EXECUTIVE SUMMARY

1. • The Rohingya are the boat people of the twenty-first century. More are braving the sea as a result of the sectarian conflict in Rakhine State. From October 2012, there was a 62% increase from 2011, the highest figure to date.

2. • The composition of boat passengers has changed. The sectarian violence has caused women, babies and small children to risk the sea journey together with their male counterparts.

3. • Besides death, the dangers they encounter on their journey include being detained by Thai authorities and/or being pushed out to sea. If they manage to land on Thai shores, brokers move them on towards Malaysia through ‘smugglers’ camps’.

4. • The Rohingya pay for the boat trip and for brokers to take them through Thailand and into Malaysia either in advance or through debt-bondage.

5. • The 1752 Rohingya arrested in Thailand in January and February 2013 have been given leave to stay in Thailand for six months. However, Thailand does not intend to allow them to stay permanently.

6. • The temporary and limited nature of Thailand's policy towards the Rohingya and other asylum seekers is intended to discourage others from flocking to it, to protect its ‘national security’ and to preserve good relations with Nyapidaw.

7. • Thailand has hosted more than its fair share of refugees since the late 1960s. It has experience handling such inflows, in setting up structures to deal with refugee welfare and security, and managing delicate relations with its neighbours. In this respect, Thailand has a unique and key role in developing durable and humane solutions.

INTRODUCTION

Between 9 January and 4 February, 1752 Rohingya were arrested in Thailand. Unusually, the Thai authorities have granted 1500 of them leave to stay for six months. At present, they are residing in shelters and detention centres in southern Thailand and have been provided with food and water. However, Thailand's generosity has its limits: it announced that it would prevent new arrivals from landing on its shores. On 31 January, Thailand stopped the entry of boats carrying 340 Rohingya and ordered them to continue to Malaysia after providing them with food and water.

EXECUTIVE SUMMARY

1. • The rise of China's power and influence had for a long time been re-garded as beneficent in general. The closeness between Southeast Asia and China has led to an expanding and tight relationship through infrastructure, investments and aid.

2. • However, as China's power and influence begin to be expressed through military might and growing assertiveness in its maritime claims, what was once regarded in Southeast Asia as a blessing is now looked upon by many as a threat.

3. • In the face of actual or potential Chinese competition, the Association of Southeast Asian Nations (ASEAN) sought regional economic integration and also concluded free-trade-area agreements with several of its leading trading partners, including China.

4. • Current debates speculate a bifurcated landscape for the Asia- Pacific region into competing U.S. and Chinese “spheres of influence.” The Chinese, in particular, have ascribed to the view that the U.S. sees China as a rival for leadership in the Asia-Pacific region. Many Southeast Asians, but not all, seem to agree with this view. • Although a united ASEAN will be in the interest of both China and the U.S., ASEAN's involvement in the Sino-American competition may have divided ASEAN. How irrevocably this division will be depends on the wisdom and skill of diplomats and decision-makers in China, the United States and ASEAN member-states.

5. • China's upward path cannot be guaranteed though. It is beset by problems such as the growing income gap; the widening development disparity between its coastal south-eastern provinces and the relatively neglected land-locked western ones; environmental pollution; pressure to uphold human rights, etc. These problems, which are many and difficult to resolve, render uncertain China's domestic and international destiny, including its future relations with Southeast Asia.

6. • China will have to weigh the costs of its increasing interests and ambitions in Southeast Asia. How China's rise in the region will further develop depends on the diplomatic, political, economic and military calculus of China's decision-makers and those of its neighbours and putative rivals.

INTRODUCTION: CHINA'S RISE

Perhaps future records of world history will show that the most significant development during the decade preceding and following the turn of the 21st century will be the rise of China in political, diplomatic, economic and military terms. Statistics support this notion. The most telling, and simplest, is the percentage increase in China's gross domestic product.

EXECUTIVE SUMMARY

1. • President Obama's visit to Southeast Asia in November 2012 highlighted the increased strategic and economic importance of this region in America's Indo-Pacific strategy.

2. • The President's presence at the East Asian Summit (EAS) and the ASEAN-US Leaders Meeting showed US support for the ASEAN-centred regional security architecture and its desire to be an active player in helping to shape its future direction.

3. • In Thailand Obama tried to shore up relations with an old treaty ally which has the second largest economy in Southeast Asia, with an enticing middle class market for US exports. It is uncertain if Obama's visit will revitalise the relationship and induce Thailand to join negotiations for the Trans-Pacific Partnership which US earnestly seeks.

