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Background Brief: South China Sea: Chinese Foreign Minister Mends Fences Carlyle A. Thayer August 16, 2012

[client name deleted] We some questions regarding the territorial disputes in the South China Sea and request your assessment of the following issues. Q1. What are the implications of Chinese Minister of Foreign Affairs Yang Jiechis visit to three ASEAN member states, in terms of dispute resolution in the South China Sea? ANSWER: Chinas Foreign Minister Yang was basically on a fence-mending trip to clear the air after allegations that China had used its influence with Cambodia to block the joint communique of the 45th ASEAN Foreign Ministers Meeting (AMM). Minister Yang strongly pushed for progress on the DOC but not the COC. Q2. Will Vietnam and the Philippines be isolated in ASEAN as a result of= this visit? ANSWER: The issue of implementing the DOC is a matter between all ten ASEAN members and China. Whatever the disagreements at the AMM in Phnom Penh, all ASEAN members want to see progress on the DOC. So far it has been all talk about cooperative activities with no practical implementation of any projects. Vietnam and the Philippines received strong support in Phnom Penh from Indonesia, Malaysia and Singapore. China will have to take this into account. Q3. During recent weeks, the US Department of State has opposed Chinas actions in the South China Sea twice, regarding the establishment of Sansha military garrison, and for dominating and conquering ASEAN member states. Do you think this frequency is unusual? What is the message that the US wants to convey with these statements? ANSWER: The U.S. apparently has concluded that China has decided to take a harder stance on the South China Sea issue. The role of the Central Military Commission (CMC) in approving the garrison at Sansha is one indication. China is undergoing a powershift in its leadership. It is clear that Hu Jintao will relinquish his posts as party leader and state president. But he wants to retain hold of the chairmanship of the CMC. Xi Jinping who will take up Hus posts also wants to chair the CMC. This may explain Chinas harder line. It is unusual for the State Department to issue two statements on the South China Sea coming so close together. The U.S. wants to deter the Chinese from taking

2 aggressive action and it also would like to influence the thinking of the new Chinese leadership. The U.S. is trying to convey the message to the new leaders that when they come to office there is much to be gained by cooperating with the United States and that assertive actions in the South China Sea will complicate matters. Q4. What are the benefits and disadvantages that Vietnam will bear as a result of the US statements? ANSWER: All U.S. statements opposing force and intimidation in the South China Sea may act as a deterrent to the Chinese and restrain their actions. This will benefit Vietnam because it is in Vietnams interest to have a stable and peaceful regional environment to develop. The disadvantage is that the U.S. statements will reinforce a view in China that the U.S. actions only encourage Vietnam and the Philippines to stand up to China. China fears containment and encirclement and they might view U.S. statements as confirming this view. Q5. The ASEANs Six-point principles on the South China Sea do not appear to be able to bridge the gap between different member states stances in the Association. How do you assess the prospect of a Code of Conduct by 2012, as planned by ASEAN earlier? ANSWER: There are three separate issues here. First, ASEAN foreign ministers approved the key elements of the COC on July 9th. Second, the failure to issue a joint communique came after. This disagreement was not over fundamentals but over whether or not to include mention of Scarborough Shoal and Chinas letting of oil leases in Vietnams Exclusive Economic Zone. Third, Indonesias Foreign Minister Marty Natalegawa intervened to do what Cambodia, as ASEAN Chair, should have done, and forged consensus. ASEANs Six Principles reaffirm what has already been decided. It restores a semblance of ASEAN unity to its members, to China and to ASEANs other dialogue partners. The ASEAN statement put Indonesias reputation at stake and China will have to take this into account. ASEAN will now try to get the ASEAN-China Joint Working Group on the COC to resume discussions at the formal level. This will be the occasion for ASEAN to table officially its key elements for China to review. In my view, the pressure will be on China to appear conciliatory and engage in diplomacy with ASEAN members. China could offer a gift to Cambodia if an agreement on the COC were signed at the ASEAN Summit in Phnom Penh in November. More importantly, if China does not play the diplomatic game it will be confronted by the other dialogue partners in November, especially at the East Asia Summit. And if China drags its feet on the COC it might prompt ASEAN to reach its own agreement on the COC and open it to accession by its dialogue partners. This would isolate China. Note that when Foreign Minister Yang visited Malaysia, the Malaysian Foreign Minister called for ASEAN members to settle their maritime disputes first. The longer China remains uncooperative the more unified the coalition of nations opposing China will become.

3 Suggested citation: Carlyle A. Thayer, South China Sea: Chinese Foreign Minister Mends Fences, Thayer Consultancy Background Brief, August 16, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.