Order Code RL31183
CRS Report for Congress
Received through the CRS Web
China’s Maritime Territorial Claims:
Implications for U.S. Interests
November 12, 2001
Kerry Dumbaugh (coordinator)
Foreign Affairs, Defense, and Trade Division
American Law Division
Richard Cronin, Shirley Kan, and Larry Niksch
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
China’s Maritime Territorial Claims:
Implications for U.S. Interests
The relatively shallow and resource-rich waters surrounding the People’s
Republic of China (PRC) are of growing economic and strategic importance, yet they
often remain invisible in the American foreign policy process. The United States,
along with most of the international community, regards these as international waters,
through which approximately half of the world’s sea-going commercial shipments
pass each year. Consequently, a primary U.S. economic and strategic objective in the
region has been the maintenance of freedom-of-navigation through these waters.
But apart from their economic and strategic importance, the semi-enclosed South
and East China Seas are filled with political and diplomatic complexities. Nine
surrounding states have competing territorial claims to the hundreds of various islets,
shoals, reefs, and maritime zones in these waters. The common claimant in all cases
is the PRC, which increasingly has sought to define its sovereignty and economic
exclusivity here in the broadest possible way hundreds of miles from its shores, to
include the Spratly Islands, Pratas Islands, Paracel Islands, Macclesfield Bank, and
Senkaku Islands. Successful prosecution of these wide-ranging maritime claims by
the PRC could greatly change the economic and strategic make-up of the region.
Other claimants of these islands and maritime zones include countries with which the
United States has defense commitments, such as Japan, Thailand, and the Philippines,
making peaceful resolution of these claims an important U.S. interest.
In addition to claims of sovereignty over the islands and reefs in these waters,
the PRC increasingly is narrowly interpreting provisions of international law that
govern activity in the 200-mile maritime zone – the exclusive economic zone (EEZ)
– off its coast. As demonstrated by the April 2001 U.S. Navy EP-3 reconnaissance
plane incident, the PRC now appears to be arguing that its 200-mile maritime
jurisdiction extends to the airspace over its EEZ. Moreover, the PRC is claiming that
the freedom of navigation and overflight in EEZs provided under the U.N.
Convention on the Law of the Sea (LOS Convention) should be subordinate to the
broad jurisdiction of the sovereign state – not, as the LOS Convention is generally
read, subject only to the economic and resource-related rights of the sovereign state.
In addition to their economic implications, competing regional maritime claims
and disagreements over provisions of international law have far-ranging security
implications. The PRC views its southern coast as fairly vulnerable, particularly to
U.S. naval forces. Although PRC military forces are still limited, the PRC is steadily
expanding its presence in the South China Sea, pre-positioning supplies and
equipment and building up outposts on various islands. Some believe that over the
longer term, continued PRC expansion and assertiveness in these maritime regions
will put Beijing in a position to more effectively challenge U.S. economic, political,
and security interests in the region.
Overview and Issue Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Issues Surrounding China’s Maritime Claims . . . . . . . . . . . . . . . . . . . . . . . . . . .
Territorial/Sovereignty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South China Sea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senkaku and Ryukyu Islands, East China Sea . . . . . . . . . . . . . . . . . . .
Maritime/Exclusive Economic Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freedoms of Navigation and Overflight . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S.-China Differences on Freedom of Navigation . . . . . . . . . . . . . . . . . . .
Competing Territorial Claims and Diplomacy . . . . . . . . . . . . . . . . . . . . . . . . . .
Spratlys and Paracels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philippine-PRC Diplomacy and Confrontation . . . . . . . . . . . . . . . . .
ASEAN Diplomacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ASEAN and the Proposed Code of Conduct . . . . . . . . . . . . . . . . . .
U.S. Policy Toward China’s South China Sea Claims . . . . . . . . . . . .
Incidents and Diplomacy in the East China Sea . . . . . . . . . . . . . . . . . . . .
U.S. Policy Toward the Senkakus . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Administration of the Senkaku Islands, 1945-1971 . . . . . . . . . .
Okinawa Reversion Treaty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Relevance of the Security Treaty for the Senkakus . . . . . . . . . . . . . .
Economic Dimension and Implications of China’s Maritime Territorial Claims .
International Economic and Commercial Stakes . . . . . . . . . . . . . . . . . . . .
Resources Affected by Territorial Disputes . . . . . . . . . . . . . . . . . . . . . . .
The “Economics” of Using Armed Force to Resolve Disputes . . . . . . . . .
Mutual Vulnerabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Predominance of Interregional Maritime Trade . . . . . . . . . . . . . . . . . . . . .
Economic Implications for the United States . . . . . . . . . . . . . . . . . . . . . .
Security and Strategic Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLA Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLA Assertiveness and Confrontations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strategic Security Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options and Implications for the United States . . . . . . . . . . . . . . . . . . . . . . . . . 39
Territorial Claims: Cases in International Law . . . . . . . . . . . . . . . . . . . . . 41
List of Figures
Figure 1. China’s “Nine-Dotted Line” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2. South China Sea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 3. World Crude Oil Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
This analysis was originally prepared at the request of Senator Orrin Hatch, and is
being reprinted by CRS for general congressional distribution with his permission.
China’s Maritime Territorial Claims:
Implications for U.S. Interests
Overview and Issue Definition1
The collision on April 1, 2001, of a Chinese jet fighter with a U.S. navy
reconnaissance plane over the South China Sea drew unusual public attention to the
ocean areas south and east of the People’s Republic of China (PRC): the South China
Sea and the East China Sea. These relatively shallow, resource-rich waters are of
growing economic and strategic importance, yet they often remain invisible in the
American policy process. The United States, along with most of the international
community, regards these as international waters. According to one estimate, more
than half of the world’s sea-going commercial shipments pass through this area each
year, including the bulk of inter-Asian trade and most of Japan’s annual oil imports.
Consequently, a primary U.S. economic and strategic objective in the region has been
the maintenance of freedom-of-navigation through these waters.
But apart from their economic and strategic importance, the semi-enclosed South
and East China Seas are filled with political and diplomatic complexities. Nine
surrounding states have competing territorial claims to the hundreds of various islets,
shoals, reefs, and maritime zones in these waters. The common claimant in all cases
is the PRC, which increasingly has sought to define its sovereignty and economic
exclusivity here in the broadest possible way, to include most or all of the South and
East China Seas. Other claimants include countries with which the United States has
defense commitments, such as Japan, Thailand, and the Philippines, making peaceful
resolution of these claims a vital U.S. interest.
In a further complication, the island of Taiwan, easily the most sensitive and
long-standing issue in U.S.-PRC relations, straddles the East and South China Seas,
separated from the PRC mainland by 90 miles across the Taiwan Strait. Taiwan
makes the same claims as the PRC to islands in these waters, but its claims are based
on the Taiwan government’s pre-civil war status as the Republic of China on the
mainland. On this issue, then, both the Taiwan and PRC governments find themselves
in the unusual position of being on the same side, as both make their claims on behalf
of the Chinese nation.
This report provides an overview of which islands and reefs are in dispute and
who claims them; background on Chinese assertions and justifications about the
extent of Chinese sovereignty in these waters; the economic and strategic significance
of the relevant sea lines of communication, both for Asia and for U.S. interests; an
analysis of PRC military activity and interests in the region, as well as an overview of
Prepared by Kerry Dumbaugh, Foreign Affairs, Defense, and Trade Division, October 2001.
confrontations in the area; and an analysis of international legal interpretations of
these issues. Finally, the report discusses the implications of competing South/East
China Sea claims for U.S. economic and strategic interests, and the implications that
U.S. treaty obligations to claimant states have for resolution of these claims.
Issues Surrounding China’s Maritime Claims
The South China Sea is a semi-enclosed sea bordered by China, Taiwan,
Vietnam, Brunei, Malaysia, Indonesia, and the Philippines, all of which have long
maintained claims to some or all of the islands and shoals that dot the sea. Another
set of claims involves the Ryukyu and Kyushu Islands in the East China Sea, bordered
by China, Taiwan, and Japan. Beginning in the 1970's, when seismic explorations
indicated the potential for vast off-shore oil and gas fields in the South and East China
Sea areas, claimant countries began to pay more attention to their competing maritime
claims in these waters and began to press their claims more assertively. Three
interrelated issues are involved in these claims: conflicting claims about sovereignty
over territory; conflicting interpretations about national Exclusive Economic Zones
(EEZ’s) and maritime zones; and disagreements over the extent of freedom of
navigation and overflight that is permitted under the U.N. Convention on the Law of
the Sea (hereafter called LOS Convention).
South China Sea. Since the early 1900's, the Chinese government has used
what has come to be known as the “nine-dotted (or U-shaped) line” to define its
territorial claims in the South China Sea.2 Official Chinese maps – both those of the
PRC and of Taiwan – continue to show this dotted line marking the presumed area
claimed as sovereign Chinese territory. (See Figure 1.) There is international legal
controversy and disagreement over this drawn line, even among some Chinese
scholars. First, the exact boundaries of the line are unknown, as they contain no
reference to latitude and longitude points, making its legal validity questionable.
Second, that the line is drawn on maps of China appears to suggest that China claims
sovereignty over not only the islands within this line, but the sea and seabed itself,
including all marine and natural resources – an interpretation at variance with the LOS
Convention, which the PRC has ratified.3 Some Chinese scholars justify this claim
on the grounds that this is China’s “historic bay,” despite the fact that many western
scholars say that waters surrounded by so many other sovereign states can be no
single country’s “historic bay.” Under the LOS Convention, a state is allowed to
According to Stein Tonnesson, the nine-dotted line was drawn in the 1930's, although first
published officially only in 1947 by the Chiang Kai-shek ROC government. (Tonnesson,
Stein, “China and the South China Sea: A Peace Proposal,” in Security Dialogue, Vol. 31(3),
September 2000, p. 312.)
Peter Kien-Hong Yu makes this point in his article, “The Chinese (Broken) U-shaped Line:
Points, Lines, and Zones in the South China Sea.” (Not yet published.) Other scholars have
argued that only the islands and land masses themselves are being claimed – another
problematic point, given the low-tide elevations of many of them.
subsume waters in its “historic bay” which otherwise would be subject to the 200
nautical mile EEZ limitations. Thus, any exploration or other economic activity can
be conducted in an “historic bay” only with the express permission of the sovereign
government. Other Chinese scholars, however, allege that western concepts that
China “wants to make the South China Sea a domestic lake” are misconceptions.4
Figure 1. China’s “Nine-Dotted Line”
In 1992, the PRC attempted to codify the claims implied by the nine-dotted line
by enacting The Law on the Territorial Sea and the Contiguous Zones, which
specifically stated its territorial claims over four island and reef groups in the South
China Sea.5 The following year, in 1993, Taiwan established its own policy position
for all of its South China Sea claims through the Executive Yuan’s Policy Guidelines
for the South China Sea. The economic implications of the conflicting claims in this
region are profound. In addition to potentially large off-shore oil and gas deposits,
these shallow waters provide transit for much of the world’s shipping through the
South China Sea by way of the Strait of Malacca (between Thailand and Indonesia),
the Sunda Strait, and the Lombok Strait (both within the Indonesian island chain).
In addition, bordering countries are placing increasing emphasis on the rich fishing
Ji Guoxing, “China Versus South China Sea Security,” in Security Dialogue, Vol. 29 (1),
1998, p. 101.
In addition, the 1992 Territorial Waters law asserts PRC sovereignty over Taiwan, the
Senkaku Islands, and the Pescadores.
resources in this region, the health of which increasingly depends on coordinated and
environmentally sound ocean transport and marine management policies.
Spratly Islands. The largest group of the South China Sea islands is the
Spratly group, the 400 or so islands, islets, reefs, and rocks spread across
approximately 800,000 square miles in the far southeast of the area delineated by the
PRC’s “nine-dotted line” and due west of the Philippine coast. (See Figure 2.) The
PRC claims sovereignty over all of the Spratly Islands (Nansha), as do Taiwan and
Vietnam.6 Since 1955, Taiwan has maintained a naval presence on the northern island
of Itu Aba, or “Taiping” island, the largest of the Spratly Islands, although in 1999
Taiwan replaced its military troops with coast guard personnel, claiming the island
could not be defended – a common problem with all the islets and reefs in the Spratly
group. Other islands in the Spratlys are claimed by Brunei (which claims one reef and
occupies no territory in the Spratlys), the Philippines, and Malaysia. Although China,
Taiwan, Vietnam, the Philippines, and Malaysia all occupy territory in the Spratlys,
none of the islands has been permanently inhabited, an important distinction in the
LOS Convention. In another important LOS Convention distinction, only 22 to 40
of the Spratly Islands are above water at high tide.7 Mischief Reef, one of the
Spratlys on which the PRC has constructed permanent structures, is below water at
high tide, and thus is not considered an island under LOS Convention definitions.
The Paracel Islands. The PRC also lays claim to all of the Paracel Islands
(Xisha), a group of islands east of the Vietnam coast and closer to the south China
coast than are the Spratlys (see Figure 1). Although the Paracels are also claimed by
Vietnam, PRC military forces have been the sole occupants of the islands since 1974.
The PRC’s navy maintains an airbase on one of the islands in the Paracel group –
Woody Island, located mid-way between the PRC’s Hainan Island and the
The Pratas Islands. Although the PRC also claims the small Pratas Island
(Dongsha) group, off the south-western Taiwan and southern PRC coasts, Taiwan
physically occupies the one island and two coral reefs making up this grouping. As
Pratas Island is always above water, Taiwan maintains an airfield on Pratas, as well
as several emergency service centers for fishing boats operating in this area of the
South China Sea.
The Macclesfield Bank. The fourth island archipelago claimed by the PRC
in the South China Sea is the Macclesfield Bank (Zhongsha), including Scarborough
Reef, both north of the Spratly Islands. Scarborough Reef is also claimed by Taiwan
and the Philippines.
From 1939-1945, Japan occupied both the Spratlys and the Paracels, establishing submarine
bases there. After Japan’s surrender, the Republic of China government briefly established
a garrison in the Spratlys before abandoning it and fleeing to Taiwan after defeat by Chinese
Under the LOS Convention, a body of land meets the definition of an “island” if it is above
water at high tide. See LOS Convention 121.1.
