Bloomberg story --China’s Ancient Mariners Stoke Modern Conflict Over Oil in South China Sea
China’s Ancient Mariners Stoke Modern Conflict Over Oil in South China Sea
China’s Ancient Mariners Stoke Modern Conflict in S. China Sea
2012-08-12 22:00:01.3 GMT
By Flavia Krause-Jackson and Daniel Ten Kate
Aug. 13 (Bloomberg) -- In asserting its claims to the tiny
islands, rocks and reefs in the South China Sea, China points to
records of its ancient mariners. Today, those waters are far
more important to China than in the age of the sail.
That’s because the area may hold oil riches that rival
Saudi Arabia’s, a prospect that is stoking tensions in one of
the world’s busiest shipping lanes as China undertakes its once-
in-a-decade leadership transition.
China’s assertiveness over a vast stretch of sea has grown
in lockstep with its economic clout as it overtook the U.S. to
become the world’s largest energy user. It is encountering
competition over the rights from others, notably Vietnam and the
Philippines, which are also asserting their claims.
“There is no advantage for China to back down or enter
negotiations,” said Andrew Nathan, a scholar of Chinese
politics and foreign policy at Columbia University in New York.
“China won’t calm down, and the current posture reflects a
long-established strategy to reassert its claims steadily over
time without ceding an inch.”
At stake are unproven oil reserves of as much as 213
billion barrels, according to Chinese studies cited in 2008 by
the U.S. Energy Information Administration. That compares with
265.4 billion barrels of proven reserves held by Saudi Arabia as
of 2011, according to the BP Statistical Review of World Energy.
In 2010, China became the world’s top energy consumer. Its
demand for oil alone surged to 9.8 million barrels per day in
2011 from 216,000 barrels per day in 1965, BP data shows. That’s
more than double its daily production of 4.1 million barrels.
A net oil importer since 1993, China’s own proven oil
reserves would last only 10 years at the current production
levels, while Vietnam’s production would last 37 years,
according to BP Plc estimates. The needs of the Philippines,
because it imports nearly all of its oil, are greater than
China’s, Philippine Foreign Minister Albert del Rosario said in
an interview last year.
The world’s second-largest economy claims “indisputable
sovereignty” over most of a body of water that lies south of
mainland China, including more than 100 small islands, atolls
and reefs that form the Paracel and Spratly Islands. Those
claims are contested by Vietnam, the Philippines, Malaysia,
Brunei and Taiwan.
China says explorer Zheng He, whose sea adventures predate
Christopher Columbus, crossed the South China Sea during the
Ming Dynasty and cites historical maps that long predate the
founding of the People’s Republic in 1949. The Chinese Foreign
Ministry website says the earliest discovery of the Spratlys,
called Nansha in China and Troung Sa in Vietnam, can be traced
back 2,000 years to the Han dynasty.
These records form the basis of China’s “nine-dash” map
of the sea, first published in 1947, that extends hundreds of
miles south from China’s Hainan Island to the equatorial waters
off the coast of Borneo. North Vietnam recognized Chinese
sovereignty over the area from the 1950s to the 1970s, while the
Philippine claim of some islands dates back to the 1950s.
In the closing days of the Vietnam War, China seized the
Paracel Islands in a 1974 naval battle with South Vietnam. In
1988, China sank several ships and killed more than 70
Vietnamese sailors in a skirmish over the Spratlys.
Along with the growing strength of its navy, China has used
its maritime surveillance ships to harass foreign fishing boats,
cut survey ships’ cables, and plant markers on unoccupied reefs.
At least eight incidents between China and the Philippines, a
U.S. ally, in the last 18 months have highlighted conflicting
territorial and resource claims, according to the Congressional
While all-out war is unlikely, “all of the trends are in
the wrong direction,” the International Crisis Group, a policy
research organization, said in a report last month.
The competing nations have moved to assert administrative
control over the islands through setting up local governments,
building structures, passing laws and promoting tourism, often
leading to tensions. After Vietnam passed a maritime law in
June, China delineated oil blocks off areas that Hanoi’s leaders
had already awarded and set up a military garrison in the
Adding to the mix is the U.S., which is shifting military
assets to Asia and is advocating multilateral regional talks on
the South China Sea. Secretary of State Hillary Clinton said in
a July 18 editorial that China’s call for bilateral talks “is a
recipe for confusion and even confrontation.”
China’s actions in the Paracels run “counter to
collaborative diplomatic efforts to resolve differences and
risks further escalating tensions in the region,” State
Department spokesman Patrick Ventrell said on Aug. 3. A day
later, officials in Beijing said the U.S. was sending “a
seriously wrong signal” to rivals for territorial rights in the
South China Sea.
“The Chinese tend to react in very visceral fashion, and
that does not always go down well,” said Jonathan D. Pollack,
an Asian and Pacific Studies specialist at the Brookings
Institution in Washington, in a telephone interview. “Any time
they see a U.S. role in anything, they will lash out.”
The U.S., which says it doesn’t take sides on competing
claims, has a declared national interest in a stretch of sea
that carries an annual $5 trillion in ship-borne trade and
frequently cites concerns of freedom of navigation. China denies
ever threatening ships passing through its waters.
“The U.S. is unlikely to get involved directly, as that
would alter a long-standing policy of maintaining neutrality in
territorial disputes and complicate its broader relationship
with China,” said Taylor Fravel, a professor at the
Massachusetts Institute of Technology in Cambridge,
Massachusetts. “However, the U.S. is likely to speak out when
it believes that trends are challenging regional stability or
the principle of freedom of navigation.”
The new surge in hostilities can be traced to about 2007,
when claimants moved to strengthen their positions and develop
oil and gas fields within their 200-nautical-mile economic
zones, according to analyst Ian Storey of the Institute of
Southeast Asian Studies in Singapore.
Government-owned China National Offshore Oil Corp., China’s
largest off-shore oil producer and parent of Cnooc Ltd., in May
begin drilling using its first deep-water drilling rig north of
the Paracels. The proposed acquisition of Nexen Inc. of Canada
by Cnooc, in a deal valued at $15.1 billion, would give China
in-house deep-sea drilling expertise it had lacked, according to
Dean Cheng, a researcher on Chinese political and security
issues at the Heritage Foundation in Washington.
“It is certainly conceivable that if the Chinese are out
there first, and the Chinese find oil and they can back their
claims with military force that, in a sense, the region is going
to be effectively ceded to the Chinese,” he said.
Vietnam has bid out areas within China’s claims, with Exxon
Mobil Corp. and Gazprom OAO among companies that have signed
deals to explore the area. The Philippines has also opened parts
of the waters to international companies, though in a July
auction it received bids only from smaller, local oil companies
such as Makati City-based Helios Petroleum.
The existing mechanisms for China and Southeast Asian
nations to hammer out their differences are proving inadequate.
China says its claims pre-date the 1982 United Nations
Convention on the Law of the Sea, which sets out a framework for
a solution, and won’t submit to international arbitration.
A meeting in July of the Association of Southeast Asian
Nations hosted by Cambodia failed to reach a consensus on
handling disputes in the South China Sea.
If after nine years Asean and China cannot agree on how to
implement a set of confidence-building measures, “what hope is
there for reaching an agreement on a binding code designed to
limit the sovereignty-building activities of the more active
claimants?” said Storey. “Little to none, I would say.”