[EAI Commentary] China's Moves Following the South China Sea Ruling

On July 12, the Permanent Court of Arbitration (PCA) in The Hague, Netherlands, ruled that China's claims of sovereignty in the dispute between China and the Philippines over the South China Sea lacked legal basis under international law. Despite the highly predictable outcome, China strongly reacted by stating, "The decision is null, void, and without legal effect, and shall not be recognized or accepted," and by conducting large-scale maritime military exercises. While it remains uncertain whether this ruling can actually compel China's compliance, it is clear that China, which has advocated for itself as a "major responsible country," has suffered a critical blow to its image as a "major country that does not abide by international law."

China has officially framed the South China Sea issue as a territorial dispute, aiming to weaken or circumvent U.S. containment efforts. However, unexpectedly, the issue shifted to one of "international law," which China had sought to avoid, due to the Philippines' actions. Since its emergence on the international stage in the early 1970s, China has experienced criticism from the West for being a "state that does not adhere to international norms and rules" or a "state that pursues maximum benefits and minimum obligations" in international organizations, leading to a kind of trauma regarding international law and norms. Perhaps influenced by this, China adopted a seemingly dismissive attitude when the Philippines brought the case to arbitration in 2013, but internally, it appeared to be caught off guard by the unexpected lawsuit. Despite declaring "non-appearance" in response to the Philippines' suit, China issued a Position Paper in December 2014 outlining its stance, inadvertently leading the arbitral tribunal to perceive it as a "defense."

In essence, China's attempt to frame the South China Sea issue as a territorial dispute and thereby weaken U.S. containment has resulted in significant damage to China's international image. Particularly, the so-called "Xi Jinping-style diplomacy," where President Xi Jinping has personally led summit diplomacy to showcase China's international status and standing as a G2, despite internal political and economic difficulties, has been wounded. Consequently, China's future actions are a matter of intense interest. Concerns are being raised that if China escalates its offensive response to mitigate this damage, the power competition between the U.S. and China in the South China Sea could enter a critical phase. To find clues for predicting China's future moves, a fundamental review is necessary regarding how China actually perceives the South China Sea issue and what its policy priorities are concerning this matter.

Officially, China defines the South China Sea issue as a matter of territorial sovereignty and maritime rights and interests, making it clear that it is an issue where no compromise is possible, thus appearing to leave no room for negotiation. However, internally, China considers the South China Sea issue from multiple complex and diverse perspectives rather than adhering strictly to its official stance, suggesting that its future actions are likely to be fluid and influenced by various variables.

Primarily, China's assertion that the South China Sea issue is a territorial dispute conceals its intention to prevent U.S. intervention. China argues that territorial disputes should be resolved through bilateral dialogue and negotiation between the parties involved, and that "third parties" (implicitly referring to the U.S.) should not intervene, nor should the issue be subject to international discussion and rulings. In other words, China is more concerned about the potential for increased U.S. involvement, using the ruling as a pretext, than about the ruling itself, which was largely anticipated. Therefore, U.S. actions are likely to remain a significant variable in China's response.

Meanwhile, China's response to the territorial dispute with Japan in the East China Sea offers some insights. The East China Sea, like the South China Sea, involved territorial disputes, and the potential for U.S. intervention was a key variable. However, from China's perspective, the East China Sea is a case where China lacks effective control, unlike the South China Sea, and where nationalistic sentiments are strongly involved, making it difficult to find an easy resolution. Despite the fact that Japan's nationalization measure, which triggered the dispute, was not withdrawn, China sought a way out through crisis management discussions with Japan. Given the nature of the dispute, the South China Sea conflict is an issue where China can exercise more flexibility than in the East China Sea. That is, if the U.S. does not expand its military activities in the South China Sea under the pretext of the ruling, China will have little incentive to further escalate the situation.

Considering its current domestic political and economic situation, escalating a naval and air force competition with the U.S. is not a rational choice for China. China has already experienced this dilemma through the cases of the Philippines and Vietnam. Its hardline stance, aimed at weakening U.S. intervention and surveillance activities, paradoxically stimulated security concerns among neighboring ASEAN countries, increasing their reliance on the U.S. and providing justification for U.S. intervention.

China's South China Sea policy aims to achieve two objectives simultaneously: weakening U.S. regional intervention and influence, while expanding its maritime presence through cooperation with ASEAN countries. President Xi Jinping's proposal of the "Maritime Silk Road in the 21st Century," also known as the "One Belt, One Road" (OBOR) initiative, is precisely aimed at these dual policy goals. In short, China seeks to expand its maritime reach by circumventing U.S. containment whenever possible.

