The South China Sea issue first arose in the late 1960s. In essence, it  is about territorial disputes over some islands and reefs of China’s Nansha Islands illegally occupied by countries like Vietnam and the Philippines. With the development of the maritime legal system afterwards, overlapping claims to maritime rights and interests have also added a new dimension to the issue. The rising tensions in recent years have turned the issue from a regional maritime dispute into an international hotspot topic. Still it may become even more complicated as outside countries like the United States and Japan have weighed in.

I. Origin of the South China Sea Issue

The South China Sea had not been an issue before the 1960s. No country expressed objection to China's sovereignty over the Nansha Islands except the South Vietnam authorities. After the 1970s, the relevant disputes arose when the Philippines, among others, used force to occupy and encroach upon part of China’s Nansha Islands. To date, 42 islands have been illegally occupied by the Philippines and other countries and a Philippine vessel, since it "ran aground" on Ren’ai Jiao of China's Nansha Islands, has stayed there for years, which stands as a valid example of the Philippines’ malicious intention. 

The major causes behind the South China Sea issue can be boiled down to the following four aspects:

First, geopolitical rivalry. The South China Sea is a maritime transportation hub, and home to many important waterways, and the South China Sea Islands are thus of prominent strategic significance. Almost one-third of goods, over half of oil and two-thirds of LNG around the world pass through the South China Sea every year. Such statistics stand testimony to the region's enormous economic and strategic value, which makes it another battlefield for major powers.

 

Second, promising potentials for resource exploitation. The geophysical survey in 1968 by the Committee for Coordination of Joint Prospecting for Mineral Resources in Asian Offshore Areas (CCOP) under the auspices of the United Nations Economic Commission for Asia and the Far East (ECAFE), as well as the geological survey in 1969 by a US research vessel “the Chagent” both confirmed the abundant reserves of oil and gas in the South China Sea. The fourth Arab-Israeli War and the oil crisis in 1973 highlighted the significance of oil and as a result, the Philippines, among others, felt a strong sense of urgency to turn their back on previous stance on the South China Sea. Through constitutional amendments, legislation and release of political statements, they began to assert sovereignty over part of the Nansha Islands and make claims of maritime rights and interests in the relevant waters.       

 

Third, impact of the United Nations Convention on the Law of the Sea. The modern maritime legal regime, represented by the United Nations Convention on the Law of the Sea (UNCLOS), was established in the Cold War era. The UNCLOS has exerted a profound impact on the evolution of the South China Sea issue. Despite the relatively well-designed provisions on exclusive economic zone and continental shelf, the UNCLOS does not touch upon or give clear definitions to such concepts as “historic water”, “historic title” or “historic right”. This has been used as an excuse by some countries in the region to illegally assert sovereignty over the Nansha islands and reefs and make claims to the relevant waters. 

Fourth, impact of colonialism and power politics. In the early 20th century, France and Japan occupied some of China’s islands and reefs in the South China Sea. In 1951, in disregard of China’s absence and protests, the US assembled 52 countries and convened a meeting to seek peace with Japan. The attendees signed the Peace Treaty of San Francisco, in which Japan was asked to renounce all right, title and claim to the Spratly Islands (the Nansha Islands) and the Paracel Islands (the Xisha Islands). In 1952, Japan made the same promise of renouncing all right, title and claim to the Nansha Islands and the Xisha Islands in the Treaty of Peace between the Republic of China and Japan, concluded between the Taiwan authorities and Japan. As the Chinese government had already taken over the islands in the South China Sea and resumed exercise of sovereignty, Japan could do nothing but return the Nansha Islands and the Xisha Islands to China. Though the Chinese government has never recognized the legality of the two aforementioned treaties, they still serve as solid evidence supporting China’s sovereignty over the South China Sea Islands. 

II. China’s South China Sea Policy

China, as the first country to have discovered, named, explored and exploited the South China Sea, has indisputable sovereignty over the South China Sea Islands and is entitled to the corresponding sovereign rights. Japan seized some of China's islands by force during World War II. After the war, in 1946 and 1947, the then Chinese government sent warships such as “Taiping” and “Zhongye” to recover the islands, pursuant to international law, including the Potsdam Declaration and the Cairo Declaration, and renamed some of the islands after the names of the abovementioned warships as the Taiping Island, the Zhongye Island, etc. Between 1947 and 1948, the Chinese government officially demarcated and published an eleven-dash line to affirm and consolidate China’s sovereignty over the South China Sea Islands and its maritime rights and interests in the South China Sea. For several decades afterwards, there was no objection against the line whatsoever from the international community. 

Though the Philippines and some other countries are illegally occupying some islands and reefs of China's Nansha Islands, China has always been committed to peaceful settlement of the South China Sea disputes through bilateral negotiations. Firmly committed to building and safeguarding peace and stability in the South China Sea, China has taken concrete measures to uphold regional peace and stability, proposing a series of cooperation mechanisms, such as the provisional measure of “shelving the disputes and seeking joint development” and the “dual-track” approach.

