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China and the South China Sea: Shifting Positions

Published On November 14, 2014 | Far East

The precarious situation in the South China Sea is not a mystery anymore for anyone. Declarations have been made, accusations have been thrown and disputes arose, putting this particular environment in an escalated situation of crisis. Territorial disputes in the South China Sea involve maritime and resource based claims among six states from the area: People’s Republic of China, Vietnam, Taiwan, Philippines, Brunei and Malaysia. What makes the area a disputed region is the  presence of several small islands, that even if they are not a treasure, they offer possibilities of territorial claims, giving access to the seas around the islands and even more important, to the resources that can be found there. The exploitation of oil and natural gas has been seen as the highest bid alongside fishery and continuous access to shipping lanes.

Territorial moves made by China made the other countries ask for their rights as well and provoked great controversy. China recently placed a rig in the area, claiming sovereignty over that area. In this sense, Taiwan, Vietnam, Philippines, Brunei, Malaysia, all have claims over the region. In Vietnam a series of protests took place as a result of the strategic positioning of the rig in the South China Sea. In addition, Vietnam believes that the rig is located in its continental shelf and since then Vietnam started to show aggression towards Chinese citizens. Even though China adopted a stiff and forceful position at the beginning, it shifted its position recently due several reasons.

The alliances formed between the neighboring countries and United States, several deployments and agreements and continuous interventions from the US and  Association of South East Asian Nations (ASEAN) probably scared China into shifting position. The mobilization of the actors involved against China in general provoked China at the beginning which realized that force and denial are not always the best way to manage crisis. It can be seen that China saw itself as being restrained due to the pressure put on it not only by the main actors but also by the United States and the entire international scene. Most of the assumptions however believe that the new inclination of China towards negotiation and new relations with the United States is just a strategic move. Many things of the latest events in the area are related to the fact that China wants to change the status quo in the South China Sea.

The reasons and interests behind this shift in thinking of the Chinese officials can be the economic factors which have a great role in the balance of great powers. With regards to this we can analyze the Silk Road Economic Belt, one of the newest projects signed and adopted by China, a project that has as a main objective the economical cooperation. Without strong relations, such a connection is hard to create. China would need to preserve the extensive trade with the West, to create new connections and to generate new options for development.

Also, China acknowledges the importance of sustainability enforced by the neighbors and not only in fighting possible threats. Getting the “blessing” of Japan for instance, could improve the access and flow of the exploited resources – such is oil or gas – partially settling its needs through cooperative strategic moves rather than competing and opposing ones. This may be considered the reasons for which China tries to get to the East with the help of the West and in this way to take back at least a little piece of what it lost in the last year. Of course that this maneuver would help China gain access to more economical and political power, but in the end, by reconstructing the chain of trust it can even justify its entire presence in the East China Sea. Gaining access to all the upper mentioned goals means access to other markets (ex: Latin America) and control over the region.

China-Malaysia relations

The solid China-Malaysia relations, established 40 years ago and fused into a comprehensive strategic partnership now, are expected to elevate bilateral trade to US$160 billion by 2017 from the US$106 billion it is now. This is the first estimate made by the Special Monitoring Committee set up on November 4th, which has the aim to coordinate and monitor economic activities with China and is made up of agencies under the ministry.  The committee was announced by the Prime Minister Datuk Seri Najib Razak at the celebration of the 40th anniversary of the alliance, in May. In the words of the PM, 2014 is a historical and auspicious year for the allies.

On November 10th, in a bilateral meeting at the Great Hall of People in Beijing, apart from the 2014  Asia-Pacific Economic Cooperation (APEC) Economic Leader’s Meeting, Chinese president Xi Jinping told Najib that Malaysia and China are “intimate friends and trustworthy partners”. Both leaders agreed that both countries should raise the relationship to a higher level and achieve ongoing fruitful results.  According to President Xi, China and Malaysia need to strengthen their cooperation in infrastructure, connectivity and financing and promote the bilateral comprehensive strategic partnership. Among future endeavors, Xi sees China and Malaysia building the joint industrial parks in China’s Quinzhou and Malaysia’s Kuantan as representative for China-Malaysia and China-ASEAN cooperation. Other common objectives for the two allies would be promoting maritime cooperation, building the Silk Road Economic Belt and 21st Century Maritime Silk Road. Moreover, in Xi’s views, the two countries have to push forward regional peace, stability and obviously, prosperity.

The same November 10 brought an agreement signed between the central banks of the two allies under which the Bank of China (BoC), China’s fourth biggest lender is nominated as the yuan clearing bank in Malaysia. Is would be the first of this type in the country. This is yet another bilateral effort to boost the use of China’s renminbi (yuan) in the international financial system also by setting up regional yuan clearing systems. Malaysia will be the first ASEAN country to start a yuan swap with the BoC and the deal should translate into high cost savings from traders in both countries, and it would advance trade and investment.

Following the consistent development of bilateral relations, China-Malaysia strategic joint effort is expected to elevate the overall China-ASEAN strategic partnership. As new models of relations are formulated in the Asia-Pacific, Southeast Asia’s significance as a strategic middle ground has increased, also considering the progress in the South China Sea. Even though China might be working hard to present itself as a development ally, in a region that’s wary, if not distrustful of its assertiveness, the country will need all the friends it can gain as it rises.

China-US relations

The South China Sea disputes also represent a challenging topic on US agenda, especially for the interests the United States have in respecting the international norms and law concerning the freedom of navigation. A potential failure to advocate the international laws could severely affect U.S. interests in the whole region. By now, China supported the freedom of navigation, but at the same time, it developed a series of capabilities to deny American naval access to those waters in a conflict, which emphasize the Chinese intentions to block freedom of navigation in specific contingencies. This is why the U.S allies should maintain free trade, safe and secure sea lines of communication and an overall stability in the region.

The United States have a constant interest in preserving stability in the U.S.-China relationship and recent efforts were made during the last meeting between president Obama and president Xi Jinping. Xi downplayed controversy over competing visions for free trade in the Asia-Pacific whereas Washington is working on a 12-country Trans-Pacific Partnership (TPP) deal which excludes China. Although they are fierce rivals for global economic primacy, promoting the competing free trade blocs for the Asian region may lead to a reduction of mutual suspicions and defuse regional tensions – but there are still many efforts to be done in order to reach tangible outcomes.

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