Upon its inception, the Xi Jinping administration clearly designated the construction of a "maritime power" as one of the key national objectives for realizing the "Chinese Dream." The 2013 Chinese Defense White Paper unusually stated, "The ocean is a crucial space for China to achieve sustainable development and guarantee resources; it is related to the well-being of the people and the future of the nation. Building a maritime power is a major national development strategy." Concurrently, the Xi Jinping administration, through the slogan of "Two Centenaries," made it clear that the target year for realizing the Chinese Dream is 2049. The Chinese leadership had already reached a consensus on a stable and sustainable long-term rise plan, rather than a hasty ascent, through a collective study on "the rise and fall of great powers" in 2003. They also fully anticipated that conflict with the established great power, the U.S., would be inevitable in this process. In other words, the "loss" in the South China Sea, which might appear as a shocking event for China, was in fact a predictable outcome within the context of U.S.-China competition. China had indeed foreseen an unfavorable ruling in the South China Sea and had prepared a "White Paper" in advance. China will continue to pursue its goal of becoming a maritime power, but it has determined that avoiding unnecessary escalation of competition with the U.S., even if inevitable, is the rational choice.

Furthermore, for China to become a maritime power, it is crucial to dispel the "China threat theory" traditionally held by ASEAN countries and provide incentives for cooperation. To emphasize that its pursuit of becoming a maritime power does not pose a threat or cause anxiety to neighboring countries, China has put forth the concepts of an "interest community" and a "community of shared future." The Maritime Silk Road initiative is also part of an effort to materialize the expected spillover effects of China's rise for ASEAN countries. China anticipates that by building economic networks with ASEAN countries, it can ultimately weaken the justification for U.S. intervention in the region. However, excessive competition and tension with the U.S. in the South China Sea could hinder the "One Belt, One Road" initiative, which China is ambitiously pursuing as a new growth engine, and consequently disrupt its rise schedule. In summary, China's primary concern regarding the South China Sea issue is how to effectively counter the U.S. attempt to "proxy contain" China by fronting its allies in Southeast Asia.

Nevertheless, China will continue to assert its territorial sovereignty and maritime rights and interests in the South China Sea based on the existing nine-dash line. The Xi Jinping administration's national objective of building a maritime power and its "sovereign actions" will not be seen as retreating due to "U.S. pressure" or an "ineffective arbitration decision." Simultaneously, China is highly likely to intensify its diplomatic offensive towards the international community and ASEAN countries. Firstly, China feels significant pressure from the international community's perception that disregarding the PCA ruling undermines existing international law and the international order, and it is actively seeking to defend itself. This can be seen in China's counterarguments to the PCA ruling. China is counter-attacking by claiming that the arbitral decision actually "violates the spirit of the rule of law" and "tramples on international law and the rules of international relations." Furthermore, China emphasizes that it "firmly supports freedom of navigation," but argues that the "freedom of navigation operations" conducted by the U.S. destabilize the region and are therefore unacceptable. China is highly sensitive to being perceived as a revisionist power that denies current international law and the international order, and it intends to actively counter this perception. Instead, China is accusing the U.S. of being the source of instability in the South China Sea. In other words, China has concluded that engaging in diplomatic warfare targeting the international community is more realistic than direct military competition with the U.S.

This also implies that China is mindful of a third perspective in its competition with the U.S., particularly that of ASEAN countries. Therefore, while maintaining its existing claims of sovereignty over the South China Sea, China is likely to intensify its economic diplomacy offensive towards ASEAN countries. The "One Belt, One Road" initiative is also expected to gain momentum in this context. Traditionally friendly countries like Cambodia and Laos, as well as neutral countries such as Thailand and Indonesia, have considerable expectations for China's Maritime Silk Road initiative. Recently, with changes in government in Myanmar, Vietnam, and the Philippines, these countries have expressed a willingness to improve relations with China, unlike their previous governments, leading China to believe that the diplomatic environment for engaging with ASEAN is favorable.

In conclusion, from China's perspective, the South China Sea issue is not merely a territorial dispute but a complex equation involving multiple intertwined issues: advancing the Maritime Silk Road, gradually realizing its ambition of becoming a maritime power, satisfying domestic expectations for its rise, strengthening networks with ASEAN countries, and competing with the U.S. for power and norms. Ultimately, the Xi Jinping administration's policy response to the South China Sea will likely unfold fluidly depending on whose gaze it prioritizes: the Chinese people, ASEAN countries, the U.S., or the international community. Nevertheless, China will maintain a consistent approach in pursuing its gradual and long-term rise agenda. Considering this complex reality, China aims to proceed with its gradual rise by circumventing direct confrontation with the U.S. whenever possible and leveraging various economic tools, where it perceives itself to have a relative advantage, to draw in neighboring countries and counter U.S. containment. In this process, Asian countries will increasingly face unwanted choices between the U.S. and China, and particularly for South Korea, which bears the burden of the North Korean nuclear issue, the pressure is expected to intensify.

Author

Lee Dong-ryulDirector of the EAI China Research Center and Professor at Dongduk Women's University. He holds a Ph.D. in Political Science from Peking University and has served as a policy advisor to the Ministry of Unification and an executive member of the Joint Research Committee of Korean and Chinese Experts. His main research areas include China's foreign relations, China's ethnic minorities, and Chinese nationalism. His recent works include "Changes and Continuity in the Foreign Policy of the Xi Jinping Regime," "China's policy and influence on the North Korea nuclear issue: denuclearization and/or stabilization of the Korean peninsula?" "Speaking of China's Future" (editor), and "China's Territorial Disputes" (co-author).

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