First, China proposes joint development of oil and gas resources in disputed waters off the Nansha Islands. With a view to enhancing mutual trust, easing conflicts at sea and facilitating the settlement of disputes, China introduced the policy of “shelving the disputes and seeking joint development” in the 1980s and has conducted active negotiations afterwards with countries like the Philippines and Vietnam on joint development and cooperation in the relevant waters of the South China Sea. The negotiations came to some fruition. In March 2005, China, the Philippines and Vietnam signed the Tripartite Agreement for Joint Marine Seismic Undertaking in the Agreement Area in the South China Sea in Manila. Under the agreement, oil companies from the three sides shall work in concert to collect seismic data and study and evaluate the oil reserves in the agreement area, which provides the foundation for the future joint development of oil and gas resources. Besides, since 2013, China also has also reached consensus through friendly consultations with other countries like Vietnam and Brunei on jointly developing oil and gas resources in disputed waters.

Second, China promotes establishment of frameworks to strengthen maritime mutual trust and crisis management. Since the late 20th century, in the interest of managing disputes at sea, maintaining peace, stability and development in the South China Sea, and expanding positive interaction with Southeast Asian countries, China has crafted a number of crisis management mechanisms and confidence building measures with ASEAN countries, including the Philippines and other parties to the disputes. First, China and ten ASEAN countries signed the Declaration on the Conduct of Parties in the South China Sea (DOC) in 2002, which has not only effectively reinforced mutual trust and dispute management in the South China Sea, but also played a crucial and unique role in safeguarding regional peace and stability. Second, in response to the developments of the South China Sea issue, China launched consultations and negotiations with ten ASEAN countries on a “Code of Conduct in the South China Sea” (COC) in 2013. Initial progress has been made, including two lists of commonalities. Third, under the framework of the DOC and through dialogues and consultations, China and ASEAN countries have set up a series of bilateral and multilateral crisis management mechanisms between their foreign ministries, such as the senior officials’ hotline platform in response to maritime emergencies and the maritime hotline on search and rescue. Fourth, China and ASEAN countries affirmed the commitment to a “dual-track” approach for handling the South China Sea issue in 2014, emphasizing that disputes shall be peacefully resolved through negotiations and consultations by countries directly concerned, while peace and stability in the South China Sea shall be maintained jointly by China and ASEAN countries. This novel approach not only makes the disputes in the South China Sea manageable, but also ensures that the South China Sea disputes will not stand in the way of the sound overall relations and interaction between China and ASEAN countries. 

Third, China advocates establishment of dialogue and consultation mechanisms for maritime dispute settlement, and consensus has been reached in a number of areas. Over the years, taking into account the complexity and particularity of the South China Sea issue, China has conducted direct dialogues with other claimants, including the Philippines, to resolve disputes and achieved fruitful results in this regard. For example, on 10 August 1995, China and the Philippines published the Joint Statement Between the People’s Republic of China and the Republic of the Philippines Concerning Consultations on the South China Sea and on Other Areas of Cooperation. On 11 October 2011, China and Vietnam inked the Agreement on Basic Principles Guiding the Settlement of Sea-related Issues Between the People’s Republic of China and the Socialist Republic of Vietnam.

Fourth, China actively advances practical cooperation in the South China Sea. In 2002, China and ten ASEAN countries signed the DOC, highlighting practical cooperation in five aspects, namely, marine environmental protection, scientific research, search and rescue operation, safety of navigation and combating transnational crime. Since the Senior Officials’ Meeting on implementing the DOC held in Bali in 2011, China has been earnestly promoting practical maritime cooperation under the framework of the DOC and actively advancing the proposals to establish three special committees on marine scientific research and environmental protection, navigation safety and search and rescue as well as combating transnational crime. In 2011, the Chinese government set up the China-ASEAN Maritime Cooperation Fund to provide financial support for practical maritime cooperation in the South China Sea.

III. The South China Sea: Dynamics and Challenges

(1) Current Dynamics in the South China Sea

In recent years, the South China Sea situation has remained manageable on the whole. But with the heavy involvement of the US, it has become an increasingly hot issue, as evidenced by frequent disputes or hotspot incidents. Destabilizing factors in the South China Sea are on the rise, and the following features can be seen:

First, interplay between the involvement of major non-regional countries and tactical manoeuver of small countries has become normalcy. From "neutral" to "limited involvement", America's South China Sea policy has metamorphosized into "full involvement" in the military, political and diplomatic fields. The South China Sea issue has become an important vehicle for America's rebalancing strategy towards the Asia-Pacific. Since 2015 in particular, the United States has expanded the area of close-range reconnaissance, intelligence gathering and surveillance from the Nansha Islands to Xisha and Zhongsha Islands. The frequency and intensity have also gone up significantly. Its means are more diverse. Furthermore, the United States deliberately hyped up this issue and tried to shape public opinion in its favor. The Philippines and other claimants, on their part, are capitalizing on this opportunity to speed up unilateral exploration and exploitation of resources and construction on the islands and reefs they have occupied, and maximize their interests through unilaterally initiating arbitration and other means.