Figure 2. South China Sea
Senkaku and Ryukyu Islands, East China Sea. A different set of issues
surrounds China’s competing claims over the eight uninhabited Senkaku (Diaoyu)
Islands and the Ryukyu Islands (the largest of which is Okinawa) in the East China
Sea. The PRC, Taiwan, and Japan have all had long-standing claims to these islands
which, like the South China Sea islands, are presumed to have good potential for oil
and gas deposits. The Chinese side – both the PRC and Taiwan – traces its claims
back to the 14th century, when Ming Dynasty fishing vessels frequented the islands,
although the Ming never established a permanent presence there. Japan’s claim to the
islands dates from January of 1895, during the Sino-Japanese War, when the Chinese
Emperor agreed to cede the Senkakus to Japan.8
In the 1951 Treaty of Peace with Japan, the United States assumed control over
both the Senkakus and the Ryukyus, although the former were not specifically
mentioned in the 1951 Treaty. In a 1953 proclamation, U.S. officials responsible for
administering the Ryukyus broadly defined the region under U.S. control to include
the Senkakus.9 Thus, in 1971, when the United States signed the Okinawa Reversion
Treaty with Japan, returning to Japan the areas and territories being administered by
the United States, the Senkakus were included.10 Japan’s claim to the Senkaku
Islands has been in dispute with both China and Taiwan ever since. Subsequently, and
despite language in the Okinawa Reversion Treaty that has been interpreted to apply
the U.S.-Japan Security Treaty to both the Ryukyu and Senkaku islands, U.S. officials
have maintained a neutral position over the islands’ status, repeatedly stating that the
Okinawa Treaty language has no bearing on any outstanding claims to sovereignty
over the islands in question.
International law gives some guidance for resolving the conflicting claims of
sovereignty over these various islands. The decided cases are few; but the elements
that have been used in determining sovereignty have included discovery, occupation,
exercise of authority, and acquiescence by other states. Thus, historical facts about
these elements play a crucial legal role in any given situation, and the cases are
necessarily fact-specific. While it seems doubtful that the competing claimants to the
islands in the South China Sea and East China Sea are amenable to a legal resolution
of the various disputes at present, their public justifications are often rooted in these
legal concepts. (See Appendix A for a summary of the international legal cases
involving questions of sovereignty over islands.)
In the Sino-Japanese Treaty of Shimonoseki ending the war, signed in May 1895, China also
ceded Taiwan (Formosa) to the Japanese. Since this Treaty did not mention the Senkakus,
Japan has claimed that its rights to the islands were conveyed in a separate action unrelated
to the war. This becomes relevant later, during Allied agreements at Potsdam, in which the
Allies agreed to restore to China those territories it lost to Japan through military aggression.
U.S. Civil Administration of the Ryukyus Proclamation 27 (USCAR 27).
Inclusion of both the Ryukyus and the Senkakus was clarified in an Agreed Minute to the
Okinawa Reversion Treaty. See U.S. Congress. Senate Committee on Foreign Relations.
Okinawa Reversion Treaty (hearings). 92nd Congress, 1st Session, October 27 - 29, 1971.
Washington, U.S. Govt. Printing office, 1971.
Maritime/Exclusive Economic Zones11
The second set of issues involved in competing maritime claims is the definition
of maritime and exclusive economic zones, or EEZ’s. These issues are primarily
governed by the LOS Convention, which is intended to establish a comprehensive
legal regime governing all uses of the oceans and of their resources.12 The
Convention recognizes that every coastal state may lay claim to a number of differing
maritime zones that give it designated rights:
territorial sea: First, a coastal state is entitled to claim a belt of sea
adjacent to its coast as its “territorial sea.” This territorial sea may
extend up to 12 miles from the coast, and in this belt of sea the
coastal state may exercise full sovereignty.13
contiguous zone: Second, a coastal state may also establish a zone
adjacent to its territorial sea as a “contiguous zone.” Within this
zone the coastal state is not sovereign, but it may exercise the control
necessary to prevent and punish infringements of the customs, fiscal,
immigration, and sanitary laws and regulations that apply in its
territorial sea. The contiguous zone may extend up to 24 miles from
exclusive economic zone (EEZ): Third, a coastal state may claim a
belt of sea up to 200 miles from its coast as its “exclusive economic
zone (EEZ).” In this area the coastal state is entitled to exercise
sovereign rights over the living and non-living resources of the sea,
the seabed, and the subsoil of the seabed.15
continental shelf: Finally, the LOS Convention recognizes the legal
right of every coastal state to control and exploit the natural
resources of its continental shelf up to 350 miles from its coast.16
The claims of Malaysia and Brunei apparently rest in part on the assertion that
some of the islands in these waters are within one or more of their maritime zones.
But more importantly, under the LOS Convention these maritime zones may extend
not only from the primary land area of a coastal state but also from any islands over
which it is sovereign.17 Thus, to the extent that any of the claimant states can
successfully lay claim to sovereignty over disputed islands, they may also establish the
pertinent maritime zones around the islands and lay claim to their economic and other
Prepared by Dave Ackerman, American Law Division, August 2001.
The Convention entered into force on November 16, 1994, and as of September 2nd, 2001,
has been ratified by 137 states, including the PRC and all of the other state claimants to the
Spratly Islands with the exception of Taiwan.
LOS Convention, Articles 2 and 3.
Id. Art. 33.
LOS Convention Articles 55-57.
Id. Articles 76-77.
Id. Art. 121.
benefits. That could include the fisheries of the islands’ EEZ as well as the oil and
mineral resources of their EEZ(s) and continental shelf(s).
Nonetheless, it deserves emphasis that serious questions exist concerning the
extent to which some of these disputed islands possess the characteristics necessary
to give rise to these maritime zones. Under the LOS Convention, an “island” is
broadly defined to mean “a naturally formed area of land, surrounded by water, which
is above water at high tide.”18 However, few of these islands – for instance, only 2240 of the more than 400 “islands” in the Spratly group – are above water at high tide;
thus, they do not meet the LOS Convention definition of an “island.” Moreover, the
LOS Convention also provides that an EEZ and a continental shelf may be generated
by an island only if the island is “habitable or able to sustain an economic life.” In
other words, these zones may not be based on possession of an uninhabitable rock.19
Although these standards concerning habitability and economic viability are not
entirely transparent, they likely pose additional barriers to the capacity of at least
some of the islands to be used as a basis for establishing an EEZ or claiming the
resources of their continental shelf(s).
Freedoms of Navigation and Overflight
The foregoing maritime zones also have implications for navigation in, and
overflight of, parts of the South China Sea – the third set of issues in competing
maritime claims in the region. Under the LOS Convention, the “high seas” are
deemed to comprise all parts of the sea that are not included in a state’s internal
waters, territorial sea, or EEZ, or in the archipelagic waters of an archipelagic state.20
On and over the high seas the principles of freedom of navigation and freedom of
overflight govern.21 Similarly, the Convention states that the principles of freedom
of navigation and of overflight apply with respect to the 200-mile EEZ. On and over
internal waters and the territorial sea (12 miles), however, there is no right of
overflight at all; overflight is allowed only with the permission of the coastal state.
In these areas, moreover, navigation is subject to the control of the coastal state.
While the ships of other states have a right to traverse the territorial sea (but not
internal waters) of a coastal state, that passage is required to be “innocent” in nature,
i.e., it must not be “prejudicial to the peace, good order, or security of the coastal
The Convention provides that “[r]ocks which cannot sustain human habitation or economic
life of their own shall have no exclusive economic zone or continental shelf.” Id.
In the LOS Convention, archipelagic states are accorded special privileges. The Convention
defines an archipelagic state as “a group of islands, including parts of islands, interconnecting
waters and other natural features which are so closely interrelated that such islands, waters
and other natural features form an intrinsic geographical, economic, and political entity...”
The LOS Convention allows archipelagic nations, such as Indonesia, to draw baselines
connecting their islands which essentially create sovereign archipelagic waters. States also
have rights of transit passage and overflight through archipelagic waters.
LOS Convention, Art. 87.
State”22; also, the coastal state may impose a variety of regulations on navigation in
the territorial sea. Thus, to the extent that the contending nations establish
sovereignty over part or all of the islands under dispute, some limitations on overflight
and navigation in the region may result.
U.S.-China Differences on Freedom of Navigation23
The United States has not ratified the LOS Convention, but has actively sought
to maintain a broad scope for the freedom of navigation around the world, a position
supported equally by most developed and maritime powers with global trading
interests. For purposes of navigation and overflight, the United States asserts that the
LOS Convention treats EEZs as international waters in which all states’ rights to
freedom of navigation and overflight are assured, subject only to the rights that
sovereign states have economically to exploit the resources in their own EEZs. For
freedom of navigation, then, EEZs are equivalent to the high seas, through which
vessels of all states can navigate freely without paying much attention to the incidental
economic interests of the relevant sovereign state. U.S. specialists further argue that
the LOS Convention allows overflight in aircraft of an EEZ.
The PRC has ratified the LOS Convention, but argues that the rights of states
to control and exploit resources in their own EEZs should predominate over
international rights of freedom of navigation and overflight. In the PRC view, then,
the LOS Convention subordinates freedom of navigation and overflight in the 200mile EEZs to the economic interests of the coastal sovereign state.24 Furthermore, as
demonstrated by the U.S. Navy EP-3 incident, the PRC now appears to be arguing
that these restrictions should extend as well to the airspace over an EEZ.25
Id. Art. 19.
Prepared by Kerry Dumbaugh, Foreign Affairs, Defense, and Trade Division, October
See Ji Guoxing, “Rough Waters in the South China Sea: Navigation Issues and ConfidenceBuilding Measures,” in Asia Pacific Issues, East-West Center, No. 53, August 2001.
Article 58 states: “In the exclusive economic zone all States, whether coastal or
land-locked, enjoy, subject to the relevant provisions of this Convention, the freedoms referred
to in article 87 of navigation and overflight and of the laying of submarine cables and
pipelines, and other internationally lawful uses of the sea related to these freedoms, such as
those associated with the operation of ships, aircraft and submarine cables and pipelines, and
compatible with the other provisions of this Convention.... In exercising their rights and
performing their duties under this Convention in the exclusive economic zone, States shall
have due regard to the rights and duties of the coastal State and shall comply with the laws
and regulations adopted by the coastal State in accordance with the provisions of this
Convention and other rules of international law in so far as they are not incompatible with this
Competing Territorial Claims and Diplomacy26
Spratlys and Paracels
The PRC’s physical occupation of islands, reefs, and shoals in the South China
Sea has brought China’s broad claims into competition with the claims of several
members of the Association of Southeast Asian Nations (ASEAN).27 This is
especially so of Vietnam, the Philippines, and Malaysia, which also occupy islands,
shoals, and reefs in the areas and who have territorial disputes both among themselves
and with China. Brunei maintains a claim but does not occupy territory. There is also
a question of whether China’s territorial claim to the southern region of the South
China Sea overlaps with Indonesia’s claim to natural gas fields near its Natuna islands.
Indonesia currently is developing these gas fields through contracts with American oil
Prior to 1995, PRC actions affected only Vietnam, which claimed both the
Spratly and the Paracel Islands. PRC forces had occupied the Paracel islands in 1974
near the end of the Vietnam War, driving out South Vietnamese forces, although
Communist Vietnam has continued to maintain these maritime claims. After 1975,
China’s occupation of several positions in the area of the Spratly islands resulted in
military clashes and confrontations between the Chinese and Vietnamese navies,
including the years 1988, 1992, and 1994. Although Vietnam was not a member of
ASEAN at the time, ASEAN did take diplomatic initiatives to resolve SinoVietnamese disputes. In 1990, for instance, Indonesia began holding annual South
China Sea workshops attended by government officials and private experts. These
workshops discussed areas of potential cooperation among states in developing the
natural resources of the South China Sea, as well as possible confidence building
measures (CBMs) among claimant countries. The workshops were defined as
“unofficial” and produced no formal agreements.28
In 1992, ASEAN took formal action in response to new tensions between China
and Vietnam and in response to China’s issuance in February 1992 of its “Law on
Territorial Waters and their Contiguous Areas,” which specified China’s claim to most
of the South China Sea basin. ASEAN foreign ministers issued an “ASEAN
Declaration on the South China Sea” which called on claimant governments to
“exercise restraint” and resolve disputes “without resort to force.” The Declaration
also called on governments to put aside the issue of “sovereignty” and cooperate on
issues like navigation, maritime pollution, search and rescue, and combating piracy.
With an eye toward China, the declaration invited “all parties concerned to subscribe
to this Declaration of principles.”
Prepared by Larry Niksch, Foreign Affairs, Defense, and Trade Division, October 2001.
Current ASEAN member nations are: Burma, Brunei, Cambodia, Indonesia, Laos,
Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Wain, Barry, “ In the Spratlys, an Angel May be in the Details,” in Asian Wall Street
Journal, September 12, 1994, p. 14.
The PRC did not subscribe. Instead, China used the next several years (19921995) to set forth several policy positions which it has attempted since to make the
basis of diplomacy, with some success. These positions are: (1) China will negotiate
bilaterally with other claimant countries; (2) China will not negotiate multilaterally
with other claimant countries; (3) China opposes the participation of any outside
country (i.e., the United States) in negotiations on the South China Sea; (4) China
opposes “internationalization” of the dispute, such as taking the dispute to an
international forum for arbitration or legal rulings.29
Little further diplomacy occurred until early 1995, when the PRC seized Mischief
Reef in the Spratly Islands. This marked the first time that the PRC had seized
territory claimed by an ASEAN country, the Philippines. Consequently, ASEAN
intensified its diplomatic efforts to address South China Sea territorial claims. These
efforts had three elements: (1) bilateral negotiations with China, mainly by the
Philippines; (2) pressure on China to discuss the South China Sea multilaterally with
ASEAN; and (3) focus on negotiating a “code of conduct” with China to regulate and
place limits on the actions of the claimant countries.
Philippine-PRC Diplomacy and Confrontation. Unilaterally, the
Philippines responded to China’s seizure of Mischief Reef with more activist
diplomatic and even military efforts to pressure China to end its occupation of the reef
and to deter China from occupying other Philippine-claimed territories in the Spratlys.
