The Great Bet China Is Making in the South China Sea

The first few weeks of 2024 have already seen a serious escalation of tension between China and the Philippines in their sovereignty dispute over the Second Thomas Shoal – situated 105 nautical miles west of Palawan, Philippines, and about 600 nautical miles from Hainan, China. Since the fall of 2023, there have been several run-ins between the two countries’ vessels, including collisions and China Coast Guard vessels shooting water cannons at Philippine ships – while China and the Philippines-U.S. alliance have conducted naval patrols and military drills in the area.

If the current trends continues, future run-ins could lead to fatalities on either side, possibly elevating the dispute to a level where the United States may feel the pressure to come to the Philippines’ defense. Washington has promised to honor the Mutual Defense Treaty to assist Philippine vessels if they come under attack anywhere in the South China Sea.

And the scene is set not only for continuation but escalation of close encounters. The Philippines’ national budget for 2024 included about $1.8 million earmarked for the building of a permanent structure on Second Thomas Shoal, the site of the marooned and deteriorating ship BRP Sierra Madre, to serve as a base for the country’s small contingent of marines and a shelter for its fishermen.

More recently, the Philippines’ military chief announced new plans to fortify as many as nine land features in the region. If implemented, these measures will reinforce the Philippines’ sovereignty over its Exclusive Economic Zone (EEZ), as denoted by a United Nations Convention of the Law of the Sea (UNCLOS) arbitral tribunal ruling in 2016.

Having artificially built up and fortified seven islands in the Spratly archipelago to assert its sovereignty claims to around 90 percent of the South China Sea, China appreciates the importance of having permanent bases on reefs and shoals. Beijing will try its best to prevent the Philippines from doing the same on Second Thomas Shoal and ultimately seeks to dislodge Philippine marines from the Sierra Madre.

As neither side shows any willingness to back down, claiming that their actions are legitimate within areas under their claimed sovereignty, this dispute is not amenable to be peacefully resolved through negotiations or arbitration – as in the case of various settlements reached by Malaysia, Indonesia, and Singapore in the past decades. Instead tensions would persist and could easily escalate to dangerous levels testing the United States’ willingness and ability to defend its treaty ally.

China’s Reading of the Situation

From China’s perspective, the current configuration of factors appears to open a window of opportunity to advance its agenda in the South China Sea.

When the Philippine Navy grounded the BRP Sierra Madre on Second Thomas Shoal in 1999 – five years after China occupied nearby Mischief Reef – and stationed a platoon of marines there, China made representations and demanded that the Philippines remove the ship. According to China, Philippines officials under then-President Joseph Estrada (1998-2001) promised to do so – and indeed they removed the BRP Benguet, which had been grounded on a nearby reef at the same time, also following Chinese protests. However, the Philippines continued to maintain the Sierra Madre on Second Thomas Shoal with a platoon of marines on board, telling China that technical reasons prevented them from removing the ship.

The Philippines has recently rejected China’s claims that Manila ever made any promises to remove the Sierra Madre. “I’m not aware of any such arrangement or agreement that the Philippines will remove from its own territory its ship,” President Ferdinand Marcos, Jr. said last year. “…if there does exist such an agreement, I rescind that agreement now.”

Despite the back-and-forth about promises to remove the ship, China has put forth the narrative that the Philippines is taking provocative actions, from grounding the Sierra Madre, to maintaining it in the past decades, and now trying to build a permanent structure there. Therefore, in Beijing’s telling, Manila is responsible for the escalation of tension, justifying China’s counter actions.

To advance its strategy, China has tried to isolate the Philippines from other ASEAN members with a charm offensive, involving a flurry of diplomatic activities including proposed Belt and Road Initiative projects with other countries having claims in the South China Sea, such as Indonesia, Malaysia, and Vietnam. In particular, after the United States and Vietnam upgraded their relationship to strategic and comprehensive levels, China and Vietnam agreed to designate their relationship as a “community with shared destiny” (in the Chinese version) or “community with shared future” (in the Vietnamese version).