4. • The visit to Myanmar, the first by a sitting US President, was symbolically important in demonstrating US support for the country's reforms. After being heavily dependent on China, Myanmar is now seeking more balanced relations with the major powers. It is in the US interest to see this attempt succeed, together with the country's internal reforms. However Myanmar will not become an American

5. military ally or even a security partner, given the country's strong tradition of neutrality.

6. • The US-China contest for influence is also being played out in the South China Sea. Although the territorial disputes in the sea are between China and four Southeast Asian states, China's extensive claims raise the stakes for the US in view of the strategic and commercial importance of the South China sea to the US and its allies.

INTRODUCTION

Obama's three-day visit in November 2012 to three countries in Southeast Asia, viewed by some as “swing states” in the contest for influence between the US and China, was portrayed by the US side as part of its process of pivoting or “re-balancing” to the Indo-Pacific region. Apparently, that process is a broad one requiring sustained diplomatic, economic and security engagement.

The visit highlighted again the increased importance of Southeast Asia in America's strategy in the Indo-Pacific region, stretching from Japan in northeast Asia, to Australia in the south, and to India in the west.

EXECUTIVE SUMMARY

1. • The reformist government in Myanmar is in the process of trying to consolidate ceasefires with contentious ethnic groups and to move towards political dialogue. This is part of a long history of interethnic strife in the country.

2. • After many failed attempts by successive Myanmar governments to achieve peace with these groups, the first round of widespread ceasefires was finally achieved in the early 1990s due to military government's initiatives. It was premised on three points: the right to remain armed; the right to administer each group's own demarcated territory; and the right to conduct cross-border commercial activities.

3. • After the elections in November 2010, however, the earlier ceasefire agreements lapsed. The elected Union Government of President U Thein Sein subsequently announced a peace offer on 18 August 2011. Though initially skeptical, 13 of these armed groups eventually entered into ceasefire talks at both provincial and Union level. All agreed to cease hostilities after discussions with government representatives and have engaged in further negotiations.

4. • The Myanmar military is an important player in the peace process and its top leaders need to handle the negotiations with finesse and patience.

INTRODUCTION

State-building in Myanmar is a contentious exercise with many ethnic ‘nations’ challenging the unitary concept of the ruling elites who are mainly from the majority Bamar ethnic group and resorting to armed struggle. The Communists also did not accept the nascent government's legitimacy and sought ‘regime change’ through force of arms. Consequently, the army was wracked by mutinies and civil war erupted soon after independence and the government had to fight a multifront war against a multitude of ideological and ethnic insurgencies some of which are still continuing.

Through all this, the incessant fighting in support of the government and its legendary role in the resistance movement against British rulers and later Japanese occupiers in World War II elevated the Myanmar Defence Services (MDS)—known as the Tatmadaw (Royal Force)—not only into an indispensable adjunct to state power but also into a fount of power itself. As such, the military's perspective has had a domineering influence in shaping Myanmar's security outlook since independence

EXECUTIVE SUMMARY

1. • The Chinese government and a range of allied commercial enterprises, cultivated close relations with the Myanmar side during the years when interactions with Western democracies were constrained

2. • For a time, there was talk that China's “soft power” in Myanmar had become suffocating and that the large numbers of recent Chinese migrants served as a vanguard for wider economic and strategic interests.

3. • Over the past 25 years, the Chinese population in Myanmar is estimated to have grown by over 2 million people.

4. • During Myanmar's present process of political and economic liberalization, the central role of such Chinese interests is being challenged from a range of angles. It is in this environment of greater diversity and competition that China's once firm position may be set to diminish.

5. • While the government of Myanmar was previously prepared to tolerate an expanding Chinese presence, there is little popular acceptance of Chinese migrants until they more fully integrate with Myanmar society and culture. • Chinese influences now jostle for position alongside an ever-increasing array of other foreign populations, ideas, cultures and approaches, including those that have recently re-engaged Myanmar from among the Western democracies.

6. • While the Chinese continue to hold some measure of influence in many spheres of Myanmar life, the extent to which they can exercise their influence is subject to limits imposed by the fiercely patriotic Myanmar people and government.

7. • During the ongoing political transformation under President Thein Sein there is emerging evidence that such limits will be more consistently demarcated.

INTRODUCTION: RELATIONS IN FLUX

In September 2011 Myanmar President Thein Sein made an abrupt decision to suspend construction on the Myitsone dam.Ð This multi-billion dollar project, spearheaded by major Chinese and Myanmar construction interests, had long served as a magnet for controversy but the decision nonetheless took local and international observers by surprise. They wondered aloud whether Thein Sein was sending a new signal to his allies in Beijing. Curiosity about the deeper significance of the project's suspension was fuelled when Chinese disapproval began surfacing in the media.