As a result of its diplomatic efforts, the Philippines succeeded in negotiating a “code
of conduct” agreement with China on August 9-10, 1995, which contained a joint
pledge “to refrain from using force or threat of force” in the South China Sea; to
initiate joint cooperation in fields like maritime environment, marine research, safety
of navigation, etc; and to settle disputes in accord with international law “including
the UN Convention on the Law of the Sea.” The Philippine government also was able
to persuade other ASEAN members to adopt more assertive policies.
The actual impact of the Philippine-PRC code of conduct agreement, however,
has been limited. There has been little joint cooperation in the specified areas.
Although the PRC has not seized more positions in the Philippine-claimed part of the
Spratlys, it has established a regular presence of Chinese fishing and naval vessels and
has placed PRC territorial markers on islands and reefs, leading some to believe it
intends to occupy more territory. China also has asserted a claim to Scarborough
Shoal, located about 125 miles west of the Philippine main island of Luzon, and it has
tried to establish a regular presence in that area.
Despite the code of conduct’s pledges to avoid force in the South China Sea,
there have been a series of incidents and confrontations since 1996 between PRC
vessels and the Philippine navy in the disputed area. As the PRC established a more
permanent presence of naval and fishing vessels, the Philippine government adopted
a policy of physically challenging this Chinese presence. In numerous clashes and
confrontations in the Spratlys and near Scarborough Shoal, the Philippine navy has
Ibid. Chandi, Mayan, “ Divide and Rule,” in Far Eastern Economic Review, August 11,
1994. p. 18. JI Gazing, “ Security in the South China Sea: a Chinese Perspective,” in
PACNET, January 12, 1995.
blocked and rammed Chinese fishing and ocean research boats, arrested Chinese
fisherman and “researchers,” fired warning shots, and pulled down Chinese territorial
On the diplomatic front, from 1995-1998 each side rejected proposals made by
the other. The Philippines rejected a PRC proposal to allow Filipino fishermen access
to Mischief Reef (in return for an end to Philippine reconnaissance flights), as well as
a PRC proposal to ban the arrest of fishermen in the disputed region. For its part, the
PRC rejected a Philippine proposal for U.N. mediation, and a Philippine proposal that
each side refrain from any new construction in the disputed area.
Diplomatic deadlock deepened when the PRC installed permanent structures on
Mischief Reef, including military emplacements.30 Although the Philippines and the
PRC reiterated their adherence to their original code of conduct agreement in a
statement of March 22, 1999,31 a meeting that month between the two governments
broke up when the PRC rejected Philippine proposals for dismantling the Mischief
Reef structures, transferring control of Mischief Reef to the Philippines, and assuring
that the PRC government would build no new structures. The Philippine side rejected
PRC proposals to ban arrests of Chinese fishermen, avoid sending Filipino vessels and
aircraft into “Chinese territory,” and ending the Philippine government’s anti-China
ASEAN Diplomacy. When the PRC first seized Mischief Reef in 1995,
ASEAN supported the Philippines in a diplomatic effort reminiscent of its 1980s
diplomacy toward Vietnam’s occupation of Cambodia. Two factors stood out. First,
ASEAN’s six members at the time (Vietnam was admitted as a seventh member later,
in July 1995) presented a united front at a PRC-ASEAN meeting in April 1995, where
ASEAN ministers warned China that its relations with ASEAN countries would suffer
because of Mischief Reef. Second, Indonesia took a leadership role, criticizing
China’s territorial claim to the South China Sea, calling for an early settlement of the
competing claims, and pressing Beijing for a specific answer on whether its territorial
claims included the Natuna gas fields.
ASEAN’s stand appeared to produce two Chinese concessions. China agreed
to negotiate with ASEAN, thus modifying its earlier position of holding bilateral
negotiations only. China also agreed to resolve the dispute in accord with the LOS
Convention (subsequently stated in the Philippine-PRC code of conduct). But China
held firm that third parties, i.e. the United States, should not be involved.
The PRC’s formal ratification of the LOS Convention in May 1996 seemed to
be another diplomatic success for ASEAN, but Beijing quickly negated this by
Agence France Presse (Hong Kong) report, December 9, 1988. Lamb, David, “ Chinese
Heat Up Spratly Spat,” in Los Angeles Times, December 15, 1998, p. A4.
Joint Statement Issued on Confidence-Building Measures. Xinhua (Beijing), March 23,
“Manila Said Losing Faith in Talks with Beijing,” in Business World (Manila, Internet
version), March 26, 1999.
declaring a 200 mile exclusive economic zone outward from the Paracel islands,
disputed between China and Vietnam.33 Furthermore, by the time the PRC installed
permanent structures on Mischief Reef in 1998, ASEAN’s strength and unity on
South China Sea questions had weakened, for several reasons.34 First, ASEAN’s
admission of Laos, Cambodia, and Burma after 1995 added countries that had little
interest in the South China Sea. Instead, the priority of these new ASEAN members
was to improve relations with China, whose economic and political influence
throughout Southeast Asia was growing. The onset of the Asian financial crisis in
1997 further distracted ASEAN governments from security issues and from giving
priority to ASEAN itself. The collapse of Indonesia’s Suharto government in 1998
removed the crucial element of Indonesian leadership in ASEAN’s policy toward the
South China Sea. Inter-ASEAN tensions over competing claims also increased when
Malaysia placed structures on two reefs in its claimed area in 1999, which the
Philippines and Vietnam protested.
ASEAN and the Proposed Code of Conduct. In January 1999, Philippine
President Joseph Estrada’s National Security Council formulated a new strategy
toward the Spratly islands. The Council decided to ask regional and international
bodies to consider China’s actions, and to urge ASEAN to negotiate a regional code
of conduct with China reminiscent of the Philippine-PRC code-of-conduct agreement
of 1995. Consequently, the Philippines proposed a regional code of conduct at an
ASEAN-PRC consultative meeting in April 1999.
Throughout the year, ASEAN members negotiated over the proposal. The
Philippines, Vietnam, and Malaysia disagreed over the proposal’s content. Malaysia
reportedly was cool to the proposal, while Vietnam wanted it to cover the Paracels
as well as the Spratlys. Senior ASEAN officials finally agreed in November 1999 to
a draft code of conduct that would include the Paracels. They presented it informally
to PRC officials attending an ASEAN Plus Three (PRC, South Korea, and Japan)
meeting. The PRC rejected it, objecting to inclusion of the Paracels and to a clause
providing for “a halt to any new occupation of reefs, shoals and islets in the disputed
area.” PRC officials did propose further discussion of a code of conduct but with two
qualifications: that the discussions be bilateral with individual “relevant ASEAN
members” and that the process proceed “gradually in an orderly fashion.”35
PRC officials produced their own draft code of conduct in March 2000. Clauses
related to peaceful settlement of disputes and freedom of navigation were similar to
the ASEAN draft, but the PRC draft differed on three other issues. It included a
prohibition of the arrest or use of force against Chinese fishermen. It stated that
signatories would refrain from “dangerous and close-in reconnaissance” and military
patrols, thus limiting ASEAN country surveillance of PRC activities. This position
Leahy, Joe, “Round One to Rangoon,” in Far Eastern Economic Review, August 1, 1996,
Wain, Barry, “The Illusion of Chinese Power Is Ingrained by ASEAN’s Inaction,”in Asian
Wall Street Journal Weekly, July 5-11, 1999, p. 17. Thayer, Carlyle A., “New Fault Lines
in ASEAN,” in Asia-Pacific Defence Reporter, February-March 2000, p. 26-27.
Beijing Radio Zhongguo Xinwen She broadcast, November 26, 1999.
is similar to the PRC’s position in the EP-3 collision incident – to whit, that the
United States should cease military activities, including reconnaissance, in the areas
off the South China coast and within the PRC’s 200-mile Exclusive Economic Zone.
Finally, the PRC draft did not include the ASEAN draft’s ban on new occupation of
reefs, shoals, and islets, instead calling on parties only “to exercise self-restraint.”36
The production of both the ASEAN and PRC drafts created a mechanism to
negotiate specific differences over a code of conduct. However, there appears to
have been little progress in negotiations since the issuance of the PRC draft. In May
2001, Dino Patti Djalal, Political Counselor of the Indonesian Embassy in
Washington, praised the idea of a “South China Sea Code of Conduct” and said that
negotiations were continuing; but he did not indicate that talks were achieving
According to informed sources interviewed by CRS for this report, the PRC is
taking a hard line against including the Paracels in any regional code of conduct.
China appears to be following this line partly in knowledge that Malaysia also favors
excluding the Paracels. Malaysia’s split with Vietnam and the Philippines on this issue
divides ASEAN to China’s diplomatic advantage. According to these sources, China
hints at flexibility toward the ASEAN proposal to prohibit new seizures and structures
in the Spratlys. This could signal a change in the PRC’s position. But it also could
be a tactic to appeal to Malaysia, since the PRC undoubtedly knows that the deadlock
over the Paracels gives China diplomatic flexibility to maneuver and exploit ASEAN
divisions without having to make firm commitments and promises on other issues.
U.S. Policy Toward China’s South China Sea Claims. Until the PRC’s
seizure of Mischief Reef, U.S. policy toward the South China Sea dispute had minimal
content. The stance of U.S. Administrations since the 1970s had been that the United
States takes no position on the merits of the competing claims, supports a peaceful
resolution of the conflict, and opposes the threat or use of force in the region by any
of the claimants. There was little active diplomacy. The PRC’s seizure of Mischief
Reef changed all this. On May 10, 1995, the Clinton Administration issued a
statement on the South China Sea that led to an exchange with China relevant to the
U.S. Navy EP-3 reconnaissance plane episode. In its May 10 statement, the Clinton
Administration reiterated that the United States takes no position on the “legal
merits” of competing claims and opposes the use of force. The statement also
expressed concern over “the pattern of unilateral actions and reactions” and that “the
United States has an abiding interest in the maintenance of peace and stability in the
South China Sea.” The statement focused on the issue of freedom of navigation,
warning against any attempt to hinder it. It declared: “The United States would,
however, view with serious concern any maritime claim, or restriction on maritime
activity, in the South China Sea that was not consistent with international law,
including the 1982 United Nations Convention on the Law of the Sea.”
JIJI Press (Tokyo) report, March 14, 2000. JIJI quoted from a Chinese draft it said it had
obtained. An Associated Press report of March 15, 2000, described similar differences
between the Chinese and ASEAN drafts.
Djalal, Dino Patti, “The U.S.-China Aircrafts Collision and the South China Sea Disputes,”
in Policy Views Series Issue No. 6, May 2001.
Assistant Secretary of Defense Joseph Nye elaborated on this position in a June
1995 interview with Japanese journalists. He said that if fighting broke out in the
Spratlys and threatened “freedom of the seas, then we would be prepared to escort
and make sure that free navigation continues.38 Nye’s remark went beyond the May
10 statement, suggesting a U.S. willingness to become involved militarily if the United
States determined that freedom of navigation were threatened. China reacted to the
U.S. May 10 statement with a Foreign Ministry statement on freedom of navigation,
declaring that the PRC “claim to a group of islands in the South China Sea is not
meant to impede freedom of navigation or the safe passage of aircraft and other ships
of other countries.”39
After these statements, U.S. diplomacy settled back into a low level of activity.
Although press reports of high-level U.S.-PRC meetings after 1995 describe
continuous discussions of the issues of Taiwan, human rights, proliferation of
weapons of mass destruction, and trade and investment, they contain little or no
mention of the South China Sea as a topic in these encounters. This suggested either
that the Clinton Administration did not raise the South China Sea issue at such
meetings, or if it did, it did so infrequently and did not seek substantive dialogue with
the Chinese. Early high level U.S.-PRC talks under the George W. Bush
Administration show a similar pattern.
The low profile U.S. approach also appears to be true of U.S. diplomacy relative
to the ASEAN-China negotiations, including the talks over a regional code of
conduct. For the most part, the United States has not raised the South China Sea
issue at ASEAN-sponsored conferences with “dialogue partners,” such as the ASEAN
Regional Forum (ARF).
An exception to this approach apparently occurred in 1999, possibly in response
to the situation created by China’s emplacement of permanent structures on Mischief
Reef. State Department spokesman, James Rubin, warned China on January 6, 1999,
to “avoid actions that create tensions in the region.”40 At the ARF meeting in July
1999, when ASEAN was considering proposing a regional code of conduct,
Secretary of State Madeleine Albright warned that “we cannot simply sit on the
sidelines and watch” if a cycle were “to emerge in which each incident leads to
another with potentially greater risks and graver consequences.”41 In her statement,
however, the Secretary stopped short of endorsing a code of conduct. (The
Australian Foreign Minister, in contrast, argued for one.)
It appears that at this time the Clinton Administration suggested to the Philippine
and other ASEAN governments that a broader international group, including the
Witter, Willis, “Sanctions Threaten U.S.-Japan Alliance,” in Washington Times, June 26,
Cruz, J.V., “ PROC Assures Free Navigation Across Spratlys,”in Manila Chronicle, May
30, 1995, p. 4.
Agence France Presse (Hong Kong), January 6, 1999.
Kyodo News Agency report, July 26, 1999. Pathan, Don, “US Urges ARF to East Military
Tension in the South China Sea,” in The Nation (Bangkok), July 27, 1999, p.1.
