The Award by the Permanent Court of Arbitration: Challenge or Chance for China?

The Award by the Permanent Court of Arbitration: Challenge or Chance for China?

Many politicians and political observers were surprised by the recent award of the Permanent Court of Arbitration (PCA) in The Hague regarding the South China Sea (SCS) case. It decided nearly 100 percent in favour of the Philippines, and denied nearly 100 percent of all the claims made by China. In addition, the award accused China of encroaching illegally into the Philippine’s Exclusive Economic Zone (EEZ), violating the UNCLOS by blocking Philippine fishing boats and oil exploration vessels, and causing “severe harm” to the habitats of endangered species in the SCS.

Only few politicians and political observers were accordingly not surprised when China declared: the award is “null and void and has no binding force”. China neither accepts nor recognizes it. In a 13.900-word White Paper, published just one day after the PCA decision, Beijing once again emphasized its historic rights and claimed that the Philippines had “distorted facts, misinterpreted laws and concocted a pack of lies” in order to undermine China’s interests. Other Chinese commentators and newspapers were even more outspoken. The People’s Daily qualified the PCA as a “lackey of some outside forces” that would be remembered as a “laughing stock” in human history (New York Times, July 12, 2016). Prof. Sen Dingli from Fudan-University demanded that his country revise its stance and “employ a more effective approach”. The Chinese newspaper “Global Times” reassured its readers that “Chinese law enforcement forces have been well prepared” and “Chinese people will firmly support our government to launch a tit-for-tat counterpunch.”(The Guardian, July 12, 2016).

But this tough language was not followed by equally militant actions. Though China’s vice-foreign minister stated one day after the decision of The Hague that its government reserved the right to declare an “Air Defence Identification Zone” (ADIZ) over the SCS, China did not impose it. No flights of the Chinese Air Force were reported in the contested area between Mischief and Subic Reefs. Moreover, China did not begin construction of an artificial island on Scarborough Shoal, nor did it announce any intent to withdraw from UNCLOS. Unlike the 2012 Japanese nationalization of the disputed Senkaku/Diaoyutai-islands, China has not allowed managed public protests to take place near the Philippines or US embassies.

China’s Strategic Options

These different and sometimes contradictory signals given by China may indicate the country needs time to digest the tribunal’s award and to develop a strategy to cope with this grave challenge to its international reputation. Generally speaking, there are three strategies at China’s disposal.

1. Staying on course

Some analysts argue that China’s refraining from militant actions is only a tactical move to be revised after September, when the high-level segment of the 2016 UN-General-Assembly and the meeting of the G- 20- Summit. After that, Beijing would again adhere to its old strategy “pushing towards the bottom-line without breaking it” (Shi Yinhong (Renmin-University Beijing) Shi Yinhong 2015 „China’s Complicated Foreign Policy.“) by fortifying its position in the SCS with both non-military and military means: building and expanding artificial islands, dispatching fishery flotillas protected by para-military maritime forces, and strengthening its navy and air force units.

On the diplomatic front, Beijing has already started some initiatives. Though the Chinese government has repeatedly rejected an “internationalization” of the conflicts in the SCS, it has again launched an international campaign to support its stance against dispute settlement by supra-national institutions such as the PCA. In June, Beijing claimed that it had won support for its position from 60 countries, but so far only Sudan, Gambia, Kenya, Russia, South Africa, Zimbabwe and Cambodia have explicitly endorsed China’s position.

In ASEAN, Cambodia is the staunchest and most important ally of Beijing. For the past several years, Phnom Penh has successfully prevented ASEAN from passing a common resolution openly criticising China’s policy towards the SCS. A new Chinese aid package of almost 600 Mio. US$ was given to Cambodia shortly after the PCA announced its award. Though Prime Minister Hun Sen denied any political strings attached to this package, outside observers were not surprised, when at the ASEAN Foreign Ministers’ meeting in Vientiane (July 24, 2016), Cambodia blocked a joint statement endorsing the award of The Hague. The official statement of this meeting only expressed serious concerns over artificial land reclamations and escalations of activities in the SCS, and added that such actions had “eroded trust and confidence, increased tensions and may undermine peace, security and stability in the region.”

