Turning the tide in the South China Sea

Turning the tide in the South China Sea [Content preview Subscribe to IHS Jane s Defence Weekly for full article] Despite an international court ruling invalidating China's 'nine-dash line' claim in the South China Sea, Beijing has managed to boost its influence in the disputed waters by strengthening commercial and defence ties with neighbouring countries, bolstering its military capabilities and repeatedly putting on a show of force. Gabriel Dominguez reports One of the most anticipated events in 2016 was arguably a court ruling delivered on 12 July by the Permanent Court of Arbitration (PCA) in The Hague - a tribunal under the United Nations Convention on the Law of the Sea (UNCLOS) - on the legality of China's territorial claims in the South China Sea (SCS). Deciding on a case brought by the Philippines in 2013, the PCA said in a landmark decision that China's claim to 'historic rights' within most of the contested areas of the SCS had no legal basis, given that there was "no evidence" that China had historically exercised exclusive control over the waters or their resources. The longstanding SCS dispute has not only been about territory, but also about sovereignty claims over ocean areas that include the Paracel and Spratly islands as well as several rocky outcrops, atolls, and reefs. The tribunal at the PCA ruled on 12 July 2016 that there was no legal basis for China's claim to 'historic maritime rights' in most of the SCS and invalidated China's 'nine-dash line' claim. (IHS Markit) 1456424 The court ruling, which among other things found that China had "violated" the Philippines' sovereign rights in previous years by constructing artificial islands within the Southeast Asian Page 1 of 12

country's exclusive economic zone, effectively invalidated Beijing's 'nine-dash line' claim, which is estimated to encompass about 90% of the SCS. Many analysts hoped that the court's decision would help settle the longstanding territorial dispute and set a precedent for potential similar legal cases, especially given that Brunei, Malaysia, Taiwan, and Vietnam also have overlapping claims in the area. However, while the long-awaited ruling was binding, the tribunal had no powers of enforcement. Airbus Defence and Space imagery showing Johnson South Reef in the South China Sea on 4 June 2015. Island-building activity is complete and installation of surface features and infrastructure elements is well under way. (CNES 2015, Distribution Airbus DS / IHS Markit) 1639939 Rallying support Instead, Asia's largest economic and military power launched a diplomatic offensive, reaching out to neighbouring nations and other SCS claimants to try and resolve the disputes bilaterally instead of through legal action or multilateral negotiations. Jon Grevatt, the Asia-Pacific industry reporter at Jane's, says part of this strategy has involved China ramping up efforts to engage Southeast Asian countries in economic and strategic relations, including in the defence domain. "This is clearly intended to enhance the country's influence in the region and undermine the consequences of the PCA ruling," Grevatt noted. Page 2 of 12

Airbus Defence and Space imagery showing Chinese facilities on Cuarteron Reef. Structures at either end of the island represent possible mounting points for sensors and/or short-range defensive weapons, while an antenna farm may represent an over-the-horizon receiver. (CNES 2016, Distribution Airbus DS/2016 IHS Markit ) 1641933 USS William P Lawrence (pictured here in 2013), sailed within 12 n miles of Chinese-controlled Fiery Cross Reef in May 2016. (Huntington Ingalls Industries) 1478577 Page 3 of 12

China's renewed emphasis on the issue has already yielded favourable results, as can be seen in the recent rapprochement between Manila and Beijing, with the Philippines now pursuing a security partnership and expanded military ties with China through, for example, defence trade. The change of outlook in the Philippines is indicative of a turning tide in the SCS disputes, especially given that Manila - a long-standing ally of the United States - was the state that initiated legal proceedings against China at the PCA. A brief video clip on Chinese state TV in May 2016 showed that a Xian H-6K bomber had flown over China's reclaimed island base on Fiery Cross Reef at some point around that time. The base can be seen in the lower right of this image under the windshield wiper. (CCTV) 1678865 'Driving a wedge' In contrast to Aquino, Duterte views China as a potential economic and security partner while seeing the United States as an ally on which the Philippines has grown too dependent. China's air force has sent aircraft, including H-6K strategic bombers and Sukhoi Su-30 fighters (seen here), on 'combat patrols' near Scarborough Shoal and the Spratly Islands in the disputed SCS. (Xinhua via news.cn) 1682227 Also in October 2016 Manila announced that China Coast Guard vessels had left the waters around the disputed Scarborough Shoal in the SCS after maintaining a continuous presence there since 2012. The move allowed Philippine fishermen to fish in the area once more. "The Chinese have successfully driven a wedge between Washington and Manila: a development that puts a crimp in the US strategy of building a security network with Southeast Asian claimants and Indonesia," Robert A Manning, a senior fellow at the Washington-based Atlantic Council, told Jane's. Page 4 of 12