A conference on “Entering Unchartered Waters? The ASEAN and South China Sea Dispute” was held at the Institute of Southeast Asian Studies (ISEAS) on 18 February 2011. It was organized by the ASEAN Studies Centre (ASC). Conference speakers were former journalists, legal professionals, academics, government representatives, and other analysts. The aim of the conference was not to provide an instant solution to the disputes but to highlight the claims of the states involved, understand these claims in the context of the legal framework, such as the 1982 United Nations Convention on the Law of the Sea (UNCLOS), and illuminate how external parties to the disputes, such as the non-claimant member-states of ASEAN, can help to resolve these disagreements by peaceful means.

The day began with an overview of the current state of affairs in the South China Sea, provided by a former ASEAN Secretary-General, Rodolfo C. Severino, and Professor Robert Beckman, Director of the Centre for International Law, National University of Singapore. Severino, now head of the ASC at ISEAS, explained that everyone's objective regarding the SCS was essentially to “prevent conflict”. It was extremely unlikely, he said, that there would be a “grand solution” to what was a matter, for the individual states concerned, of “strategic national interest”. In this light, none of the countries involved were prepared to compromise on territorial issues. It was important, Severino declared, for the claimants to align their claims with the provisions and requirements of UNCLOS and come to agreement on what is and what is not allowed in an individual country's exclusive economic zone (EEZ). To prevent the disputes from escalating, the ASEAN states, China and the United States should play their parts. This was, of course, easier said than done.

Beckman's international law perspective provided participants with an understanding of how the law could be applied and utilized. However, Beckman echoed Severino's sentiment that the law was “not determinative” when it came to resolving the dispute. It was more a tool to “influence the conduct of the parties” involved and to make possible a “frank and fair debate”. The legal instruments that were available and applicable to the SCS dispute included the 1982 UNCLOS, which clearly defined the maritime zones to include the twelve-mile territorial sea, the 200-mile EEZ and the continental shelf.

The workshop on “Entering Uncharted Waters? ASEAN and the South China Sea Dispute” was organized by the ASEAN Studies Centre (ASC), Institute of Southeast Asian Studies (ISEAS), on 18 February 2011. It was the initiative of then ISEAS Director, Ambassador K. Kesavapany, who first asked this question: What does the Association of Southeast Asian Nations (ASEAN) have to do with the South China Sea?

In an attempt to answer this question, one may find that ASEAN — not just the ASEAN members that have claims to little pieces of land and vast waters of the South China Sea, not just individual ASEAN members, but ASEAN as a whole — has an abiding interest in peace and stability in this region and in freedom of navigation in and overflight above the South China Sea. Much of ASEAN's commerce, including its members’ traded food and energy resources, passes through or over the South China Sea. The stakes of ASEAN and its members in the South China Sea are very high. It is very important for our security and our economies.

Indeed, the ASEAN Political-Security Community Blueprint is quite specific. It calls on ASEAN to continue its “current practice of close consultation among Member States to achieve full implementation of the DOC” — The DOC is the Declaration on the Conduct of Parties in the South China Sea, which China and the ten ASEAN states signed in Phnom Penh in November 2002. The DOC commits ASEAN members and China to the peaceful settlement of their disputes, freedom of navigation and overflight, self-restraint, no new occupations, confidence-building measures, and cooperative activities in the South China Sea. As we all know, the multiple claims to land features and their waters in the South China Sea are one of the critical flashpoints for potential conflict in our part of the world. It is, therefore, valuable for us at least to understand the nature and extent of each party's claims.

ISEAS was, therefore, fortunate to have so many scholars participating in this conference who are experts in South China Sea issues. Even if they did not speak for their respective governments, they at least well understood the positions of those governments.

Since the beginning of exploration in the South China Sea, the Republic of China (ROC or Taiwan) has controlled the Xisha Islands (Paracel Islands), Zhongsha (Macclesfield Bank), Nansha (Spratly Islands) and Dongsha (Pratas Islands). Inherited from recorded history, the ROC has undeniably claimed sovereignty over the large part of the South China Sea within a “U-shaped line” for many decades. Over the last few decades or so, although the ROC's claim has not changed at all, its ambiguous political status in the international community weakens its position in the disputes of the South China Sea (SCS). As a result, diplomatic setbacks in the international community have discouraged the government in Taipei from any new efforts to activate its South China Sea policy. The typical focus of the political agenda in Taipei has been very much on an inward-looking approach of democratization. Political inability and a lack of political will to cope with the challenges in the SCS seem inevitable for Taipei.

