The arbitration panel’s ruling
against China on July 12 was a stinging blow to China’s international prestige.
China advanced a narrative that it had historic rights to nearly all of the
South China Sea (SCS) and that it could prevent states like the Philippines and
Vietnam from fishing in their Exclusive Economic Zones (EEZs) and drilling for
oil near their coasts. China also maintained the right to engage in island
building and fishing practices which caused severe damage to the marine
environment. Since these activities occurred inside of its nine dash line
claim. China felt justified in these “internal matters” and told its neighbors
in almost evangelical terms that the SCS is their patrimony and that no country
or international body has a right to mess with their domestic affairs. On all
these counts, the tribunal disagreed and issued a strong rebuke of China’s
activities and has been lashing out against a variety of countries including
the United States, Australia—and most importantly—Japan.
The positive signs that China was moving past
the ruling have been overtaken by a number of very disturbing trends which,
regardless which path China ultimately takes, puts it on a collision course
with Japan, the United States or perhaps a much broader group of states. Unless
something dramatic emerges as a result of the secret conclave in Beidaihe,
China seems intent on settling scores with those states responsible for its
legal embarrassment and loss of face in ASEAN. Japan now seems to be the likely
candidate even though it is an East China Sea (ECS) power. Japan warned China’s
ambassador twice in the past week that relations between the two countries were
“deteriorating markedly.”
China’s Negative Reactions
Immediately after the July 12 ruling the
Chinese Ministry of Foreign Affairs issued a
detailed repudiation declaring that the ruling was “null and
void,” “has no binding force” and “China neither accepts nor recognizes it.”
The Chinese state media declared
the permanent court of arbitration a “puppet” of external forces and that
“China will take all necessary measures to protect its territorial sovereignty
and maritime rights and interests.” In addition to that harsh criticism:
·
On July 13,
China sent civilian aircraft to two new airports on Mischief Reef and Subi Reef
in apparent violation of the ruling.
On July 13,
China’s vice foreign minister said “If our security is being threatened, of
course we have the right demarcate a [air defense identification] zone.”
·
On July 15,
China posts images of its recent overflight of the highly contested Scarborough
Shoal by nuclear capable H-6K bombers (and escorts) and announced that such
patrols would be a “Regular Practice.” This again is in violation of the
Ruling.
·
On July 24,
ASEAN failed to achieve consensus to issue a statement on the Tribunal decision
after China’s ally Cambodia broke away from a consensus document that was being
proposed by the Philippines, Vietnam and others.
·
On July 25,
the United States, Australia, and Japan held a Trilateral Strategic Dialogue
and issued a statement expressing “their strong support for the rule of law and
called on China and the Philippines to abide by the Arbitral Tribunal’s Award
of July 12 in the Philippines–China arbitration, which is final and legally
binding on both parties.” The ministers also expressed opposition to any
coercive or unilateral actions that could alter the status quo including future
land reclamation activities.
·
On July 27,
Chinese Foreign Minister Wang Yi dismissed the trilateral statement and charged
that the statement was not constructive and “fanning the flames.” Foreign
Ministry spokesman Lu Kang also charged that the United States, Australia and
Japan have been adopting double standards towards international law which they
adopt when it “fits their needs.”
On July 28,
the Chinese Defense Ministry announced plans to held a joint military exercise
with Russia in the SCS in September; the first such bilateral exercise in that
body of water. Note that in 2014, China and Russia held joint naval
exercises in the East China Sea.
On August 1,
China held a significant live fire drill in the East China Sea (ECS) that
including the firing of “dozens” of missiles and torpedoes.There were also
reports that six PRC coast guard vessels and over 200 fishing vessels swarmed
in the vicinity of the Senkaku (or Diaoyu) Islands.
On August 2,
Japan’s Ministry of Defense published a white paper describing China’s position
on the SCS an object of “deep concern.” China’s Ministry of Foreign Affairs
called Japan’s paper “full of malice,” “lousy clichés,” “irresponsible” and a
smokescreen to obscure Japan’s expansionist arms policies.
On
August 3, North Korea launched two missiles; one of which impacted in the Sea
of Japan about 150 miles from the Japanese coast. President Abe called the
launch a “reckless act that is difficult to forgive.”
When the UN Security Council sought to condemn North Korea’s actions, China
curtailed the Security Council’s actions.
·
On August 2,
China’s Supreme People’s Court clarified China’s 2014 Fishing Regulation to the
effect that those that engage in illegal activities inside of the waters
claimed by China will be arrested and tried as criminals. The practical import
is that fishing within the nine dash line area will be met with vessel seizure
and imprisonment.