USS Decatur (pictured here in 2016), sailed near Chinese-controlled Triton and Woody Island in the Paracels on 21 October last year. (US Navy) 1686073 China, which is a key trading partner of every member state of the Association of Southeast Asian Nations (ASEAN), has also enhanced ties with Malaysia. It succeeded in boosting naval cooperation with Kuala Lumpur when an agreement was signed between the two countries during a November 2016 visit to Beijing by Malaysian prime minister Najib Razak. Defence diplomacy In fact, China began using defence trade ties - and related technology transfers and industrial relations - as an important tool for building relations in Southeast Asia in 2016. The countries it is currently enhancing defence trade ties with include not only Malaysia and the Philippines, but also Cambodia, Indonesia, Myanmar, and Thailand. As an example of this Zachary Abuza, a Southeast Asia security analyst and professor at the Washington-based National War College, points out that China is already the largest source of military aid to the Cambodian military and has recently stepped up spending levels. China has also taken advantage of the Royal Thai Armed Forces' diplomatic isolation since the country's 2006 coup, which was only exacerbated after the 2014 coup, and has stepped up bilateral military training, Abuza noted, adding that joint marine corps trainings now takes place between the two countries annually. China and Thailand have also progressed plans to establish a joint defence production facility in the Southeast Asian country focused on manufacturing Chinese military equipment and spare parts. Moreover, in January 2017 the Thai government approved a funding of USD383 million to support the Royal Thai Navy's plan to procure the first of three S26T (Thailand) submarines from China. Beijing is also pursuing closer strategic ties with Hanoi after tensions escalated in 2014 following China's deployment of a deepwater oil rig to territory near the Paracels, which are also claimed by Vietnam. In January 2017 the two governments signed 15 co-operation agreements in areas including investment, transport, health, and defence, with the latter intended to support defence ministry dialogues. Page 5 of 12

A show of force It is important to point out, however, that China's multipronged approach on the SCS disputes has not only entailed diplomacy and the strengthening of commercial and defence ties with neighbouring countries. A key part of China's strategy in the region has involved displaying military power, using part of its fishing fleet as a 'maritime militia' to assert territorial claims, and enhancing its military capabilities in the area: a development that has worried not only other SCS claimants, but also regional powers such as, Japan and the United States. In November 2016 the PLAN announced that it had declared the aircraft carrier Liaoning (seen here operating J-15s) combat ready. (China Daily) 1692720 For instance, just weeks after the PCA ruling the People's Liberation Army Air Force began sending aircraft on what it described as "regular combat patrols" near the disputed areas of the SCS to "safeguard China's state sovereignty, security, and maritime interests". The move followed an announcement by Beijing that it would decide whether to declare an Air Defence Identification Zone (ADIZ) over parts of the SCS depending on "the extent of threat". Other displays of Chinese military force took the form of naval drills conducted in the area, including one carried out between the People's Liberation Army Navy (PLAN) and the Russian Navy in September 2016. Growing naval capabilities At the same time Beijing has continued to invest heavily in naval power, with Chinese shipyards launching an average of one Jiangdao-class (Type 056/056A) corvette every six weeks throughout 2016. Page 6 of 12

