Clearing the haze of speculation, the Permanent Court of Arbitration (PCA) handed down its ruling on the maritime dispute between China and the Philippines on 12 July. The Philippines filed the case under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS) in 2013. The Tribunal found that China’s claimed ‘nine-dash line’ has no legal basis under UNCLOS and China could claim no ‘historic rights’ to resources in the South China Sea.
China did not participate in the proceedings and the Chinese foreign ministry has already announced that it ‘neither accepts nor recognises’ the decision. As the Tribunal has no enforcement mechanism in place, the ruling is unlikely to directly lead to a dispute resolution. Still a change of course in China’s approach is in order.
Besides China and the Philippines, the disputes over the South China Sea also involve Brunei, Malaysia, Vietnam and Taiwan. While China has always preferred a bilateral approach, the Philippines sought the support of extra-regional powers, the United Nations and filed a case against China in the PCA. In 2009, Malaysia and Vietnam also jointly submitted their claims to the United Nations Commission on the Limits of the Continental Shelf, although they have not filed individual cases against China.
While the Tribunal’s decision is in some ways not surprising, it is definitely bold. The challenges now facing China lie on two fronts. First, China faces an emboldened US naval presence to safeguard the interests of the United States and its allies in the region. Backed by the Tribunal’s decision, the United States could find itself more justified in patrolling the South China Sea waters and carrying on with its FONOPs (Freedom of Navigation Operations).
Just three days prior to the ruling, China held a week-long combat drill near the Paracel Islands involving ships from its North, East and South fleets. Clearly, China intends to send strong signals to Washington and its allies by exhibiting its naval capabilities.
Second, China faces heightened international claims that it is neither a responsible nor law-abiding global power. Criticism from several corners has already begun. Mindful of a possible backlash, China released its White Paper on the South China Sea, which further strengthens its position as outlined in December 2014. Beijing is also concerned about the acceptability of its claims in the international community, which is illustrated by the fact that it has decided to play a South China Sea propaganda video 120 times a day in Times Square, New York.
Given that the South China Sea is a critical part of China’s 21st Century Maritime Silk Road, it cannot afford to not exercise restraint. Deadlock in the dispute is already damaging the prospects of the maritime arm of the One Belt, One Road (OBOR) initiative, which promises to act as a catalyst for China to step up infrastructure connectivity in the region and beyond.
China spends a huge sum of its GDP every year to showcase its impressive growth, development and soft power. The fear of a poor image and possible isolation may lead China to strike a deal with the Philippines. Such an approach might not lead to a speedy resolution, but will ensure stability in the region.
Maintaining the ‘status quo’ while quietly trying to turn the situation in its favour is China’s preferred option in almost all of its territorial disputes. It is likely to strive to preserve the current situation in the South China Sea as well. Beijing might therefore reopen bilateral negotiations with Manila. China has also been asking countries in the region to endorse its stand. In April, Brunei, Cambodia and Laos endorsed China’s bilateral approach to resolving the dispute.
For the Philippines, the ruling has certainly bolstered its position. The Tribunal decision enables Manila to negotiate with China from a position of strength. Manila is likely to avoid an overly assertive posture — a move that is consistent with its business interests. President Rodrigo Duterte has already stated that he seeks a ‘soft landing’ with China on the matter. However, if China continues to follow its assertive approach, the Philippines will need to rethink its policy. When push comes to shove, with the support of the United States and the Tribunal’s decision, Manila is unlikely to back down.
The South China Sea dispute is one of the biggest flashpoints of this century and any development will have repercussions for the entire region. Any lasting solution must ensure that regional peace and stability is maintained. Sustained communication, continuous dialogue and respect for international law are the only tools to achieve lasting peace, stability and order in the region.