 

Second, the frequency of incidents in the South China Sea has gone up markedly. The interplay of forces within and outside this region has emboldened the Philippines and other claimants to make trouble more often, on a larger scale and with greater impact. The local conflicts and incidents they provoke involve many areas, including fishery disputes, oil and gas development, the arbitration case, the formulation of a "COC" and close-range military reconnaissance. 

Third, unilateral actions such as unilateral oil and gas development and illegal fishing that violate others' rights and unilaterally resorting to international dispute settlement mechanisms are the main causes for growing tensions in the South China Sea. In the South China Sea, "disputes over claims" have evolved into "disputes over actual jurisdiction". Most notably, the Philippines and other claimants, in an attempt to further assert their sovereignty, have stepped up actual control over the islands they have illegally occupied and strengthened oil and gas development around them. Despite the DOC's contribution to maintaining stability and advancing cooperation in the South China Sea, the Arbitral Tribunal chose to ignore and even deny its positive role. The Philippines, among others, in flagrant violation of the relevant spirit and agreement in the DOC, tried to advance their "sovereign claims" through such means as increasing construction of military and civilian facilities on the islands they occupy, speeding up unilateral development of oil and gas resources and promoting tourism on relevant islands. Since 2015, Vietnam accelerated construction on the islands it occupies, including Nanwei Dao and Nanhua Jiao. The Philippines also plans to restart airport renovation on Zhongye Dao which it occupies, and seeks opportunities to fortify its military vessels "grounded" on Ren'ai Jiao, which is part of China's Nansha Islands. On oil and gas development, in October 2014, Vietnam signed an agreement with India on jointly developing oil and gas in the South China Sea, where Vietnam intends to offer five additional oil blocks (three were already offered previously) to India for better cooperation between PetroVietnam and Videsh Ltd. of Oil and Natural Gas Corporation of India. The Philippines is also advancing oil and gas exploration and development around Liyue Tan of China's Nansha Islands.

(2) Challenges in Managing the Situation in the South China Sea

On the whole, the following three challenges need to be addressed properly in managing the South China Sea situation:

First, China and the United States face the common challenge of properly managing maritime differences. As the United States increases its military deployment in the South China Sea and steps up close-range reconnaissance, intelligence gathering and surveillance through "regular" patrols, maritime differences between China and the United States are increasingly acute. In 2015, the US military issued three strategic reports, i.e. National Security Strategy, Asia-Pacific Maritime Security Strategy, and A Cooperative Strategy for 21st Century Seapower, all of which stressed that the United States would step up military deployment in the region, increase military activities, enhance its allies' and partners' military power in the air and at sea, and continue to butress its maritime dominance in the Asia-Pacific. As a main focus of America's rebalancing strategy, the South China Sea will become a key avenue for it to maintain dominance in the Asia-Pacific. Since 2015, the United States has been conducting maritime and air close-range reconnaissance and intelligence gathering activities off Zhubi Jiao of the Nansha Islands, Zhongjian Dao of the Xisha Islands and Huangyan Dao of the Zhongsha Islands. China and the United States are increasingly at loggerheads in this area as China tries to uphold its rights and develop resources in the South China Sea and the United States attempts to maintain its dominance at sea. There are greater risks of unintended clashes as the United States conducts reconnaissance and surveillance while China responds. Going forward, the two countries face an even more daunting challenge in managing maritime differences and avoiding maritime conflicts and escalation of tensions. 

Second, both regional and non-regional countries such as the United States and the Philippines keep making moves, and geostrategic competition in the South China Sea is intensifying with more uncertainties in the developments at sea. The centerpiece of the US rebalancing strategy is to strengthen alliances with the Philippines, Japan and others and enhance its relationship with partners such as Vietnam and Malaysia. In 2014, the United States and the Philippines signed the Enhanced Defense Cooperation Agreement, which laid the groundwork for US troops' "returning" to the Philippines. In March and April 2016, the US military gained the right to use the Antonio Bautista Air Base located near the contested Nansha Islands, the Basa Air Base to the northwest of Manila, Fort Magsaysay to the north of Manila, Lumbia Air Base located on the southern island of Mindanao and Mactan-Benito Ebuen Air Base in Cebu, and has stationed 300 troops on these bases. On 14 April 2016, US Secretary of Defense Ashton Carter publicly stated that the United States and the Philippines had carried out "joint patrols" in the South China Sea. On the South China Sea issue, the United States and the Philippines increasingly need each other for their own interests. They collaborate with each other at every turn to contain China. The geostrategic rivalry between China and the US in the South China Sea is intensifying with more uncertainties lurking. There are also greater risks of non-regional countries such as the US getting embroiled in maritime conflicts between China and the Philippines or between China and Vietnam.

