Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

South China Sea: Chinas Game
Plan and Draft Code of Conduct
Carlyle A. Thayer
May 26, 2017

[client name deleted]

We are preparing a report on Chinas long-term objectives in the South China Sea. We
request that you respond to the following questions:
Q1. What do you think is China's grand plan in the South China Sea? Do you think
Chinas island-building campaign or the creation of the so-called Great Wall of Sand
in the contested shoals is part of Beijing's aggressive design? Do you think its part of
Chinas adoption of Admiral Liu Huaquing's strategy about the so-called First Island
Chain of Defense?
ANSWER: China has multiple objectives with respect to the South China Sea. First,
Beijing seeks to gain control over the South China Sea and the island features it claims
China claims it was "the first to discover, name and administer" these features. In
other words, this is part of the nationalistic objective of overcoming the century of
humiliation in the rejuvenation the Chinese nation.
More to the point, China seeks to safeguard its southern flank from US intervention in
a Taiwan contingency by making it risky for US Naval forces to transit the South China
Sea at a time of crisis. China also seeks to secure the sea lanes for its trade to prevent
disruption by the US Navy. China also seeks to build up a military presence to pressure
Southeast Asian littoral states to weaken if not cut their military ties with the United
States. Finally, China seeks to protect its submarine fleet, especially its ballistic missile
nuclear submarines (SSBNs), so they can exit the first island chain and deploy to the
western Pacific as a nuclear deterrent against the United States.
Q2. What steps should Washington take to reverse Beijings perceived diplomatic
advantage among members of ASEAN?
ANSWER: The US should hasten the process of completing a National Security Strategy
(NSS). Congress has mandated that a national security strategy should be produced by
a new administration within 120 days of taking office. The Trump Administration will
miss this deadline.
Once the NSS is drawn up, through an inter-agency process under the guidance of the
National Security Council, a Maritime Security Strategy should be issued. These
documents will replace Obama's rebalance strategy. These strategy documents should
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outline America's national interest and how the US will engage with the region to
ensure peace, security and stability.
President Trump must complete the appointment of the top tier of appointees at the
departments of State and Defense (assistant secretaries etc) as soon as possible. This
will enable better policy coordination. Until these appointments are made the US will
have no policy or strategy to overcome China's diplomatic advantage.
US engagement with ASEAN should focus on economics, trade and investment. The
Trump Administration needs to re-evaluate its focus on bilateral trade agreements
and consider multilateral arrangements. This is likely anathema to Trump and as long
as he remains entrenched in this view, Xi will "eat America's lunch" through its
advocacy of the One Belt, One Road initiative and support for the Regional
Comprehensive Economic Partnership.
The bottom line is that the Trump Administration and its officials must turn up to
regional meetings regularly and support ASEAN's centrality in regional affairs by
offering a balance to China. The US needs to work with ASEAN and not get out of step
through unilateral actions or worse, drift.
Q3. Whats your view on the recent ASEAN draft Framework Code of Conduct in the
South China SEa?
ANSWER: I have read what purports to be the draft Framework Code of Conduct. It is
a bare one page outline with short dot points sometimes running several lines. The
AEAN-China diplomatic elephant has given birth to a mouse.
The current draft replicates a Zero Draft Code of Conduct drawn up by Indonesia in
September 2012. This was presented to ASEAN foreign ministers on the sidelines of
the UN General Assembly meeting that year. It was rejected for two reasons: (1) it was
drawn up by Indonesia without prior consultation and (2) China got wind of it and
strongly suggested it would reject a "pre-cooked" ASEAN document. Chian insisted all
eleven parties (ten ASEAN members and China) draft the COC.
Diplomacy later turned to drafting a framework that set out the principles, purposes
and objectives of the Code of Conduct. The current draft does not indicate the
geographical area of coverage. China insists that the COC apply to the southern area
of the South China Sea (the Spratlys) but exclude Scarborough Shoal and the Paracels.
The draft also does not indicate how the COC will come into force. Who will sign the
COC? ASEAN want the COC to be ratified by the national legislatures of all eleven
countries such as China's National People's Congress. China has demurred. Most
significantly, the draft does not include any mention of a mechanism to (1) interpret
the COC if differences arise or (2) how actual incidents will be resolved such as through
an established dispute settlement process.
The draft COC makes reference, as the Indonesia's Zero COC did, to the UN Charter,
ASEAN Treaty of Amity and Cooperation, Five Principles of Peaceful Co-existence,
international law including the United Nations Convention on the Law of the Sea
(UNCLOS). The problem here is that China absolutely refuses to recognise the Award
by the Arbitral Tribunal (erroneously referred to as the Permanent Court of Arbitration
by the media) set up under Annex VII of UNCLOS. The draft COC also call for respect
of sovereignty. But how is this to be determined since land features in the Spratlys
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(and Parcels) are disputed. The draft COC correctly states that the COC will not resolve
sovereignty issues or maritime delimitation. The former is a matter between the states
directly concerned, the latter is under the jurisdiction of UNCLOS.
On a positive note, the draft Framework mentions transparency, self-restraint,
confidence building, avoidance of incidents, and the implementation of the
Declaration on Conduct of Parties in the South China Sea (DOC). The DOC, drawn up
in 2002, lists five cooperative activities. Four working groups have been set up to deal
with four of these activities but nothing has been done to implement these activities.
There is no working group on safety of navigation and communication at sea due to
China's objections. Despite the fact that ASEAN and China reached agreement to apply
the Code on Unplanned Encounters at Sea (CUES) to the Spratlys, no mention is made
in the draft Framework COC.
The Draft Framework COC is to be considered in August and if approved will lead to
consultations - not negotiations- on the Code of Conduct proper. The consultations
will move forward on the basis of consensus.
Basically, the draft Framework COC reiterates well known principles, purposes and
objectives that have been mentioned in ASEAN documents since 2000 and especially
2002 when the DOC was adopted. Why has it taken so long? Or rather, why has China
moved so swiftly since last year to reach a framework COC? The answer lies in a
confluence of events including the election of Rodrigo Duterte as president of the
Philippines, Xi Jin-ping's consolidation of power in the lead up to the 19th congress of
the Chinese Communist Party later this year, and China's move to pre-empt the Trump
Administration. China's line is that the US should not interfere as it is an outside power
and the US should not disrupt China-ASEAN diplomacy which is going along quite well
in Beijings view.

Suggested citation: Carlyle A. Thayer, South China Sea: Chinas Game Plan and Draft
Code of Conduct, Thayer Consultancy Background Brief, May 26, 2017. All
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.