Vietnam’s South China Sea Disputes with China: The Economic Determinants

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[Korean Journal of Defense Analysis] This article seeks to provide an investigation of the influence of economic factors on the dynamics of Vietnam’s South China Sea disputes with China as well as the shaping of its related strategy. The article argues that since the late 1980s economic factors have contributed significantly and in different ways to the evolving dynamics of the bilateral disputes. Vietnam’s effective exploitation of the sea’s resources for economic development and China’s moves to counter such efforts have generated constant tensions in their bilateral relationship. Meanwhile, the growing economic interdependence between Vietnam and China is unlikely to provide pacifying effects on the disputes due to the asymmetrical nature of the relationship.

Introduction

Despite significant developments in bilateral relations since normalization, a number of problems still threaten to unsettle Vietnam’s relations with China in the long term. The South China Sea (SCS)[i] disputes stand out as the single most challenging issue. Resurfacing since the 1970s, the disputes not only remain the most serious sticking point in bilateral relations but have even pitted the two countries against each other in deadly armed confrontation on a number of occasions as well. The management and resolution (if ever) of the disputes therefore bear significant implications for the future evolution of bilateral relations.

Since 1991, SCS disputes between Vietnam and China have witnessed both positive and negative developments. While the two countries successfully signed a treaty on the maritime delimitation of the Tonkin Gulf in 2000, thereby removing part of the disputes, other disputes over the sovereignty of the Paracels and the Spratlys as well as maritime boundaries in the sea remain intractable. In recent years, as both countries step up their military modernization and China pursues more assertive measures in pressing its claims, the disputes tend to become even more intense and threaten to undo hitherto positive developments in other fields of the bilateral relations.

Contributing to the dynamics of the disputes is a wide range of drivers, in which geo-strategic and economic ones are the most important. While both geo-strategic and economic factors driving China’s moves in the SCS have been extensively studied,[ii] they have not been equally examined on the part of Vietnam. So far, most of the studies on the dynamics of Vietnam’s SCS disputes with China have focused on the geo-strategic aspect,[iii] leaving the economic aspect to be largely under-examined. This literature gap makes it difficult to fully appreciate the dynamics of Vietnam’s SCS disputes with China at a time when economic factors, following Vietnam’s launch of economic reforms under Doi Moi, have been playing an increasingly important role in shaping the country’s foreign policy in general and SCS strategy in particular.

The present article seeks to address this literature gap by providing an examination of economic factors’ influence on the dynamics of Vietnam’s SCS disputes with China as well as the shaping of its related strategy. As such, although several aspects of the SCS disputes are multilateral in nature, the article will strictly focus on the disputes between Vietnam and China, the two claimants that have the most overlapping claims. At the same time, as its title suggests, the article will mainly focus on the implications for the disputes of economic factors originated or as seen from the Vietnamese perspective. However, the role of economic factors in China’s SCS policy will also be discussed whenever relevant to provide a more comprehensive and balanced analysis of the issue.

The article argues that economic factors have contributed considerably to the evolving dynamics of Vietnam’s SCS disputes with China over the past few decades, especially since Vietnam launched its economic reform under Doi Moi. Vietnam’s effective exploitation of the sea’s resources for economic development and China’s moves to counter such an effort have generated constant tensions for their relations.[iv] At the same time, Vietnam’s perception of the SCS in terms of economic interests has also strengthened. It is therefore adopting measures to protect and advance its legitimate interests in the sea against China’s expansive claims. These measures include various policies and strategies to develop a marine economy, and considerable investments in naval modernization and maritime enforcement capacity building. Meanwhile, the growing economic interdependence between Vietnam and China under Doi Moi is not likely to provide pacifying effects on the disputes due to the asymmetrical nature of the relationship.

The article proceeds in three sections. The first section will briefly analyze the geo-strategic versus economic drivers of Vietnam’s SCS disputes and explain why it is necessary to study the role of economic factors in the evolution of the disputes from the Vietnamese point of view. The last two sections will then analyze the role of economic factors in the shaping of Vietnam’s SCS strategy as well as their contribution to the underlying dynamics and recent developments of the disputes. While the second section examines how economic factors, especially developments in Vietnam’s oil and gas and fisheries industries, have intensified the disputes, the third will provide an assessment of their pacifying effects.

Vietnam’s SCS disputes with China: geo-strategic vs. economic drivers

Vietnam’s economic development and implications for SCS disputes

Oil and gas industry

Fishery

The Pacifying Effects of Economic Interdependence?

Conclusion

Download full text of the article (in pdf) HERE or HERE

 

[i]    The sea is called Biển Đông, or the East Sea, in Vietnamese.

[ii]   Sea, for example, Leszek Buszynski & Iskandar Sazlan, “Maritime Claims and Energy Cooperation in the South China Sea,” Contemporary Southeast Asia  29, no. 1 (April 2007): 143-71; Leszek Buszynski, “The South China Sea: Oil, Maritime Claims, and U.S.-China Strategic Rivalry,” The Washington Quarterly 35, no. 2 (2012) 139-56; Jean A. Garrison, China and the Energy Equation in Asia: The Determinants of Policy Choice (Boulder, CO: First Forum Press, 2009); Chi-kin Lo, China’s Policy Towards Territorial Disputes: The Case of the South China Sea Islands (London: Routledge, 1989); Michael Leifer, “Chinese Economic Reform and Security Policy: The South China Sea Connection”, Survival 37, no. 2, (1995)  44-­59; Nick A. Owen & Clive H. Schofield, “Disputed South China Sea Hydrocarbons in Perspective,” Marine Policy 36, no. 3, 809-22; M. Taylor Fravel, “China’s Strategy in the South China Sea,” Contemporary Southeast Asia 33, no. 3 (May 2012), 292-319; Ian J. Storey, “Creeping Assertiveness: China, the Philippines and the South China Sea Dispute,” Contemporary Southeast Asia 21, no.1 (April 1999), 95-118.

[iii]   See, for example, Andrew A. Butterfield, Vietnamese Strategic Culture and the Coming Struggle for the South China Sea (Monterey, CA: Naval Postgraduate School, 1996); Carlyle A. Thayer, “The Tyranny of Geography: Vietnamese Strategies to Constrain China in the South China Sea,” Contemporary Southeast Asia 33, no. 3  (December 2011): 348-69; Stein Tonnesson, “Vietnam’s Objective in the South China Sea: National or Regional Security?”, Contemporary Southeast Asia 22, no.1, (April 2000) 199-220; Ian J. Storey & Carlyle A. Thayer, “Cam Ranh Bay: Past Imperfect, Future Conditional”, Contemporary Southeast Asia 23, no. 3, (December 2001) 452-73.

[iv]   It should be noted while Vietnam’s economic activities in the SCS are conducted mainly within its lawful waters under the 1982 United Nations Convention on the Law of the Sea, China’s moves to counter such activities are largely based on its expansive and legally shaky claims, especially the nine-dashed line. For analyses of the weight of Vietnam’s and China’s claims in the SCS, see Mark J. Valencia, Jon  M. Van Dyke and Noel A. Ludwig, Sharing the Resources of the South China Sea (Honolulu, HI: University of Hawaii Press, 1999), and Hong Thao Nguyen, “Vietnam’s Position on the Sovereignty over the Paracels & the Spratlys: Its Maritime Claims,” Journal of East Asia and International Law 5, no. 1 (Spring 2012): 165-211.

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