The PLA Navy commissioned its fourth Luyang III-class (Type 052D) destroyer on 12 July in a ceremony at the Sanya/Yalong Bay base on Hainan Island. (Via Navy.81.cn) 1682116 China's South Sea Fleet, which patrols parts of the SCS, is also becoming the most important fleet in the Chinese navy as it hosts nuclear-powered ballistic submarines at a new base on Hainan Island: China's southernmost province. It has also been building capability faster than the PLAN's North and East Sea Fleets, with many of its vessels being replaced over the past few years with new destroyers, frigates, corvettes, and amphibious ships. In addition, the fleet conducted training exercises throughout 2016 and it should be assumed that its capabilities and proficiency is growing rapidly, as Captain Andrew Tate (retd), a former Royal Navy attaché at the British Embassy in Beijing, told Jane's. A particular area of improvement is likely to have been in anti-submarine warfare (ASW). "While this had been a long-standing weakness of the PLAN, photographs from an exercise conducted in December 2016 show one of the fleet's newest destroyers streaming its variable-depth and towedarray sonars: a sure sign that the PLAN is increasingly confident of its capabilities in ASW," said Tate. The Chinese aircraft carrier Liaoning and its carrier strike group carried out training in an undisclosed area of the SCS on 2 January. (81.cn) 1692811 China seems to be well aware of its 'soft power' and is using the navy as a diplomatic tool to exert influence and shift the balance of power, he added. "Ships returning from counter-piracy operations in the Gulf of Aden now routinely make goodwill visits during their return passage and China participates in an increasing number of bilateral and multilateral exercises," Tate said, indicating that in 2016 visits by PLAN ships involved ports in Brunei, Cambodia, Indonesia, Malaysia, Singapore, and Vietnam. Page 7 of 12

The Chinese aircraft carrier Liaoning and its carrier strike group carried out training in an undisclosed area of the SCS on 2 January. (81.cn) 1692812 A fishing fleet-based militia As previously mentioned a key strategy employed by China is the use of its fishing fleet as a 'maritime militia' to assert territorial claims, with Beijing said to offer the so-called 'Spratly Island subsidies' to encourage fishermen to fish in the disputed waters. In a Jane's analysis piece published in December 2016 Manning and James Clad, a senior adviser to the CNA Corporation and a former US deputy assistant secretary of defence for Asia, explained that Beijing provides electronic equipment and basic military training to fishermen with a focus on duties such as, special search-and-rescue and safeguarding sovereignty operations. Chinese carrier-borne J-15 fighters taking off from the aircraft carrier Liaoning during training operations in an undisclosed area of the SCS on 2 January. (81.cn) 1692813 When Indonesian, Philippine, or Vietnamese security forces detain or evict Chinese fishermen, militia members on board then summon the China Coast Guard. The militia sometimes engages in a unilateral pushback, given that Beijing argues that bilateral/multilateral maritime protocols to avoid incidents at sea apply only to naval forces and not to 'civilian' vessels. Chinese fishing fleet militias, for example, have reportedly harassed reconnaissance ships from Southeast Asian countries. Page 8 of 12

Beijing's fishing fleet-based militia is centred on Hainan Island. Speaking there in 2013, Chinese president Xi Jinping praised the fishermen for "protecting China's interests in the South China Sea". He then said that part of the fishing fleet "should not only lead fishing activities, but also collect oceanic information and support [China's] construction of islands and reefs". "The fishing fleet's dual purpose has become increasingly prominent, given that overfishing has depleted fish stocks within China's exclusive economic zone and that the country's onshore aquaculture has become increasingly polluted," according to Manning and Clad. The Chinese aircraft carrier Liaoning and its carrier strike group carried out training in an undisclosed area of the SCS on 2 January. (81.cn) 1692814 Reinforcing island defences China has deployed the HQ-9 fourth-generation air defence system to Woody Island in the South China Sea. (Chinese Internet) 1650338 Beijing has also made global headlines by enhancing its military capabilities on the islets it has built in disputed areas of the SCS. In February 2016, for example, Beijing deployed for the first time up to eight fourth-generation HQ-9 surface-to-air missile (SAM) launchers to Woody Island in the Paracels. A month later satellite imagery revealed that China had also deployed the landbased version of the 400 km-range YJ-62 anti-ship cruise missile to the island. Page 9 of 12

Airbus Defence and Space imagery showing an HQ-9 surface-to-air missile battery deployed on Woody Island in the Paracels. The deployment consists of a complete battery, consisting of an HT- 233 target engagement radar and four transporter-erector-launcher pairs, supported by a target acquisition radar and associated equipment. (CNES 2016, Distribution Airbus DS / 2016 IHS Markit) 1650964 Satellite imagery taken in late July last year also suggested that China has built reinforced hangars on three islets in the Spratlys: Fiery Cross, Mischief, and Subi. China has also continued to expand its harbour infrastructure to ensure that its navy, coast guard, and paramilitary ships can maintain a constant presence in the southern half of the SCS. The PLA has also continued to build advanced radar and signal intelligence capabilities on the islets to monitor this vast expanse of water. Additionally, the Chinese appear to have installed significant defensive firepower in the form of large anti-aircraft guns and what seem to be close-in weapon systems on Cuarteron, Fiery Cross, Gaven, Hughes, Johnson, Mischief, and Subi reefs, according to the Asia Maritime Transparency Initiative (AMTI) at the Washington-based Center for Strategic and International Studies (CSIS). US and Japanese reactions Such Chinese behaviour has unsettled countries in the region, many of which are concerned that Beijing may accelerate its efforts to establish de facto control over the disputed area through Page 10 of 12