·
On August 6,
China sent bombers and fighter jets on patrol in the vicinity of “Scarborough
Shoals.” China announced that these flights will be a “regular practice” to
“normalize South China Sea combat patrols” to safeguard its sovereignty
interests.
On August 7,
Japan reported that it had issued multiple protests to China after it found
that China had installed ocean surveillance radar “facilities” on a number of
its offshore gas platforms.
It is hard to imagine what is likely to
happen next in the high-stakes poker game being played out in Asian waters. It
is somewhat curious that China is lashing out at Japan given that the Senkaku
or Diaoyu issue has been rather quiet until recently and the SCS is China’s
current problem. Regardless, taking into account what has happened to date and
where China believes that it has leverage, there are two possible ways in which
China might lash out against Japan: in a military capacity, economic capacity
or both.
Possible Military Moves by China In The Senkaku
The statements by China’s Chief of the
Naval Staff and their military activity near the Senkakus suggest that China is
employing tactics of intimidation to get Japan to back away from its recent
statements. It may also be the case that the presence of swarming vessels, in
and around the Senkakus, and the North Korean missile shot (presumably with
tacit PRC approval) suggests that China is trying to goad Japan to militarily
respond or back off its claims.
The Senkakus has always been the powder
keg of Asia because it features the two leading powers in Asia: one ascending
and one arguably on decline competing on the world stage. Both are rivals for
dominance over a tiny scrap of land and associated maritime space which, given
the implications for access to fisheries and oil and gas, is not irrational.
This is ironic because the Tribunal decision in China v. the Philippines takes
away much of the incentive for the two states to fight over these rocks since
they would be enclaved within the continental shelf of most likely Japan. (See: Fixing the
Senkaku/Diaoyu Problem Once and For All.)
China would do well to revisit its
strategic objectives especially because the United States declared, in April of
2014, that Japan is the lawful administrator of the islands and within the
scope of Article 5 of the 1961 Mutual Defense Treaty. The reaffirmation of
solidarity between United States, Australia and Japan in the July 25 trilateral
declaration likely provides Tokyo the fortitude it needs to military respond if
China continues to operate provocatively near the Senkakus.
Another important point
this calculus is President Abe. Abe has stated in 2015 that Japan is a
“maritime state” and can “only ensure its own peace and security by actively
engaging in efforts to make the entire world a more peaceful and secure place.”
Japan’s record 2016 military budget of roughly $42 billion is further evidence
of that goal. Japan has a combatant fleet of 131 vessels including three
aircraft carriers, forty-three destroyers and seventeen submarines using front
line U.S. tactics and systems. China has substantially more hulls (and
submarines) but most naval analysts interviewed by the author cite the
excellent Japanese submarine force as likely game changers.
More important is the will to fight. Japan
has been greatly increasing its military spending even though its economy has
been in the doldrums. According to the OECD,
“output growth has been slowed by a drop in demand from China and other Asian
countries and by sluggish private consumption.”
The point of this is that if Japan is pushed to the point that it must
militarily respond, it has three valid reasons for using instant and
overwhelming force now. First, Japan’s economy is too fragile to become
involved in a protracted war with China. It needs to win fast and win big to
reestablish economic dominance within Asia. If China is not dealt a mortal blow
and forced to capitulate, it will use its economic leverage to coerce states to
suspend trading with Japan. Japan’s trading economy cannot easily weather a
suspension of its trade relations—even if the United States and Australia
remain in their corner. Second, Japan cannot win a military war of attrition
with China: it suffers from a lack of hulls, aircraft, personnel and production
capacity. Like Israel did in 1967 (when it launched its six-day attack on
Egypt, Jordan and Syria), it needs use its current qualitative advantages to
deliver a massive blow to Chinese maritime and air forces to dissuade Beijing
from further military incursions in the ECS. In a few years, the military edge
could shift to China because of its massive building plans. Third, Japanese
domestic politics today would likely support a massive strike. This starts with
Japan’s new self-defense law which entered into force in March of 2016 and
allows Japan to engage in limited coalition warfare. Also, a 2012 public
opinion poll by the Cabinet Office shows a nosedive in Japanese attitudes
towards China. According to a 2013 paper
by a Stimson Center Analyst, Chinese economic ascendancy has been a source of
friction as has been the influx of Chinese citizens into Japan members of the
workforce or as tourists. People complain of the increases in crime by Chinese
living and working in Japan [and] bad manners by Chinese tourists. Finally, the
Japanese public is extremely well read and are likely becoming unnerved and
physically threatened by the constant scrambling of Japanese fighters (two
hundred times in April–June) to intercept Chinese aircraft, ballistic missile
tests by China’s “puppet” in Pyongyang, and live fire exercises in the
Senkakus.
Embargoes and Sanctions.
