For Xi Jinping's China, this dispute represents, among other things, a checkmark in its to-do list in Asia. In the book Power Politics In Asia's Contested Waters, it treats the dispute as a litmus test for China's rise. If left unchecked, will the world ever witness a de-escalation of tensions in this tug-of-war in this lifetime?
The disputed waters, which covers 3 million square kilometers, have morphed into a geopolitical battleground for the Philippines, Taiwan, Vietnam, and China in recent years. This body of water is resource rich, housing one third of the planet's marine biodiversity, has oil reserves that could potentially produce 28 billion barrels and is considered to be the second most important sea lane in the world. Consider the last phrase. The South China Sea is an important waterway for resource traffic in global trade.
To put it in perspective, waterways, like oceans and seas, host 80 percent of global trade by value and 70 percent by volume, according to the United Nations Conference on Trade and Development. Because Asia carries 60 percent of that volume, the South China Sea's importance lies in the fact that it directs one-third of global shipping traffic.
Because of China's increasingly important role in the international arena, controlling that flow of global trade and resources is essential if it wants to cement its status as a superpower. So as tensions in the South China Sea continue to simmer, China's strategy to assert its sovereignty in the region will fall under harsh scrutiny.
There are numerous scenarios into how this dispute could evolve. Robert Beckman, a director of the National University of Singapore's Center for International Law, believes these countries could eventually set aside their difference and enter an accord of resource sharing and development of the region. There`s also Robert Haddick's "salami-slicing technique" wherein China's small actions could eventually lead to a major strategic shift. Or the concept of Finlandization, an idea resuscitated by Robert Kaplan in his book Asia's Cauldron, wherein Southeast Asia could fall prey to China's pressure, similar to the Soviet Union's tactics on its Scandinavian neighbor during the Cold War.
A pejorative term used to describe a process where a powerful country compels weaker nations to abide by its foreign policy rules, Finlandization was a mean of survival for the Nordic country. In theory, this could be happening in the South China Sea right now. China has the second world's largest military force, bypassing only to the United States. Independent estimates peg China's military spending to be at $200 billion, but Beijing's pronouncements should always be viewed with caution.
The past decade witnessed an increase of militarization in the disputed waters. Numerous artificial islands housing military bases now populate the South China Sea. When Beijing waved around its 'old' historical claims over region, it ruffled its neighbors' feathers. Those historic claims come in the form of nine-dash line, covers almost all the exclusive economic zones of the Philippines, Vietnam, Taiwan, Brunei, Indonesia, and Malaysia. Complex as it may seem, China impinged on those countries' sovereignty since the United Nations Convention on the Law of the Sea stated that up to 230 kilometers from a coastal nation's baseline, it has sole exploitation rights on the resources that fall on those waters.
For a concept like 'Finlandization' to manifest, geographic boundaries have to be taken into account. According to John Deni, a professor in the Strategic Studies Institute of the US Army War College, this is unlikely since China does not have the land borders that the Soviet Union shared with Finland. "It is a lot easier for China to achieve a Finlandized Mongolia than it is to achieve a Finlandized Philippines. Mongolia, no kidding around, has legitimate concerns over a Chinese invasion and takeover of their country," he said.
Back in 2016, Manila won an arbitration case over its territorial claims in the South China Sea. But Beijing refused to accept the international court's decision. This led to a boycott of sorts of Filipino products in China, like banana exports going rotten in warehouses. Vietnam, which claims 25 reefs and islands in the disputed waters, has been forced to cease oil exploration operations because of the pressure from Beijing. The list goes on for China's kerfuffles in the South China Sea.
Now, what options are left on the table? Bandwagoning, a strategy often used by weaker states to piggyback on a stronger nation to avoid conflicts is a possibility these days but the security situation is far from clear. Since the dispute started as a diplomatic disagreement, and Beijing started militarizing the islands, a security dilemma for China materialized. The onus is on Mr Xi and the Communist Party to de-escalate tension in the region. Just like the United States in the past century, it could use its money, culture, and military to stake its claim over the region.
A Forked Road for the Politburo?
China's economic growth in the past has opened possibilities for a regional, even global domination. In 2017, its economy produced $23.12 trillion; the European Union trails behind at $19.9 trillion and the US at $19.3 trillion. Its factories, known for cheap labor, still stand as the best option for companies. With a tool as powerful as this, China's economic power opens doors for better relations with other countries. Whether Mr Xi derides his neighbors or not, Chinese expansionism needs them.
According to Jeffrey Reeves, associate professor at Asia-Pacific Center for Security Studies, while this path of economic cooperation has been beneficial for China in recent years, it has devolved to finger pointing since economic projects, especially under Mr Xi, has left a trail of environmental destruction and land seizures in its wake. While those choices seem streaky, its plans to resurrect the Silk Road is a glimmer of hope for China's 'peaceful' rise in the region.
Silk Road 2.0, aptly called by Beijing as the Belt and Road Initiative (BRI), is part of Mr Xi's to-do list in Asia. The BRI, as seen from the eyes of China's economic planners, is geared towards promoting development in the country hand in hand with its neighbors. When the Chinese leader unveiled this in 2013, it was meant to link the Eurasian Economic Union (Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan) with China at the center. Currently, this initiative has tapped 65 countries which spans 62 percent of the global population and 31 percent aggregate GDP. Under this project, economic corridors will be located all over Asia, including the South China Sea. While the plan is ambitious at its core, China has to wrangle its neighbors' wrists if this will see fruition.
