Global Investing Hot Spots

As Trump talks trade and nukes, China quietly tightens its grip on the South China Sea

Key Points
  • China continues to strengthen its military position in the South China Sea, a key global trade route, at a time when U.S.-China trade war fears mount.
  • On Saturday, U.S. Secretary of Defense James Mattis delivered a stern rebuke of recent Chinese actions at a major Asia-Pacific security summit.
  • Trillions of dollars worth of global trade passes through the strategic waterway annually.
A PLA Navy fleet including the aircraft carrier Liaoning, submarines, vessels and fighter jets take part in a review in the South China Sea last April.
VCG/VCG | Getty Images

With global attention fixated on fraught U.S.-China trade negotiations and on-again, off-again nuclear talks between the U.S. and North Korea, China continues to strengthen its position in the South China Sea. The world's second largest economy is boosting its military capabilities there, and analysts say there's really not a whole lot the U.S. can do about it.

Despite U.S. Secretary of Defense James Mattis' stern warning on Saturday about "consequences" for China's provocations in the region, experts say that won't slow Beijing's militarization of the strategic waterway, through which $3.4 trillion in global trade passes annually.

The strategic importance of the region to global trade and economic stability cannot be underestimated. The United Nations Conference on Trade and Development estimates that roughly one third of global shipping passes through the South China Sea annually. Over 64 percent of China's maritime trade transited the waterway in 2016, while nearly 42 percent of Japanese trade passed through it during the same period.

The U.S. is less reliant with just over 14 percent of its maritime trade passing through it. But it is key for global LNG trade since almost 40 percent flow through the sea, the U.S. Energy Information Administration reports.

The latest series of Chinese provocations in the region began last month when intelligence assessments determined the country's military had quietly installed anti-ship cruise missiles as well as surface-to-air missiles on three of its fortified outposts in the South China Sea. Those reports followed assessments a month prior that found China had installed communications and radar jamming equipment on its Spratly Island outposts as well.

Chinese military authorities also announced late in May that China had conducted launch and landing drills with several H-6K long-range bombers at an unspecified base in the South China Sea for the first time, a marked escalation in China's airborne strike capability in the region that places all of Southeast Asia within the nuclear-capable H-6K's combat radius.

U.S. Defense Secretary James Mattis testifies before the Senate Appropriations Defense Subcommittee hearing on funding for the Department of Defense, on Capitol Hill in Washington, May 9, 2018.
Yuri Gripas | Reuters

Chinese warships also confronted two U.S. Naval ships that had sailed within 12 miles of one of the Chinese-claimed Paracel Islands. China claims the waters as its own — a claim the U.S. doesn't recognize.

With global attention turned elsewhere and little recourse beyond sending warships on freedom of navigation exercises through Chinese-claimed waters, there's little the U.S. can — or is willing — to do to deter increasing Chinese militarization of the region.

China's unbridled ambitions

"We are spending 99 percent of our diplomatic interactions with the Chinese talking about trade and North Korea," said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies. "So I think the South China Sea is seen by the Chinese — and rightly so — as a lesser priority for the United States. One could then conclude that they therefore think they can get away with what they're doing, and I think that's correct. They also realize that they've made so much headway in the South China Sea that it's impossible for the U.S. to reverse."

Top 5 nations trading through South China Sea

Country South China Sea trade value ($billions) As % of all trade

Source: Center for Strategic and International Studies/International Monetary Fund/2016

If China's ultimate aim is to alter the status quo in its favor in the South China Sea, it has quietly achieved that aim in extremely short order, starting with the development of its first military outpost there in 2014. In the years since, it has established multiple civilian and military bases in other parts of the strategic waterway, often in parts of the sea also claimed by neighboring nations like Vietnam or the Philippines. In many cases it has built up man-made islands atop reefs or other shallow geographical features, creating new habitable islands where there were none before, a controversial practice that has drawn criticism from the U.S. and other nations.