United States, be established to negotiate on the South China Sea. According to
Filipino diplomats, Assistant Secretary of State Stanley Roth proposed at an ARF
senior officials meeting in May 1999 that the ARF form an inter-sessional group (ISG)
on the South China Sea.42 This initiative did not receive strong support from within
ASEAN and therefore made no progress, although the Philippine government
supported it.43 Malaysia apparently opposed a more direct U.S. diplomatic role,44 and
the U.S. proposal apparently received minimal support from other ASEAN
The lack of a positive response to the 1999 U.S. initiative reflected the existing
divisions within ASEAN on the South China Sea discussed earlier. Malaysia’s
apparent rejection also may be due to the antagonisms in U.S.-Malaysia relations that
existed for several years under Malaysian Prime Minister Mahathir Mohammed. The
ASEAN reaction also probably reflected the PRC’s diplomatic successes, particularly
the influence of its constantly stated position that outside parties should not be
involved in the South China Sea issue. Within ASEAN, only the Philippines, a U.S.
ally, has challenged publicly the Chinese position. A number of American observers
at that time also concluded that ASEAN’s stance stemmed from uncertainty over the
extent of U.S. support.45
The most active component of U.S. policy related to the South China Sea has
been the U.S. effort to revitalize its security relations with the Philippines.46 Until
1992, the Philippines and the United States had an intimate security relationship based
on a 1947 military bases agreement and a 1952 Mutual Defense Treaty. The security
relationship was frayed in 1991 when the Philippine Senate voted to reject ratification
of a new U.S.-Philippine agreement to extend U.S. rights to military bases beyond
1992, the expiration date of the 1947 agreement. As a result, the United States
withdrew from its bases by December 1992, including its huge naval base at Subic
Bay, and security relations went into a decline. This changed with the PRC’s seizure
of Mischief Reef. The two governments began to negotiate on ways to restore
functioning security relations absent the U.S. bases. In February 1998, they took a
first step by concluding a Visiting Forces Agreement (VFA), which set legal ground
rules for U.S. military personnel to visit the Philippines for various activities, including
joint military exercises.
A second step came in an agreement to begin a U.S. military support program
for the Philippines. Secretary of Defense William Cohen and Philippine Secretary of
Villaviray, Johnna, “ASEAN Endorses Manila’s Draft of Spratlys Code of Conduct,” in
Manila Times (Internet version), May 26, 1999.
“There Is No Need for Foreign Interference in the Spratly Issue,” in Berita Minggu (Kuala
Lumpur, Internet version), January 17, 1999. Berita Minggu is a government-controlled
McDevitt, Michael, “China and the South China Sea–A Conference Summary Report,”
PacNet, April 16, 1999.
See CRS Report RS20697, Philippine-U.S. Security Relations, by Larry Niksch, October
Defense Orlando Mercado announced on October 3, 1999, “an exchange of defense
experts to facilitate, coordinate and assist in meeting the equipment requirements of
the AFP” [Armed Forces of the Philippines].
The Philippines’ military confrontations with the PRC appeared to be a major
motive for restoring active security relations with the United States. The Philippine
government’s initial priority was to gain U.S. military aid to strengthen AFP naval and
air capabilities in the South China Sea. The South China Sea issue was discussed in
depth at the joint news conference that Secretary of Defense William Cohen and
Philippine Secretary of National Defense Orlando Mercado held in Manila on October
3, 1999, to announce the formation of the defense experts’ group. Cohen issued a
statement that went beyond any previous Clinton Administration pronouncements.
He reiterated the U.S. position of neutrality regarding the claims of the disputant
countries, but he stated that “we do reject very strongly any country taking unilateral
action to assert sovereignty over the Spratlys.” He went further to endorse Philippine
diplomatic efforts to realize a regional code of conduct, describing it as “a very
positive step that they are taking to promote this code of conduct.”47 Philippine
defense planners envisaged a program of U.S. assistance that would give the AFP the
capability to carry out defined military missions in the South China Sea. Military
missions would include intelligence gathering and surveillance; moving troops to
occupy islands and atolls; mounting a credible show of force at a particular time and
place if it appeared that the Chinese were about to occupy another position; and
successfully engaging the Chinese navy and air force if China resorted to military
force. Senator Rodolfo Biazon, Chairman of the Philippine Congress’ Committee on
National Defense and Security and a respected former Marine General, publicly
recommended this kind of program.48
Within a year after the establishment of the defense experts’ group, U.S.Philippine military cooperation was hampered by a growing Muslim insurgency in the
southern Philippines, including the taking of foreign hostages, which began to
dominate Philippine defense policy in 2000 and into 2001. The Cohen-Mercado news
conference of September 15, 2000, reflected these priorities, and contained no
references to the South China Sea.49 Following the removal of President Estrada
from office in January 2001 and the assumption of the presidency by Gloria
Macapagal-Arroyo, the defense experts’ group has resumed meetings. It faces
difficult choices regarding tailoring of a U.S. assistance program in the face of
Philippine military weaknesses and these competing defense priorities.
The renewal of U.S.-Philippines security relations has raised the question of
whether the 1952 Mutual Defense Treaty (MDT) covers the disputed areas in the
Office of the Assistant Secretary of Defense for Public Affairs. Joint Press Conference by
Secretary of Defense Cohen and Secretary of National Defense Mercado, Manila, October
“Manila Urged to Use US Aid Against PRC, Not Insurgents,” in Philippine Star (Internet
version), March 14, 2000.
Office of the Assistant Secretary of Defense for Public Affairs. Joint Press Conference by
Secretary of Defense Secretary Cohen and Secretary of National Defense Mercado, September
South and East China Seas. Successive U.S. Administrations have stated that Article
IV of the MDT, calling for responses to an armed attack on either of the signatories,
does not cover the Spratly islands,50 but U.S. statements are more vague regarding
Scarborough Shoal. U.S. officials have said that the United States would consult with
the Philippines “on what action to take” if Philippine military forces in the Spratlys
were attacked.51 Article III of the MDT provides for consultations if either signatory
is threatened by armed attack. Philippine government statements have indicated an
acceptance of the U.S. position regarding the MDT but also that the Philippines might
invoke Article III regarding consultations in case of a Chinese attack on Philippine
forces or positions in the South China Sea.
Statements regarding the defense commitment and U.S. military activities in or
near the South China Sea also appear aimed at deterring Chinese aggressiveness. The
first U.S.-Philippine military exercise after Philippine ratification of the VFA took
place on Palawan, a main Philippine island near the disputed area in the Spratlys.
Admiral Joseph Prueher, Commander of U.S. Pacific Forces, stated in February 1999
that the U.S. Navy would make “a little bigger show of our presence there [South
China Sea] than we have in the past.52 At that time, U.S. military intelligence officials
began to disclose publicly details of Chinese military activities in the South China Sea
and provided this information to the Philippine government.53 PRC officials have
criticized the Palawan exercise and other U.S. military activities, and have warned
Southeast Asian countries against strengthening military cooperation with the United
Incidents and Diplomacy in the East China Sea
PRC and Japanese policies toward their competing claims in the East China Sea
reflect the interrelationship of the dual nature of their claims. The claims of
sovereignty over the Senkaku (Diaoyu) islands, including actual control of the islands,
and the overlapping claims to exclusive economic zones (EEZs) may be legally
distinct, but they are intertwined for two reasons. One is that control of the Senkakus
by Japan reinforces its geographical EEZ claim. The second is that PRC activities in
the area where EEZ claims overlap often are viewed in Japan as preparation for a
PRC attempt to occupy the Senkakus. This Japanese view is exacerbated when PRC
activities become incidents, sometimes contributed to by Japanese responses.
Pablo, Carlito, “Cohen Says US Defending RP Not Automatic,” in Philippine Daily
Inquirer, August 4, 1998, p. 1.
Joint Press Conference of Secretary of Defense Cohen and Secretary of National Defense
Mercado, October 3, 1999.
Halloran, Richard, “Reading Beijing,” in Far Eastern Economic Review, February 25,
1999, p. 28. Admiral Prueher later was named U.S. Ambassador to the PRC.
Gertz, Bill, “China Makes Upgrades to Island Base, in Washington Times, February 11,
1999, p.A1. “Manila Reports on More PRC Military Buildup in Spratlys,” in Philippine Star
(Internet version), April 16, 1999.
Khumrungroj, Sa Nguan, “ PRC Official Warns ASEAN Against Boosting U.S. Military
Ties,” in The Nation (Bangkok, Internet version), March 15, 2000.
Throughout the past decade, there have been periods of intense Chinese activity
in the area of the overlapping EEZ claims, including the vicinity of the Senkakus.
PRC oceanographic research and other vessels repeatedly have entered the area,
apparently to conduct marine research on natural resources. This reportedly has
included preliminary drilling for mineral deposits on the ocean floor.55 PRC fishing
vessels also have been active. Periodically, PRC naval vessels and fighter aircraft
have entered the disputed region.56 In 1992 and 1993, Chinese naval vessels fired
warning shots at Japanese civilian ships.57 Japan launched fighters from bases in the
Ryukyu Islands in August 1995 when PRC fighters entered Japan’s air identification
zone around the Senkakus.58 The August 1995 incident and particularly heavy PRC
ship activities in early 1996 led to an escalation of tensions between Japan and the
PRC lasting until the end of 1996.
When PRC activities reach high levels, the Japanese become suspicious that the
PRC is preparing to occupy the Senkakus. The PRC’s occupation of Mischief Reef
in the South China Sea in early 1995 increased Japanese suspicions. While Japan has
not established a permanent, physical presence on the Senkakus, it responded to the
1992-1993 shooting incidents frequently by deploying patrol boats of the Maritime
Safety Agency near the islands. It also stepped up air reconnaissance.
The Japanese government also responds with verbal assertions of its sovereignty
over the Senkakus and the legality of its claimed EEZ. This sometimes is contained
in diplomatic notes to Beijing. The PRC responds with similar assertions. The
heating of the rhetoric over sovereignty has had the effect of weakening an
understanding the PRC and Japan reached in 1978 to “shelve” the dispute over
The Japanese government also has had to deal with the actions of Japanese rightwing groups. These groups periodically send members to the Senkakus where they
have implanted markers, flags, and even erected a small lighthouse. The rightist
groups sometime act in response to heavy PRC ship traffic near the islands. Other
times, they act without alleged PRC provocations. Beijing considers their actions as
a provocation and has issued diplomatic protests to Japan demanding that the
Japanese government prevent such activities. The Japanese government replies that
“PRC Mobilizes Warships to ‘Unlawfully’ Explore for Resources in Japan’s EEZ,” in The
Daily Yomiuri (Tokyo, Internet version), July 26, 2001. Gilley, Bruce, “Rocks of
Contention,” in Far Eastern Economic Review, September 19, 1996.
Kyodo News Service reports, July 21, 1992, and February 12, 1993.
Lu Te-yun, “Official Views PRC-Japanese Fighter Encounter,” in Lien-ho Pao (Taipei),
August 25, 1995, p. 3
He Chong, “Japanese Rightwing Forces Again Cause a Political Situation on Diaoyu
Island,” in Zhongguo Tongxun She (Hong Kong), May 14, 2000, page unknown. Komori,
Yoshihisa, “Japanese Policy Toward the Disputes over the Senkaku Islands,” prepared for the
11th International Round Table on Asia and Pacific Studies, 1997, p. 6.
the government is limited in its right to interfere with the activities of Japanese
Japan responds to PRC activities near the Senkakus in two other important ways.
One is an ongoing debate among Japanese over whether the government would use
military force to prevent a PRC occupation of the Senkakus.61 The government has
not taken a position on this. The second response is to discuss whether the United
States has an obligation to help defend the Senkakus under the U.S.-Japan Security
Treaty (see section on U.S. Policy Toward the Senkakus).
Tokyo and Beijing negotiated in 2000 an agreement for each government to
notify the other in advance of research vessels entering the EEZ of the other
country.62 This accord, however, is vague on the requirement for notification of
activities in the overlapping area of the Chinese and Japanese EEZs. This became
clear in July 2001 when PRC research vessels operated near the Senkakus without
prior notification of Japan.63 PRC actions at that time suggest that Beijing holds that
the notification requirement does not apply to its claimed EEZ but only to its maritime
research in Japan’s EEZ outside the geographical limits of China’s claim. The
Japanese Foreign Ministry did not formally protest the Chinese activities in July 2001,
claiming that it did not have sufficient legal grounds.64
U.S. Policy Toward the Senkakus. Maritime disputes in the East China
Sea are primarily between the PRC and Japan, and arise from three different factors:
(1) U.S. administration of the Senkakus as part of the Ryukyu islands from the end
of World War II until 1971; (2) the 1971 U.S. agreement with Japan to revert
administration of the Ryukyu Islands to Japan; and (3) the debated question of the
application of the U.S.-Japan Security Treaty to the Senkakus. These elements make
the United States more directly involved in China’s claims in the East China Sea than
in other maritime disputes.
U.S. Administration of the Senkaku Islands, 1945-1971. Following
the American victory over Japanese forces on the island of Okinawa (June 1945), the
U.S. Navy set up a Military Government of the Ryukyu Islands. In the winter of
1945-1946, it defined the geographical boundaries of its administration to include the
Senkaku islands. This continued during the U.S. military occupation of Japan and
was incorporated into the Japanese Peace Treaty of 1951. The Treaty granted the
United States “the right to exercise all and any powers of administration, legislation,
Agence France Presse (Hong Kong) report, May 1, 2000. Kyodo News Service (Tokyo)
report, September 7, 1999.
Kristof, Nicholas D., “ Would You Fight for These Islands,”in New York Times, October
23, 1996, p.E3.
Eckholm, Erik, “China and Japan Affirm Ties Despite Tensions and Rivalry,” in New York
Times, August 30, 2000, p.A13.
