The U.S. State Department issued an official statement on Aug. 22 condemning China for interfering with Vietnam’s longstanding oil and gas activity in the South China Sea.
Around the time that President Donald Trump was preparing for the 3-day G-7 meeting in Biarritz, France, where he is expected to highlight China’s closed markets, intellectual property theft, and abuse of Hong Kong citizens, there were media reports that the Chinese coast guard and maritime militia vessels, in a provocation, were blanketing the oil-rich coastal waters off Vietnam, Malaysia, and the Philippines’ Exclusive Economic Zones (EZZ).
Beijing has made territorial claims since 1947, referred to as the “nine-dash-line,” proclaiming it has sovereignty over 90 percent of the South China Sea; at the expense of Taiwan, Vietnam, the Philippines, Brunei, and Malaysia. But the United Nations Law of the Sea Permanent Court of Arbitration in Republic of the Philippines v. People’s Republic of China ruled overwhelmingly in 2016 against China’s expanded territorial claims.
The ruling stated that China had “violated the Philippines’ sovereign rights in its exclusive economic zone by (a) interfering with Philippine fishing and petroleum exploration, (b) constructing artificial islands and (c) failing to prevent Chinese fishermen from fishing in the zone.”
China issued a 13,900-word white paper claiming that the Philippines “distorted facts, misinterpreted laws and concocted a pack of lies” in order to undermine Chinese interests. Beijing called the ruling “a piece of paper that is destined to come to naught.”
The state-run China Daily ominously stated at the time: “With military activity reaching unprecedented levels in the South China Sea, there is no guarantee that an escalating war of words will not transform into something more.”
According to the latest U.S. State Department press statement, China had disregarded a number of international agreements. But in a first, the State Department quantified that China is trying to “impose economic costs on Southeast Asian states by blocking their access to an estimated $2.5 trillion in unexploited hydrocarbon resources.”
The statement cited China for deploying its own petroleum survey vessel and armed escorts into Vietnam’s offshore waters near Vanguard Bank on August 13. The activity is described as an effort to coerce ASEAN nations to abandon partnerships with foreign oil and gas firms and only work with China’s state-owned enterprises.
The State Department added that with America as the world’s leader in offshore exploration and extraction of hydrocarbon resources, it intends to bolster energy security for partners and allies in the Indo-Pacific region.
Analyst firm Geopolitical Futures suggests that Beijing’s goal is “not to take the hydrocarbons for itself but to force regional states into joint exploration agreements that implicitly acknowledge China’s distended territorial claims.”
With Philippine President Rodrigo Duterte traveling to Beijing over the weekend, some observers expect that he will give credibility to China’s purported interference by discussing a joint-venture petroleum development agreement with China.
Of note, the State Department issued its denunciation of Chinese “intimidation” in Vietnamese waters on the same day that Australia’s Prime Minister Scott Morrison arrived in Hanoi. It is the first visit by an Australian leader since the two countries formalized their “strategic partnership” earlier this year.