PRC FOCUSED ON ITS TERRITORIAL CLAIMS IN SOUTH

C O N F I D E N T I A L BEIJING 002699 DEPT FOR EAP/CM, EAP/MLS - BRETT BLACKSHAW E.O. 12958: DECL: 09/21/2029 TAGS: PREL PBTS PHSA MARR PHUM PGOV VN CH SUBJECT: PRC FOCUSED ON ITS TERRITORIAL CLAIMS IN SOUTH CHINA SEA REF: A. 08 BEIJING 3499 ¶B. HANOI 362 Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1. 4 (b, d) ¶1. (C) Summary: China's primary interests in the South China Sea (SCS) are to defend its claimed territorial boundaries, protect and develop its claims to natural resources, and maintain freedom of navigation, according to an Embassy contact. Scholars and officials suggest China prefers to address territorial disputes bilaterally with individual Southeast Asian claimants for two reasons: 1) to leverage China's influence over its smaller Southeast Asian neighbors; and 2) to focus ASEAN as a whole away from the SCS and onto China's broader foreign policy objective of regional economic integration. Chinese and Vietnamese officials acknowledge that boundary disputes in the South China Sea influence their bilateral relationship, but say the disputes do not impede the positive trend in relations. While Chinese officials and scholars hold differing views of the PLA role in China's South China Sea policy, our contacts unambiguously underscore China's sensitivity to activities they perceive as U.S. meddling in the South China Sea. End summary. CHINESE INTERESTS IN THE SOUTH CHINA SEA -------------- ¶2. (C) Han Feng, Deputy Director of the State Council-affiliated Chinese Academy of Social Sciences' Institute of Asia-Pacific Studies told PolOff August 21 that China's primary interests in the South China Sea were to defend its territorial integrity, to protect and develop its claims to natural resources, and to maintain freedom of navigation. Han said that China's broader foreign policy objective was to deepen its economic integration with the region. To accomplish this, China wanted to manage territorial disputes with smaller countries bilaterally and outside of the ASEAN framework, thereby enabling China to focus its interaction with ASEAN on establishing a China-ASEAN free trade area. LOW LIKELIHOOD OF MOVEMENT FROM DOC TO COC -------------- ¶3. (C) To ensure that negotiations over territorial disputes in the South China Sea were conducted between China and individual ASEAN member states rather than between China and ASEAN countries as a unified bloc, China had set conditions on its engagement with ASEAN on the SCS issue, MFA Boundary and Ocean Affairs Department Maritime Delimitation Division Deputy Director Fu Fengshan told PolOff September 1. China, he said, would only re-engage in the ASEAN-China Joint Working Group on the Implementation of the Declaration of Conduct (DoC) of Parties in the South China Sea if ASEAN member-states dropped efforts to form a coordinated ASEAN position. Fu stated that ASEAN member states, most notably Vietnam, would like to move from a DoC to a more politically-significant Code of Conduct (CoC) of Parties in the South China Sea. Fu described the working group as "stalemated" and said a date had not been set for its next meeting. CASS' Han separately stated that China was "relatively positive" about moving from a DoC to a CoC on the condition that all parties negotiated in good faith without a pre-coordinated ASEAN position. ASEAN COORDINATION ON SOUTH CHINA SEA -------------- ¶4. (C) MFA-affiliated China Institute of International Studies scholar Shen Shishun (whom PolOff met separately August 21) and CASS' Han both dismissed the possibility that ASEAN member-states would be able to reach a coordinated position on territorial claims in the South China Sea. Shen did not believe it was possible for ASEAN to form a bloc given the overlapping claims of the Philippines, Brunei, Malaysia, Indonesia and Vietnam, a point that Vietnam Embassy Second Secretary Nguyen Thai Son acknowledged to PolOff September 10. (Note: Vietnam and Malaysia's joint submission in May on their extended continental baseline claim to the Commission on the Limits of the Continental Shelf pursuant to the UN Convention on the Law of the Sea (UNCLOS),while short of ASEAN-wide coordination, did represent a step in that direction. Vietnam's assumption this year of ASEAN's three-year "plus 1" coordinator position and of the ASEAN Chairmanship in January 2010 could mean that the South China Sea issue will be more prominent in ASEAN-China relations over the coming year.) IMPACT ON CHINA-VIETNAM RELATIONS -------------- ¶5. (C) MFA's Fu and Vietnamese diplomat Son each told PolOff that while South China Sea territorial disputes were a source of bilateral tension, the disputes would not impede the positive trajectory of China-Vietnam relations. MFA's Fu described Vice Foreign Minister Wu Dawei's August 13 talks in Hanoi on the South China Sea as routine, and noted that both sides would meet again before the end of the year. According to MFA's Fu, China reiterated to Vietnam during the August round that the PRC would like to reach a