Beijing’s troubling South China Sea policy

by Michael Richardson

SINGAPORE — China is already one of the world’s largest offshore energy producers. It wants to become bigger still by finding more oil and natural gas in home waters or in zones close to China, to avoid becoming excessively dependent on foreign imports.

However, China’s evolving energy security strategy could further complicate its relations with Southeast Asia, and with countries like Japan, the United States and South Korea that regard the South China Sea as an international highway for trade and free movement of military planes and ships.

A major focus of Beijing’s offshore search for energy to fuel its rapid economic growth is on the South China Sea, where it has overlapping territorial claims with Vietnam, the Philippines, Malaysia and Brunei.

China’s Global Times on April 19 published a special report on the South China Sea, which it dubbed the “second Persian Gulf.” The paper said that the South China Sea contained over 50 billion tons of crude oil and more than 20 trillion cubic meters of gas. This is about 25 times China’s proven reserves of oil and eight times its gas reserves.

No source was cited by the Global Times for its estimate of the amount of oil and gas beneath the seabed of the South China Sea. However, the paper quoted Zhang Dawei, a senior official in the Ministry of Land and Resources, as saying that an intensified offshore search was “the key” to solving China ‘s energy predicament.

China’s voracious appetite for oil to run its transport system has shifted the economy from oil self-sufficiency in the early 1990s to dependence on imports for 55 percent of its consumption in 2010, exceeding what the Global Times called “the globally recognized energy security alert level of 50 percent.”

Not only is China’s oil import ratio rising fast, its reliance on foreign gas is increasing apace too as the government encourages a switch to cleaner burning gas from coal to cut air pollution and global warming emissions. Coal is China’s predominant fuel for generating electricity.

A recent report by Macquarie investment bank forecast that China’s gas self-sufficiency ratio was set to decline from 90 percent in 2010 to 65 percent in 2020. State-owned energy companies are preparing to search the seabed off the Chinese coast for oil and gas at ever greater water depths and distances from China’s shores.

CNOOC, the offshore oil and gas producer, notes that the deep waters of the South China Sea remain “underexplored” and have “huge potential.” The company has outlined plans for a major push into the area as it learns to operate a fleet of Chinese-built deep-sea drilling rigs over the next few years.

China’s navy and air force are rapidly acquiring the equipment and skills to project power into the South China Sea and protect Chinese energy companies there.

Until now, China’s energy search and production have been confined to the northern sector of the South China Sea off Hong Kong and Hainan Island. Only Taiwan contests China’s territorial claims in this area.

But just this month, Beijing reiterated its assertion of control over some 80 percent of the South China Sea and all the islands and reefs in a U-shaped claim extending deep into the maritime heart of Southeast Asia. It did so in a letter of protest concerning the Philippines that was circulated to all member states of the United Nations.

In the letter, dated April 14, China said that since the 1970s, the Philippines had “started to invade and occupy some islands and reefs of China’s Nansha Islands,” known in English as the Spratly Islands. In defining the scope of China’s claim, Beijing’s letter went further than its previous U.N. protests at Malaysian and Vietnamese territorial claims in the South China Sea.

Beijing’s letter asserted that the widely scattered Spratly Islands were “fully entitled” to their own Territorial Sea, Exclusive Economic Zone and Continental Shelf, even though most are uninhabited and barely visible at high tide.

There is no way that China could use current international law to justify a claim to a sovereign territorial sea extending out as far as 12 nautical miles from each Spratly atoll and reef, plus a 200-nautical mile exclusive economic zone and a continental shelf stretching as far out as 350 nautical miles, for fisheries, energy and mineral resources.

But in the U.N. letter, China justified its claim based on two of its own controversial maritime laws, in addition to the 1982 U.N. Convention on the Law of the Sea. The national laws validate China’s claims; the U.N. treaty does not.

If the struggle to control the South China Sea is based on power politics instead of current international law, Beijing will have the upper hand against weaker opponents.

Michael Richardson is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore.