By Jian Junbo and Wu Zhong
LONDON and HONG KONG - The Chinese Communist Party (CCP) will celebrate its 90th birthday on July 1. While the party has withstood tough tests to reach this point, without doubt there are challenges ahead. One immediate issue is the escalating tensions on the South China Sea with neighboring countries, Vietnam in particular.
For Beijing, this is not simply an issue of international relations. It also has great impact on China's strategy for a "peaceful rise" and on domestic stability. This may explain why so far Beijing has exercised self-restraint in the face of what it sees as provocations by Vietnam. These included high-profile war games in disputed territories, issuing toughly-worded statements to condemn "China's invasion" and allowing fierce protests against China.
Beijing's reaction has been low key. Chinese Foreign Ministry spokesman Hong Li reiterated on June 16 that China would always seek a bilateral solution to disagreements on the South China Sea, and not use or threaten force. He added that China would work together with all parties to effectively implement the Declaration on Conduct of Parties in the South China Sea and maintain stability in the region.
There are ample reasons for China to cool tensions with Vietnam. Firstly, territorial disputes between China and Vietnam in the South China Sea are not a new issue - the dispute largely emerged in the 1970s after the discovery of huge oil and gas reserves there.
Vietnam (and some other Southeast Asian countries) began to gradually colonize some islands and explore oil and gas in waters that Hanoi had previously recognized as China's sovereign territories. For instance, the People's Republic of China (PRC) issued a declaration on September 4, 1958, defining its territorial waters which encompassed the Nansha (Spratly) and Xisha (Paracel) Islands.
North Vietnam's then prime minister Pham Van Dong sent a diplomatic note to Chinese premier Zhou Enlai stating, "The Government of the Democratic Republic of Vietnam respects this decision and will give instructions to its State bodies to respect the 12-mile [19-kilometer] width of the territorial waters of China in all their relations in the maritime field with the PRC [People's Republic of China]." The diplomatic note was written on September 14 and was publicized on Vietnam's Nhan Dan newspaper on September 22, 1958. 
To concentrate on China's own economic development with reform and opening up, Deng Xiaoping then set a policy of "shelving disputes for joint cultivation" of the South China Sea.
After three decades of reform and opening up, China has grown into the world's second-largest economy. But Beijing is fully aware of emerging problems at home. In this regard, a peaceful international environment is crucial for China. President Hu Jintao is seeking a "peaceful rise" to ease concern that China may seek world hegemony.
In recent years there have been growing calls, especially from the United States, for China to act as a "responsible player" in international affairs.
Therefore, Beijing does not want to take tit-for-tat actions against Vietnam that could jeopardize its image.
China may also see Vietnam's provocation as related to the latter's domestic issues. Vietnam's economy is in a bad shape and public discontent is growing. It is an ancient Chinese wisdom (Vietnam is strongly influenced by Chinese culture) that a foreign enemy can be of great use in easing domestic tensions.
Beijing does not want to be goaded by Hanoi. Moreover, China has kept a wary eye on the US ever since Washington announced its "return to Asia". Vietnam has openly called for US intervention in the South China Sea, and if Beijing reacts too harshly, this may give the US a convenient excuse to step in.
For Beijing, which always opposes any attempt to internationalize the South China Sea issue, US intervention would further complicate the matter.
On June 22, China's Vice Foreign Minister Cui Tiankai warned the US to stay out of the escalating tensions in the South China Sea:
I believe some countries now are playing with fire. And I hope the US won't 'draw this fire onto itself'." Apparently referring to remarks from Washington about free passage in the South China Sea, Hong had said earlier: "China's maintenance of sovereignty in the South China Sea ... will never influence the freedom of navigation of other countries in the South China Sea.
While netizens have not criticized top Chinese leaders, they have taken aim at generals of the People's Liberation Army (PLA), as well as officials and media commentators who have appealed for calm. Websites of state-run media are a prominent forum for nationalists expressing their frustrations.
One of the more striking comments was found on the online forum of the website of Global Times, a sister publication of the People's Daily, the CCP's flagship newspaper:
Confronting such a hooligan country and in face of losses of national territories, you spineless generals and officials must listen to people's voices: "We must strike back! We must take back our territories lost because of the treacherous shelving disputes for joint development." China is in peril today mainly because the government is full of corrupt officials ... and party members and cadres have lost their faith! Now only the powerless, penniless but selfless and fearless grass-roots people remain patriotic.
Beijing is walking a tight rope between behaving as a "responsible player" in international arena and responding to these domestic pressures. The balancing act is particularly fraught ahead of the CPP's 90th birthday, which the party will use to justify the legitimacy of its continuous rule by glorifying past successes.