Third, the arbitration case unilaterally initiated by the Philippines cannot help to resolve disputes. On the contrary, it only complicates the disputes and makes them harder to settle. In January 2013, the Philippines unilaterally initiated arbitration on its relevant disputes with China in the South China Sea. In October 2015, the Arbitral Tribunal rendered an award on jurisdiction and admissibility in which it decided that it has jurisdiction to consider seven of the Philippines' 15 submissions and its jurisdiction over the rest would be considered at the merits phase. A final ruling is expected by the end of June this year. As a matter of fact, the arbitration case cannot settle disputes between China and the Philippines; it will only exacerbate tensions between the two countries. In particular, the Arbitral Tribunal completely denied the Position Paper of the Government of the People's Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines published on 7 December 2014 and ignored the legal effect of the declaration on optional exceptions made by China in 2006 and the binding force of the DOC on parties concerned. It also neglected the preference of settling disputes through negotiation and consultation and steered the ruling far off the nature of the sovereign disputes over the Nansha Islands. In addition, this will also embolden the Philippines and other claimants to ratchet up their activities in the disputed areas in the South China Sea, such as oil and gas development and construction and control of the islands they occupy. Such moves will make it much harder for claimants to manage differences and resolve disputes and serve no good to regional peace and stability.

IV. Some Thoughts on Advancing Cooperation and Managing Differences in the South China Sea

Going forward, China will continue to defend and contribute to peace and stability in the South China Sea. It is important that China and the United States step up dialogue and communication on the South China Sea issue. China and ASEAN countries should actively pursue the dual-track approach and work together to uphold peace and stability in this region. 

First, China and the United States should increase communication and cooperation through multiple channels to ensure timely information sharing and dialogue on the South China Sea issue and avoid strategic miscalculation and escalation of tension or even conflicts at sea. The United States claims that it takes no position on the disputes in the South China Sea. But in reality, it is siding with the Philippines and Vietnam. The United States' taking position on the South China Sea issue has become the main factor shaping developments in the South China Sea. To maintain peace and stability in the South China Sea and build a new model of major-country relationship, the United States and China need to bear the long-term interests in mind, actively conduct timely dialogue on the South China Sea issue, cement the foundation of mutual trust, avoid strategic miscalculation and suspicion and advance cooperation in low sensitivity areas and functional domains such as oil and gas development, joint maritime search and rescue and combating piracy. 

Second, China and ASEAN countries should implement the "dual-track" approach and explore workable ways and mechanisms to manage the situation in the South China Sea through cooperation. In 2014, China and ASEAN countries agreed to handle the South China Sea issue with a "dual-track" approach, namely, the relevant disputes should be handled properly by parties directly concerned through consultation and negotiation; and China and ASEAN countries will jointly safeguard peace and stability in the South China Sea. The "dual-track" approach takes into account ASEAN countries' interests and concerns in the developments in the South China Sea and provides the feasible means of resolving disputes by countries directly concerned through negotiation. It points the way forward for handling China-ASEAN relations and disputes in the South China Sea in a coordinated manner. That requires the common efforts of all, including China, the Philippines and Vietnam. Parties need to steadily substantiate this initiative, expand common ground and explore workable ways to implement this approach.

Third, parties should establish effective mechanisms for managing risks at sea so as to avoid outbreak and escalation of maritime conflicts. Given the increasingly complex situation in the South China Sea, the Philippines and other claimants have been stepping up military deployment. Non-regional countries such as the United States and Japan are also increasing military presence in the South China Sea. These countries are collaborating with each other to carry out more "regular" joint maritime patrols targeted at China. There are greater risks of tension escalation and conflicts in the South China Sea. So, to effectively manage frictions at sea and maintain regional peace and stability, in particular to prevent maritime frictions from turning into large-scale conflicts, China, the United States, Japan, the Philippines and all other relevant parties should increase communication and jointly build efficient and timely emergency response and confidence-building mechanisms on maritime affairs, such as setting up a maritime emergency hotline and improving the code of conduct on the safety of naval and air military encounters in the South China Sea.

Fourth, China and ASEAN need to jointly build the 21st Century Maritime Silk Road, grow maritime partnerships and deepen cooperation in such areas as trade, investment, people-to-people exchange, infrastructure connectivity and marine development so as to forge stronger bonds with intertwined economic interests, build the South China Sea into a sea of cooperation and form a community of common interests and shared future.