These diplomatic victories notwithstanding, Beijing has also had to take into account the negative effects of a policy based on its economic and military power. With a carrot-and-stick approach, China can force most of the governments of the ASEAN members into some kind of cooperation. It cannot, however, foster the image of a benign hegemon, which selflessly promotes the economic success and national sovereignty of its neighbours in the South. Vice versa, the ASEAN governments face grave difficulties in explaining to their nationalistically-inclined populations why following China’s lead is in the interest of their country.

To balance China’s growing military power, most of the ASEAN states have increased their military budgets, and more or less openly welcomed the deployment of military forces from the US, Japan and even India. But a further militarization of the conflicts in the SCS will inevitably jeopardize the comprehensive and intensive economic cooperation between China and Southeast Asia which Beijing is aiming for.

2. Complying with the International Law

After being a pariah state for over two decades, China’s integration into the world market and the acceptance of the international order made it possible for the PRC to become one of the world’s leading economic and political powers. Not only has Beijing signed most UN-conventions and agreements – last not least the UNCLOS – but it also acceded to the WTO and has participated pro-actively in many UN peacekeeping missions.

In stark contrast to other Asian nations such as India, Bangladesh, Singapore, Malaysia, Myanmar and others which, in their respective maritime areas, accepted dispute settlement by international courts, the PRC has boycotted the PCA’s proceedings and rejected its ruling. Some analysts interpreted this move as a rejection of the entire system of international law, instead opting for the law of the strongest.

But Beijing’s attitude to international law is much more ambiguous and contradictory. Though the PRC refused to participate, it did not ignore the proceedings in The Hague. In December 7, 2014 the Chinese Ministry of Foreign Affairs released the Chinese government’s response which defines the Chinese position, referring to the UNCLOS. The Chinese White Paper published after the announcement of the award in The Hague in 2016 pursues this approach in more detail.

“This novel form of ‘non-participating participation’ must be seen against the backcloth of a strategic ambition by China to develop a greater mastery of international law.” to quote a report of Chatham House in London. According to this, the Chinese leadership took “impressive steps” to promote compliance with international law by hiring international lawyers and by educating and training Chinese experts in international law (China’s fury over south China Sea belies its legal insecurities? Aug 7, 2016).

To show its willingness to comply with international law, and with substantial parts of the award, “all China has to do is – nothing”, as Bill Hayton put it (Bill Hayton, What will follow China’s legel defeat in South China Sea? NIKKEI Asian review, July 13, 2016). China does needs not publically abandon its claims in the SCS. It can show that it respects the Economic Exclusive Zones of the other claimant states with practical steps, such as stopping oil exploration or fishery.

Even if that is done in a low-profile, discreet and face-saving way, it will not be easy to pass this message to a Chinese public who, over the past decades, have come to view China’s sovereignty and territorial integrity in the SCS as non-negotiable, undisputed. For them, any compromise could come close to high treason. Last not least, power, influence and resources of organisations and institutions like the navy and the air force, the governments of the coastal provinces, the coast guards, the fishery protection flotillas etc. have grown enormously in size in these years of conflict. It is only logical then that they would be more than reluctant to agree with a form of conflict settlement which might be a serious blow to their power, influence and resources.

(Dr. Gerhard Will)

3. Establishing new international rules and practices

China’s rise took place in an international system which is coming under growing criticism, because it is based on “Western” dominance, and therefore unfair to countries like China. The Chinese Communist Party (CCP) considers itself as the front-rank in a fierce ideological confrontation with the “West”. CCP’s general secretary Xi Jinping began an ideological campaign at home and abroad to create and promote a “Chinese ideology”. “An important part of the strategy is to discredit Western ideas and institutions, both in order to make China’s alternative model seem more attractive …” (Mareike Ohlberg, Boosting the Party’s Voice. China’s quest for global ideological dominance. MERICS China Monitor, July 21, 2016).