Meanwhile, the Philippines’ initiative to get Vietnam and Malaysia to negotiate a separate Code of Conduct in the South China Sea with Manila – apart from the main ASEAN-China COC negotiations, which have been making very slow progress over the past two decades – has found no traction amid strong Chinese criticism.

ASEAN has managed to issue a joint statement solely on the South China Sea, for the first time, with the group’s foreign ministers expressing concerns over tensions in “our maritime sphere” and urging “peaceful dialogues among parties.” However, complicating the Philippines’ strategy has been Vietnam’s stance. While Hanoi supported the 2016 ruling in the Philippines’ favor by the UNCLOS arbitral tribunal, Vietnam maintains its claims over both the Paracel and Spratly archipelagos and has rebuked both China and the Philippines for raising tensions in the South China Sea.

China also hopes to exploit divisions within the Philippines itself. As Marcos seeks a close alliance with the United States and allies such as Japan to counter pressures from China, domestic opposition has built up. Former President Rodrigo Duterte, his daughter and Vice President Sara Duterte, and former President Gloria Macapagal Arroyo have publicly criticized Marcos’ hard line against China as risking the Philippines becoming a battlefield between the U.S. and China, imperiling the country’s peace and prosperity. There have been rumors that Arroyo and Duterte will team up in the 2025 mid-term elections to strengthen their parliamentary opposition to the governing coalition. Similar division has also emerged in the business community.

More generally, public support for the Marcos government has declined from 50 percent in the third quarter to 46 percent in the fourth, mainly due to economic problems such as high inflation. China has seized upon such political discord to weaken Marcos’ hand using misinformation campaigns – portraying his administration as colluding with the U.S., an external force, to cause instability in the region.

Last but not least, China may be willing to bet against the United States truly getting involved in the dispute. The U.S. faces a challenging 2024 with a very divisive presidential election amid growing political division over U.S. aid to Ukraine and Israel. Against that backdrop, it is quite unclear if domestic public opinion will support the United States’ becoming involved in a military conflict with China. Even if the will is there, it’s unclear if the U.S. can mobilize the resources needed to deal with three regional wars at the same time.

After all, while pushing the Philippines out of Second Thomas Shoal is important in China’s strategic efforts to assert sovereignty over the ten-dash line area, competing claims over a shoal thousands of miles away from home rank pretty low among core U.S. national interests. While officials and international relation experts may be dismayed at the prospect of a weakening of the reliability and credibility of U.S. commitments to allies – if the Biden administration fails to go all the way to support the Philippines – the issue is probably seen by most voters as not worth going to war over.

In the context of the South China Sea, historical precedents also argue in China’s favor: Beijing has militarily taken over many South China Sea islands and features – the latest example being the Scarborough Shoal in 2012 – without the U.S. doing anything about the takeovers.

China’s Calculated Risk

On balance, China’s favorable assessments of the current situation will likely lead it to push the envelope of its “gray zone” tactics to pursue its long-term campaign. China’s past strategy suggests it will take small steps to achieve specific goals of asymmetric strategic values – goals that are important for China but not essential to the United States, thus minimizing the risk of the U.S. getting into a direct military conflict with China. Beijing does not want conflict, either, but it probably is willing to take a calculated risk to advance its core interests in the region.

If China is right in this calculation, it will be emboldened to take even more aggressive measures to occupy the South China Sea reef by reef, shoal by shoal, until it controls most of the features within the ten-dash lines – in the process heightening tension globally as Beijing flexes its muscles as a regional hegemon.

However, if China is wrong and the United States is prepared to push back against Beijing’s attempt to expand its holdings in the South China Sea, the risk of military conflicts will rise substantially. In this scenario, the recently resumed military communication lines between the two sides can be useful in preventing skirmishes from getting out of control, but not sufficient to prevent them, since those potential skirmishes would be intentional, not accidental.

In short, the year 2024 will show which of the two undesirable outcomes described above – a full Chinese takeover of the South China Sea or a conflict between China and the U.S. – is more likely to materialize in the future, with significant consequences for the world.

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