bilateral understanding on fishing rights and oil exploration in the disputed territory and was awaiting Vietnam's response. Fu told us that the primary take-away from the talks was that both sides agreed on the importance of preserving peace and avoiding conflict. Fu affirmed that the recently established MFA Boundary and Ocean Affairs Department, not the MFA Asian Affairs Department, had responsibility for managing the South China Sea issue given its relation to China's territorial boundaries. CIIS' Shen separately characterized the talks as a multi-year endeavor aimed at managing disputes. He suggested that neither China nor Vietnam had proposed any "grand bargain" at the August talks to resolve outstanding differences. ¶6. (C) Describing Vietnam's weak negotiating hand in the South China Sea, Vietnamese Embassy contact Son noted that, on the one hand, Vietnam did not possess the requisite strategic strength to negotiate with China bilaterally, given the aggressiveness with which China asserted its claims. On the other hand, Vietnam had been unsuccessful in drawing ASEAN member states to a unified position on territorial claims in the South China Sea. Consequently, Vietnam wanted to manage ongoing differences with China diplomatically in the hope that, over time, a consensus ASEAN position would emerge that would enable Vietnam to negotiate from a position of collective strength. MIXED SIGNALS ON ROLE OF PLA IN SOUTH CHINA SEA -------------- -- ¶7. (C) MFA's Fu emphasized to PolOff September 1 that the MFA -- not the PLA -- drove the PRC's policy on the South China Sea. The MFA was focused on keeping the situation calm so China could deepen its bilateral relations and further its economic integration with the ASEAN region. Chinese scholars, however, suggested that the PLA played a more active role in China's South China Sea policy. Renmin University Associate Dean of International Studies Jin Canrong suggested in an August 28 roundtable discussion with a visiting senior U.S. military official that tension in the South China Sea and along the China-India border helped justify the PLA's annual request for increased defense spending now that the situation in the Taiwan Strait was relatively calm. During the same roundtable, CASS American Studies Institute Director Tao Wenzhao stated that the PLA was under pressure to protect China's interests in the ocean economy ("haiyang jingji"),which currently accounted for over 10% of China's GDP. Many Chinese livelihoods depended on the ocean economy (comprising fishing, off-shore oil, logistics, sea transportation, etc.),and as such, the PLA Navy had a duty to protect China's ocean interests, notably in the South China Sea, Tao said. PRC SENSITIVITY TO U.S. PRESENCE IN SCS -------------- ¶8. (C) Chinese officials and scholars alike argued that incidents such as the March confrontation between the USNS Impeccable and PRC fishing vessels stemmed in large part from differing interpretations of UNCLOS and underscored that China was a signatory to UNCLOS, whereas the U.S. was not. At the August 26 special session of the U.S.-China Military Maritime Consultative Agreement (MMCA) talks, PRC officials argued that the United States had to observe UNCLOS (in line with China's interpretation) in order to eliminate the possibility of future incidents in the vicinity of the South China Sea. China interpreted UNCLOS to mean that all military operations in its exclusive economic zone (EEZ) had to be conducted for peaceful purposes and had to respect and abide by the sovereign rights of the legal state. China asserted that U.S. military reconnaissance and surveillance operations in China's EEZ were not conducted for peaceful purposes and were not consistent with China's internal rules and regulations. MFA Boundary and Ocean Affairs Department official Fu Fengshan repeated the point to PolOff September ¶1. (Note: Whereas Chinese interlocutors regularly draw attention to China being a signatory to UNCLOS, they explain that the PRC's extensive claim to "territorial waters" in the SCS -- defined by the so-called "Nine Dashes" or "Cow's Tongue" -- is a "reflection of history" that predates and therefore "does not contradict" UNCLOS (ref A). As UNCLOS stipulates that claims to a maritime zone must derive from a land territory (which the PRC claim does not),maritime disputes in the SCS result not only from different interpretations of legal activities in the EEZ under UNCLOS, but also from competing territorial and sovereignty claims among countries in the region.) ¶9. (C) Other areas of concern often cited by Chinese officials and scholars with whom we spoke include public U.S. questioning of China's sovereignty claims in the South China Sea, and the Chinese impression that the United States was encouraging ASEAN member-states to form a unified ASEAN position on territorial claims in the South China Sea. CIIS' Shen warned that such a perception of U.S. encouragement to ASEAN member-states would "poison" the overall atmosphere of U.S. - China relations. HUNTSMAN