If there is a danger that the CPP might lose the people's support over a certain policy, then it would have to change it. Needless to say, the "core interest" of all "core interests" for the CCP is to continue its rule of China. Compared with this, other affairs - such as maintaining regional peace and good relations with other countries or acting like a "responsible player" - are all secondary.
Apparently in response to the rising nationalistic zeal over Vietnam's "provocations", China has quietly taken some action, such as staging a war game on Hainan Island and sending a sea border patrol boat through the South China Sea to Singapore.
For the time being, Beijing can still feel comfortable over the nationalism rage as its expression is largely limited to the virtual space (the Internet). There are no sharp criticisms of Beijing's policy in state-controlled media or any spontaneous street demonstrations in protest at "Vietnam's invasion". The row, for the time being, is still not big enough to provoke the social instability that the CCP considers a threat.
However, if Hanoi keeps escalating tensions, and especially if the US sides with Vietnam, Beijing will be forced to take more radical actions. Despite its low-profile stance, Beijing has imagined all possible scenarios and prepared for the worst.
For the sake of its "peaceful rise", war is the last thing the Chinese government or people want. Fortunately, there is no sign so far indicating the current tension between Vietnam and China is likely to escalate into a violent conflict.
Instead, the latest development suggests that tensions between China and Vietnam have eased. Xinhua reported this week a statement on the website of China's Defense Ministry that China and Vietnam conducted joint naval patrols in the Beibu (Tonkin) Gulf (between Vietnam and China's Hainan) from June 19 to 20.
After the joint patrols, a Vietnamese naval delegation will visit the coastal city of Zhanjiang in south China's Guangdong province from June 21 to 24. The statement said the joint naval patrols and the port call were part of a scheduled bilateral annual exchange plan, but stressed it was "a friendly exchange activity between the two armed forces".
That such activity could take place at this juncture is strong evidence that tensions between the two countries on the South China Sea has so far not affected normal channels.
1. File: 1958 diplomatic note from Pham van Dong to Zhou Enlai, Wikimedia.
By Al Labita
MANILA - From waging a joint bloody war against Islamic terrorists, the United States and Philippines now find themselves shifting to another battle front: checking China's provocations on the high seas.
In what could be a prelude to an imminent face-off with China, American and Filipino naval forces will launch "war games" on June 28-July 8 off the coast of Palawan province, west of Manila, near the hotly contested and potentially oil and gas rich Spratly islands in the South China Sea.
The US will deploy three warships - USS Chung-Hoon, USS Howard and USNS Safeguard, while the Philippines will pitch in four US-made battleships. They will be backed by hundreds of
combat-ready American and Filipino marines.
The joint military maneuvers, part of the US-Philippine military alliance, come amid reports that China will test next week its first-ever Russian-designed aircraft carrier prior to its formal mobilization later this year.
China, seen by many Filipinos as an emerging neighborhood bully, had earlier sent its biggest maritime vessel to the Spratlys in what critics here described as "gunboat diplomacy" to assert its "historic" claims to the island chain following a verbal spat with rival claimants, the Philippines and Vietnam.
In reaction, the Philippines sent its biggest, oldest and lone warship, the US-made RP Rajah Humabon, to patrol the country's 250-nautical miles exclusive economic zone (EEZ), which Manila now refers to as the "West Philippine Sea".
"If they attack us, we will fight back," Armed Forces of the Philippines (AFP) chief General Eduardo Oban said, referring to repeated Chinese intrusions into the Philippines-claimed portion of the Spratlys. AFP troops have in retaliation dismantled markers and buoys bearing Chinese characters planted by Beijing within the Philippines' claimed EEZ.
The AFP has recorded at least seven incidents of Chinese incursions into its claimed Spratly Island areas since February, prompting Manila to lodge diplomatic protests with Beijing. The government has announced plans to elevate soon its complaints to the United Nations.
On March 2, Chinese ships harassed a Philippine vessel exploring oil in the Reed Bank located 80 miles (129 kilometers) off Palawan and within the Philippines' EEZ, but 576 miles (927 kilometers) from China. "Why should there be a dispute if we are conforming to international law?," Philippine president Benigno Aquino told a news briefing about the incident.
Manila's mild saber rattling followed Washington's assurance that it would honor its mutual defense treaty, which both countries signed in 1951. The treaty mandates both sides to aid each other in case of external attacks.
"The Philippines and the United States are strategic treaty allies. We are partners. We will continue to consult and work with each other on all issues, including the South China Sea and Spratly islands," US ambassador to the Philippines Harry Thomas recently said.