The most important message of this campaign means: “Democracy with Chinese characteristics” is superior to “Western Democracy” because it is “real democracy” with a better economic performance.

But what does that mean for the realm of international relations?

So far, Beijing did not present an alternative vision of an international order. The PRC has launched and supported some initiatives and cooperation formats in which the US have no say, such as  the “Shanghai Cooperation Organization”, the BRICS group,  or, in the economic,  the “One Belt One Road Initiative” and the “Asian Infrastructure Investment Bank”. These have been conceived to transform old power constellations. It is, however, quite unclear which role existing international law would play in these cooperation agreements, and how far conflicts would be settled by referring to international law or via bilateral or multilateral consultations.

It is obvious that such new or modified international norms and procedures cannot be worked out on the drawing board. They have to be developed in a closely linked process between theory and practice. In this process, the SCS could become a new testing ground for China’s ability to build a new regional order and cooperative security architecture which would find the consent of its neighbours in South East Asia.

For almost 20 years, Beijing has declared that the conflicts in the SCS should be settled by bilateral negotiations, and by the joint development of the shared resources. In the summer of 2016, Foreign Minister Wang Yi stated that bilateral negotiations can be complemented by multilateral negotiations and arrangements. But till now, there has been only one case of such a bilateral agreement regarding maritime delimitation and fishery cooperation. These are the agreements on the Gulf of Tong King which were signed on Dec. 25, 2000, and ratified more than three years later (June 30, 2004). Other projects of common development with Chinese participation failed, and Beijing did not give prominence to the above mentioned Tong King – agreements as examples of China’s willingness and ability for compromise and cooperation.

Therefore, the award of The Hague could and should be a reminder, a last call for Beijing to demonstrate its willingness and ability to settle conflicts via bilateral agreements and cooperative arrangements. Since the competition for dwindling fish-stocks is one of the most critical drivers of conflict in the SCS, endangering not only the livelihood but the very lives of many fishermen in cooperation projects, fishery should be given absolute priority.

Successfully concluded and implemented cooperation agreements could pave the way for further steps in building regional security architecture and for a comprehensive conflict settlement in the SCS. Beyond that, they could form important components of the new regional and international system the PRC is striving for. If Chinese proposals of bilateral and multilateral consultations and negotiations do not show any positive results in the near future, they will be seen as nothing but a fig-leaf for China’s assertive pursuit in the SCS, casting grave doubts in China’s sincerity.

4. Concluding remarks

When we look at recent speeches and statements of Xi Jinping and his advisers, a military approach to the conflicts in the SCS appear to get priority, whereas diplomatic efforts would only play a secondary, auxiliary role. One of Xi’s senior advisers described his strategy as follows: “China’s leaders have exhibited different types of leadership. Mao took great risks as he crashed repeatedly against immovable ‘walls’ to achieve his goals. Jiang Zemin and Hu Jintao shunned risks and tiptoed away from the walls. Xi like Mao takes bold risks, fearlessly attacks a well-chosen wall, and adjusts when the wall won’t budge or cracks.” In February 2016, the seven existing military regions were replaced by five externally oriented theatre commands. One of them, the new “Southern Theatre Command” with a “main strategic direction towards the South China Sea will be the “core of China’s national defence.” (Op. cit. P. 217).

Xi himself speaks of a renaissance of the Chinese Nation, restoring it to its old strength, magnitude and splendour. He called this “China’s dream”. But contrary to old imperial China whose power rested on a flourishing, auto-centric economy, the power of modern China rests on flourishing economic relations with regional and international partners. An indispensable precondition for flourishing economic relations is an international order and norms accepted by the members of the international community.

Therefore, the SCS will be a litmus-test or a very decisive testing-ground for China’s ability either to comply with the existing international order or to modify it or to create a new international order which will get the consent of as many countries as possible. In any case, China will be confronted with a huge task. Whether China can master this task will depend to a great deal on the willingness and capacity of non-Chinese actors to engage China with firmness, flexibility and constructiveness.

Dr. Gerhard Will

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