“D.A. Pressured Not to Announce PRC Ships Activity Near Japan Due to ‘Delicate’ Ties,”
Sankei Shimbun (Tokyo, Internet version), July 14, 2001. Kyodo News Service (Tokyo)
report, July 18, 2001.
and jurisdiction over the territory” defined as “Nansei Shoto, south of 29 degrees
North latitude (including the Ryukyu and the Daito Islands).” U.S. Civil
Administration of the Ryukyus Proclamation 27 (USCAR 27) set geographical
boundaries of the Ryukyus that included the Senkakus.65 Moreover, during U.S.
administration of the islands, the U.S. Navy built firing ranges on them and paid
annual rent of $11,000 to Jinji Koga, son of the first Japanese settler of the islands.66
During the Japanese Peace Treaty discussions, John Foster Dulles, chief U.S.
delegate to the peace conference and later Secretary of State during the Eisenhower
Administration, set forth the concept that Japan had “residual sovereignty” over the
Ryukyu Islands. According to an official analysis prepared by the U.S. Army, residual
sovereignty meant that “the United States will not transfer its sovereign powers over
the Ryukyu Islands to any nation other than Japan.”67 Kenneth Younger, the British
delegate to the conference, stated that the Peace Treaty did not remove the Ryukyus
from Japanese sovereignty.68 President Eisenhower confirmed this at the U.S.-Japan
summit meeting of June 1957, telling Japanese Prime Minister Nobusuke Kishi that
residual sovereignty over the Ryukyus meant that “the United States would exercise
its rights for a period and that the sovereignty would then return to Japan.”69 In
March 1962, President Kennedy stated in an Executive Order for the Ryukyus that
“I recognize the Ryukyus to be a part of the Japanese homeland and look forward to
the day when the security interests of the Free World will permit their restoration to
full Japanese sovereignty.”70 Since there was no U.S. action to separate the Senkakus
from the Ryukyus, these applications of “residual sovereignty” appeared to include
Okinawa Reversion Treaty. On June 17, 1971, the United States and Japan
signed an Agreement Between Japan and the United States of America Concerning
the Ryukyu Islands and the Daito Islands.71 Commonly referred to as the Okinawa
Reversion Treaty, it was ratified by the U.S. Senate on November 10, 1971. It
provided for the return to Japan of “all and any powers of administration, legislation
and jurisdiction” over the Ryukyu Islands which had been conveyed to the United
States in the Japanese Peace Treaty. Article I of the Okinawa Reversion Treaty
U.S. Congress. Senate. Committee on Foreign Relations. Okinawa Reversion Treaty. 92nd
Cong., 1st Sess. October 27, 28, and 29, 1971. Washington, U.S. Govt. Print. Office, 1971.
Ibid., p. 77, 94, 119. Hornsby, Michael, “ Japan Asserts Rights to Isles Claimed by
China,” in London Times, March 19, 1972.
Blanchard, Jean-Marc F., “The U.S. Role in the Sino-Japanese Dispute over the Diaoyu
(Senkaku) Islands, 1945-1971,” in The China Quarterly, March 2000,. p. 109
Ibid. p. 110. During this period, the U.S. Government debated over whether to annex the
Ryukyus, including the Senkakus, or have them placed under long-term U.N. trusteeship with
the United States as the administering authority.
Ibid. p. 117.
Ibid. p. 118.
For more on this Treaty, see CRS Report 96-798 F, Senkaku (Diaoyu) Islands Dispute:
The U.S. Legal Relationship and Obligations, by Larry Niksch, September 30, 1996.
defined the term “the Ryukyu Islands and the Daito Islands” as “all territories with
their territorial waters with respect to which the right to exercise all and any powers
of administration, legislation and jurisdiction was accorded to the United States of
America under Article 3 of the Treaty of Peace with Japan....” An Agreed Minute to
the Okinawa Reversion Treaty defined the boundaries of the Ryukyu Islands “as
designated under USCAR 27,” which included the Senkakus. The latitude and
longitude boundaries set forth in the Agreed Minute also appeared to include the
Senkakus; this was acknowledged by the Chinese government and by supporters of
China’s claims, who testified in the Okinawa Reversion Treaty hearings before the
Senate Foreign Relations Committee.72 A letter of October 20, 1971, by Robert
Starr, Acting Assistant Legal Adviser for East Asian and Pacific Affairs–acting on the
instructions of Secretary of State William Rogers–stated that the Okinawa Reversion
Treaty contained “the terms and conditions for the reversion of the Ryukyu Islands,
including the Senkakus.”73
However, in presenting the Okinawa Reversion Treaty to the U.S. Senate for
ratification, the Nixon Administration removed the Senkakus from its inclusion in the
concept of Japanese residual sovereignty. The Nixon Administration asserted that the
United States took no position on the issue of competing Japanese and Chinese claims
to sovereignty. Acting Assistant Legal Adviser Robert Starr stated that the United
States had returned only administrative rights to Japan and that “a return of
administrative rights over those islands to Japan, from which the rights were received,
can in no way prejudice any underlying claims.” Secretary of State Rogers testified
that “this treaty does not affect the legal status of those islands at all.”74
Several experts have attributed this Nixon Administration policy shift as having
been influenced by White House overtures to China during 1971-1972, culminating
in the Nixon visit to China. This new U.S. position of neutrality on sovereignty has
been continued by successive Administrations. The Clinton Administration reiterated
this position during the 1996 tensions over the Senkakus.75
Relevance of the Security Treaty for the Senkakus. As Sino-Japanese
tensions over the East China Sea grew in the 1990s, the Clinton Administration had
difficulty stating a clear position on whether the 1960 U.S.-Japan Security Treaty
covers the Senkakus. The issue appeared clear at the time of the signing of the
Okinawa Reversion Treaty. Article II of the Treaty stated that the islands returned
to Japanese administration were covered by “treaties, conventions and other
agreements concluded between Japan and the United States of America, including, but
without limitation, the Treaty of Mutual Cooperation and Security between Japan and
the United States of America.” Deputy Secretary of Defense David Packard, in his
testimony before the Foreign Relations Committee, stated that Japan would assume
Okinawa Reversion Treaty Hearings, p. 93, 144, 148.
Ibid. p. 91.
Ibid. p. 11, 91.
Kristof, A Mini Asian Tempest Over Mini Island Group, New York Times, September 16,
1996, p. A8.
the “primary responsibility” for the defense of the treaty area but that the Security
Treaty was applicable.76
The issue remained moot until the 1996 tensions. The New York Times of
September 16, 1996, carried an article on the Senkakus, which reported that “some
Japanese officials say the United States would be obliged to use its military forces to
protect the Japanese claims to the islands, because of the Japanese-American security
treaty.” The article added that “Ambassador Walter F. Mondale has noted that the
United States takes no position on who owns the islands and has said American forces
would not be compelled by the treaty to intervene in a dispute over them.” The New
York Times later quoted Mondale that the status of the Senkakus was similar to that
of Taiwan, with which the United States has no defense treaty.77
In contrast to Ambassador Mondale, the State Department did not give specific
answers to questions of whether the Security Treaty covered the Senkakus, despite
repeated queries by the press. Acting State Department spokesman, Glyn Davies, on
September 23, 1996, brushed off a question on the U.S. reaction to a military conflict,
answering that “its not the kind of issue that’s worth elevating beyond a war of words,
where we are now.” Davies asserted “I don’t think you’ll find that the United States
will be saying a whole lot about it.”78 Department spokesman Nicholas Burns, refused
to answer repeated questions on the Security Treaty’s relationship to the islands
during his daily press briefing on October 3, 1996. He described the issue of the
Treaty’s coverage as “a hypothetic situation” and that “my policy is not to comment
upon hypothetical situations unless it’s in my self-interest to do so, and it’s not at this
The PRC government issued a statement on the Security Treaty’s relationship
to the Senkakus on October 15, 1996. The Foreign Ministry spokesman stated that
the U.S.-Japan Security Treaty “must not exceed the bilateral category, and there is
no reason for any third country to intervene in the Sino-Japanese dispute over the
Diaoyu Islands issue.” He went on to describe as “illegal” the transfer of
administration over the Senkakus from the United States to Japan in the Okinawa
Reversion Treaty.79 The PRC statement clearly reiterated Beijing’s position that
disputes over PRC maritime claims should be settled bilaterally between China and the
other claimant without the intervention of third parties. The PRC government also
may have intended to pressure the Clinton Administration to maintain the State
Department’s evasive position on the Security Treaty or even to adopt the position
enunciated by Ambassador Mondale.
Ibid., p. 42, 44. Also, CRS Report 96-798 F, Senkaku (Diaoyu) Islands Dispute: The U.S.
Legal Relationship and Obligations, by Larry Niksch, September 30, 1996
Kristof, Nicholas D., “Would You Fight for These Islands,” in New York Times, October
20, 1996, p. E3.
Transcript of State Department Noon Briefing, September 23, 1996.
“Japan-US Security Accord Must Not Exceed Bilateral Category,” in Xinhua (Beijing)
English Newswire, October 15, 1996.
In contrast to the State Department’s reticence on the matter of the Security
Treaty, the Pentagon stated that the Senkakus were included in the geographical area
covered by the Security Treaty. Assistant Secretary of Defense Kurt Campbell visited
Japan in late November 1996 and stated in an interview with the newspaper Yomiuri
Shimbun on November 28:
The 1972 U.S. agreement on the return of Okinawa to Japan clarified that the
Senkaku islands fall under Japanese administration. This was clearly specified by
the United States for security purposes. . . .America made a solemn promise in the
U.S.-Japan Security Treaty to defend Japan’s territory and areas under its
administration in time of emergency. We will keep this promise.80
Campbell’s statement was followed up by a statement by Secretary of Defense
William Perry at a Tokyo press conference on December 2, 1996, during the
Question: I’m sure you are aware of our territorial dispute over the Senkaku
islands with China. Do you think that part of Japan is part of the U.S.-Japan
Perry: I am not a lawyer–an international lawyer–and I do not have expert
judgment to deal with these questions. What I do know is that the United States
has a treaty, a security treaty with Japan, and no Japanese should ever doubt that
America will honor its security agreement to Japan. And we will.81
The differences between the State and Defense departments over this issue
appears to represent a broader disagreement over U.S. policy priorities in East Asia
at that time. The State Department’s position likely was influenced by the Clinton
Administration’s policy of “engagement” with China, which stressed improving
relations with China after the period of tensions in the Taiwan Straits in early 1996.
The Sino-Japanese tensions of 1996 arose as the United States was negotiating with
PRC officials over holding a series of high level meetings: Secretary of State
Christopher’s visit to China in November 1996, Chinese Defense Minister Chi
Haotian’s visit to Washington in December 1996, Vice President Gore’s visit to China
in January 1997, and an exchange of presidential visits between Presidents Clinton and
Jiang Zemin in 1997 and 1998. State Department officials may have judged that an
affirmation of the Security Treaty’s coverage of the Senkakus could anger China and
disrupt these plans.
The Defense Department’s priorities, on the other hand, were tilted toward
strengthening U.S.-Japan security relations. The Senkakus question emerged as the
Pentagon was negotiating with Japan over new defense guidelines that would include
Japanese support of U.S. military operations outside of Japanese territory “in areas
adjacent to Japan.” Pentagon officials apparently saw a dilemma: How could the
United States gain from Japan expanded commitments of military cooperation when
the Senkakus issue raised new questions over the credibility of the U.S. defense
“U.S.-Japan Treaty Covers Disputed Isles,” in Reuters North American Wire Service
report, November 28, 1996.
Transcript: Secretary Perry, December 2, 1996, Press Roundtable in Tokyo.
commitment to Japan itself? Japanese critics of the alliance had begun to accuse the
United States of unreliability over the Senkakus issue.
The George W. Bush Administration has made no public statements concerning
the Senkakus. Nevertheless, before taking office as Deputy Secretary of State in the
current Bush Administration, Richard Armitage directed a study group at the National
Defense University that issued a widely publicized report in October 2000 on U.S.Japan relations. Among its recommendations was the following: “The United States
should reaffirm its commitment to the defense of Japan and those areas under the
administrative control of Japan, including the Senkaku Islands.”82
Economic Dimension and Implications of China’s
Maritime Territorial Claims83
How China addresses the issue of conflicting maritime territorial claims in East
Asia has major economic implications for regional and Pacific Rim countries,
including the United States and its Asia-Pacific allies and economic partners.
International Economic and Commercial Stakes
The economic and
commercial stakes involved
in this issue include the
natural resources of the
region, both currently
exploited and those whose
potential is yet to be
established, access to extraregional resources such as
the oil and gas of the Persian
Gulf, the security of oceanborne commerce, including
both oil and gas resources
and manufactured goods,
and the economic
development prospects of
Figure 3. World Crude Oil Flows
The value of the region’s natural resources and cargoes transiting disputed areas
is staggering – a major share of the world’s total however the various components are
estimated. A 1996 publication by the U.S. National Defense University (NDU)
The United States and Japan: Advancing Toward a Nature Partnership, U.S. National
Defense University, Institute for National Strategic Studies, October 11, 2000, p. 4. Armitage
was the co-director of the project with Joseph Nye, Assistant Secretary of Defense during the
Prepared by Richard Cronin, Foreign Affairs, Defense, and Trade Division, October 2001.
calculated the value of interregional cargoes transiting the Straits of Malacca and
Sunda through the Spratly Islands area at $568 billion annually, mainly attributed to
Europe, Japan and other countries of Northeast Asia (South Korea, Taiwan, and
Hong Kong), and the Southeast Asian economies. As the NDU report noted, traffic
moving West to East is dominated by bulk cargoes such as oil, iron ore, and coal
destined for the manufacturing economies of Northeast Asia, while manufactured
goods tend to move southward and westward towards markets in Southeast Asia.
The United States has a relatively small stake in these shipments, which predominantly
serve Japan and other industrialized economies of Northeast Asia. Since these data
were compiled, the PRC also has emerged as a major destination for Persian Gulf oil
and point of origin for manufactured goods shipments. From this perspective, the
primary U.S. interest may be in what the authors of the NDU study term “maritime
stability,” which is essential to freedom of navigation and the smooth functioning of
the global trading system.84 Equally important, however, are the increments of
regional economic growth that would be gained or lost depending on whether the
disputes are resolved peacefully (or at least contained) or become sources of
instability and conflict.
The possibility of a military conflict over maritime territorial disputes has been
of particular concern to a number of members of ASEAN, especially those who have
disputes with China. ASEAN countries, which have prospered in recent years
through export-led growth, are worried both about the potential loss of valuable
resources rights and the disruption of trade and commerce that could result from a
PRC military move to seize territory in the Spratlys or the oil fields in the Paracels.85
China, for its part, has denied any intention of disrupting sea lines of communication
(SLOC) in the South China Sea. In the midst of its assertive moves to seize Mischief
Reef, the PRC foreign ministry asserted in April 1995, “While safeguarding its
sovereignty over the Nansha (Spratly) islands and its maritime rights and interests,
China will fulfill its duty of guaranteeing freedom of navigation for foreign ships and
air routes through and over the international passage of the South China Sea
according to international law.”86
Resources Affected by Territorial Disputes
The total value of natural resources that are affected in one way or another by
the maritime territorial disputes cannot be established with any precision, since the
existence and value of many of the resources such as offshore oil and seabed minerals
are largely speculative. Fisheries are probably the most clearly measurable resource,
and appear to be uppermost in the case of the Senkakus/Diaoyutais dispute between
Noer, John H. (with David Gregory), Chokepoints: Maritime Economic Concerns in
Southeast Asia, National Defense University, Institute for National Strategic Studies (in
cooperation with the Center for Naval Analyses), Washington, DC, 1996.