A Foreign Policy report noted that China's global dreams of economic development raises concerns for Chinese imperialism. Mix in China's territorial disputes, militarization and a perfect formula for conflict comes boiling to the surface; Mr Xi has to be aware that perceptions on China has dived among its neighbors. China's hard power workings are gaining ground in other parts of Asia. After all, if indigent nations are backed into a corner without money, it could turn to China and its BRI for help. Just like what Sri Lanka did.
This little Asian nation was shopping around for foreign direct investment to spur economic activity. Aside from the US which tallies it FDI at $400 million, China is currently its biggest investor at $1.1 billion in the past decade. With the Belt and Road Initiative in mind, Sri Lanka's strategic coastal location also puts it in China's scope. However, years after letting Chinese money flow into its economy, it had a problem. It was defaulting in a huge infrastructure loan from their Chinese guarantors which meant Beijing could have full control of the Hambantota Port. Reports estimate that China's stake in the port project is 70 percent. Think pieces in recent memory dubbed this as China's' debt trap.' For Beijing, a 99-year lease on this port was an enormous victory for the BRI. For Colombo, maybe not but relations between the two have never been this good.
Similar to Sri Lanka, the Philippines is close to securing a seat at China's feast. Remember the many deals that Beijing signed with Manila in the past two years? Those memorandums of agreements and trade deals have left an imprint in the Philippine president's mind because he jokingly told reporters that he was warming up to the idea of making the Philippines a province of Beijing. According to the Philippine government, the agreements are meant to smooth its relations with China since the start of the South China Sea dispute.
China's stars are aligning perfectly since most of its neighbors, especially Asia, bear witness to a huge influx of Chinese money in its economies. In a Reuters report last year, it estimated to China's export to Southeast Asia are estimated to be at 90 percent from Malaysia, Indonesia, Singapore, Thailand and the Philippines. Under the BRI, China placed its bet all over Southeast Asia with 191 infrastructure projects in the burner. In Central Asia, China's Ministry of Commerce estimates at least $304.9 billion handed out to countries along the Silk Road 2.0's routes. From 2010 to 2016, Kazakhstan has received $11.4 billion in FDIs from China while Kyrgyzstan has $1.8 billion from the same period. In Southeast Asia, a little-known 'bamboo network' made up of Chinese companies have been quietly carving their own empires over the decades.
Just as the renminbi is buying its way into the hearts of its debtors, money is not the only option for China to soothe tensions in the disputed waters. As it turns out, China has been using its resources to acquire soft power in matters of statecraft. In Joseph Nye's classic work, he proposes three pillars on how a country can accumulate soft power: by means of its culture, political ideals, and foreign policies. Soft power simply means a country's ability to persuade other nations to do its bidding without necessary force or coercion.
China and its rocky relationship with soft power has been exposed to the world all these years. In Joshua Kurlantzick's Charm Offensive, Beijing's tactic to woo its neighbors to cooperate lies on "selling the idea that China will not be a threat to other nations." While China has yet to become transparent on how much it actually spends selling its brand to the world, an American professor estimates that China spends at least $10 billion a year on these tools of soft power.
One of these tools of soft power is the appeal of China's history and culture to the West. This appeal has always been on hyperdrive ever since Deng Xiaoping's economic reforms in 1979 opened China to the world, literally and figuratively. In 2016, China welcomed 138 million tourists. The Great Wall of China's historical value remains a catch for tourists. Even Macau, a popular haunt for gamblers, attracted 32 million tourists in 2017. Aside from tourism, education is one of China's strongest tools of power. A good example are Confucius Institutes around the globe.
Similar to Germany's Goethe-Institut and Spain's Instituto Cervantes among others, the Confucius Institute serves as vessels of language and cultural promotion but it has a catch. Unlike the other two, universities play host to Confucius Institutes. As of 2017, China's Ministry of Education has successfully opened 516 Confucius Institutes all over the world; 135 of these located within countries that are part of Beijing's BRI.
Even its media interest is noteworthy. Its forays in media ownership has led to the creation of Xinhua, now the official mouthpiece of the Communist party. Its print counterpart, People's Daily, has a global circulation of 3 million and considered by the US as a foreign agent. A 2015 Reuters investigation uncovered 33 radio stations all over the world that echo Beijing's party line, even one operating within Washington.
On top of that, celebrities like Jackie Chan and NBA Hall of Famer Yao Ming are just some of China's unofficial culture ambassadors in the West. But Beijing has bigger dreams, it came up with its own version of the American Dream.
Mr Xi's Chinese Dream encapsulates China's for its future even surpassing Mao Zedong's Great Leap Forward. In Robert Kuhn's book, this Chinese dream envisions a China that is strong, harmonious, beautiful, and civilized. Seemingly sounding like propaganda, this idea which gained popularity in 2013 after the Chinese leader's tour in a museum is China's soft power in its grandest form. In this scenario, should tension come to a head in the South China Sea dispute, Mr Xi might besmirch the Chinese dream so closely associated with him.
While the world has welcomed China's rise, a benevolent China can change its behaviour in the international arena. These all point to the fact that Beijing must lead the way to de-escalate tensions in the disputed waters. If either those international relations concepts, the BRI, and soft power accomplishes what it wants for China, tensions in the disputed waters may dissipate. Why? These countries would have no reason to be intimidated by China's growing influence in the region. There is evidence of that already. In the past, Hanoi has agreed to launch joint explorations with Beijing in the disputed waters, similar to what Manila is considering nowadays. The South China Sea is essential for China's plans in the Southeast Asia corridor of the BRI; if it were to become a calming presence in the region, Beijing's neighbors can rest easy that a full-blown dispute won't be there when they wake up.