For political reasons Taiwan has over the last decades been neglected in the process of negotiating the code of conduct in the South China Sea. Taiwan remains the only claimant to not have diplomatic relations with any country in the region. Further, political confrontation in the Taiwan Strait continues to be critical to Taiwan's survival. As a result, not only have neighbouring countries been very cautious of the Chinese attitude in dealing with Taiwan, but Taiwan has also contradicted itself on its position in the SCS.

When cross-strait relations were antagonistic, Taiwan stood almost no chance to engage in any discussion of international affairs on the official level in the region. For decades hostility was the nature of the cross-strait relationship. Nevertheless, President Ma Ying-jeou came to power in May 2008 and has since shifted the negative course in the relationship with Mainland China. Up to the end of 2010, fifteen formal agreements were signed to facilitate mutual cooperation across the Taiwan Strait. The Economic Cooperation Framework Agreement (ECFA) has proven to have made the most important progress made so far, as it has led to broader institutional cooperation. It has opened new opportunities and demands for China and Taiwan to cooperate in the context of the South China Sea. How has Taiwan extended efforts to cooperate with China in SCS affairs? Are there internal or external political obstacles to cross-strait cooperation?

Bac kground on the South China Sea Disputes

The South China Sea consists of four groups of islands, two of which are in dispute, the Paracels and the Spratlys.

The Paracel Islands consist of two groups, the Crescent Group and the Amphitrite Group. Together they contain over 30 islets, sandbanks or reefs, and occupy about 15,000 square kilometres of ocean. The Paracels are located in the northern part of the South China Sea, approximately equidistant from the coastlines of Vietnam and China (Hainan). In 1974 China forcibly ejected South Vietnamese troops from the Paracels, and since then they have been occupied exclusively by China, but they are also claimed by Vietnam.

The Spratly Islands consist of more than 100 islets, coral reefs, and seamounts scattered over an area of nearly 410,000 square kilometres in the central South China Sea, north of the island of Borneo, east of Vietnam, and west of the southern Philippines. The total land area of all of the islands is less than 5 square miles. The Spratly Islands are claimed in their entirety by China, Taiwan, and Vietnam, while some islands and other features are claimed by Malaysia and the Philippines. Brunei has established a fishing zone that overlaps a southern reef, but it has not made any formal claim.

The Spratly Islands are not critically important for international maritime navigation. They are dangerous for shipping, and no major international shipping lanes pass through them. However, the islands could be important in safeguarding the international shipping lanes, and are often described as having strategic importance. Japan occupied all of the islands during its expansion into Asia in the 1930s and staged its invasion of the Philippines from its submarine naval base on Itu Aba, the largest island in the Spratlys.

The islands were not regarded as very important until the 1970s, when it was agreed at the Third United Nations Conference on the Law of the Sea1 (UNCLOS) to allow states to claim a 200 nautical mile exclusive economic zone (EEZ) from islands. The prospect of a 200 nautical mile EEZ around the islands triggered a renewed interest in the islands because of potential gas and oil deposits and fisheries resources.

Taiwan has occupied Itu Abu, the largest island, since 1947, except during the period from 1950 to 1956 when it withdrew because of the civil war in China.

The Treaty of Peace with Japan, signed in San Francisco on 8 September 1951, states in its Article 2, “Japan renounces all right, title and claim to the Spratly Islands and to the Paracel Islands”, which Japanese forces occupied just before and during World War II and from which they launched attacks on other countries in the region. However, the treaty does not say which nation is to have such right, title or claim to those islands, although the Vietnamese have asserted that, since those islands belong to Vietnam, it can be assumed that they reverted to Vietnam after Japan was divested of them. The Chinese have made a similar claim on behalf of Chinese ownership.

The Philippines and Vietnam were among the forty-nine states that signed the treaty. Neither the People's Republic of China, which had taken control of the Chinese mainland almost two years earlier, nor the “Republic of China”, which had fled to Taiwan but claimed to be the government of all of China, was invited to the San Francisco conference that produced the treaty. This was mainly because some of the participants in the conference recognized the People's Republic as the rightful government of China, while others continued to give recognition to the authorities on Taiwan as the government of all of China.

