China-Vietnam: The Oil Rig Non-diplomacy

28 May, 2014    ·   4471

Roomana Hukil analyses the causes and potential implications of China's decision to install oil rigs in a disputed area of the South China Sea, near Vietnam

Roomana Hukil
Roomana Hukil
Research Officer
The recent impasse between China and Vietnam over Beijing’s deployment of oil rigs in the South China Sea (SCS) has generated chaos in the Southeast Asian political arena. The tension between the two states has renewed security challenges in Asia, pressurising the international system to accelerate a ‘pivot’ of military assets to the region to counter China’s rising influence. Why did China choose to deploy the oil rig in the South China Sea all of a sudden? What are the potential implications of such a move?

Why did China Deploy the Oil Rigs?
There are several contrasting views over China’s decision to install the oil rig in the contested waters. While some insist that the act was Beijing’s attempt to gauge international responses over its maritime territorial claims, others see it plainly as China’s assertiveness in the SCS.

The state-owned China National Offshore Oil Company’s (CNOOC) decision to move the oil rig near Paracel Islands is not only seen as its assertion of territorial obsession but also exemplifies the well-planned, political nature of the Chinese government. The calculated decision did take into account the fact that the area possesses unverified hydrocarbon reserves that would ultimately incite a global outcry. However, that did not deter Beijing from placing the billion dollars-worth rig in the space they consider their national fisheries zone. More so, the 80 People’s Liberation Army Navy (PLAN) and Chinese coast guard ships that were present during the installation of the rig in the said area is indicative of China’s strategic push towards its territorial ambitions.

China has become more assertive in pursuing its claims over the SCS in the recent years and this has been demonstrated in its stand-offs with Japan, the Philippines and now Vietnam. Until now, Beijing and Hanoi maintained relatively peaceful bilateral relations, and, in 2013, they had also agreed to enhance socio-economic and political cooperation. While China’s recent provocation may be puzzling for some, it was no act of shooting in the dark.

The SCS produces 1.7 billion tonnes of fish and is considered to be a key zone for the fisheries industry. This gives China ample reason to claim the space as its ‘national fisheries’ zone. Energy is another motivation for China to wade into the disputed area. Last year, China imported 320 million tonnes of oil from West Asia & North Africa. Despite the discovery of shale gas reserves in China, and the Arctic being re-opened for energy cooperation, the demand for oil in China has only accelerated and is not completely met by sufficient supply.

China’s move may also be a test to check Vietnam’s future equation with the US. Vietnam was the best candidate for China to push the dispute in the SCS to test the mettle of the US and the ASEAN. Vietnam may not want to be an ally of the US in opposing China given that it requires China’s market and investment for its own development. Hence, China gambled with confidence that despite provocations, Vietnam would respond with restraint and not use force against China. This highlights China’s ambitions towards attaining a great power status in the SCS, in the midst of power transitions underway at the global level. China seeks to enhance its naval operations and project its autonomy to the hilt by reaching further out into the SCS. China’s current move of reasserting its territorial foothold in areas which it sees as its ‘national sovereignty’ has demonstrated this intent.

How Far is the Dispute Likely to Go?
At present, the Vietnamese government is in a fix because ignoring China’s aggressive act will further stoke anger within the country and for ‘adopting a soft approach’ towards its belligerent neighbour. Vietnamese Prime Minister Nguyễn Tấn Dũng has hence threatened legal action against China for towing the oil rig into the sea and attacking Vietnamese vessels. Many Vietnamese citizens have also begun perceiving China as a bully who is merely interested in economic exploitation of the smaller and militarily weaker Vietnam. This sentiment is growing substantially, adding to the divide between the two nations.

While the likelihood of a full-fledged war between both states is highly unlikely, continued tensions and disturbances can be expected.  Relations between the two will remain strained for a while, but trade ties (that currently remain unaffected) are likely to offer the way forward. China is Vietnam’s largest trading partner. In 2013, bilateral trade stood at $50 billion, with Beijing responsible for 28 per cent of Vietnam’s imports. Given the similarities in political ideologies in both nations, especially their commitment to an autocratic rule of governance, China and Vietnam have immense potential for cooperation in the future for trade and development.

Therefore, although the currently souring in the relationship does pose problem for the bilateral at present, these tensions are likely to be short-lived.