Saturday, October 25, 2014

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




About 2point6billion.com

2point6billion.com discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.




China’s Tibet Price: the South China Sea

Photo: Reuters

Op/Ed Commentary: Chris Devonshire-Ellis

Aug. 6 – The fallout from the recently held ASEAN summit in Hanoi has far reaching implications for China and the region, but also indicates rising disquiet of China’s attempts to gain regional assertiveness. With Vietnam currently chairing ASEAN, the item that China had wanted to avoid discussion over – ownership of parts of the South China Sea – well and truly gained the glare of the spotlight.

That the region is disputed is beyond doubt, the Paracel and Spratly Islands lie in these waters and are claimed in all or in part by China, Taiwan, Vietnam, the Philippines, Malaysia, Indonesia, and Brunei, all of which have stationed troops on various sections. The entire land mass of the Spratlys is a little less than five square kilometers, however in total the Spratlys include 148 or so islets, coral reefs, and seamounts scattered over an area of nearly 410,000 square kilometers of the central South China Sea.

The Paracel Islands, meanwhile, consist of over 30 islets, sandbanks or reefs, occupy about 15,000 square kilometers of the ocean surface, and are also located in the South China Sea. Currently under Chinese control, they are also claimed by Vietnam and Taiwan, the latter which mirrors politically the Mainland Chinese position. The islands are considered important for several reasons: the fishing rights, submarine military access to deep water ocean, the potential for oil and gas exploitation, and tourism. A successful Chinese claim will also take the associated sea bed claims directly to the coast of all of eastern Vietnam, and could effectively seal Vietnamese shipping off from any other sea access. Understandably, Vietnam is highly nervous about this, while China wants to control the waves in its own backyard.

China’s diplomatic solution to dealing with the situation has been to flex its financial muscle and to insist that negotiations over sovereignty of the islands take place with it alone, on a bilateral basis. That has left each individual claimant out on a limb and has negated any involvement of ASEAN, unilaterally a more powerful bloc, out of the picture.

China is not a member of ASEAN, and does not have voting or sanction rights. Step forward to Vietnam, the current ASEAN chair, and fast forward to last month’s meetings in Hanoi. Inviting the United States to participate, like China, as an “observer,” the Hanoi meeting quickly got on with business and brought to the table the one topic China did not want to hear about – the sovereignty of the South China Sea. While attending the meeting, U.S. Secretary of State Hillary Clinton was quick to observe from the sidelines that the dispute was now high on the agenda as part of America’s international interests. Noting that commercial shipping passed through the seas, she effectively indicated that the issue was no longer one that China would be able to unilaterally dictate. The repercussions are going to rumble on, and have dealt a major blow to Chinese assertiveness in the waters.

In part, China only has itself to blame. Although Tibet was never mentioned as part of the dispute in the South China Sea, and the Chinese position over its sovereignty is both very clear and undisputed by all attending ASEAN nations and observers, it is obvious that China’s 60 year old assertiveness towards regional disputes has reached a plateau. Buddhism is still a strong influence in many ASEAN member countries and the plight of the Dalai Lama, while not officially recognized or discussed, still causes regional discomfort. Add to that skirmishes with Vietnam in 1979, and still ongoing border disputes over Tibetan territorial claims with India, and China’s position as asserting more regional sovereignty is now starting to be questioned.

While China has moved on from 1979 and the days when it could engage in Southeast Asian diplomacy down the barrel of a gun, its relative strengths in terms of investment and financial muscle can make it hard for individual nations to resist overtures. Contracts have been dangled as incentives to secure sovereignty, and used as punishments through cancellations to show displeasure. Collectively, ASEAN has more bargaining power, and is a sizeable trading bloc that can stand up to China’s belligerence. It also diminishes the possibility of China punishing errant neighbor countries by taking the onus away from unilateral discussions. Add the United States to that mix and the situation gets less sustainable for China to press claims over disputed lands. While the Chinese always claim to have long memories, it’s a game now being played by ASEAN members, and the situation over China’s handling over the Tibet issue still reverberates. While that issue is not going to be discussed, the price to pay for it is now arriving – a toughening of regional attitudes towards further Chinese territorial claims and, specifically, China’s influence over the South China Sea.

Chris Devonshire-Ellis is the principal and founding partner of Dezan Shira & Associates, establishing the firm’s China practice in 1992 and the India practice in 2007. The firm now has ten offices in China and five in India. For advice over China-India strategy, trade, investment, legal and tax matters please contact the firm at info@dezshira.com. The firm’s brochure may be downloaded here. Chris also contributes to Asia Briefing’s other titles, India Briefing, China Briefing and Vietnam Briefing.

Related Reading
Containing China from Mongolia to Vietnam

This entry was posted in Politics. Bookmark the permalink.

4 Responses to China’s Tibet Price: the South China Sea

  1. What says:

    Vietnam did not start this new round of highly publicized controversy. Vietnam has very little influence. The US launched this new round on its own initiative. Tibet is not a high priority for the US. I doubt anybody in ASEAN is very concerned with Tibet. I never hear of ASEAN countries championing independence for Tibet. You admit the same: “the plight of the Dalai Lama, while not officially recognized or discussed, still causes regional discomfort.” So I think you made the link up out of some misinformation or hobby interest in Tibet.

    However, the US certainly does have a strategy behind their new and loud push. I wonder if it has anything to do with Iran. A prime motivation for China-Iran ties is energy security–oil that can be delivered overland rather than through US controlled seas. I I wonder if the US is trying to set up a bargain.

  2. Dev says:

    Typical amateurish analysis… where do I even begin to pick it apart?

    1) “Although Tibet was never mentioned as part of the dispute in the South China Sea…”
    The reason Tibet as never mentioned is because it has nothing to do with the South China sea dispute. Stop linking unrelated matters together.

    2) “Buddhism is still a strong influence in many ASEAN member countries and the plight of the Dalai Lama…”
    Buddhism is only influential in one ASEAN nation: Thailand. Get your facts straight.

  3. Dev says:

    “While the Chinese always claim to have long memories, it’s a game now being played by ASEAN members, and the situation over China’s handling over the Tibet issue still reverberates.”

    Would you care to elaborate, or did you pull that one out of your you-know-what-not? The only way I see the Tibet issue reverberate with ASEAN nations is that they too wish to follow China’s example to ruthlessly crush separatists. They just wish they could.

    1) Indonesians still would love to have East Timor back.
    2) Thailand has severe problems keeping its Malay Pattani region in the fold.
    3) The Filipinos would rather that Muslim separatists go away in southern Phillipines.

    etc. etc. etc…

  4. The author and USA doesnot know how to deal with Rising China(not soft power but hard power).US is not going to fight for security of Taiwan or Japan is now known with its troops cannot even take on ragtag Taliban in spite of complete air dominance.Iran,Venezula are all showing this beligerance towarsds USA due to this performance in Afghanistan. China is far cry for USA

Comments are closed.



Dezan Shira & Associates provide a range of services for companies looking to undertake foreign direct investment into Asia, These include corporate establishment, accounting, tax, payroll, audit and due diligence. To learn more about the firm, please contact one of our specialists at china@dezshira.com, download our corporate brochure or visit at us www.dezshira.com


Dezan Shira & Associates, Twenty years of Excellence

The Asia Briefing Bookstore

Our best selling legal, financial, tax and regional guides to Asia business, industry reports and more…
Click here to view all titles now

China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store

NOW AVAILABLE IN PDF