On 28 April 1952, the same day that the San Francisco Treaty entered into force, Japan and the “Republic of China”, which Japan then considered as the Chinese government, signed a separate Treaty of Peace in Taipei. In it, the two parties “recognized” that, under the San Francisco Treaty, Japan had “renounced all right, title, and claim to Taiwan (Formosa) and Penghu (the Pescadores) as well as the Spratley Islands and the Paracel Islands”, again without specifying which nation would have such right, title or claim. On 29 September 1972, Japan shifted its diplomatic relations from Taipei to Beijing by means of the Joint Communique issued during Prime Minister Kakuei Tanaka's visit to China.

China, since 1949, has not treated its territorial disputes with neighbouring countries as an isolated issue in its foreign and security policy. Rather, Beijing has always handled those territorial issues in the larger context of its strategic interests of the time. Chinese decision-makers made concessions on territorial contentions when they believed that those compromises served China's broader and longer-term strategic benefits. Conversely, China appeared to be quite stubborn when heavy-handedness and assertiveness served its other purposes, either domestic or international.

The South China Sea issue is no exception in China's foreign and security calculations. Over the decades, China's handling of the dispute has been affected by a wide range of factors, apart from territorial or sovereignty claims. There are many good examples to illustrate this point. For instance, it has been argued that the 1974 conflict between China and South Vietnam, which ended in China taking control of the whole Paracels, was partly motivated by Chinese anxiety of a Soviet security threat from the sea. The 1988 Sino-Vietnamese conflict in the Spratlys had to do with the People's Liberation Army (PLA) Navy's interest in pushing for a greater budget when Beijing was reducing military expenditure in the 1980s.The 1995 Mischief conflict was partly a result of internal elite political power struggles in China. And the “calculated moderation” in China's approach to the South China Sea dispute in the past decade reflected China's attempt to balance its interests in domestic economic development, sovereignty claims, and regional strategic interests.These cases sufficiently demonstrate that it is useful and highly necessary to take into consideration many other factors to better understand China's policy on the South China Sea dispute.

This chapter attempts to analyse some of the major factors that have helped to shape China's policy on the South China Sea in the past decade or so. I will then discuss whether the context of China's policy-making, both internal and external, has significantly changed and what impacts this changed context would have on China's future policy on the dispute.

Strategic Interests and Moderation

Throughout the 1990s, China made great efforts to normalize its relations with Southeast Asian states. Departing from its initial approach that favoured bilateral relations, China became more involved in multilateral and regional institutions, especially in frameworks that allowed Beijing to enhance its dialogue with the Association of Southeast Asian Nations (ASEAN).

China has not issued any official document announcing its comprehensive policy on the South China Sea (SCS) issue, nor have the other SCS littoral states. However, China's stance on some major issues of the SCS has been clearly illustrated in its official documents and statements. This chapter illustrates China's basic stance on the SCS based on the historical records, official documents, statements, and state practice concerned.

China's Indisputable Territorial Sovereignty over the Xisha (Paracel) and Nansha (Spratly) islands and their adjacent waters

China was the first to discover and name the islands of the Xisha and Nansha Islands and the first to exercise sovereign jurisdiction over them. This is supported by ample historical and jurisprudential evidence and has long been recognized by the international community.

Major Historical Evidence Supporting China's Sovereignty over Nansha Islands

China the First to Discover and Name the Nansha Islands

The discovery by the Chinese people of the Nansha Islands can be traced back to as early as the Han Dynasty. Yang Fu of the East Han Dynasty (ad 23–220) made reference to the Nansha Islands in his book entitled Yiwu Zhi (Records of Rarities), which reads: “Zhanghai qitou, shui qian er duo cishi”, or “There are islets, sand cays, reefs, and banks in the South China Sea, the water there is shallow and filled with magnetic rocks or stones.” Chinese people then called the South China Sea Zhanghai and all the islands, reefs, shoals, and isles in the South China Sea, including the Nansha and Xisha Islands, Qitou.

General Kang Tai, one of the famous ancient Chinese navigators of the East Wu State of the Three Kingdoms Period (ad 220–280), also mentioned the Nansha Islands in his book entitled Funan Zhuan (or Journeys to and from Phnom, the name of an ancient state in today's Cambodia). He used the following sentences in describing the islands: “In the South China Sea, there are coral islands and reefs; below these islands and reefs are rocks upon which the corals were formed.”

In numerous history and geography books published in the Tang and Song Dynasties, the Nansha and Xisha Islands were called Jiuruluo Islands, Shitang (literally meaning atolls surrounding a lagoon), Changsha (literally meaning long ranges of shoals), Qianli Shitang, Qianli Changsha, Wanli Shitang, and Wanli Changsha among others.