China, Russia and the South China Sea

BEIJING-We are seeing the emergence of a dual power structure in Central Asia, with China as the dominant economic power and Russia as the big security player.

Or, as Alexander Gabuev, senior associate and the chair of the Russia in the Asia-Pacific program at the Carnegie Moscow Center, told Foreign Policy: “China would be the bank and Russia would be the big gun.”

China continues to take the lead in economic-power ventures including the AIIB and the potential SCO development bank (which Russia is finally warming up to). Additionally, China has become the main moneylender in Central Asia: Its trade volume with the region surpassed that of Russia in 2009.

At the same time, Russia wants to keep its military bases and arms deals in Central Asia, as well as the Collective Security Treaty Organization, a security bloc of former Soviet countries.

China “sees economics as power,” according to a report by Stratfor. “For Beijing, military might rests on a strong economic base, and global power stems as much from the ability to shape global markets as it does from military force.”

The same reports suggest that Russia is pursuing the regional muscle role because Moscow “believes military might is the basis for national strength, power, and influence.”

That may be partially true, but it’s difficult to make that call considering that China is the economic leader in the region.

Alternatively, there’s the sense that Russia is pursuing security power in Eurasia because, simply put, that’s the second best option.

“The Kremlin knows that they won’t be able to compete with Chinese investment,” Luca Anceschi, a Central Asia expert at the University of Glasgow, told Foreign Policy. “Russia simply can’t catch up.”

A recent Foreign Policy article argued that China’s deployment of a billion-dollar offshore oil rig into maritime territory claimed by both Vietnam and China represents a potentially dangerous escalation of tensions in the South China Sea—one signaling China’s determination to exploit energy resources that lie under disputed waters.

Over the past two decades, China has gone from being a net energy exporter to a net energy importer. Forecasts in the 2013 IEA World Energy Outlook show Chinese demand will account for 31% of global net energy demand growth between 2011 and 2035. Its energy demand in 2035 will be double that of the United States and triple that of the European Union. And China’s growing appetite for energy resources will be increasingly backed by its growing naval power—meaning it’ll have options to push the strategic envelope in the South China Sea in order to enhance its own future energy security.

The seabed around the Natuna Islands is gas-rich and falls partly within the boundaries of China’s so-called nine-dash line in the South China Sea. But it’s also a part of Indonesia’s maritime Exclusive Economic Zone (EEZ). Indonesia has asserted on a number occasions that there’s no dispute with China around the EEZ because China’s audacious claim has no basis in international law. But Beijing has simply refused to respond consistently or clearly to Jakarta’s multiple requests for clarification.

At the least, there’s a conflict over the interpretation of the 1982 UNCLOS—and the legal concept that ‘land dominates the seas’—between China and Indonesia. Jakarta’s attempts to find consensus in ASEAN over the South China Sea has rested primarily on diplomatic efforts to engineer a middle-power driven construct—known as ‘dynamic equilibrium’ (PDF)— that might moderate the growing power imbalance in Southeast Asia. Regarding Indonesia’s perspective on China’s long-term interests and role in the region, Rizal Sukma defines (PDF) Indonesia’s relationship with China in terms of ongoing ‘strategic ambiguity’.

The ambiguity that pervades the relationship is driven in part by historical anxieties. Beijing and Jakarta suspended diplomatic relations for 23 years after Suharto’s ascent to power. Their resumption in 1990 did not prevent another crisis in the relationship in 1994 over the treatment of Chinese Indonesians in North Sumatra. In 1998, during the height of the Asian Financial Crisis and Jakarta riots, Chinese Indonesians were again targeted, resulting in thousands fleeing abroad. Even though both countries are currently reaping the economic benefits of good relations, Jakarta can’t help but factor Chinese coercive practices elsewhere in the region into its strategic thinking.