Despite assurances made by Chinese President Xi Jinping in 2015 that China would not militarize its South China Sea islands, the Chinese military has slowly expanded its footprint in the region. This creeping militarization has allowed China to make controversial territorial and economic claims in the region over the vocal protests of neighboring countries and Western states alike.

During April confirmation proceedings prior to taking command of all U.S. forces in the Pacific, U.S. Navy Admiral Philip Davidson called China's military buildup in the South China Sea "a substantial challenge" to U.S. military operations in the region in written testimony to Congress. "In short," he wrote, "China is now capable of controlling the South China Sea in scenarios short of war with the United States."

Davidson's comments follow repeated warnings from his predecessor, Admiral Harry Harris, whom President Trump recently tapped to fill the long-vacant position of ambassador to South Korea.

During Harris's three-year tenure at Pacific Command, China's activities in the South China Sea slowly but steadily transitioned from land reclamation projects scattered across the region to the development of fully-functioning military installations, complete with living quarters, runways capable of launching and landing large military and civilian aircraft, and harbors large and deep enough to service a range of civilian and coast guard vessels as well as China's growing fleet of naval warships.

Four main outposts make up the bulk of China's military presence in the region — Woody Island in the Paracels (a string of islands and reefs some 250 miles southeast of China's Hainan Island) and Subi Reef, Fiery Cross Reef, and Mischief Reef, all in the Spratly Islands, another archipelago stretching across the lower South China Sea some 750 miles south of the Chinese mainland. Each is home to three-kilometer runways, expansive storage facilities, emplacements for missiles, and various facilities for tracking airborne and maritime traffic, according to a recent Reuters analysis of satellite imagery of the sites. Subi Reef alone is now home to nearly 400 buildings that bear striking similarities to those at People's Liberation Army bases on the Chinese mainland. The facilities could someday house and support hundreds of marines, according to analysts.

The permanent deployment of a large contingent of Chinese troops or combat aircraft to the islands would prove a serious test for Western nations — the U.S. chief among them — that have vocally opposed China's island-building and associated territorial claims and pledged consequences for its military buildup in the region, analysts say. Such a test could be in the offing. The U.S. likely won't be able to deter China from landing and eventually basing fighter jets on its South China Sea Islands, Glaser says. Likewise, China will likely conduct further exercises with long-range bombers in the Spratlys over the objections of the United States. The installations are already in place, and the U.S. possesses limited tools that might prompt the Chinese to scale back their South China Sea operations.

A contentious issue for US-China relations

"The U.S. is trying to stop China from doing something it's already doing," said Dr. Taylor Fravel, associate professor of political science at the Massachusetts Institute of Technology. "That's harder than stopping it from doing something it hasn't done yet."

On Tuesday Defense Secretary Mattis told reporters the United States will continue "a steady drumbeat" of naval exercises to challenge China in the region, but thus far those exercises have had little noticeable deterrent effect. Earlier this month, the U.S. disinvited the People's Liberation Army Navy from the 2018 Rim of the Pacific (RIMPAC) exercise, a biennial maritime warfare exercise, in response to "China's continued militarization of disputed features in the South China Sea" and other actions that "raise tensions and destabilize the region," according to a Pentagon spokesman.

Mattis also announced on Wednesday that U.S. Pacific Command, or PACOM, would be rechristened "INDOPACOM," or U.S. Indo-Pacific Command, a nod to increased U.S. cooperation with India to counter Chinese military and economic influence in the region.

But absent a cohesive strategy to respond to increased Chinese militarization in the region, it's unclear how the new China-fashioned status quo in the region can be altered. Both Glaser and Fravel note that the Trump administration has prioritized trade and North Korea above issues related to the South China Sea — a fact not lost on Chinese military planners as their creeping militarization of the region continues.

"Do we want to risk a major war with China over the landing of bombers on Subi Reef or Mischief Reef?" Glaser said. "I think the answer is no."

Clarification: Over 64 percent of China's maritime trade transited the South China Sea in 2016, while nearly 42 percent of Japanese trade passed through it during the same period.

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