The Endangered Asian Century
America, China, and the Perils of Confrontation
A Map of Conflicts in the South China Sea (Sam Pepple / Sample Cartography). Click to enlarge.
Last month, Japanese activists planted their country's flag on one of the Senkaku Islands (which the Chinese call the Diaoyu Islands), a chain claimed by China, Japan, and Taiwan. The move sparked protests in China and inspired headlines in the West, but the provocation was hardly surprising. The three bodies of water in East Asia -- the Sea of Japan (bounded by Japan, North Korea, South Korea, and Russia), the East China Sea (bordered by China and Japan's Ryukyu Islands), and the South China Sea (surrounded by Borneo, China, the Philippines, and Vietnam) -- are home to hundreds of disputed islands, atolls, and shoals. And in the last few years, the diplomatic and militaristic struggles to assert authority have become increasingly brazen.
On one level, patriotism is making things worse. Japan's tussle with China over the Senkaku/Diaoyu Islands, for example, is a touchstone for those in Japan who fear China's growing political and economic might. Likewise, South Korea's assertion of control over the Dokdo Islands (known as the Takeshima Islands in Japan) is viewed at home as a patriotic riposte to Japan's 40-year occupation of the peninsula.
Beyond symbolism, however, these three bodies of water flow over East Asia's Outer Continental Shelf and the submerged deltas of many major river systems -- geological features that suggest the presence of vast deposits of oil and natural gas. Yet, although the resources have been there for millennia, it is only in the last decade that the energy sector has even started to develop extractive technologies that will eventually make these reserves accessible.
Nobody wants to lose out, especially because East Asia is energy hungry. The region is home to only three percent of the world's proven oil reserves and eight percent of its natural gas reserves. China, for example, already imports 58 percent of the oil and 22 percent of the gas it uses each year. Japan is far more dependent, importing nearly all of its oil and gas. According to the U.S. Department of Energy, in the next 25 years, Asia's energy consumption is expected to grow faster than anywhere else in the world. Eager for energy security, these countries have long sought to exploit their offshore oil and gas reserves.
Until recently, however, given the difficulty of operating in the blue-water seas, that was all but impossible. But eager to take advantage of oil and gas reservoirs in the deep waters of the Gulf of Mexico and offshore Africa, Western energy firms have developed drilling rigs capable of operating in a mile of water or more. Now that the necessary technology is within reach, powers in Asia are determined to assert what they argue are their rightful claims to vast amounts of energy.
Just who owns the potential riches, however, is a matter of some contention. Under the United Nations Convention on the Law of the Sea (UNCLOS), coastal states are allowed to claim a 200-nautical-mile exclusive economic zone extending from their land borders. All of the countries in the region have done so. But China has also laid claim to virtually all of the South China Sea on the basis that it has periodically occupied the Spratly and Paracel islands, small clusters of atolls and shoals that take up the northern and southernmost reaches of the sea. China has further cited provisions of UNCLOS that allow it to develop exclusively its Outer Continental Shelf (even if the shelf extends beyond 200 miles) and stake out a large stretch of the East China Sea. Of course, many other countries have claims in those seas, too.
Chinese behavior is a good example of the trend. Beijing's claims on the South China Sea (and the islands within it) are long-standing, as are its intentions to exploit the undersea hydrocarbon reserves there. In the past few years, however, it has stepped up its use of force. In June 2011, it harassed survey ships working for PetroVietnam in Vietnamese-claimed waters. Then, in April 2012, Chinese ships blocked efforts by the Philippine Navy to combat illegal fishing by Chinese ships in Philippine-claimed waters. Such belligerence is in line with hard-line elements of the Chinese military that have recently assumed a more assertive role in foreign affairs.
But the aggression also coincides with the China National Offshore Oil Corporation's acquisition of its first deepwater drilling rig and announcement of plans to operate in the South China Sea. The Chinese drilling rig, the CNOOC 981, was first deployed in May and sited some 200 miles southeast of Hong Kong, in an area also claimed by Taiwan and Vietnam. As the energy company's chairman, Wang Yilin, put it, "Large deepwater drilling rigs are our mobile national territory and strategic weapon for promoting the development of the country's offshore oil industry." The firm also chose the occasion to auction off to foreign and domestic corporations a number of exploration blocks in areas of the South China Sea situated close to Vietnam. Needless to say, the move infuriated Hanoi.
The Vietnamese, too, want to drill in deeper waters, but their national oil company, PetroVietnam, lacks the technological capacity to do so on its own. In recent years, it has been teaming up with foreign firms -- including Chevron and ExxonMobil -- to explore farther offshore. Last October, ExxonMobil reported finding a large natural gas field off the coast of central Vietnam. The Vietnamese say the field lies within their 200-nautical-mile exclusive economic zone. The Chinese have countered by asserting that the land falls within their territory and warning non-Chinese companies to desist from operating there. To hammer home the message, Chinese ships have, on several occasions, sliced PetroVietnam cables to underwater sensors.
The dispute between South Korea and Japan over the Dokdo/ Takeshima Islands is a variation on the same theme. So far, the two sides have fought mainly over fishing rights in the area. But the waters are also thought to harbor vast quantities of methane hydrates -- frozen bubbles of natural gas trapped in ice crystals on the ocean floor. If harvested safely (methane is a highly potent greenhouse gas, so any uncontrolled release would accelerate global warming), the hydrates would be a huge cache of energy. South Korea and Japan have raced to develop the technology to mine the undersea gold and hope to begin commercial extraction by the end of this decade. Once that starts, the seabed around the Dokdo/Takeshima Islands would become extremely valuable, rendering the fight over them far more economically critical.
The Obama administration has been caught off guard by the intensity of these disputes, which are threatening progress on a wide range of other issues. The disagreement between Japan and South Korea over the Dokdo (Takeshima) Islands, for example, has sabotaged plans for improved defense ties between the two countries and hurt U.S. efforts to isolate North Korea. Increased Chinese-Japanese tensions over the Senkaku/Diaoyu Islands are damaging efforts to boost trade in the region, another U.S. objective. In the South China Sea, the Obama administration has sought to bolster its ties with Vietnam, the Philippines, and other local powers by supporting their drive to negotiate en masse with China over the contested islands. Although welcomed in Hanoi and Manila, the strategy has angered Beijing and put a damper on Sino-American relations.
Meanwhile, there is little reason to suspect that Beijing, Hanoi, Manila, Seoul, or Tokyo will relent in the coming years. A desire for cheap and nearby energy will only increase, and as Asian economies grow, nationalistic impulses will become more assertive. Government officials have been quick to exploit these impulses for their own political advantage, but they also recognize that increased tensions and belligerency could undermine efforts to promote economic cooperation in the region, further slowing growth. Eventually, therefore, they are likely to seek an alternative to violent confrontation. This could involve joint development of the disputed areas (as Malaysia and Thailand have chosen to do in a disputed chunk of their own offshore waters) and accelerated development of renewable resources.