The treaty will be reviewed during a top-level meeting of US and Philippine defense and military officials in August this year in Hawaii. Atop the agenda will be China's perceived as belligerent moves to press its claims to the Spratlys and how the US and its allies will in future respond.
Also expected to be discussed at the Hawaii meeting will be US access to its former Philippines-based military bases at Subic and Clark which the US abandoned in 2001 after Manila refused to renew a lease deal with Washington.
Now economic zones, Subic and Clark boast US-built ports and airports which could be of strategic importance both amid mounting tensions with China over the Spratly Islands and Washington's wider aim to contain China's strategic rise.
Though Manila remains hopeful the territorial row with China can be solved through diplomacy, it's not taking chances either. President Benigno Aquino's government has recently stepped up its acquisition of armaments under the US foreign military sales program, in what could be seen as a sign of an impending arms race among Spratly claimants.
In August this year, the US Coast Guard will deliver to Manila a large and modern Hamilton-class cutter patrol craft to boost the Philippine Navy's maritime patrols. The vessel, which boasts a wide array of state-of-the art interdiction capabilities, forms part of the US commitment to help modernize the 125,000-strong AFP, which has lagged behind its Asian counterparts in terms of equipment.
Philippine Foreign Secretary Albert del Rosario is this week in Washington on invitation of US Secretary of State Hillary Clinton to lobby for more American vessels and equipment to beef up the AFP's external defense posture.
Other items on del Rosario's shopping list reportedly include frigates, fighter jets, patrol helicopters with sensors, search-and-rescue vessels, transport aircraft and strategic sea-lift ships.
Aquino earlier warned visiting Chinese defense minister Liang Guanglie of a possible arms race should tensions over the conflicting Spratlys claims worsen. He noted that while the AFP is currently ill-equipped to match China's military might, this could force Manila's hand to beef up its armaments, given China's repeated intrusions into the Philippine-claimed portions of the Spratlys.
"We may not have the capabilities now, but that might force us to increase our capabilities also," he said.
In turn, Liang assured Aquino that China wanted to resolve the Spratlys dispute through peaceful and diplomatic means. In their talks, Aquino and Liang pledged to avoid any "unilateral actions" that could inflame tensions over rival claims.
Stronger strategic ties with the US carries certain political risks for Aquino, who earlier carefully balanced his policy between China and the US. As expected, leftist groups have already assailed US involvement in Manila's diplomatic spat with Beijing over the Spratlys.
"The US game plan is clear. Washington will scare its puppet government in Manila about the possible outbreak of war between China and the Philippines and other Spratlys claimant-countries," militant leftist leader Salvador France said.
In a statement, he criticized Aquino for "playing the role of mascot under the US game plan." he claimed. "The best way to resolve the Spratlys issue is to first get the US government out of the picture, engage in diplomatic discourse with China and other claimants and junk Washington's best buy offer of its excess war gears," France said.
Another prominent leftist, Renato Reyes Jr, criticized the Aquino government's purchase of second-hand US armaments, claiming the deal was tied to quid pro quo considerations, including maintenance of the controversial US-Philippines Visiting Forces Agreement (VFA). The VFA allows US troops to hold military exercises on Philippine soil.
"The irony here is that after five decades of being promised by the US that the AFP will be modernized under the VFA, here is the Philippine government still trying to acquire second-hand equipment from the US - proof that our dependence on the US has brought us nowhere," says Reyes, secretary-general of Bagong Alyansang Makabayan (New Nationalists Alliance).
By Robert M Cutler
MONTREAL - China's gas imports jumped nearly a third in May from a year earlier to a record 2.6 billion cubic meters (bcm), according to the country's National Development and Reform Commission, with half delivered by pipeline from Central Asia. The rest was in the form of liquefied natural gas (LNG).
Increased imports are helping China to achieve its goal of having gas contribute as much as 10% of its energy consumption mix by 2020, but at an ever-higher cost, as domestic prices are lower than import cost.
China National Petroleum Corporation (CNPC), the country's largest oil and gas producer and supplier, lost 5 billion yuan (US$773 million) last year on imports of natural gas from Central Asia, according to Caijing, because domestic sales prices are lower than import prices. Losses this year will increase, with importing one cubic meter of natural gas meaning a loss of 1 yuan, the China Coal Resource web site reported in April, citing unnamed CNPC sources. China itself produced 42.6 bcm during the first five months of the year.
