Beijing’s South China Sea expansion: The salami slices back!

By Peter Lee

The South China Sea escalation mechanism received another crank last week.

In response to the People’s Republic of China’s (PRC) crash island-building program in the South China Sea (itself apparently a response to the arbitration case filed by the Philippines concerning the validity of the “nine-dash-line”) and thanks to the Japanese government’s rather obliging (and not too popular) willingness to sidle away from the so-called “Peace” constitution and participate in faraway U.S. military adventures, the United States signaled that it’s ready to respond to PRC “salami slicing” & “cabbage wrapping” i.e. incremental expansions of the PRC presence in the South China Sea designed to fall below the threat response threshold a.k.a. Chinese “assertiveness” in the South China Sea with a new gambit:

Defense Secretary Ash Carter requested options that include sending aircraft and ships within 12 nautical miles (22 km) of reefs that China has been building up in the Spratly island chain, the official said.

Such a move would directly challenge Chinese efforts to expand its influence in the maritime heart of Southeast Asia.

“We are considering how to demonstrate freedom of navigation in an area that is critical to world trade,” the U.S. official said, speaking on condition of anonymity, adding that any options would need White House approval.

Finally, the salami is slicing back!  With a lot of help from “freedom of navigation.”

“Freedom of navigation in an area that is critical to world trade” is the indispensable public rationale justifying the U.S. injecting itself into the South China Sea which is a) 8,000 miles from the United States and b) at its heart a welter of conflicting claims involving island sovereignty, an issue upon which the U.S. as a matter of policy takes no positions.

The “critical to world trade” angle invokes the truly massive flow of goods, energy, and other resources through the South China Sea.  It’s not just a matter of billions or hundreds of billions; it’s trillions.

As the National Interest told us in a breathless headline, “China’s Dangerous $5 Trillion Dollar Bet: A South China Sea ADIZ? (Air Defense Identification Zone)”

“Freedom of navigation in an area that is critical to world trade” also gives Japan a rationale for its first cautious military tiptoe beyond defense of its homeland and home waters, conduct training exercises with Philippine units, and consider joint air patrols with the U.S. over the South China Sea.

As the BBC put it:

Japan needs one oil or gas tanker to cross the South China Sea every six hours to keep its economy functioning; South Korea is similarly dependent on energy imports.

Regrettably, however, I must point out that the statement “freedom of navigation in the South China Sea is crucial to world trade” is complete and utter bullsh*t.

(With one important exception that we’ll come to later.)

An afternoon profitably spent with an atlas and the Google are enough to inform the curious that … wait for it … it’s a big ocean out there.

Specifically, it’s an ocean that offers ample alternatives to America’s treaty partners and would-be allies a.k.a. Japan, South Korea, the Philippines, and Vietnam to do their vital shipping business without going through the South China Sea.

Today, they use the South China Sea because the shortest and cheapest way from the Middle East to the energy-hungry maritime states of East Asia is via the Strait of Malacca and the South China Sea.

But it’s not the only way.

There are alternate routes to Japan, Korea, and the Philippines via the Lombok and Sunda Straits in the Indonesian archipelago, and up through the Celebes and Sulu Sea.

Don’t take my word for it.  Ask Japan, which has obsessively investigated “energy security” since the OPEC oil shock of the 1970s and has gamed the economics of non-Malacca/non-SCS routes to a fare-thee-well.  Bottom line: to avoid Malacca/SCS completely by switching to the Lombok route, shipping costs to Japan go up maybe 13.5% over the Malacca route. In other words, less than half a penny a barrel (see page 65).

Back of the envelope, increase in Japan’s oil import bill of maybe $150 million.  Maybe $200 million?

For comparison, value of Japan’s crude oil imports from GCC in 2014: $100 billion.  Japan’s 2014 defense budget: $42 billion.

Incremental cost of securing Japan’s energy imports from the PRC threat in the South China Sea: A rounding error.

Pretty much same order of magnitude for South Korea.

Added costs for Philippines to access its ports at Manila, Subic Bay, the Batangas terminal: Basically zip.  The Lombok route run right through the Philippine archipelago.

As for Vietnam, it’s a net oil exporter.  In any case, its vital ports lie outside the dreaded “cow tongue” and are accessible without traversing the South China Sea.

And the alternate routes are not only proven.  They’re currently in use and have higher capacities than the Malacca Strait.

The behemoth ore carriers plying the routes from Australia to South Korea and Japan transit through Sunda and Lombok by default and as a matter of necessity.  Their drafts are too great to safely transit the Malacca Strait with its 25 meter restriction.  And there are a number of “postMalaccamax” ultralarge crude carriers that couldn’t transit Malacca even if they wanted to.

There is of course, one nation that is desperately reliant on freedom of navigation in the South China Sea to ensure its energy and economic security.

That country, if you haven’t guessed already, is the People’s Republic of China.

The PRC has been obsessed with the vulnerability of its Middle East energy imports to disruption in the South China Sea for over a decade.

And it’s put its money where its mouth it.  Between the energy “pivot” toward Central Asia and Russia, the Burma-Kunming pipeline, and the announcement of the Gwadar-to-Kashgar infrastructure corridor, the PRC has committed tens of billions of dollars to make sure the U.S. Seventh Fleet can’t sail into the South China Sea and shut off the PRC’s oil import spigot.

There may be good reasons for the U.S. to escalate tensions with the PRC in the South China Sea.  But “freedom of navigation in an area that is critical to world trade” isn’t one of them.

Unless we’re trying to guarantee the PRC’s energy & economic security.  Which we’re not.

The temptation is to say, So what?  The PRC is big & bad & throwing its weight around.  Beijing has done a halfway decent job of exploiting vulnerable regional institutions like ASEAN, parsing loopholes in UNCLOS, and invoking favorable precedents for its actions (like the eager island-building of its various interlocutors) to erect a plausible “lawfare” shield against effective U.S. intervention.

We need a good-sounding excuse to yank China’s chain, and the claim that PRC is slowly but surely crushing the world’s watery energy and economic jugular with its salami slicing & cabbage wrapping jackboot is better than most.

But here’s the problem I see.

Confucius said: “You can’t paint a wall of dung.”  Yes, he really said that: 粪土之墙不可圬也 .

He meant, I can’t teach a disciple who doesn’t have the proper attributes.  Same applies to policies.  A policy that relies on a fallacy won’t succeed.

The fallacy is that the U.S., Japan, and the ASEAN countries will risk military confrontation with the PRC over the South China Sea over “freedom of navigation,” a useful but low cost soundbite for them but a matter of genuine, near existential importance to the PRC.

The PRC has been accused of building a “Great Wall of Sand” in the South China Sea with its island expansion program.

I think the U.S. is trying to build a” Great Wall of Bullsh*t” in the South China Sea, by invoking “freedom of navigation in an area that is critical to world trade” as a pretext for U.S. intervention.

And when the PRC is ready to test that wall, it may not turn out to be very sturdy.

Peter Lee runs the China Matters blog. He writes on the intersection of U.S. policy with Asian and world affairs.

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