Shortly after the Tribunal ruling, China’s
Deputy Minister of Trade was careful to encourage Chinese citizens to not
boycott United States. and the Philippines; however, that does not mean that
sanctions and boycotts are off the table. Bloomberg
reported on August 4 that China will likely resume trade
retaliation tactics against South Korea for its decision to deploy the U.S.
THAAD missiles to counter North Korean missile launches. Korea’s International
Trade Association has identified twenty-six measures currently in place to
restrict trade and is expecting more nontariff barriers such as bogus safety
inspections of inbound products, the establishment of new licensing
requirements and manipulation of quarantine and safety inspections to frustrate
Korean imports.
The above actions are not unprecedented
and could target Japan. In 2010, Chinese customs officials halted the shipments
of rare earth minerals destined for Japan (for user in hybrid cars, wind
turbines and guided missiles) as a form of protest for detention of a Chinese
fisherman fishing near the Senkakus. The United States has also been victimized
by China’s extensive unfair trade practices (dumping and illegal subsidies),
theft of intellectual property and hacking of U.S. companies. Working within
the WTO system, the United States has filed a record number of suits versus
China in the WTO on behalf of U.S. poultry producers and is now considering the
unilateral institution of a total ban on Chinese steel imports because of
illegal price fixing and other illegal actions by Chinese steel producers.
The use of nontariff
barriers has been a favorite ploy by countries to sneakily frustrate imports to
protect local producers while at the same time staying compliant with the WTO
rules. As for embargoes, Article 21 of the World Trade Organization recognizes that states can impose
measured national security and health and welfare controls on both exports and
imports to protect their citizen’s “essential security interests” or to prevent
the proliferation of weapons. Using this exception, China passed new a national
security laws in 2015 which required foreign technology companies to be “secure
and controllable” by Chinese National Security Agencies as a way of pushing out
foreign technology firms, like Microsoft, Apple and Cisco in favor of local
suppliers.
In the short term, China has considerable
legal room to maneuver should it wish to impose national security controls or
erect non-tariff barriers to punish Japan. WTO cases are time very time-consuming
to document and litigate. But, that same legal maneuver space can also be
exploited by Japan to frustrate Chinese imports and place limits on its exports
of mostly electrical and industrial equipment to China.
History confirms that China would suffer likely more than the Japan as a result
of an embargo. Tough Allied embargoes against Nazi Germany and Italy proved
ineffective when self-interest among allied business interests caused the
embargoes to leak or, in the case of Germany, forced innovation when Germany
developed synthetic substitutes for oil and other commodities. When the
U.S. embargoed wheat exports to the USSR in 1973 to the USSR, Canada and
Australia picked up the business. This point is especially important in the
current situation: if China were to stop buying Japanese finished products, the
world economy is sufficiently diverse to compensate for some of these losses.
Likewise, a government approved boycott of Japanese products would, apart from
the legal repercussions, would have extremely destructive impacts on its
economy since China is very much an international trading nation.
Assessment
China needs to ask itself what it is
trying to achieve in the ECS. If their intent is to beat Tokyo into submission
or lure it into a limited and protracted war of attrition to undermine public
support for Abe, it seems very unlikely that Tokyo will take the bait. If
their intent is to provoke a full-scale military attack which they will win,
they are likely to be very disappointed; particularly since U.S. forces will be
present to backstop Japanese offensive operations and protect Japan’s homeland.
Inexorably, China is painting itself into a corner in which its escape options
become more limited. While it was hoped by officials in the U.S. and elsewhere
that China would eventually come to the realization that they needed to
capitalize on the favorable aspects of the ruling and “pivot” on those they did
not like, that is not happening. The recent military displays in the ECS, the
threatened sanctions towards South Korea, continued “trashing” of the Tribunal
ruling, and the harsh rhetoric towards Tokyo suggest that China is opting for
confrontation versus conciliation and now runs the risk of becoming involved in
a major military conflict. China says that it is committed to a rules
based order and leadership in Asia but its recent actions say otherwise.
Lastly, and perhaps most importantly, pursuit of high risk strategies which
could place China’s international trading relations at risk is antithetical to
the Chinese
Community Party’s 13th Five Year Plan for 2016–2020 to promote
balanced international trade, inbound investment, and free trade zones. It is
entirely possible that China’s leadership does not fully appreciate the
dangerous choices their countrymen are making and how their actions are being
perceived on the world stage. Recent military encounters in the East China Sea
especially are occurring frequently and the potential for a costly misstep
increases with each passing day. China’s leaders need to appreciate that they
may be setting into motion a Japanese military juggernaut that it cannot stop.
A maritime and international lawyer, Mark
E. Rosen is the SVP and General Counsel of CNA and holds an adjunct faculty
appointment at George Washington School of Law.
No comments:
Post a Comment