Weeks, Stanley B., “Sea Lines of Communication (SLOC) Security and Access,”
University of California, Institute on Global Conflict and Cooperation, Policy Paper
Weeks, op. cit.
Japan and China (and Taiwan). The very word diaoyutai is said to mean “fishing
platform or terrace” in the Chinese Mandarin dialect.87
Deep sea resources, especially in the area around the Spratlys and the Paracels
in the South China Sea, are by all accounts extensive, but no meaningful value can
currently be assigned to these resources. Whatever the value of the resources, their
exploitation currently is limited by the territorial disputes, since these highly capitalintensive activities generally require the participation of multinational companies
which are very sensitive to issues of conflicting legal claims.
Already, however, the South China Sea area is the source of about 1,367,000
barrels per day in oil output, involving eight nations, with about half being accounted
for by Malaysia, and one-fifth by China. This output is slightly more than U.S.
production in the Gulf of Mexico, about one-fourth of the North Sea output, and just
a small fraction of the 19,226,000 barrels produced in the Persian Gulf. Chinese
claims or claims that are implied in Chinese produced maps reportedly include oil and
gas producing areas of Indonesia (Natuna Island group), the Philippines, Malaysia,
and Vietnam. By one account, the “most optimistic western estimates” are that the
area around the Spratly Islands themselves may hold 1-2 billion barrels, which might
yield a maximum output of 180,000-370,000 per day – equivalent to the current
production of Brunei or Vietnam.88
The “Economics” of Using Armed Force to Resolve Disputes
Although nations often cast economic concerns aside when responding to armed
attacks or armed challenges to their territorial interests, the consequences of initiating
military action to resolve territorial disputes tend to have a deterrent effect. A number
of the East Asian territorial disputes, in fact, are the residue of major military conflicts
or the outcome of colonial-style expansion that took advantage of periods of
weakness or collapse involving one or more of the claimants. Disputes such as those
between China and Japan, and between Japan and either of the Koreas, could provide
minor military confrontations, but are not expected to lead either to full scale war or
to the change of possession of the disputed territories.
The major exception is the PRC-Taiwan issue, which is a dispute of a very
different nature. Clearly, if the PRC were to succeed in gaining control of Taiwan
either by negotiation or force, the geopolitical map of East Asia would change
dramatically. The economic consequences would depend on how the scenario
originated and played out, but they certainly would be major. One clearly identifiable
consequence would be Beijing’s acquisition of Taiwan’s 200 nautical mile EEZ.
Ting, David K., The World Paper Online, December 1996.
Federation of American Scientists (FAS),
The PRC is generally viewed as the power most likely to upset the regional
status quo by using military force – a source of some anxiety in Southeast Asia,
especially among claimants to disputed territories – but the PRC also has its own
vulnerabilities. China became a net oil importing nation in 1993 and currently imports
about 20 percent of its oil, mainly from the Persian Gulf. These imports are expected
to surge to 40 percent of total domestic consumption by 2010, and they appear to be
a significant motive for Beijing’s efforts to develop its own oil and gas reserves in
Xinjiang and to construct oil pipelines from Xinjiang and from Central Asian oil
supplies. Because of the rapid – almost exponential – growth of China’s oil and gas
consumption, these overland projects are not likely to end China’s dependance on seaborne shipments. Also, because of the vast sums and special technologies required
for these massive planned pipeline projects, China has entered into partnerships with
multinational oil companies, notably BP-Amoco and ExxonMobil. The PRC’s two
largest state-owned oil companies have also listed shares of subsidiaries on Wall
Street in order to raise funds for pipeline construction.89 In theory, then, the U.S.
Government could counter any Chinese efforts to disrupt sea-lanes in the South China
Sea by military, diplomatic, and financial means.
Predominance of Interregional Maritime Trade
The largest share of sea-borne traffic in areas subject to maritime territorial
disputes is accounted for by Asian countries, particularly Japan. The Japanese
economy, despite a decade-long slump, remains the largest economy in the region and
the “core” economy for Northeast and Southeast Asia. In Southeast Asia, especially,
Japan is usually the first or second (after the United States) source of foreign direct
investment (FDI), and shipping traffic is dominated by the movement of raw materials
from Southeast Asia to Japan and manufactured goods from Japan to Southeast Asia.
A large share of interregional trade in Southeast Asia involves shipments of parts and
components by Japanese companies for local assembly operations. Overall, export
manufacturing in Southeast Asia tends to be linked backwards to Japanese
technology, parts and components, and forward to the U.S. and other third markets.90
Economic Implications for the United States
Given the range and nature of the U.S. economic stake in the disputed territories
in the maritime periphery of China, and the issues posed by conflicting claims and
concepts of international law, a number of conclusions are suggested. First, none of
these disputes would be of major importance to the United States were it not for the
Chan, John, “China Pushes into Central Asia for Oil and Gas,” World Socialist Web Site
(WSWS), News and Analysis, Jan. 3, 2001[ww.wsws.org/articles/2001/Jan2001/oilj03_prn.shtml]; Xu Xiaojie, “Oil and Gas Linkages Between Central Asia and China: A
Geological Perspective,” James A. Baker III Institute for Public Policy, Rice University
Bernard, Mitchell and Ravenhill, John, “Beyond Product Cycles and Flying Geese:
Regionalization, Hierarchy, and the Industrialization of East Asia.” World Politics, No. 47
(January 1995): 171-172.
fact that China, a rising economic and military power, is a party to the disputes.
Second, the disputed Spratly Islands have the most relevance to U.S. interests because
of their importance to sea-lines of communication and the implications for control of
the seabed resources if China’s concept of its legal right were to be accepted. The
Spratlys would appear to be of greater importance from an economic than from a
military standpoint, as they are militarily indefensible. Third, economic stakes are less
important to the United States than to its Southeast and Northeast Asian allies and
friends. Even if the maritime disputes were resolved in China’s favor, Beijing would
have no logical motive or incentive to seek to interfere with international shipping
save for the possible case of a cross-Straits conflict or an effort to strangle Taiwan
economically. Even in this case, the main determinant would be the power of the
PRC Navy, not the status of PRC claims to the Spratlys. Finally, the most important
threat to U.S. economic interests is instability or conflict arising out of the maritime
territorial disputes, or obstacles to resources extraction caused by disputed claims.
In this respect, U.S. interests and those of all of the claimants would best be served
by some form of agreement to facilitate resources sharing even without a resolution
of the claims themselves.
Considering the issue from the widest perspective, U.S. economic interests in the
South China Sea region may be more threatened by the sheer weight of China’s
economy and its tendency at the moment to draw trade and investment away from the
ASEAN countries. China’s economic competitiveness, which may be artificially
enhanced by various distortions of the market caused by the still large state role in the
economy and an undervalued currency, has enabled the PRC to attract the lion’s share
of inward foreign direct investment into the region. Ideally, China’s entry into the
WTO will create a more expanding-sum relationship, with the Chinese economy
serving as an “engine of growth” for neighboring economies.
Even though direct U.S. interests in the maritime territorial disputes in East Asia
may be comparatively small, the nature of economic globalization guarantees that
disturbances in East Asia arising out of interruptions of shipping would reverberate
in the American economy. For this reason, as well as in the interest of broader
geopolitical concerns, the current deployment of U.S. military power throughout the
region would appear important to supporting stability and, if necessary, enforcing
rights of free passage in international sea-lanes.
Security and Strategic Issues91
For some observers, the April 2001 EP-3 incident92 demonstrated growing risks
of confrontation in or over the maritime areas surrounding China.93 In assessing these
broader security ramifications, several factors argue against an aggressive posture for
Prepared by Shirley A. Kan, Foreign Affairs, Defense, and Trade Division, October 2001.
See CRS Report RL30946, China-U.S. Aircraft Collision Incident of April 2001:
Assessments and Policy Implications, coordinated by Shirley Kan.
See, for example, Scott Snyder and Ralph Cossa, “Storm Warnings Off South China,”
International Herald Tribune, May 24, 2001; Dean Cheng, “Upon the Fields of (Black) Gold:
the Spratly Islands,” China Online, June 18, 2001.
the PRC, including: economic interdependence between the PRC and other countries,
a currently weak People’s Liberation Army (PLA),94 Beijing’s preoccupation with
Taiwan, the PRC’s own pressing internal problems, and the U.S. military presence.
Nonetheless, the EP-3 incident showed that it may be prudent to also look closer at
the maritime disputes that could well pose unexpected, destabilizing security crises
for the United States and its allies and friends – even as the world watches the Taiwan
Strait as an Asian flash point. Indeed, the George W. Bush Administration’s
Quadrennial Defense Review (QDR), released in September 2001, highlighted the
“East Asian littoral” (south of Japan through Australia and into the Bay of Bengal)
as a “particularly challenging area.”95
Even while the PLA pursues gradual modernization of elite, mobile segments of
the armed forces, experts assess PLA capabilities as limited today, so that it would
have difficulty militarily enforcing its many maritime claims. In 1996, the Center for
Naval Analysis assessed the prospects of the PLA Navy (PLAN) becoming a “blue
water” navy compared to a “green water,” or regional, navy.96 The study found that
the PRC cannot indigenously develop and build even a regional navy by 2010. It
could choose to reverse-engineer a regional navy, but such a process would take more
than 15 years (perhaps by 2020). If China enjoys an optimistic economic growth rate
of 8 percent per year for 15 years and it purchases naval assets from abroad, it could
buy a “green water” navy, but not a “blue water” one. Thus, American and regional
observers are watchful of a longer-term PLAN strategy of first developing “green
water” capabilities out to the “first island chain” early in the 21st century – which some
believe could have implications for the PRC’s ability to pursue maritime claims in the
region – then achieving “blue water” status further out to the “second island chain”
perhaps by the middle of the century.97 According to an expert on the PLAN, its
maritime ambition is one of “sea denial” – the ability to achieve regional objectives
The PRC’s military is collectively called the People’s Liberation Army (PLA), which also
includes the PLA Navy (PLAN), PLA Air Force (PLAAF), and the Second Artillery, the
Department of Defense, Quadrennial Defense Review Report, September 30, 2001.
Yung, Christopher D., People’s War At Sea: Chinese Naval Power in the Twenty-First
Century, Center for Naval Analyses report, March 1996. A “blue water” navy was defined
as one having the capability of controlling the seas around China (South China Sea and East
China Sea) and denying access to the Sea of Japan, the Philippine Sea, and the Northern
Pacific Ocean to other navies, except the U.S. Navy. A “green water” navy was defined as
one capable of achieving regional objectives (e.g., blockade of Taiwan, seizure of islands in
the Spratlys, sustaining a naval force in the South China Sea, and inflicting damage on an
intervening foreign navy).
Kaplan, Capt. Brad, “China’s Navy Today,” Seapower Magazine, December 1999; Cole,
Bernard, “China’s Maritime Strategy,” People’s Liberation Army After Next, edited by Col.
Susan Puska, U.S. Army War College, August 2000; and Japan Defense Agency, Defense of
Japan 2001: Toward a More Vigorous and Professional SDF in the 21st Century, July 2001.
Kaplan states the “first island chain” extends through the Aleutians, Kuriles, Japan, Ryukyus,
Taiwan, Philippines, and the Greater Sunda islands (Brunei, Indonesia, and Malaysia). The
“second island chain” consists of the Bonins, Guam, Marianas, and Palau.
while denying an adversary the use of a discrete maritime area – rather than “sea
control,” the ability to command a discrete ocean area.98
One U.S. Navy analyst has noted that even within the region, the PLAN’s
capabilities are below those of the navies of Japan, South Korea, and Taiwan.99 The
PRC has focused its steady military modernization on about 10 percent of its military
forces. Recognizing the limits of its own weapons development to replace obsolete
systems, Beijing has turned to Moscow for advanced arms since 1990, particularly air
and naval items. Currently, among the more modern parts of the PLAN are: 4 Kiloclass conventional diesel-electric submarines from Russia, 17 Ming-class and 1 Songclass conventional submarines, 2 Sovremenny-class destroyers equipped with Sunburn
anti-ship cruise missiles from Russia, 1 Luhai-class destroyer, 2 Luhu-class destroyers,
and 10 Jiangwei-class frigates.100
The PLAN has limited air support at sea and no aircraft carriers. The
modernization of the PLAN Air Force has lagged behind that of the PLA Air Force
(PLAAF). The PLAAF has turned to Moscow since 1990 to acquire advanced
Russian aircraft like the Su-27 fighter. Among its more modern equipment, the
PRC’s naval aviation uses upgraded versions of old F-7 and F-8 fighters and B-6
bombers. The PLAN Air Force also has a limited inventory (perhaps 20) of newer,
indigenous FB-7 fighter-bombers for maritime strike. The FB-7 is equipped with C801 cruise missiles. There is also one Y-8 airborne early warning (AEW) aircraft.101
For longer-range operations, the PLAN Air Force has slowly developed an in-flight
refueling capability. By 1996, the PLA reportedly had five converted B-6 tankers to
refuel F-8 and FB-7 fighters, according to a news story that cited a classified
Pentagon report.102 For the October 1, 1999 military parade, PRC official media also
reported that the PLA flew its aerial refueling tankers in public for the first time.
Aside from limited advanced hardware, experts have pointed to shortcomings in
PLA training and personnel, including scripted war games, poor logistics, inadequate
maintenance, rigid command, and lack of combined arms and joint operations.
Although fleet exercises are conducted several times a year, “there is little integration
between naval air and surface units, and even less integration of naval operations with
units of either the PLA Air Force or Army.”103
Cole, Bernard D., The Great Wall At Sea (Annapolis: Naval Institute Press, 2001).
Kaplan, op. cit. Captain Kaplan is a former U.S. Naval Attache to the PRC.
Kaplan, op. cit; The Military Balance 2000-2001, International Institute for Strategic
Studies, October 2000; and CRS Report RL30700, China’s Foreign Conventional Arms
Acquisitions: Background and Analysis, Shirley Kan (coordinator).