increased military deployments, more land reclamation, and/or the enforcement of a naval blockade or an ADIZ. Among those alarmed nations are Japan and the United States, both of which have been striving to counter China's growing assertiveness in the region. Tokyo, which is already embroiled in a territorial dispute with China over parts of the East Asia Sea, has repeatedly advocated the importance of resolving the disputes peacefully through the rule of law, but has also begun establishing closer relationships with Southeast Asian governments by boosting materiel exports. For instance, Japan has already provided or agreed to provide patrol vessels to Malaysia, the Philippines, and Vietnam, all of which are SCS claimants: a development that has angered Beijing. However, China's main rival in the SCS is undoubtedly the United States, which has been the dominant naval power in the region for decades. The United States says it has an interest in ensuring freedom of navigation in these waters, which are also key regional trade routes. The US administration of former president Barack Obama identified US national interests in the area as three-fold: the protection of international law and the rules-based order, freedom of navigation, and the preservation of a stable and secure Asia, including the defence of allied nations such as the Philippines. However, while the Obama administration recognised that there was no military solution to the SCS disputes, it also knew that convincing China that its behaviour was "unbefitting of a great power and ultimately counterproductive" would take time, AMTI director Gregory Poling told Jane's. Tactical missteps However, as Abuza pointed out, the Obama administration was also in a bind. "Although the US Navy and Pacific Command were watching China's island construction with alarm, the Obama administration was, unsurprisingly, preoccupied with the Middle East," he noted. Moreover, he said, many in Washington were unwilling to pick a fight with China over this one issue, given that the two economies are so interdependent and the bilateral relationship is so multifaceted. "The US also needed Chinese co-operation on a host of critical issues, ranging from North Korea to climate change," said Abuza. On top of that some analysts argued that tactical missteps were made in the Obama administration's efforts to counter China. For instance, said Poling, Washington failed to respond strongly to the Chinese seizure of Scarborough Shoal in 2012 and refused to clarify its treaty commitment to defend Philippine troops or ships that might come under attack in disputed waters. This meant that US actions in the area, which are intended to re-assure allies, had only a limited effect. "If Asians ask, 'Has the US prevented China from doing anything it chooses?' the answer is no," said Manning. Potential for conflict Page 11 of 12

There is also uncertainty about how the new US administration under President Donald Trump will deal with the SCS issue as well as about its level of commitment to regional security alliances. An indication that the Trump administration might take a tougher stance on the issue was nonetheless provided on 23 January by White House Press Secretary Sean Spicer, who announced that the United States was going to "make sure we protect our interests" in the area. "If those islands are, in fact, in international waters and not part of China proper, we are going to make sure that we defend international territories from being taken over by one country," said Spicer during a press briefing without giving further details. Spicer was responding to a question about whether Trump agreed with a statement made by his then secretary of state nominee, Rex Tillerson, according to which China should not be allowed access to the islets it has built in the contested waters. China reacted to Spicer's statement by reiterating its determination "to safeguard its own sovereignty and maritime rights and interests" and insisting on a peaceful resolution of the disputes through "negotiations with the parties directly concerned", emphasising that the United States "is not a party to the SCS issue". For the full version and more content: IHS Jane's Defence Industry and Markets Intelligence Centre This analysis is taken from IHS Jane s Defence Industry & Markets Intelligence Centre, which provides world-leading analysis of commercial, industrial and technological defence developments, budget and programme forecasts, and insight into new and emerging defence markets around the world. IHS defence industry and markets news and analysis is also available within IHS Jane s Defence Weekly. To learn more and to subscribe to IHS Jane s Defence Weekly online, offline or print visit http://magazines.ihs.com/. For advertising solutions contact the IHS Jane s Advertising team Page 12 of 12