Tackling tensions in the South China Sea key to boosting global trade

Strategic stability in the South China Sea is of utmost importance to global peace and trade. The region is vital for international maritime trade, with 64 percent of total goods passing through its waterways in 2022. In 2023, 10 billion barrels of petroleum and 6.7 trillion cubic feet of liquefied natural gas passed through it.

Yet the sea continues to grapple with lingering tensions, skirmishes and hostilities with the latest clash between the Philippines and China taking place around the contested Second Thomas Shoal. While both sides reached a provisional agreement to diffuse tensions, there remains a need for sustained, durable, indigenous and workable solutions to prevent future military confrontations.

History of conflict

The islands and waterways in the South China Sea have a history of contested claims. Among them are China's attempts to exercise its sovereignty in the region, including in the Exclusive Economic Zone (EEZ) of Malaysia, Brunei, Vietnam and the Philippines.

The disputes related to territories such as the Spratly Islands, an archipelago in the South China Sea, are a product of "colonial overhang," as conflicting claims by states in close proximity to the sea came to the fore after colonial powers such as Spain and France as well as Imperial Japan ceded the territory.

France abandoned its claims after World War II as Imperial Japan overtook it in French Indo-China. However, Imperial Japan surrendered to the United States during World War II with no successor in the territories. This resulted in competing claims which continue to date.

For the Philippines and China, two sticking points remain. For Manila, its most contentious dispute with China centres on the Second Thomas Shoal, a submerged reef part of the Spratly Islands which lies within its Exclusive Economic Zone.

Beijing claims that the Spratly Islands have belonged to China since the early 1940s after Imperial Japan relinquished control. Yet since 1999, the Philippines grounded its ship to lay claim to the island. This has led to periodic clashes with the Chinese Coast Guard over territory China claims as its own.

Also important to note is that under President Beningo Aquino III, the Philippines filed an arbitration case against China for its territorial claims at the Permanent Court of Arbitration in the Hague which ruled against China in 2016. The ruling however was rebuffed by Beijing which has continued to manoeuvre in the region in defiance.

Looking to the future

The latest conflict involves a Chinese vessel colliding with a Philippine supply ship near the same disputed Spratly Islands. Both sides have blamed each other for the incident, which has further inflamed tensions.

To diffuse the situation, a provisional agreement was reached. The contents of the agreement have not been disclosed by either side.

While the agreement is a heartening sign, there is little denying that flare ups have been caused by historical territorial claims which both sides are not willing to cede.

There are loopholes in the agreement too. It does not include a clause permitting China to conduct on-site inspections of Philippine resupply missions at the Second Thomas Shoal, which Beijing has demanded.

China maintains that the contingent of troops aboard the Filipino ship Sierra Madre equates to militarisation of territory belonging to China. Not allowing on-site inspections signals a lack of trust, and could lead to future flare ups and misunderstandings.

The political rhetoric on either side also suggests that trust deficits between China and the Philippines are at an all time low.

After the agreement was signed this week, Philippine President Ferdinand Marcos Jr. stated that his country would not yield or waver on its stand on the Second Thomas Shoal, asserting that the sea located to the west of the Philippines belonged to Manila, and not Beijing.

Similarly, China maintains that its actions were lawful and reiterated its demand that the Philippines must tow away the grounded ship as shipping large amounts of building material to the shoal violates China's sovereign claims.

Given these realities, there is a need to complement existing understandings with greater depth and vision.

Avoiding US interference

China and the Philippines must work to improve engagement to address lingering suspicions rather than reinforce them. This warrants keeping the United States out of negotiations given that the Philippines already has a 1951 Mutual Defence Treaty with the US which China views with suspicion.

Hence, involving Washington or citing Manila’s security umbrella if China conducts military manoeuvres in the South China Sea is not in the Philippines' interest.

A better scenario is for bilateral dialogue to take place which discusses grievances on the Spratly islands and how both countries can work towards deescalation.

This would help build trust with Beijing and mark a detraction from the past where previous Chinese attacks on Philippine vessels prompted Manila to label Beijing as an aggressor and a brazen violator of international law.

If the Philippines continues to keep Washington out of the matter, chances of diffusion increase. So far, that has been the case with the Philippines shelving the idea of invoking the defence treaty in light of Chinese adventurism.

Matter as discussions of history are often tainted by revisionist tendencies which have so far prevented Manila and Beijing from addressing the underlying causes of tensions despite setting up hotlines and communication strategies.

Existing platforms such as the Bilateral Consultation Mechanism on the South China Sea should also include candid discussions on territorial claims.

Additionally, regional forums such as ASEAN must play a more actionable role in devising conflict management and resolution mechanisms. So far, South East Asian states have failed to resolve the decades-long quagmire through diplomacy, dialogue and deliberation, which needs to change.

While it is encouraging to see that the union held a meeting in Laos this week to discuss the China-Philippines standoff, it is important that discussions on a "code of conduct" in the South China Sea take place in the absence of external interference to prevent further polarisation and a breakdown of strong trading ties between China and the Philippines.

Such anti-revisionist approaches to conflict resolution can play a better role in generating indigenous solutions which address historical territorial grievances in the South China Sea. That is at the heart of tensions between China and the Philippines.