Home Insider South China Sea Conflict Threatens ASEAN’s Growth and Stability

South China Sea Conflict Threatens ASEAN’s Growth and Stability

Last month the Philippines offered to begin importing rice from Myanmar in a move that reflects the growing cooperation among Southeast Asian countries. Cooperation is expected to increase with the implementation of the ASEAN Economic Community (AEC) which was initiated last December. The AEC is ranked the 7th largest economy in the world and the volume of trade in the region is estimated at $2.5 trillion USD.

However, the heightened conflict between the Philippines and China over the South China Sea will be an obstacle for continued growth in the region. On 12 July, the Permanent Court of Arbitration (PCA) in The Hague declared China’s claim to the sea as without basis and upheld the Philippines’ claim to its Exclusive Economic Zone (EEZ) based on the UN Convention of the Law of the Seas (UNCLOS). China, however, has declared it has no plans to honor the court’s ruling.

Choking the Region’s Economy

The South China Sea is one of the busiest sea lanes in the world with more than 35 percent of world oil from the Middle East passing through the narrow Strait of Malacca and on to Singapore, Thailand, Hong Kong, China, Taiwan, South Korea and Japan. Restricting access to the area, as China is attempting, will affect not only the economies of these countries but the global economy as well.

China has gradually increased patrols, occupied reefsand shoals, and reclaimed and built artificial islands, constructing facilities that can be used for military purposes. With blatant disregard of diplomacy, it clashed with Vietnam and the Philippines by placing an oil rig in the Paracels in 2014 and 2016 and then occupied the Mischief Reef and the Scarborough shoal in 2012.Recently, it clashed with Indonesia in the Natuna Islands, prompting President Widodo to send several warships in the area.

The Philippines, with a weak military decided to bring the case to the PCA to enforce provisions of the UNCLOS where both countries are signatories. China refused to participate in the arbitration proceedings and insisted on bilateral talks with other claimants. Talks, China demands, would be premised on the framework of their ‘historic right’ to the whole area — a demand that is a non-starter.

China Rebuffed

The global community called for China to respect and abide by the ruling. Instead, China increased patrols and even sent a nuclear-capable bomber over the Scarborough Shoal as a show of force. However, the affected countries can pursue other legal frameworks to deal with China. The ruling can be used by the other claimants to pursue their case which will likely be a nightmare for China whose compliance to international laws and conventions will be put to test, and its position in the international community as an emerging global leader will be questioned.

At the ASEAN, its efforts are focused in keeping the issue out of the association’s agenda. It exerted its influence with Cambodia and Laos and has successfully prevented the inclusion of the issue in the communiqué during the summit in 2012. Laos who is chairing this year’s summit is expected to do the same. With a consensus decision-making process, China’s intervention has strained relations within the association and may weaken it in the end.

Impact on the Region

The region is becoming a dangerous powder keg. US is intensifying its ‘freedom of navigation’ activities and deploying more naval assets in the area. The Philippines has been forced to modernize its armed forces and Indonesia recently strengthened its forces in the Natuna Islands where its navy clashed with Chinese coast guard vessels. Vietnam, of course is now considering acquiring US arms. China further upped the ante by increasing its patrols and threatening to put up an air defense zone (ADZ).

Miscalculations could easily happen that will lead to armed confrontation.

Disturbing the status quo in the South China Sea will be economically disastrous for the region. Most countries are silent and do not want to rock the boat lest their economic ties with China will be affected. But some countries are now making their voices heard. Singapore, whose economy is dependent on the business that passes through the South China Sea, was the first to issue a statement after the PAC ruling was released. Malaysia is pushing more for ASEAN’s collective position on the issue.

Consensus is the foundation of ASEAN cooperation. The wedge driven by China is deepening a division between its members and dragging the economy of the region with it. It may be successful in preventing discussion of the issue, but it will also polarize the region with members taking extreme sides. A divided ASEAN will not be good for China, but it will be advantageous to the US and Japan.

Myanmar in the Balancing Act

China is currently the top investor and one of the biggest trading partners of Myanmar. It is the sourceof the country’s consumer goods and buys rice, precious stones and other resources. It hosts a pipeline from the Bay of Bengal to the Yunan province of China. Military cooperation between the two countries is another tie that binds them. Outside the sphere of China, the country is also poised to grow with the other countries through the AEC. All of these will be impacted by the South China Sea conflict.

In response to the ruling, the Myanmar government issued a statement that it is committed to the principle of rule of law in the conduct of its foreign policy, a general statement which mirrors the balancing act of the government. It has to maintain its long-standing bilateral relations with China, but at the same time it needs support from the West for its transition to democracy. We have to see if the country will kowtow to the Chinese or it will take its own independent course when the right time comes.

Where is China’s Guan Xi Philosophy for Foreign Relations?

The myth of China’s ‘peaceful rise’ has been shattered and its image as the regional bully has been reinforced after its response to the PCA ruling. Saber-rattling is the language China uses in its foreign policy agenda. China has been a polarizing agent in the region, working on its selfish interest rather than what is beneficial to all.

However, China would be wise apply their own advice of Guan Xi. This phrase refers to the development of supporters and communal relationships and many say this philosophy is the foundation of Chinese business. However, it appears China needs to apply this philosophy to their foreign policy agenda as well. Instead of building a community, the Chinese have been busy threatening its neighbors with displays of military hardware and braggadocio.