Allen, Ken, discussion at a conference. See McDevitt, Michael, “The PLA Navy: Past,
Present, and Future Prospects,” conference report, Center for Naval Analyses, May 2000; The
Military Balance, 2000-2001, op. cit.
Gertz, Bill, “Chinese Arms Buildup Increases Attack Range,” Washington Times, March
Kaplan, op. cit.
Still, the PLA likely recognizes its poor performance and can be expected to
make progress in carrying out more realistic operations. Even the overall glowing
accounts in official media have mentioned certain problems in PLA capabilities. For
example, one report on a PLAN exercise in the East China Sea in March 2000 said
that units of the East Sea Fleet tended to repeat training routines year after year, so
that their commanding officers passed evaluations without problems, but officers now
emphasize “strategizing skills.”104 Another report in 2001 noted that surface ships and
submarines have not trained together, and “such training practices have lagged far
behind what is needed in real war.”105
The PLAN has demonstrated some capacity to deploy on long voyages. In
1997, the PLAN dispatched a multi-ship task group to Southeast Asia and another to
North, Central, and South America. In March 1997, a contingent of three PLAN
ships sailed across the Pacific for port visits in Honolulu and San Diego – the first
time to the U.S. mainland – then sailed on to Mexico, Peru, and Chile.106 In August
2001, two PLAN ships left their East Sea Fleet port of Wusong for the first PLAN
visit to Europe, with scheduled port calls in Germany, Britain, France, and Italy.107
In addition, the PLAN has taken initial steps to train with the Russian navy. In
October 1999, for the 50th anniversary of the founding of the PRC, ships of the
Russian Pacific Fleet sailed to Shanghai and participated in a naval exercise with the
PLAN for the first time in four decades.108
In April 2001, after a PLAN F-8 fighter collided with a U.S. Navy plane and
crashed into the sea, the PLA used the opportunity to launch its largest search
operation, publicly touted by PRC authorities as a mission to rescue the lost F-8 pilot.
The PLA reported that it carried out the search and rescue operation in the South
China Sea for over 10 days, quickly deploying more than 110 aircraft, over 100 naval
ships, over 1,000 civilian boats, and more than 55,000 personnel. According to
subsequent PLA reports, PRC military forces learned from this experience how to
search for missing personnel and equipment as well as how to launch an anti-search
and rescue operation “to prevent the enemy from mounting a search and rescue
operation, thus causing more casualties or damage to the enemy.”109
PLA Assertiveness and Confrontations
Even as the PLA has struggled with limited capabilities, it nonetheless has
increasingly asserted Beijing’s perceived sovereign rights and territorial claims around
a Sinocentric “periphery,” contributing to the air and maritime confrontations with
Jiefangjun Bao [Liberation Army Daily], April 13, 2000, via FBIS.
Jiefangjun Bao [Liberation Army Daily], June 19, 2001, via FBIS.
These were a Luhu-class destroyer (the Harbin) and a Luda III-class destroyer (the
Zhuhai), accompanied by a Nanyun-class oiler (the Nancang),
These were a Luhai-class destroyer (the Shenzhen) and an oiler (the Fengcang). Xinhua,
August 23, 2001 (via FBIS); People’s Daily (online), August 23, 2001.
Asia Week, Hong Kong, October 11-17, 1999, via FBIS.
Jiefangjun Bao [Liberation Army Daily], May 8, 2001, via FBIS.
regional neighbors and the United States. In its 1992 Law on Territorial Waters and
Contiguous Areas, the PRC expressly asserted the PLA’s “right” to use force to
enforce territorial claims. The following discussion briefly reviews the PLA’s publicly
reported confrontations in or over the maritime areas beyond the PRC’s coast, from
the Yellow Sea in the north to the East China Sea, Taiwan Strait, and South China
Offshore Islands. In 1954, as the United States and the Republic of China
(ROC), or Taiwan, discussed a defense treaty,111 the PLA fired artillery at the offshore islands of Quemoy and Matsu held by Taiwan forces. The PLA again
bombarded the offshore islands in 1958.112
South China Sea. In 1974, during the Vietnam War, the PLAN gained
control of all the Paracel Islands in the South China Sea by seizing the Western
Paracels from South Vietnam.113 In 1988, the PLA forcefully ousted Vietnamese
forces, sank 3 Vietnamese ships, and took control of six islands in the Spratlys.114
USS Kitty Hawk in the Yellow Sea. In October 1994, the U.S. aircraft
carrier, USS Kitty Hawk, faced a three-day encounter with a PLAN Han-class nuclear
attack submarine in the Yellow Sea near the Korean peninsula. After the Kitty
Hawk’s anti-submarine aircraft detected and tracked the Han sub, PLA fighters
scrambled toward the U.S. aircraft. The PLAN submarine then returned to its base
at Qingdao on the Shandong peninsula. Later in Beijing, the PLA sent a warning to
the U.S. Naval Attache, saying that in a future incident, the PLA would open fire.115
Mischief Reef. In February 1995, the PLAN took Mischief Reef (about 150
miles west of the Filipino island of Palawan), this time asserting territorial claims
against the Philippines, a treaty ally of the United States.116
The concern about PRC willingness to use force was discussed earlier in CRS Report 9432, China as a Security Concern in Asia: Perceptions, Assessments, and U.S. Options,
January 5, 1994, by Robert Sutter and Shirley Kan.
The Mutual Defense Treaty was signed on December 2, 1954, and was terminated at
midnight on December 31, 1979.
Clough, Ralph N., Island China (Cambridge, MA: Harvard University Press, 1978).
Ross, Robert S., The Indochina Tangle: China’s Vietnam Policy 1975-1979 (Columbia
University Press, 1988); Marko Milivojevic, “the Spratly and Paracel Islands Conflict,”
Survival, January/February 1989; CRS Report 92-614 S (archived), East Asia: Disputed
Islands and Offshore Claims – Issues for U.S. Policy, by Robert Sutter, July 28, 1992.
Cushing, Jerry, “Beached Again on Shoals,” Far Eastern Economic Review, March 17,
1988; Milivojevic, op. cit.
Mann, Jim and Art Pine, “Face-off Between U.S. Ship, Chinese Sub Is Revealed,” Los
Angeles Times, December 14, 1994; Barbara Starr, “‘Han Incident’ Proof of China’s Naval
Ambition,” Jane’s Defense Weekly, January 7, 1995.
Branigin, William, “China Takes Over Philippine-Claimed Area of Disputed Island
Group,” Washington Post, February 11, 1995; Mayan Chandi et al, “Territorial Imperative,”
1st Missile Exercises Against Taiwan. The United States announced in
May 1995 that it would issue a visa for Taiwan President Lee Teng-hui to make a
private visit to Cornell University. Thereafter, the PLA’s Second Artillery launched
“test-firings” of M-9 short-range ballistic missiles into target areas in the East China
Sea in July, and ground, air, and naval forces (at times under the command of the
Nanjing Theater of Operations) conducted military exercises in August, October, and
November – ahead of Taiwan’s legislative elections in December.
Senkakus. In August 1995, two PLAAF Su-27 fighters flew close to the
Japanese-held Senkaku (Diaoyu) Islands, and two Japanese Air Self-Defense Force
F-4 fighters intercepted them.117
2nd Missile Exercises Against Taiwan. In March 1996, ahead of Taiwan’s
first democratic presidential election, the PLA’s Second Artillery again “test-fired”
M-9 ballistic missiles toward Taiwan, this time close to the two Taiwanese ports of
Keelung and Kaohsiung. The United States deployed two aircraft carrier battle
groups, led by the USS Independence and USS Nimitz, to the vicinity. Also, PLA
naval and air forces conducted live-fire exercises in the Taiwan Strait, and the Nanjing
Theater of Operations commanded ground, air, and naval exercises.
PLAN Ships Near Japan. With disputes between Beijing and Tokyo over
the sovereignty of the Senkaku (Diaoyu) Islands and their respective EEZs, Japan has
reported increased assertiveness on the part of PLAN ships in waters close to Japan.
(Japan has also complained about the PRC’s civilian marine survey ships operating
close to Japan on numerous occasions, including the 1996 tensions.) In May 1999,
12 PLAN ships sailed to within 70 miles of the Senkakus and were confronted by a
P-3 patrol aircraft of the Japanese Maritime Self-Defense Force. Again, in July 1999,
10 PLAN ships were seen near the Senkakus. In March 2000, two PLAN Luda-class
destroyers and one Jiangwei-class frigate sailed to about 220 miles northwest of
Amami-Oshima (north of Okinawa). In May 2000, the PLAN’s Yanbing-class survey
ship/icebreaker sailed around Japan, in what Japanese media described as a trip to
collect data for PLAN submarines and information on Japanese radar sites. In July
2000, another PLAN ship sailed off the coast of Japan. The Japan Defense Agency
(JDA)’s 2001 Defense White Paper reported that the vessel was a PLAN missile
observation survey and research ship which rotated its antenna off the Kii Peninsula
to collect intelligence.118
Far Eastern Economic Review, February 23, 1995. In March 1995, Members of the House
and Senate introduced resolutions (H. Res. 114, S. Res. 97) urging U.S. support for peace and
stability in the South China Sea. It was not until 3 months later that the State Department
delivered the U.S. response, when a spokesperson stated at a news briefing on May 10, 1995,
that “the United States strongly opposes the use or threat of force to resolve competing claims
and urges all claimants to exercise restraint and to avoid destabilizing actions.” The
spokesperson, however, did not identify the PRC as having provoked tensions and was careful
to say that “we’re not suggesting that the threat is coming from any particular direction.”
AP and Kyodo, August 24, 1995.
Okinawa Times, May 15, 1999; Kyodo, July 15, 1999; Sankei Shimbun, April 18, 2000;
USS Bowditch in the Yellow Sea. According to one news report, in March
2001, a PLAN Jianghu III-class frigate (the Huangshi) confronted the U.S. Navy’s
surveillance ship (the USS Bowditch), reportedly closing to within 100 yards of the
U.S. ship in the Yellow Sea near the Korean peninsula. The PLAN ship allegedly
forced the U.S. vessel to leave the area, which the PRC claims as its EEZ.119
EP-3 Incident. In early April 2001, a serious incident occurred after a PLAN
F-8 fighter collided with a U.S. Navy EP-3 reconnaissance plane over the South China
Sea in international airspace.120 The F-8 pilot was reported killed, while the 24 U.S.
crew members survived the near-fatal accident and made an emergency landing on the
PRC’s Hainan Island. The PRC detained the U.S. personnel for 11 days. U.S.
military officials attributed the accident to a pattern of aggressive interceptions of
U.S. reconnaissance flights, beginning in December 2000, by PLAN units based in
the south on Hainan Island. Washington had already formally protested to Beijing
about the dangerous flying of its PLA pilots. Later, the PRC refused to allow the EP3 to be repaired and flown out of China. U.S. forces dismantled the aircraft and
removed it by cargo plane.
Australian Ships in the Taiwan Strait. In the wake of the F-8/EP-3
collision, in mid-April 2001, the PLAN challenged the passage of three Australian
naval ships in the Taiwan Strait. As two Australian frigates and a supply ship sailed
from South Korea to Hong Kong through the strait, a PLAN patrol ship demanded
that the Australian ships return on their course and leave the area. The Australian
ships reportedly refused to change course, stating they were in international waters.121
Strategic Security Challenges
The PLA’s modernizing efforts and willingness to threaten the use of force for
dispute resolution present security challenges to the PRC’s neighbors and the United
States, causing concern among analysts and policymakers about some aspects of
Beijing’s strategy. PRC military strategy has sought to be able to win a regional
high-tech war along China’s periphery, including in the Taiwan Strait, and East and
South China Seas. For the PLAN, the new maritime strategy is one of offshore
defense, initially advocated by the PLAN’s first commander, Xiao Jinguang (19491979), and approved by Mao Zedong in 1975 as a way to project the PLA’s perimeter
of maritime defense farther away from coastal waters. High-level promotion of this
strategy has been mainly attributed to General Liu Huaqing, vice chairman of the
Kyodo, June 10 and 19, 2000; Sankei Shimbun, July 15, 2000, (via FBIS); JDA, Defense of
Japan 2001, July 2001.
Gertz, Bill, “U.S. Spy Plane Lands in China After Collision,” Washington Times, April
CRS Report RL30946, op. cit.
Sydney Morning Herald, April 29, 2001.
PLA’s top command, the Central Military Commission (CMC), from 1989 to 1997.122
Although there may be different analyses about the validity of the PLAN’s focus on
the “island chains,” the record shows that the PLAN has been able to procure some
PRC and Russian destroyers, submarines, and aircraft, and it has expanded its
activities further out into the maritime areas off China’s coastline.123
Still, it is not clear, with the available indicators, that the PLAN per se has
particularly significant influence on PRC decision-making. Liu Huaqing rose through
the ranks in the PLAN and promoted its role in China’s military strategy, but he also
wore an army uniform while in the CMC – symbolizing the army’s traditional
dominance of the PLA. As a member of the CMC as well as of the Politburo
Standing Committee, the PRC’s highest decision-making body, Liu epitomized the
overlapping civilian and military roles of top PRC leaders. (Jiang Zemin is at once the
chairman of the CMC, President of the PRC, and general secretary of the Chinese
Communist Party.) When Generals Liu and Zhang Zhen retired in 1997, their roles
as the highest-ranking PLA officers were taken by Generals Zhang Wannian and Chi
Haotian, who were not from the PLAN, and neither inherited Liu’s place on the
Politburo Standing Committee. Thus, Liu Huaqing did not represent a particular
“PLAN seat” on the CMC or Politburo Standing Committee, and any supposed
PLAN or broader PLA influence at the apex of decision-making likely was owed to
Moreover, during the April 2001 aircraft collision incident involving the EP-3
plane, President and CMC chairman Jiang Zemin, vice premier Qian Qichen, and the
Foreign Ministry took the lead in taking a hardline stance with the United States,
while top PLA officers followed in stance and appearance with no greater
inflammatory rhetoric. That incident suggested that, while military leaders tend to
take conservative stances and advocate bigger defense budgets for better arms, the
Beijing leadership may well be united with strong views on issues of national security
As part of the strategy of offshore defense, the PLAN has steadily expanded its
presence in the South China Sea, pre-positioning supplies and equipment as well as
staking physical claims to the disputed territory. The PLA occupied the most
important Paracel Island, Woody Island (Yongxing), in 1974.125 In addition to having
built reinforced facilities on Mischief Reef, the PLA in 1999 was reported by U.S.
intelligence to be constructing a fuel-storage facility next to an airstrip on Woody
General Liu was PLAN commander (1982-1987) and deputy secretary general of the CMC
(1987-1989). He was also a member of the Politburo Standing Committee from 1992 to
For debates about PLAN leadership and the issue of “island chains,” see Allen, Kenneth,
“PLA Navy Building at the Start of the New Century,” conference report on the second
conference on the PLA Navy, Center for Naval Analyses, July 2001.