Turkmenistan alone provided half of China's total of 11.4 bcm pipeline-plus-LNG gas imports over the first five months of 2011, according to the CNPC newspaper, as reported by China Daily. The country has projected receiving 17 bcm of natural gas from Turkmenistan during the present calendar year, as the Central Asian Gas Pipeline (CAGP, Turkmenistan-Uzbekistan-Kazakhstan-China) ramps up to a 30 bcm/y capacity by the middle of next year on the way to the 40 bcm/y capacity planned for 2013.
Kazakhstan was expecting to provide one-quarter of the 40 bcm/y originally planned for the CAGP. However, its oil and gas ministry this week predicted that Central Asia gas exports to China would increase to 65 bcm/y, with its own exports originally planned at 10 bcm/y rising to 25 bcm/y of that total. In making the announcement, Kairat Kabyldin, the head of KazMunaiGaz (KMG), the state-owned gas and oil company, announced that additional volumes would reach China through the construction of a third CAGP string from Kazakhstan.
These reports are entirely credible insofar as China this week also announced that the infrastructure of the second string of its own West-East Gas Pipeline (WEGP) has been finished, taking Central Asian gas imported into Xinjiang, in the far west of China, from there to the energy-hungry regions further east and to the coast. The first WEGP was opened in 2005. (See Xinjiang: China's energy gateway, Asia Times Online, July 10, 2009.)
As reported here earlier, power shortages in China are the worst in at least seven years. The fact underlines the connection between present difficulty of China's natural gas situation and the current state of the national economy.
Caught in the middle, the government seeks to reduce demand for electricity through increasing prices, which it hopes will also lead power producers to increase power generation. (See Copper cooler for China, Asia Times Online, June 3, 2011.)
Domestic Chinese gas production trebled between 2000 and 2009 from 27 billion to 78 billion cubic meters per year (bcm/y), not enough to prevent the country becoming a net importer of natural gas in 2007 for the first time in 20 years. The country's gas reserves are estimated at 3 trillion cubic meters. The International Energy Agency noted in a report released last week that China accounts for one-third of all growth in global demand for natural gas and it is the fourth-largest gas consumer beyond the United States, Russia, and Iran.
The increased use of natural gas reflects the government's goal of raising the portion of natural gas in the country's energy consumption mix to 10% by 2020, from 3% in 2008. The current proportion is estimated at 6%, and the present five-year plan seeks to raise that to 8% by mid-decade.
Consequently, China is buying up gas almost wherever it is to be found. For example, it intends also to import up to 12 bcm per year of natural gas by pipeline from Myanmar. To this may be added expected LNG imports from large natural gas development projects in Australia. (See Bangladesh breathes in hope, Asia Times Online, January 22, 2010; on Australia, see Australia approves gas megaproject, Asia Times Online, August 27, 2009.)
What China will not do is to pay prices that it considers elevated. Those who make foreign direct investment decisions for Chinese capital have become quickly more experienced and critical of proposed deals than they were even a few years ago.
As a result, negotiations with Russia over possibilities to import as much as 68 bcm per year from two Siberian sources, which were expected to succeed in the run-up to the recent St. Petersburg Economic Summit earlier this month, have continued to founder over disputes about prices even though the preliminary agreement for such a deal was reached as long ago as 2004. (See Price limit on China's Russian friendship, Asia Times Online, October 16, 2009.)
Russia's Gazprom is looking east because that is where increased demand will come from. Public statements by leading political as well as industrial figures in Russia make it clear that the country would choose China over Europe for energy export if ever a choice were necessary.
The recent sharpened hostility between China on the one hand and Vietnam and the Philippines on the other, over the South Sea Islands of the Spratly group needs to be dissected more deeply to there is more than a squabble over territory.
Of course, territory is at the core no doubt. There is reported to be huge oil and gas deposits in the sea bed of these islets, reefs and coves, and energy or the lack of it has become vital to all concerned especially for China. China’s economic engine is becoming more dependent on imported energy, and recent Chinese moves suggest safeguarding its energy sources near and far has become an unstated “core issue”. As defined by the Chinese officially, core issues are those that must be protected and secured by any means including military.
China claims the entire Spratly group and the South China Sea as its sovereign territory, but the evidence proferred by it from time to time remains less than convincing. The other part claimants are Vietnam, the Philippines, Malaysia and Brunei. Their claims are small and well within their coastal waters. Taiwan, which is also in occupation of some reefs, holds a position same as that of China as per the old Guomingdang (Kuomingtang) doctrine that the two will unite some day when China gives up communism. China initiated the Code of Conduct Declaration (COD) in 2002 with the other claimants that issues will be resolved peacefully and till then there should be joint development of resources. The COD would never work. The Chinese conducted themselves on the principle, “what is mine is mine, what is yours is also mine but we are willing to share yours”.
