Not gone and not forgotten, China is ready to solidify its claim to the South
China Sea (SCS). Recent satellite imagery confirms China
is conducting significant land reclamation operations in the Spratly Islands
in the SCS. The SCS is an important fishing ground and is believed to hold
large amounts of oil and gas. Undermining the United States' influence in the
region, China intends to play the shepherd in one of the world's busiest trade
routes.
The Spratly Islands along with the Paracel Islands and several maritime boundaries
in the SCS have been hotly disputed for several centuries. The conflict includes
Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam and
has predominantly centered on historical and cultural claims. Though offering
very little in the way of land or resources, the islands serve as a tangible
marker. As such, parties to the conflict have been quick to occupy them.
China's most recent undertaking in
the Spratly island chain is not their first - the last 18 months have already
seen three reclamation projects. However, at more than 3,000 meters and counting
Fiery Cross Reef is their grandest venture yet and appears destined to house
an airstrip and harbor, both capable of supporting military hardware. The Philippines,
Malaysia, and Vietnam already operate airstrips
in the Spratlys, but can only support smaller, prop-based aircraft.
As it pursues expansion, China has been hesitant to
engage in multilateral negotiations and meaningful dialogue on the SCS was
relegated to the sidelines at the recent APEC and ASEAN summits. Instead, China
- demanding an in-house solution to the convoluted matter - is content to flex
its superior political and military might to limited opposition. Reluctant
to step on any toes and with its feet in multiple courts, the United States
is short on political recourse, and that's how China likes it.
Though China's aims are long-term, control of the Spratlies and Paracels is
not subsidiary to any prize that may lie beneath. Chinese President Xi Jinping's "Asian
security concept" calls for
Asian solutions to Asian problems and seeks to limit Western influence in such "domestic" affairs.
Unchecked dominance in the SCS, whether through direct force or intimidation,
would be a remarkable victory in this regard.
And to the victor go the spoils, which in this case are still pretty unclear,
a side effect of the conflict itself. The Energy Information Administration estimates the
SCS holds approximately 11 billion barrels (bbl) of oil and 190 trillion cubic
feet (Tcf) of natural gas. That estimate jumps to as much as 22 bbl of oil
and 290 Tcf of natural gas according to a U.S. Geological Survey study. Chinese
National Offshore Oil Company (CNOOC) is perhaps the most optimistic and estimates
undiscovered resources of oil and gas in the SCS total 125 bbl and 500 Tcf
respectively.
To date, the SCS nations have been relatively successful drilling in their
near-offshore waters. Malaysia and Thailand for example, have created Joint
Development Agreements to expedite production without addressing territorial
disputes. For its part, China has largely played the provocateur. In 2011 and
2012, China offered a slew of oil and gas blocks to foreign bidders; the blocks
- in contested waters - received no bids. More recently in May, China stationed its
new deepwater drilling rig within Vietnam's Exclusive Economic Zone setting
off a series of violent protests in Vietnam.
Disregarding today's low commodity prices, the SCS is a tough sell for Western
majors unwilling to take sides. Shell and ExxonMobil have been the most active
in conflict-free waters and any multilateral resolution favors their size and
deepwater drilling experience.
Despite the uncertainty of the resources below the surface, there is quantifiable
wealth above. Approximately 14 million barrels of crude oil and over half of
the global LNG trade pass through
the SCS daily. In all, $5.3 trillion in total trade moves annually
through the SCS. With an aim to control no
less than 80 percent of the sea, China may soon be able to impose its will
on global trade patterns.
