Leader Development & Education for Sustained Peace Program: Cross-Cultural, Geopolitical & Regional Education

China’s Territory Disputes: The Nexus between Economy, Military, and Leadership

Background: The aim of Secretary of State Hillary Clinton’s recent visit to Beijing was to maintain the “healthy and steady development” of relations between the U.S. and China, especially in the midst of the island territory dispute. But tensions in the region continue to build up and extend. In early September, the Japanese government announced its purchase of several disputed islands and a few days later, China sent six unarmed patrol ships into Japanese-controlled waters.

To these neighboring countries, the stakes are high. The waters surrounding the disputed islands are believed to be rich in both oil and, to a lesser extent, natural gas resources. In 2011, China experts Andrew Erickson and Gabe Collins forewarned, “China aims to more than triple its oil & gas production in the South China Sea over the next 10 years. New deepwater oil & gas exploration and production will likely complicate the South China Sea maritime security environment.”

Image courtesy of Business Insider.

Notably, China’s economy is currently struggling to maintain stability as the demand for consumer goods has slowed to a standstill. Though the issue of China’s economy is open for debate, it continues to show little sign of progress while the government has drafted multiple stimulus packages to no avail.

Meanwhile, to support and protect its maritime ventures, China is bulking up its naval and air power capabilities with an active modernization policy. In an interview with The National Bureau of Asian Research, Associate Professor in Strategic Research Department at the U.S. Naval War College, Andrew Erickson explained China’s strategic motivations for modernizing the People’s Liberation Army:

“Today, China’s naval and air forces are finally on the verge of giving the country’s leaders reliable instruments of national power. (…) Like many nations, the People’s Republic of China (PRC) has long sought to maintain domestic order and defend itself against external threats. More exceptionally, it seeks to regain its historical status as a preeminent great power as well as territories lost during an aberrant period of weakness.” (emphasis added)

China also recently tested its nascent, albeit noteworthy, aircraft carrier and announced that it plans to build a military garrison on the disputed Sansha islands.

Likewise, the civilian side of the Chinese government’s rhetoric and behavior is drawing attention to the importance of the islands under dispute. Wang Yilin, Commissioner of the state-controlled Chinese oil giant China National Offshore Oil Corporation (CNOONC), for example, stated, “large-scale deep-water rigs are our mobile national territory and a strategic weapon.” All this is in the midst of a generational leadership transition for the country’s Communist Party, which brings with it additional promising change and potential problems.

Discussion: While reports on China’s current military pursuits, the forthcoming once-in-a-decade leadership transition, and the tenuous economic situation seem to be part of their respective trends, it is clear that these three elements converge when looking at China’s territory and maritime disputes. The following sources offer some further insight into this convergence:

  • First, to highlight a useful resource, the China Sign Post is a research newsletter and web portal that covers key developments in Greater China, with particular focus on strategic commodities, trade, and security factors. The previously cited Andrew Erickson and Gabe Collins, a commodity and security specialist focused on China and Russi, are co-founders of the site.
  • The CNOOC currently has a bid in place to takeover the Canadian oil company Nexen, which currently controls oil access in Alberta and the Gulf of Mexico. Canadian Prime Minister Stephen Harper stated “to the extent there’s some distrust on that side, I think it’s incumbent upon the Chinese to indicate, as the relationship goes forward, their willingness to play by the same rules.” This takeover bid is currently under review by the Canadian and U.S. governments.
  • Carl Walter and Fraser Howe, coauthors of Red Capitalism: The Fragile Foundations of China’s Extraordinary Rise, write in Foreign Policy about “Beijing’s deliberately awkward adaptation of Western-style stock markets to a command-type economy.” Walter and Howe explain that “This is not how equity markets are supposed to work. Substituting the state for market forces eliminates the fundamental valuation function of the market, turning into an arena for speculation. (…) To truly reform these markets, the state must exit.”
  • Dean Cheng and Dr. Derek Scissors of the Heritage Foundation’s Asian Studies Center offer insight into the mystery surrounding the Vice President Xi Jinping’s whereabouts and the culture of secrecy in Chinese leadership, contextualizing this within the discussion of the upcoming leadership transition: “With [President Hu Jintao’s] departure this fall [an] era has ended. (…) The Communist Party was never a monolith, but now it can no longer pretend to be one. (…) The Party is now divided into factions and, cutting across those factions, various interests groups such as the internal security apparatus and heavy industry.”
  • Russell Leigh Moses, a Beijing-based analyst and professor, in an article for the Wall Street Journal’s China Real-Time Report, expounds upon the “brawl within the party over direction” and specifically, the implications of a rare piece of internal critical commentary on the Chinese Communist Party’s website that highlighted 10 challenges to the Party’s governance.
  • Ambrose Evans-Pritchard, an editor for The Telegraph, examines “China’s Revolution Risk” and the intertwining of the leadership crisis with the economic hard-landing that is, in his view, a risk more worrying than China’s success.
  • Joshua Keating, an associate editor for Foreign Policy, provides an insightful view of the China-Japan dispute and why the previously-mentioned China-Japan row is a U.S. foreign policy concern.
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  1. LDESP PACOM News Update – September 2012 | LDESP Blog

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