Strategic considerations – the South China Sea and China

With its narrow profile and long coastline, it is no surprise that the neighbouring South China Sea is the key to Vietnam’s future prosperity. (KYM TO TASHA, BPS) Economists estimate up to 55% of Vietnam’s GDP by 2020 will stem from the marine economy, and 55-60% of exports will arise from the sea. The South China Sea and mineral-rich Spratly and Paracel Islands are a regional point of tension, yet Vietnam’s economic development and national security are bound up with them. As well as seafloor hydrocarbon deposits, the Spratly Islands straddle international sea routes and are home to rich fishing grounds. One important new industry is oil, with Vietnam now the third-largest oil producer in Southeast Asia with daily outputs of 400,000 barrels. Chinese pressure on foreign oil companies such as Exxon Mobil and BP has previously curbed exploration and development of Vietnamese oilfields in the area.

China, Vietnam and Taiwan claim the island groups in their entirety, but one key sticking problem is China’s claim to almost the whole of the South China Sea, even where it directly cuts into the EEZ of countries like the Philippines, Vietnam, Malaysia and Brunei. Today around 2,000 Vietnamese people occupy 30 islands in the southern grouping of the Spratly Islands, territory it has claimed since the 17th century. China already operates oilfields in the north, while Vietnam has established them in the centre and south. A minor naval battle over the Spratly Islands took place in 1988.

The Paracel Islands are claimed by Vietnam, but it has no presence there. Instead, China staked its claims on the Paracels after it defeated the South Vietnam Navy in a small naval battle in 1974. A PLAN garrison is currently stationed there and an airfield was constructed on Woody Island. The military balance between China and Vietnam has obviously swung heavily in China’s favour. Ironically, many of the weapons that Vietnam relies upon are already operated by China! The South Sea Fleet is the jewel in the PLAN’s crown, with new facilities being constructed at Sanya Naval Base on Hainan Island. China’s naval modernisation poses the greatest threat to Vietnam, and in any conflict it would have to combat both the PLAN and PLAAF. The Spratly Islands come within range of Vietnamese Su-30 fighters, and Vietnam is intent on building numerous small and fast ships equipped with missiles to counter the superiority of the PLAN. Vietnam is very interested in ballistic missiles, and it already deploys the 300km-range SS-N-26 Yakhont anti-ship cruise missile able to strike PLAN bases on Hainan. Vietnam is reportedly interested in the SS-26 Iskander-E ballistic missile with a range of 260km as well.

Relations with China have traditionally been strained, despite both countries being communist led. Relations reached rock bottom in 1979 with the outbreak of the Sino-Vietnamese War when China invaded northern Vietnam with 200,000 troops in response to the latter’s occupation of Cambodia. Chinese troops withdrew a month later under a scorched-earth policy. Both sides claimed victory, but the war showed up the poor performance of the PLA. In 1999, after protracted negotiations, the two countries signed a border pact, although border demarcation was reportedly not completed till January 2009.