CRS Report RL30946, China-U.S. Aircraft Collision Incident of April 2001: Assessments
and Policy Implications, coordinated by Shirley Kan.
Milivojevic, op. cit.
Island, building up an outpost there.126 In November 1998, the Philippines released
photographs of PLAN structures on the reef and naval ships in the vicinity.127 Also,
the PLAN has replaced shacks built on stilts with permanent, reinforced concrete “sea
bastions.” The forces also have built platforms for helicopters to land and take off on
Yongshu (Fiery Cross) Reef and Zhubi (Subi) Reef, recognizing that “supply is the
lifeline of the Spratlys.” Now, according to the PLA, helicopters have been able to
take off from large supply ships and deliver large quantities of supplies to the reef
islands. Moreover, equipment has been delivered for “rapid reaction reconnaissance”
to observe and detect naval and air movements and the “state of the enemy.” The
PLAN has set up refrigerators to store fresh food and water storage ponds to ensure
a supply of clean water for several months.128 In May 2001, one news account stated
that the PLAN also was building an outpost on Scarborough Shoal.129
The PLAN’s assertiveness around the region has been remarkable, because it has
occurred even with the increased tensions over Taiwan since 1995. This boldness
may reflect little concern in Beijing over contentions with multiple neighbors on more
than one front. Beijing appears to believe that it can afford to contend with Taipei
and Washington in the Taiwan Strait, even as it confronts other neighbors elsewhere
on the periphery. There are several possible explanations for the PLAN’s increased
challenges in the region.
Beijing may perceive its strategy to be a necessary defense to counter a U.S.-led
“chain” of neighbors undermining China’s interests. As early as August 1954, PRC
Premier Zhou Enlai (Chou En-lai) criticized the United States for building a “chain”
of alliances around China.130 Beijing’s sense of insecurity has increased since the end
of the Cold War with one superpower commanding what Beijing sees as unilateral
powers. More recently, one expert at the China Institute of Contemporary
International Relations (CICIR) wrote that “the United States is preparing to
construct a strategy chain to contain China,” through ties with and presence in Japan,
South Korea, India, Taiwan, and Guam.131 Other articles also discuss the inclusion
of Guam, Singapore, India, and Indonesia in this anti-China “chain.”132 The PRC may
seek to prevent perceived attempts to encircle China, safeguard maritime choke-points
Gertz, Bill, “China Makes Upgrades to Island Base,” Washington Times, February 11,
Reuters, November 5, 1998; Defense News, November 16-22, 1998.
Jiefangjun Bao [Liberation Army Daily], April 18, 2000. All quotes in the accompanying
paragraph are from this article.
Gertz, Bill, “Chinese Navy Deploys Warships to Disputed Spratly Island China,”
Washington Times, June 25, 2001.
Clough, op. cit.
Fu Mengzi, “Strategic Considerations in U.S. China Policy,” Xiandai Guoji Guanxi
[Contemporary International Relations], June 20, 2001, translated by FBIS.
Jiefangjun Bao [Liberation Army Daily], September 6, 2000; Zhongguo Qingnian Bao
[China Youth Daily], August 2, 2001; Renmin Ribao [People’s Daily], August 17, 2001,
translated by FBIS.
as its economy develops, protect historical territorial claims and resources as other
countries have, and defend against invasions from the sea.
Moreover, Beijing may calculate that its strategy to successfully claim more
maritime territory involves little risk or strong reaction because of the attraction of
its economic growth, the weakness of some neighbors, the lack of a strong U.S.
position on territorial claims, and worldwide attention to the larger issues of the
Koreas and Taiwan. The PLAN efforts have entailed modest acquisitions of advanced
equipment, and the PLA, for the most part, has not disrupted civilian navigation of
international waters and airspace.
But even if Beijing’s strategy is undertaken in defense, there are evident elements
of preemption, strategic initiative, and offensive operations – perhaps necessary for
a military relying on asymmetric tactics and inferior equipment. According to the
PLA’s media, destroyers in the East Sea Fleet practiced “launching missiles before the
enemy,” noting that “the time needed for responding to a missile attack is crucial to
gaining the initiative by striking the enemy first.”133 The surprise aspects may well
involve the use of difficult-to-detect submarines. A PRC newspaper wrote that two
PLAN submarines had trained in the South China Sea to destroy “an invading ‘enemy’
carrier battle group” and to take “the initiative in launching attacks.”134
Further, the PRC strategy in part relies on developing sufficient military force in
order to achieve political objectives in cross-strait policies or diplomacy with other
neighbors. The PRC’s threats to use force may not be limited to intimidation of
Taipei. For example, at the PRC-Japan summit in Tokyo on November 26, 1998,
Prime Minister Keizo Obuchi refused to give Jiang Zemin a written apology for
Japanese atrocities during World War II, and declined to repeat President Clinton’s
opposition to Taiwan’s membership in the United Nations.135 After this tense
meeting, PLAN ships operating close to Japan became an issue in their bilateral
relations. PLA confrontations directed against countries such as Japan, the
Philippines, and Australia also are directed at undermining U.S.-led alliances, raising
the costs to U.S. regional allies, or bringing into question U.S. commitments in the
In addition, while a Taiwan scenario has provided an important catalyst for PLA
modernization since 1995, NATO’s mistaken bombing of the PRC embassy in
Yugoslavia in 1999 has apparently spurred the PLA to accelerate modernization
efforts.136 PLAN ships have carried out reconnaissance operations closer to Japan
since 1999, missions believed by some in Japan as partly related to PLAN submarine
Jiefangjun Bao [Liberation Army Daily], January 28, 2001.
Zhongguo Qingnian Bao [China Youth Daily], July 23, 2000, via FBIS.
Far Eastern Economic Review, December 10, 1998.
For a discussion of the PRC leadership’s strategic debate in 1999, see: David M.
Finkelstein, “China Reconsiders Its National Security: ‘the Great Peace and Development
Debate of 1999',” Center for Naval Analyses, December 2000. The Secretary of Defense also
mentioned this debate in China in the 2000 report to Congress, “Military Power of the
People’s Republic of China.”
operations. PLAN fighters and ships have confronted foreign militaries with
increased boldness and frequency, a factor contributing to the F-8's collision with the
U.S. Navy EP-3 plane. As PLA training takes on greater urgency and tougher tasks,
especially beyond China’s coast, further confrontations with regional or U.S. forces
Thus, there are continuing debates about whether the PRC’s strategy is
essentially defensive or offensive, aimed at the status quo or at expanding PRC power,
and limited or not to the Taiwan question. At the same time, the generally
conservative and insecure leadership in Beijing has looked offshore to extend its
maritime perimeter. In efforts to project the PLA’s presence, it has heightened multifront assertiveness despite limited capabilities, incorporated preemptive moves as
advantageous aspects of strategy and doctrine, and used the military to pursue
political objectives. These trends have prompted increasing concerns in Asia and the
Options and Implications for the United States137
As territorial disputes have continued, a number of options have been suggested
for addressing the maritime claims and freedom of navigation issues in the region.
Among these are the following:
Assurances from all claimants that there will be no further seizure of
Confidence-building measures, including regular military exchanges
and greater transparency on military spending.,
Regular multilateral discussions involving trade-offs and compromise
for competing claims.
Clearer understanding of what is meant by “joint resource
development,” and exploration of establishing a relevant regulatory
Further clarification of and agreement on what kinds of international
activity is expressly permitted in EEZs.
Oversight authority of shared EEZs by an agreed-upon international
Nothing on the policy horizon suggests that either the United States or the PRC
is likely to change traditional objectives with respect to Asian maritime areas. The
United States will continue to focus on assuring freedom of navigation along with the
economic and physical well-being of its regional allies, while the PRC will concentrate
more on protecting its offshore economic interests and enhancing naval security along
its southern and eastern flanks. Given the stronger U.S. policy emphasis on Asia,
increasing global transport of goods through regional waters, and long-term projected
growth of PRC economic and military power, U.S. and PRC interests in the region
are likely to continue to bump up against one another. Add to this the intersection of
Prepared by Kerry Dumbaugh, Foreign Affairs, Defense, and Trade Division, November
so many other political interests – including the volatility of the Taiwan issue, the
growing PRC concern over a more active regional military role by Japan, and the
network of U.S. defense commitments with some claimant countries – and it becomes
apparent how far-reaching the consequences of serious diplomatic and military
confrontations could be.
Nevertheless, some analysts have argued that it is this very tangle of diplomatic,
economic, and political interests that suggests a series of regional “grand bargains”
may be possible. As the current research shows, there are significant economic,
political, and logistical constraints on the ability of any regional military – even the
PLA – to effectively enforce all its maritime claims. Morever, national economic
imperatives and the desire to protect global trade relationships give claimant countries
an incentive to reach accommodations that will minimize costs and maximize benefits.
Territorial Claims: Cases in International Law138
The fundamental issue of contention with respect to the Spratly and other islands
in contention concerns which state is (or states are) sovereign. International courts
have rendered several decisions in the past with respect to the ownership of islands
that give some guidance as to the legal criteria that may apply to the competing claims
of China, Vietnam, Malaysia, the Philippines, Taiwan, Indonesia, Japan, and Brunei
In the Island of Palmas Case (or Miangas)139 in 1928 both the
United States and the Netherlands claimed sovereignty over an island
between the archipelago of the Philippines and what was then the
Dutch East Indies archipelago. The U.S. contended that the island
had first been discovered by Spain in the 16th century, that Spain’s
title had been ceded to the United States in the Treaty of Paris at the
end of the Spanish-American War in 1898, and that, in any event, the
island’s proximity to the Philippines sufficed to establish U.S.
sovereignty. But the Permanent Court of Arbitration held that
discovery alone is insufficient to confer title; actual possession and
the effective exercise of sovereign authority, it said, are more
important determinants. It further held that international law lends
no support to a claim based on “contiguity” or proximity. Because
the Netherlands established that it had effectively, peacefully, and
openly exercised political authority by means of agreements with
native princes on the island for 200 years before and after the Treaty
of Paris, the court held that it had, by prescription, acquired a valid
title of sovereignty.
In the case of Arbitral Award on the Subject of the Difference
Relative to the Sovereignty over Clipperton Island140 in 1932, France
and Mexico vied for sovereignty over an atoll 600 miles south of
Mexico in the Pacific Ocean. French sailors had landed on the atoll
in 1858 and claimed it for France; and France subsequently
publicized that declaration. But it had made no further effort at
occupation. Mexico, for its part, contended that the atoll had been
claimed by Spain in the 18th century and devolved to Mexico as the
successor state in 1836, and that its sovereignty was further
evidenced by its removal of several Americans who were found
mining the guano beds on the atoll in 1897. The arbitrator (King
Victor Emmanuel III of Italy) noted that ordinarily an initial claim of
sovereignty must be complemented by an effective occupation for a
territorial acquisition to be valid but that “[t]here may be cases where
it is unnecessary to have recourse to this method.” It may be
Prepared by Dave Ackerman, American Law Division, September 2001.
22 AJIL 867 (1928).
26 AJIL 290 (1932).
sufficient, he concluded, that an uninhabited territory remains “at the
absolute and undisputed disposition” of the state making the claim.
Finding no evidence to support the claim of Spanish discovery and
occupation, and determining that France had not only claimed the
island but had widely publicized that claim and protested occupancy
by others, he held Clipperton Island to have been “legitimately
acquired by France.”
In the Minquiers and Ecrehos Case141 in 1953 England and France
asked the International Court of Justice to determine which country
was sovereign over two islands lying between the British Channel
Island of Jersey and the French coast. The court found historical
documents to lend somewhat more support to England’s claim than
that of France but said that “any definitive conclusion as to ...
sovereignty ... must ultimately depend on the evidence which relates
directly to possession.” The court concluded that the evidence
demonstrated long-standing exercise of administrative authority over
both islands by the English authorities on Jersey and, as a
consequence, held England to have sovereignty over them.
In the Case Concerning Land, Island, and Maritime Frontier
Dispute Among El Salvador, Honduras, and Nicaragua142 in 1992,
a chamber of the International Court of Justice had to determine
which country owned three islands in the Gulf of Fonseca, which is
located where the boundaries of the three countries meet. Spain had
governed the area until 1821, and the Federal Republic of Central
America had done so until 1839. But the Federal Republic had then
disintegrated and given rise to the present states. The court ruled
that because the islands were not undiscovered territory in 1821,
sovereignty could not be established by discovery and occupation.
The initial question, it said, was whether any of the contending states
had succeeded to Spain’s title. But finding evidence on that to be
“confused and conflicting,” the court relied instead on evidence
concerning which country subsequently exercised political authority
over the islands and whether the other countries acquiesced in that
exercise. Finding Honduras to have exercised authority over one
island since 1849 and El Salvador to have done so over two islands
since the latter part of the 19th century, and discovering no evidence
of contemporaneous protests by the other states, the court held that
one island belonged to Honduras and two belonged to El Salvador.
These decisions, obviously, are not determinative of the contending states’
various claims to sovereignty over part or all of the islands in the South and East
China Seas. But they do clarify the elements that necessarily are involved in such
claims – discovery, possession, exercise of authority, and acquiescence. They also
suggest that of these elements, discovery alone is a weak basis for a claim of
ICJ, Judgment of November 17, 1953.
ICJ, Judgment of September 11, 1992.
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