China has sanctioned foreign oil companies that worked with Vietnam and the Philippines on oil and gas exploration surveys. Last year, a Chinese submarine planted a Chinese flag on the bed of the South China Sea. Most recently, Chinese maritime surveillance vessels, a fleet that is set to expand exponentially, have been cutting cables of Vietnamese and Philippine survey ships.
Tension escalated with the Vietnam navy conducting a 9-hour live fire exercise along its coast (June 13) which it described as routine. It brought strong reactions from China.
China’s PLA mouthpiece, the Liberation Army Daily (LAD) warned (June 14) Vietnam’s live-fire military exercise will intensify tensions in the region. An op-ed article by highly politically connected Li Hongmei in the Party mouthpiece the People’s Daily (June 15) commented, “China needs military foresight and it is advisable to make some preparation for action”. Li Hongmei, who is the editor of the on-line edition of the People’s Daily, is apparently the voice of a section of the Chinese leadership which is prone to take a hardline. China also despatched its largest maritime surveillance ship to the South China Sea on its way to Singapore. The English language China Daily (June 17) disclosed that in view of the escalating tension in the South China Sea, the China maritime surveillance (CMS) force will be expanded to 16 aircraft and 520 vessels by 2020 from the current nine aircraft and “more than” 260 surveillance vessels.
This does not mean China is ready to increase hostility to a point of serious military clashes with Vietnam and the Philippines. At most, if Vietnam continues with its brinkmanship, there could be minor clashes on the seas. Neither Vietnam nor the Philippines possess military strength to match any where what China has, though Hanoi is bolstering its capability enough to hurt China if the PLA navy invaded Vietnamese waters. The Philippines’ President Benigno Aquino told visiting Chinese Defence Minister Gen. Liang Guanglie in May that though his country was no match to China militarily but if China continues to provoke they would be forced to take steps to protect themselves. It was also reiterated that the Philippines has a defence treaty with the USA. The US ambassador to Manila openly declared earlier this month that the US was with the Philippines on all issues including the South China Sea.
China is watching with concern American strategic penetration in the region. A US destroyer would head to Vietnam’s Da Nang port in July to conduct a search and rescue drill. The Japan-based aircraft carrier USS George Washington has left its base for deployment through the region which will certainly include the South China Sea. There are, of course, pre-scheduled engagements that have nothing to do with the recent escalation of tensions in the South China Sea. But Beijing will see it in a much larger context of containment of China.
From the time US President George W. Bush entered into the Iraq war in 2000 and the Afghan war following the “9/11” terrorist attack on the US, China had a free ride in the region. Without an American cover, the smaller neighbours of China had no option but to succumb to China’s comprehensive might. America had retracted from the Asia-Pacific region.
China’s assertiveness emerged from the following: (i) US withdrawal from this region, (ii) the 2008 global economic meltdown which convinced China that US power was in decline and China was rising to replace it – something demonstrated with impunity, (iii) Japan was a collapsing power centre in Asia, and the European Union (EU) could be bullied into submission on trade issues, and (iv) China’s military power demonstrations in 2008 and 2009 convinced it that it was impregnable and could deny area access to the US Navy in its maritime environment especially around Taiwan.
After a long hiatus from the Asia-Pacific region, Secretary of State Hillary Clinton brought the US back to the region from mid-2009. Mid-2010 was a watershed in this strategic review, in the face of China’s force projection. There is a wide swath of issues starting from China’s clash with Japan on the disputed Diaoyu (Japanese Senkaku ) islands in Japan’s possession, protection of North Korea in Pyongyang’s military attacks against South Korea in 2010, and China’s moves to legitimise South China Sea as its sovereign territory.
China tried to persuade the US in 2010 to accept its sovereignty over the South China Sea, but Clinton made it clear that it was in US’s national interest to keep the sea lanes of the South China Sea free for international navigation.
The South China Sea is a critical navigational waterway in this region which is used from the west of the Indian Ocean to East Asia. If China controls this sea space it will dictate maritime traffic, both civilian and military, across what a Chinese strategic theory predicted in 2004-2005, from the Western Line (Middle East and Eastern Africa) to the Eastern Line (Asia-Pacific region). This is the critical mass of China’s geostrategic pursuit for control. This is a severe challenge for all concerned, and cannot be allowed.
This is a matter that a whole stream of countries across half the globe at least must be alert to. An international debate on this issue has become urgent....