The China watch

The continuing, seemingly escalating tension between the Philippines and China poses challenges for our policy makers. But there are questions asked by friends and readers trying to understand the roots and consequences of this extremely strained relationship.

Aside from territorial dispute, what is the underlying reason for China’s sudden interest in a tiny group of islands and non-islands or shoals in the West Philippine Sea (South China Sea)? What is the current state of affairs and China’s short-term plan? Is there anything that can be done to alleviate the present stand-off between the two countries?

It is important to note that China has territorial disputes with almost all its neighbors. The most serious is actually its conflicting claims over the Senkaku Islands with Japan. Unlike the Philippines, Japan has the naval and military capability to directly battle any Chinese incursion. And it has done so successfully so far.

It is not a coincidence that all these disputed areas are believed to have enormous reserves of natural gas and oil which China desperately needs.  China continues to claim two Philippine-held areas: the Panatag Shaols located only 124 nautical miles from Zambales and the Ayungin Shaol located only 106 nautical miles from Palawan.

In April 2012 China started occupying the Panatag Shaols. It is now obviously trying to occupy next the Ayungin Shoals. The Ayungin’s critical role is that it is close to the Mischief Reef and quite close to the Recto (Reed) Bank. Whoever controls Ayungin can control the path to the Recto Bank.

And what makes the Recto Bank so attractive? According to a Philex Petroleum report released last year, a seismic survey of the Recto Bank indicates probable reserves of 4.666 trillion cubic feet of natural gas.  A survey by Forum Energy of London has noted that another interpretation of the same data by Weatherford Petroleum Consultants said the prospective reserves could reach as high as 16.612 to 20 trillion cubic feet of natural gas.

The Philippines presently has only one domestic source of natural gas which is Malampaya located  northeast of the Recto Bank. Malampaya, at the start of operations in 2002, had natural gas reserves of 3.7 trillion cubic feet. It was scheduled to provide gas supply for 20 years to  power plants with a capacity of 2,700 megawatts. In ten years Malampaya will run out of natural gas.

The Recto  Bank reserves could provide 1 ½  to 5 times more gas than Malampaya and could conceivably supply more than half of our country’s power requirements. It could bring down the price of electricity with the added advantage that natural gas is clean energy unlike coal.

There is a seven-man Marine contingent stationed in a grounded ship in the Ayungin Shoals. This means the Philippines controls the area including the Recto Bank. But Chinese ships have already been seen patrolling the area.

I recently met with Chito Sta. Romana, our foremost China expert, to try and fathom China’s strategy in the West Philippine Sea especially regarding the dispute with the Philippines. These are the highlights of our discussion:

Although it clearly wants to assert its power, China still wants to create an international image that it is a peaceful power. Therefore, their strategy is calibrated. Although the Philippines claims more than 40 islands or shoals, it actually controls only around 8 or 9 islands and shoals including Ayungin.

The Chinese will try to look for weak spots and in this way they can begin to reduce one by one, the number of islands and shoals we control.  However, they want to avoid an outright military invasion. So what they are looking for is for the Philippines to give them an excuse to react militarily.

For example, if we try to arrest Chinese fishermen, they will try to resist. If we initiate hostilities which means we fire first, then they will fire back. What they want is to be able to say that what they are doing is purely a defensive measure. They will say that they did not instigate but merely reacted.

They are probably hoping we commit the same incident as the killing of the Taiwanese fisherman. If that happens, they will not be satisfied with an apology, judicial prosecution and compensation. China will most likely respond with overwhelming force.

Right now, they are analyzing and weighing the cost of further incursions into Philippine-held territory. Their dilemma is how to assert territorial claims without having to pay a high international political and diplomatic price.

China is still unsure how the US will respond to outright aggression. This is why in the confrontation with Japan over the Senkaku Islands, China decided to back down in the meantime.

Right now, China is engaged in a diplomatic offensive. They will try to neutralize any US response and ASEAN political support by trying to make the Philippines look like a troublemaker by making unreasonable demands. We must counter this with our own diplomatic offensive and a clear message to everyone that the Philippines is just trying to protect what, by international law, it owns legitimately.

At the same time, the Philippines should continue its two-pronged strategy of deterrence and diplomatic engagement with China. Perhaps it would be advisable to follow Obama’s example of a two-day summit meeting with China’s president.

If a personal or summit meeting is held between P-Noy and Xi Jinping, there should be no illusion that this will solve the issue of sovereignty. The goal is to provide a platform where the two leaders can have a measure of each other. It will allow the two to know each other’s personal positions and to understand where the differences are. More important, the two presidents may be able to find areas of common interests.

I agree, perhaps the two can arrive at an understanding on how to manage the dispute while moving on in other aspects. This dispute may last for decades and so the key is how to balance this with other areas of cooperation. It is important that, at least, at the highest levels the communication lines remain open.

After all, if even at the height of the Cold War the leaders of the US and Soviet Union held summit meetings, there’s more to gain and less to lose if we do the same.

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