Critical Analysis: China’s ‘Island-building’ may suppress economic growth in Asia

 November 14, 2014

The dispute between Vietnam and China over the CNOOC oil rig has been resolved by the withdrawal of the 31,000 ton structure from the disputed area of the Paracel Islands, but the fight in the South China Sea is far from over. Vietnam, China, The Philippines, Brunei, Malaysia, and Taiwan all have existing developments on islands and reefs in the sea, and all claim title to portions pursuant to ITLOS delimitations. Approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas lie under these waters, home to fertile fishing grounds and vital shipping lanes. However, controversy over the legal stewardship of the South China Sea stems not merely from land-sea border baseline delimitation claims. Existing developments such as oil and communications platforms installed back in the 1980’s and beached, but manned, ships are cited by these states as evidence supporting claims to ownership. Now, with the introduction of its ‘island building’ campaign, China is stirring up choppy waters and increasing the pressure on its South-East Asian neighbors, which could lead to an arms race.

China's Island Building
Airbus Defence and Space imagery shows land reclamation ongoing at Johnson South Reef in the South China Sea. Images released by the Philippine Ministry of Foreign Affairs on 15 May 2014 (left) show the progress of construction on the reef from 13 March 2012 to 11 March 2014.
Photo & Caption Credit: CNES 2014, Distribution Astrium Services/Spot Image S.A./IHS, IHS Jane’s Defence Weekly – 15 May 2014

Johnson South Reef, originally claimed by Vietnam and The Philippines, is a picturesque chain of islands and reefs at the southern end of the South China Sea. China first occupied the reef in the late 1990’s, and built a communications platform. In recent years the Chinese have expanded this platform to a 75+ acre island by dredging sand from the ocean floor to form a landmass. This summer, China completed construction of concrete and desalination plants on the island, and now looks to be planning further construction capable of sustaining a military and civilian population. While Vietnam and other ASEAN nations have countered by expanding some of their installations in the region, construction of this magnitude is costly and far out of reach for anyone with claims other than China. The newly formed island could act as an advanced outpost for Chinese military campaigns and as a mechanism to advance ownership claims. China asserts their actions are justified, and that under UNCLOS any newly developed and populated island would extend Chinese territory past the 9-dash line. However, UNCLOS Article 60 expressly prohibits the determination of delimitation based on artificial islands.

Additionally, all construction and militarization of existing features in the region is prohibited by the 2000 Declaration on the Conduct of Parties in the South China Sea (Declaration on the Sea). This non-binding declaratory effort to reduce aggression and promote peace and stability in the region has been largely ignored. This is likely because the Declaration is both vague and strict, simultaneously; It requires all parties to “exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability.” This declaration was intended as a voluntary mechanism to reduce tension between China and the ASEAN bloc and support future economic integration. Instead, it has become a thorn, reminding all parties involved of the fragility of the relationship.

Militarization of the island could trigger an arms race, forcing all nations with claims to ramp up military expenditures and increase construction of South Sea outposts. This could cause widespread economic problems in countries that are just now liberalizing international economic policy to increase development. An escalated dispute could also put future trade and investment treaties between the ASEAN bloc and China in jeopardy, reducing the annual FDI inflows these nations receive. Ultimately, an arms race could play out in one of two ways: 1) If there is no military conflict the result would be decreasing trade, economic consequences, and missed opportunities, or 2) there could be a military conflict between China and one of its Asian neighbors.

Neither result would be good for the future peace and stability of the region. China will be better served by utilizing the Declaration on the Sea as a mechanism through which to resolve the island disputes peacefully. China should cease all unilateral construction, militarization, and drilling immediately and work towards developing a joint extraction partnership plan with its ASEAN neighbors. The 2014 APEC summit would have been an ideal time to address these issues and APEC could be a potential platform for negotiations in the future. An increase in trade and investment with the ASEAN bloc is more beneficial to China’s future than claims to all of the shoals and atolls in the South China Sea.

Jeremy Goldstein is a 1L law student at University of Denver Sturm College of Law and a Staff Editor for the Denver Journal of International Law and Policy.