally in the region, Australia may come under growing pressure from the United States to make its presence felt in the South China Sea beyond statements of diplomatic support for freedom of navigation.
What the Lowy Institute does
The Lowy Institute has a strong record of analysis, commentary and research on issues pertaining to the South China Sea, particularly concerning territorial disputes and maritime security. This research has largely been conducted through both the International Security and East Asia Programs.
The Lowy Institute also holds a number of events and debates relating to the dispute in the South China Sea. In 2015, Nonresident Fellow Bonnie S. Glaser and Linda Jakobson discussed the intentions behind China's maritime actions. This was followed by a discussion on Chinese foreign policy Glaser and former Fairfax Asia Pacific Editor John Garnaut. Lowy Institute researchers including Dr Euan Graham have been at the forefront of the debate on FONOPs in the South China Sea.
The Lowy Institute also conducts polling on Australian attitudes towards countries involved in the dispute. In 2014, Australian sentiment towards China was the warmest since 2006, but this fell several degrees in 2015.
However, in 2015, 77% of Australians saw China has more of an economic partner than a military threat (15%) and compared to 2014 (48%), only 38% of Australians in 2015 considered it very likely or somewhat likely that China would pose a military threat to Australia in the next twenty years. In contrast, 80% of Australians responded in the 2015 Lowy Poll that Australia’s alliance with the United States is very important or fairly important to Australia’s security.